The draft NAMA business plan is published

peasant

available here: http://www.rte.ie/news/2009/1014/namadraft.pdf

Under the projections and assumptions, the Department believes it will make a profit of €5.48bn after ten years.
Meanwhile, the legislation giving effect to the NAMA passed its first major test in the Dáil tonight.
The Bill was approved by 77 to 73 on a second stage vote.

Haven't had time to read it yet, so sorry mods, no discussion, just a link

lmimmfn

Is it just me or do those numbers look like they've just been grabbed from the clouds, e.g.

€77 billion have been identified as likely to be eligible assets for transfer
to NAMA

The estimated aggregate average loan to value (LTV) rate for these loans is approximately 77%

ok so without saying it the total cost is 100 billion? nice to hear thats such a nice round and perfect number

so net loan balance is 68 billion( excluding 9 billion interest roll up ) and the current market value of those loans is 47 billion but we get them at the knock down price of 54billion?????

Interest to be paid by Nama between now and 2020 is expected to be 16billion, so were getting these properties at 70billion when theyre worth 47???

33% of the bloody loans are for property etc. in foreign countries!!!!!!! thank god really as at least they might be worth something

lol, 14.6 billion is the percieved interest rate swap?????

ok so after the Nama transfer the banks may need more money, the government will try and fund this from the private sector and if that fails theres more money needed from the taxpayer to help out the banks some more, at least until theyre making fortunes again.

Nama will end in 2020( they expect to sell 6.5 billion worth of stuf yearly from 2013 onwards lol ), so just another 11 years of this.

Er hold on, am i reading this right? page 10 states that Nama is expected to gain 12billion in interest? so Nama isint even offloading these to third party banks when theyre bought but theyre taking on the loans??????

Diarmuid

It's embarrassing. And scary. I though that NAMA couldn't get worse. I was wrong.

Ireland, you are being screwed.

From irisheconomy.ie

Among the highlights:

1.
NAMA is assumed to make a net profit of €5.48 billion by the end of its anticipated lifetime of ten years.
2.
However, contrary to the million times that we have been told that NAMA will “wash its face” on an ongoing basis, it is projected that NAMA will pay out €16 billion in interest payments on its debt but will receive €12 billion in interest income on the loans acquired.
3.
In addition, fees and expenses will add up to €2.64 billion over ten years.
4.
The profit of €5.48 billion stems from NAMA recouping payments of €66.1 billion from loan repayments and asset recoveries to pay off the €54 billion in loans issued.
5.
Interestingly, from Table 5’s cash flow projections, the only year in which NAMA is not projected to lose money on an income flow basis is 2010 when an interest outflow of €1.3 billion will be offset by interest income of, em, €1.3 billion. Table 7’s “budget projections” attempts to show that NAMA will make a profit in 2010-2012. The difference between this and Table 5 is “The interest income projections in this table include the impact of contractual rolled-up interest on land and development loans in addition to interest income from cash flow-producing assets.” So any “profit” reported will be of a phantom variety.
6.
From Page 10: “The projections assume that, of the €77 billion nominal value of loans acquired, €62 billion will be repaid by borrowers and that loan defaults or debt restructuring will occur on €15 billion (a rate of 20%). Over a five year period in the early 1990s, one UK bank experienced a default rate of less than 10% on its whole book. Given the concentrated nature of the prospective NAMA portfolio and the risk of a prolonged recession, a 20% default rate assumption has been made. It is also assumed that €4 billion will be realised from the sale of underlying assets secured by the defaulting loans of €15 billion. These are conservative and prudent assumptions.” Yes you read that right. 80% of the loans will be repaid in full.
7.
The 80% who pay back their loans will be in no rush to do so. Repayments will be €1 billion next year and the year after, €2.5 billion in 2012. Then in 2013 (after the next election!) the loan repayments will start arriving in buckets—€7.5 billion every year.
8.
What if more than 20% of the loans can’t be paid back? The document tells us: “Stress-testing of this assumption indicates that the default rate would have to increase to 31% to erode in full NAMA’s projected Net Present Value gain of €4.8 billion.” Feel better now?
9.
NAMA will acquire €14.6 billion in derivatives positions, mainly interest rate swaps.
10.
By the turn of the year, NAMA will only have taken on 10 loans with a total value of €16 billion.
11.
NAMA’s potential new lending: “NAMA will inherit any commitments entered into by the banks as far as the drawdown of funds is concerned; it is estimated that undrawn commitments on loans transferring to NAMA are of the order of €6.5 billion.” This exceeds the €5 billion limit placed on it in the legislation. The document says “the limit can be adjusted by order of the Minister and Resolution of the Dáil, thus ensuring parliamentary accountability for borrowing levels.”

>>>>

ei.sdraob

queue "but theres no alternative" fianna failers

kippy

I have to admit, my grasp of this level of finance is pretty poor, but if what you guys are saying is close to correct we really are getting shafted.
I dont see why we are letting those who go us into this mess with their bad maths and economics. try get us out of it. How can we trust them after all that has happened.

ei.sdraob

NAMA will acquire €14.6 billion in derivatives positions

holy ****! :eek:

thats almost 15billion for nothing more than over glorified bets, which are not worth paper they are written on

i could understand money being spend on property and land, at least that might be used down the road

but derivatives them things are pure evil and absolutely worrthless

Diarmuid

That clown Frank "property empire" Fahy was on Morning Ireland this morning saying that 20% default was pessimistic and would probably be lower than that. Currently NAMA contains 40% of non-performing loans, yet he believes that within 2 years all but 20% will be performing! OMFG! Did he miss the whole Liam Carroll debacle?

voxpop

Its never going to make money - the whole point of it is to take the rubbish out of the banks and allow the banks to get on with being banks. So taking derivatives is exactly what Nama is about.

funnyname

Fees and expenses of €2.64 billion over ten years, well at least someone is going to make money out of this deal and it isn't going to be the taxpayer.

:eek::eek::eek::eek::eek:

lmimmfn

While i disagreed with Nama before the part whereby Nama is effectively taking on the mortgages of the sales of assets makes the whole thing 10 times worse. How the feck are they going to get those cleared in 10 years? i would have thought those buying would get their loans from investment firms/banks and pay Nama in cash directly.

Diarmuid

This bit is funny:

Repayments will be €1 billion next year and the year after, €2.5 billion in 2012. Then in 2013 (after the next election!) the loan repayments will start arriving in buckets—€7.5 billion every year.

So basically nothing is expected until FG get into power. Then when the €7.5bn doesn't materialise, then is FG's problem/fault. A picture of the FF logo should be next to the definition of Machiavellianism.

ei.sdraob

voxpop wrote: »

Its never going to make money - the whole point of it is to take the rubbish out of the banks and allow the banks to get on with being banks. So taking derivatives is exactly what Nama is about.

the whole point of NAMA as being sold to taxpayer is getting loans for development land and property of the banks books

which is bad enough as it is

now we learn that a large chunk of that is nothing more than paper, giant overglorified gambling betting slips, and doesnt represent land/buildings or anything physical


do you know what derivatives are?

these things are pure speculation/gambling

i can pull a futures contact out of my arse that says boards.ie Ltd will be worth 1 billion tomorrow, thats all it is a peace of paper



i could sort of understand getting developer loans, at least if they go bankrupt some land/property can be recovered

but derivatives? nothing more than huge contracts for speculation

the whole derivatives market almost totally collapsed, and i would bet (ha! want a "hedge"?) that we will never see that 15 billion

lmimmfn

ei.sdraob wrote: »

the whole point of NAMA as being sold to taxpayer is getting loans for development land and property of the banks books

which is bad enough as it is

now we learn that a large chunk of that is nothing more than paper, and doesnt represent land/buildings or anything physical


do you know what derivatives are?

these things are pure speculation/gambling

i can pull a futures contact out of my arse that says boards.ie Ltd will be worth 1 billion tomorrow, thats all it is a peace of paper



i could sort of understand getting developer loans, at least if they go bankrupt some land/property can be recovered

but derivatives? nothing more than huge contracts for speculation

the whole derivatives market almost totally collapsed, and i would bet (ha! want a "hedge"?) that we will never see that 15 billion

Of most importance is when the damn derivatives expire or whatever the word is, if there in 5 or 6 years the might stand some chance if theyre in 2-3 years theyre worth 0.

voxpop

Nama is definitely being spun to make it sound like its something that could make money, but what its really for is to take all the crap from the banks.
Derivatives are hanging over banks as well as dodgy loans - nama will take it all from the banks, freeing up the banks and supposedly getting them lending again.

Anyone who thinks that Nama might actually make money is living in cloud cuckoo land - its just a toxic dump for all the bad decisions the banks have made in the last 10 years.

lmimmfn

voxpop wrote: »

Nama is definitely being spun to make it sound like its something that could make money, but what its really for is to take all the crap from the banks.
Derivatives are hanging over banks as well as dodgy loans - nama will take it all from the banks, freeing up the banks and supposedly getting them lending again.

Anyone who thinks that Nama might actually make money is living in cloud cuckoo land - its just a toxic dump for all the bad decisions the banks have made in the last 10 years.

exactly, if it as any way profitable WTF would the banks be doing moving the assets and junk to Nama lol, its a joke really.

EDIT:
Oh look FG are starting to cop on - http://www.irishtimes.com/newspaper/breaking/2009/1015/breaking24.htm

ei.sdraob

voxpop wrote: »

Nama is definitely being spun to make it sound like its something that could make money, but what its really for is to take all the crap from the banks.
Derivatives are hanging over banks as well as dodgy loans - nama will take it all from the banks, freeing up the banks and supposedly getting them lending again.

Anyone who thinks that Nama might actually make money is living in cloud cuckoo land - its just a toxic dump for all the bad decisions the banks have made in the last 10 years.

so we clean the banks, and what will they do? yep get in a bigger mess again in a decade and come looking for another bailout

when theres no pain theres no lesson to be learned

the current system is a perverted mix of socialism and capitalism, taking the only the worst bits of each system

Long Onion

Is there any way of getting a list of who exactly voted yes and who voted no on the bill, just as a matter of interest?

Cheers

Naz_st

However, contrary to the million times that we have been told that NAMA will “wash its face” on an ongoing basis, it is projected that NAMA will pay out €16 billion in interest payments on its debt but will receive €12 billion in interest income on the loans acquired.

Just an issue on this:

So, we "borrow" 54 billion (from the banks in the form of a mixture of trashy loans). It is expected that we will pay 16 billion in interest over the next 10 years for the privelege of this "loan". NAMA is expected to reap 12 billion in interest paid on the trashy loans by various loan holders (despite the banks having already rolled up 8 billion of interest, presumably so as not to have the loans go into default before NAMA comes along). Now, all that is bad enough, but what happens when interest rates rise over the next 5-10 years? I mean it seems to me that if this happens our (NAMA's) interest obligations would increase dramatically, while at the same time, the chance of default on the loans the government takes over also increases? So we have to pay the extra billions in interest, while at the same time NAMA's "income" drops?? :eek:

voxpop

ei.sdraob wrote: »

so we clean the banks, and what will they do? yep get in a bigger mess again in a decade and come looking for another bailout

when theres no pain theres no lesson to be learned

the current system is a perverted mix of socialism and capitalism, taking the only the worst bits of each system

Im not pro nama or anything - my point is that people are getting outraged and shocked when they see what nama is paying for loans and the rubbish that nama is actually taking off the banks. This is the whole drive behind nama. It has been created to take all the rubbish and over pay for loan/assets. Its primary goal is to recapitalize the banks, not make money.

FF are out there spinning that it may make money - but this is a load of rubbish as usual.


On cleaning the banks - well we all need money to live and to make money we need a working economy and the banks make the economy work.

It galls me to think about how much money we are using to bail out the banks and how they will most likely go straight back to doing what they were doing before - but simply put, we need the banks

SkepticOne

voxpop wrote: »

On cleaning the banks - well we all need money to live and to make money we need a working economy and the banks make the economy work.

It galls me to think about how much money we are using to bail out the banks and how they will most likely go straight back to doing what they were doing before - but simply put, we need the banks

Note that alternative have been proposed that don't put the full burden at the feet of the tax payer as NAMA does.

The criticism here, however, is that after the banks have been sorted out, NAMA will continue to lose money by holding on to assets that are deteriorating in value.

lmimmfn

Naz_st wrote: »

Just an issue on this:

So, we "borrow" 54 billion (from the banks in the form of a mixture of trashy loans). It is expected that we will pay 16 billion in interest over the next 10 years for the privelege of this "loan". NAMA is expected to reap 12 billion in interest paid on the trashy loans by various loan holders (despite the banks having already rolled up 8 billion of interest, presumably so as not to have the loans go into default before NAMA comes along). Now, all that is bad enough, but what happens when interest rates rise over the next 5-10 years? I mean it seems to me that if this happens our (NAMA's) interest obligations would increase dramatically, while at the same time, the chance of default on the loans the government takes over also increases? So we have to pay the extra billions in interest, while at the same time NAMA's "income" drops?? :eek:

youre missing a few things:
1. the interest roll up is 9 billion not 8
2. the estimated interest on the 54 billion over 11 years is 16 billion( oh yes extremely conservative ), i could work it out but id expect ECB interest rates to be between 5-7% in 2015-2020 with a good recovery( again only my guess but who knows )
3. ill make this bold WTF ARE NAMA DOING SELLING THE ASSETS VIA A MORTGAGE PROVIDED BY THEM?????????? Nama are going to sell property but provide the loan to buy it, arrgghhhh

mathie

Diarmuid wrote: »

This bit is funny:



So basically nothing is expected until FG get into power. Then when the €7.5bn doesn't materialise, then is FG's problem/fault. A picture of the FF logo should be next to the definition of Machiavellianism.

It's a cunning stunt alright.

herya

Diarmuid wrote: »

So basically nothing is expected until FG get into power. Then when the €7.5bn doesn't materialise, then is FG's problem/fault. A picture of the FF logo should be next to the definition of Machiavellianism.

Exactly, and that's why FG suddenly start to ask more difficult questions. They know they'll be the ones left to hold the fort.

bauderline

Just to fire a dumb question out there... would it be possible for an incoming government to hit the banks with a "bailout tax" ? So over and above their normal corp tax they get hit with a 10% levy on their profits to go towards the costs of NAMA on an annual basis until the public purse is no longer out of pocket... as it were... is this feasible ?

herya

bauderline wrote: »

Just to fire a dumb question out there... would it be possible for an incoming government to hit the banks with a "bailout tax" ? So over and above their normal corp tax they get hit with a 10% levy on their profits to go towards the costs of NAMA on an annual basis until the public purse is no longer out of pocket... as it were... is this feasible ?

Why not, and the banks will immediately pass it on to the customer.

peasant

missed this the other day ...even the Construction Industry Federation has reservations about NAMA :eek:

NAMA risks stifling the already struggling construction industry if implemented to the Government's current plans, according to the Construction Industry Federation.
'As NAMA will control all securities and equity, existing experienced borrowers will be excluded from trading in the property and development marketplace,' CIF Director General Tom Parlon said.
'This will restrict the market to capital funds and syndicates of non-development/construction professionals, which from the construction industry's perspective contributed in no small measure to the difficulties in which we now find ourselves,' Mr Parlon said in a statement.

http://www.rte.ie/news/2009/1013/banks.html

bauderline

herya wrote: »

Why not, and the banks will immediately pass it on to the customer.

Well, I guess they can only go so far down that road, I would also imagine that there are an array of tools to make life uncomforable for them... indeed through sufficient regulation they would have little scope to attempt that sort of behaviour ?

Diarmuid

herya wrote: »

Exactly, and that's why FG suddenly start to ask more difficult questions. They know they'll be the ones left to hold the fort.

eh? Every time Richard Bruton or Leo Varadkar has been on the radio talking about NAMA they have criticised it and pointed out the problems.

herya

Diarmuid wrote: »

eh? Every time Richard Bruton or Leo Varadkar has been on the radio talking about NAMA they have criticised it and pointed out the problems.

OK you're right, but that's where it ended. I guess I'm hopeful they'll move on to some action. I won't hold my breath though.

herya

bauderline wrote: »

Well, I guess they can only go so far down that road, I would also imagine that there are an array of tools to make life uncomforable for them... indeed through sufficient regulation they would have little scope to attempt that sort of behaviour ?

Theoretically, but then the question should be - do you trust the regulator?

Diarmuid

herya wrote: »

OK you're right, but that's where it ended. I guess I'm hopeful they'll move on to some action. I won't hold my breath though.

They were/are totally powerless to do anything about it. The legislation has passed, it's a done deal

herya

Diarmuid wrote: »

They were/are totally powerless to do anything about it. The legislation has passed, it's a done deal

Aren't they still suggesting amendments to it?