Nama to examine rapid fire disposal of €22bn loan book

GCU Flexible Demeanour

Front page of the business post

http://www.newstalk.ie/Sunday-paper-Review:-GSOC--dancing-sea-lions

The report tells us that the government have asked the National Asset Management Agency to “examine a rapid disposal of its remaining €22bn loan book, as part of an ‘overarching review’ of the state’s mammoth bad bank.”

Commercially, this may make sense. It's just the significance of this move is that it will finally establish the extent of the State's losses, and the fiction that NAMA would even seek to recover the full €70-odd billion book value of the loans it bought will be finally laid to rest.

What's interesting is the full story (not online yet, as I think the Business Post only puts the stories up a couple of days later) doesn't even bother to mention that it was ever intended that NAMA would chase the full value of the loans.

Idbatterim

Brilliant idea, just like selling the battersea site in 2010, for a fraction of the price it would achieve now...

Victor

GCU Flexible Demeanour wrote: »

Front page of the business postCommercially, this may make sense. It's just the significance of this move is that it will finally establish the extent of the State's losses, and the fiction that NAMA would even seek to recover the full €70-odd billion book value of the loans it bought will be finally laid to rest.

Some of the loans are with parties that are bankrupt or deceased. Obviously only some of that money is going to be recovered. Importantly, NAMA didn't pay book value - it paid something like one-third of book value.

Meanwhile: http://www.irishtimes.com/business/sectors/financial-services/state-has-received-10-24bn-from-bailed-out-banks-since-collapse-1.1692496

sock puppet

Idbatterim wrote: »

Brilliant idea, just like selling the orbattersea site in 2010, for a fraction of the price it would achieve now...

If only the government hadn't cut the funding of the crystal ball gazing department.

Slydice

selling off large portions of its loan book through a small number of big ticket portfolio deals

Uhuh? that's the new phrase for "his mates", is it?

GCU Flexible Demeanour

Victor wrote: »

Importantly, NAMA didn't pay book value - it paid something like one-third of book value.

Indeed, with the resultant hole being filled by the taxpayer.

I'm not especially arguing that this development wasn't predictable. I'm just commenting on how, now that it has come to pass, there isn't even a passing reference to the fact that NAMA was explained to the public, when it was first set up, as pursuing 100% of the debt.

NAMA just has to break even to justify its valuation of the loans. But if it fails to recover the full amount (which it never had a chance of doing), it leaves the taxpayer facing a large loss.

Which, of course, would bring us right around to the "in what sense were Anglo and INBS systemic" discussion. Given that they were about as systemic as something that isn't very systemic.

Prof. Armitage Shanks

An interesting development and worrying for Irish tax payers. Lets say I was a private investor interested in acquiring valuable NAMA properties on the cheap.

Step 1 - Claim information is being leaked to private investors in order to further sour public opinion towards the agency.

We saw this a couple of months ago and despite allegations being made nothing was ever proven or even reported to Gardai. Nama chairman says attempts being made to discredit agency.

Step 2 - Apply pressure through political and business means on minister for finance.

Step 3 - Wait for finance minister to put pressure on/instruct NAMA to sell loans.

Step 4 - Watch newly acquired assets rise in value.

Could this be happening as we speak?

Victor

GCU Flexible Demeanour wrote: »

Indeed, with the resultant hole being filled by the taxpayer.

No, it was filled primarily by the banks becoming nearly worthless.

I'm not especially arguing that this development wasn't predictable. I'm just commenting on how, now that it has come to pass, there isn't even a passing reference to the fact that NAMA was explained to the public, when it was first set up, as pursuing 100% of the debt.

The target is 100%. Obviously that isn't practical in every case.

NAMA just has to break even to justify its valuation of the loans. But if it fails to recover the full amount (which it never had a chance of doing), it leaves the taxpayer facing a large loss.

Not necessarily. Yes, there is a risk of a loss, but in the billions, not tens of billions.

Idbatterim

If only the government hadn't cut the funding of the crystal ball gazing department

. I dont think you need a crystal ball to tell that selling at the height of a global **** storm might not yield you the best returns :rolleyes: Im going to use my clairvoyant skills again to predict that the prices if they sell next year will be higher than now, and they year after that they will be higher again. Of course the state wont want to hold onto them indefinitely, but I would have certainly waited for the initial rebound...

SpaceTime

sock puppet wrote: »

If only the government hadn't cut the funding of the crystal ball gazing department.

We call them 'economists' these days.

GCU Flexible Demeanour

Victor wrote: »

No, it was filled primarily by the banks becoming nearly worthless.

Certainly, shareholders lost. But, as we know, not bondholders or depositors. And, somehow, the taxpayer got on the hook for Anglo and INBS, as they were terribly important for some reason.

Victor wrote: »

The target is 100%. Obviously that isn't practical in every case.

I'll take a wild guess here. I'd suspect the quantity of cases, by value, where it's a practical target are hugely outweighed by the cases where it isn't.

Victor wrote: »

Not necessarily. Yes, there is a risk of a loss, but in the billions, not tens of billions.

The potential loss is most certainly tens of billions. Hopefully, it won't be. In the same sense that we used to hope that NAMA would at least look to recover 100% of the loan value in all cases.

K-9

GCU Flexible Demeanour wrote: »

Certainly, shareholders lost. But, as we know, not bondholders or depositors. And, somehow, the taxpayer got on the hook for Anglo and INBS, as they were terribly important for some reason.

As somebody who also looks at Anglo and INBS and asks the same questions, I do think the answer with Anglo was its huge share value and market capitalisation, Anglo had the highest share value of any Irish bank in 2006/07 IIRC. Many people thought that meant something, Sean Quinn in particular as we are reading about in the last week or so. I remember reading a piece in 2007 in the Sunday papers about 90% of its loan book being property related, alarm bells went ringing in my head!

The DoF apparently still doesn't understand why Anglo was included in the Bank Guarantee scheme.

I'll take a wild guess here. I'd suspect the quantity of cases, by value, where it's a practical target are hugely outweighed by the cases where it isn't.The potential loss is most certainly tens of billions. Hopefully, it won't be. In the same sense that we used to hope that NAMA would at least look to recover 100% of the loan value in all cases.

Hard to know, some of the bigger clients would have performing assets abroad that would more than offset poorly performing assets here, that was what a high profile court case against Anglo was about, developers wanted to keep the good assets and let NAMA deal with the lemons. Some of the poor performing loans in Dublin and larger population centres will recover, especially at the figures NAMA paid.

There's a disconnect between the €100's of Million thrown by the likes of Anglo and AIB at property developers and the €10's of Millions NAMA paid. NAMA will probably do quite well in comparison to the discounted figures it paid, we wont see the losses many predicted, but I've yet to see a developer pursued for 100% of the original loans Anglo and AIB lent in the first place.

The 60/70% write downs Anglo gave to NAMA just seems to be forgotten, the taxpayer stumped up, no more of that as CJH would say!

digzy

Know it's off topic but".......

I see Namad cork developer Michael o Flynn managed to gather a few shekels together to make rog's testimonial in London.

I started a thread a while back about how bankrupt are the bankrupts and I'm baffled at how this guy can't pay his debts but can afford this nonsense. Yet the avg punter behind on their mortgage have to provide detailed budgets to their lenders- and rightly so IMHO. However, there's different rules for the big fellas:rolleyes:

Idbatterim

Nama. Sell now while prices are increasing, makes fantastic sense to me... It would be nice to get the best return possible. Yours faithfully, Mr Taxpayer...

gaius c

digzy wrote: »

Know it's off topic but".......

I see Namad cork developer Michael o Flynn managed to gather a few shekels together to make rog's testimonial in London.

I started a thread a while back about how bankrupt are the bankrupts and I'm baffled at how this guy can't pay his debts but can afford this nonsense. Yet the avg punter behind on their mortgage have to provide detailed budgets to their lenders- and rightly so IMHO. However, there's different rules for the big fellas:rolleyes:

Isn't he the fellow whose son-in-law (chartered surveyor) amazingly had enough cash handy to buy his father-in-law's old house down near Courtmac for a knock down price and then hand it back to the former owner to live in?

Simple answer is that the companies with the debts were limited liability companies but did the developer give a personal guarantee on the loan.....