Nama to return surplus to the tax payer

everdead.ie

Just reading on Aertel:

NAMA chairman Frank Daly has said he expects the agency will be wound up before its original finish date of 2020, and will also achieve a surplus for the taxpayer.

Obviously good news for us but how much will this cut the national debt then?

It is also worth noting that this will be the second surplus that the government will make out of the bailout after Bank of Ireland.

Full atricle here http://www.rte.ie/news/business/2014/0228/507420-nama-chairman/

Full debt is 31.8 Billion(15 billion repaid by the end of the year) but I suppose my question is does that come off the national debt or is namas debt handled as if Nama were a bank?

Sand

It would be a political cataclysm with the potential to bring down the government if the chairman of NAMA was to say NAMA was going to return a loss. I think the "news" that Frank Daly says "Everything is great" has to be weighed against that.

That said, I do expect NAMA to at least break-even on paper. Accountants will be doing the score-keeping, and no other result will be politically acceptable.

For your question, it wont cut national debt at all. The debt issued to fund NAMA remains until paid or rolled over. The profitability or otherwise of NAMA doesn't affect this - the national debt just counts the debt, it doesn't consider any state assets (wisely to my mind given the huge political difficulties in monetising those assets). Quite frankly, the Department of Finance was absolutely furious that NAMA was even considered as part of the national debt - the whole 51% privately owned wheeze was carried out to try and persuade people to ignore that it was the state putting all the money in.

AlekSmart

Does all of this mean that Frank Daly will get a bonus ?

Sand

I'm pretty sure it does - Frank Daly is clearly doing a great job so a pay-rise, a bonus and a pension for everyone in my book.

GCU Flexible Demeanour

everdead.ie wrote: »

Full atricle here http://www.rte.ie/news/business/2014/0228/507420-nama-chairman/

I don't like this bit

<...>the €31.8 billion in senior and subordinated debt that NAMA acquired will be fully paid off, and that anything over that would be a gain for the Irish taxpayer.

for the reasons explored on the other recent thread.

http://www.boards.ie/vbulletin/showthread.php?p=89074527#post89074527

If NAMA breaks even, then NAMA will have delivered what it thought was feasible. But it still leaves the taxpayer with a very large exposure to loss. At the start of this process, people predicted this outcome.

AlekSmart

GCU Flexible Demeanour wrote: »

I don't like this bitfor the reasons explored on the other recent thread.

http://www.boards.ie/vbulletin/showthread.php?p=89074527#post89074527

If NAMA breaks even, then NAMA will have delivered what it thought was feasible. But it still leaves the taxpayer with a very large exposure to loss. At the start of this process, people predicted this outcome.

So....are you sayin Frank won't get a bonus then?.....this is all very complexicated.....:(

gaius c

everdead.ie wrote: »

Just reading on Aertel:



Obviously good news for us but how much will this cut the national debt then?

It is also worth noting that this will be the second surplus that the government will make out of the bailout after Bank of Ireland.

Full atricle here http://www.rte.ie/news/business/2014/0228/507420-nama-chairman/

Full debt is 31.8 Billion(15 billion repaid by the end of the year) but I suppose my question is does that come off the national debt or is namas debt handled as if Nama were a bank?

They dropped that pretence of trying to recover the book value of the loans pretty quickly, didn't they?

antoobrien

everdead.ie wrote: »

Full debt is 31.8 Billion(15 billion repaid by the end of the year) but I suppose my question is does that come off the national debt or is namas debt handled as if Nama were a bank?

The Nama debt isn't counted in the national debt figures, so yes, Nama is essentially the same as any other bank, so any surplus over the 31.5bn (& coupon/interest repayments) will be up to the 4 NAMA shareholders to disperse.

antoobrien

GCU Flexible Demeanour wrote: »

If NAMA breaks even, then NAMA will have delivered what it thought was feasible. But it still leaves the taxpayer with a very large exposure to loss.

The difference between the total recouped by NAMA and the full book value of the loans has already been booked (the capital injections to the banks form part of this), so there'll be no extra losses - unless there was an expectation of some form of NAMA dividend built into numbers and further capital injections are required.

GCU Flexible Demeanour wrote: »

At the start of this process, people predicted this outcome.

There were also a fair few predictions that NAMA would not recoup the 31.8bn in debt raised to buy the loans off the banks. Indeed I remember a few comments that NAMA turning a profit would be a bad outcome because it means that they underpaid the banks for their assets, making their capital ratios worse than they should have been.

Recouping the full amount was never realistic, any claims to the contrary was nothing but PR for those gullible enough to believe it.

GCU Flexible Demeanour

antoobrien wrote: »

<...> there'll be no extra losses <...>

I'm not suggesting there will be . I'm just making the point that I've made.

antoobrien wrote: »

<...> Recouping the full amount was never realistic, any claims to the contrary was nothing but PR for those gullible enough to believe it.

Which is precisely the point I've made.

noodler

gaius c wrote: »

They dropped that pretence of trying to recover the book value of the loans pretty quickly, didn't they?

This pretence never existed.

antoobrien

GCU Flexible Demeanour wrote: »

I'm not suggesting there will be . I'm just making the point that I've made.

If NAMA breaks even, then NAMA will have delivered what it thought was feasible. But it still leaves the taxpayer with a very large exposure to loss.

Stating that there will be losses implies losses that we didn't already know about, so yeah you kinda are suggesting that there will be extra losses. We already knew that there'd be losses, just not the scale. All the nama "profit" does is reduce the potential losses on the loans.

everdead.ie

antoobrien wrote: »

Stating that there will be losses implies losses that we didn't already know about, so yeah you kinda are suggesting that there will be extra losses. We already knew that there'd be losses, just not the scale. All the nama "profit" does is reduce the potential losses on the loans.

All the expected losses have already been booked when the banks took a haircut on the loan which the taxpayer paid for. So making a loss now would be considered unexpected imo. This was also done to prevent the losses being put on our balance sheet.

This is what I have come to understand since I started the thread......

GCU Flexible Demeanour

antoobrien wrote: »

Stating that there will be losses implies losses that we didn't already know about, so yeah you kinda are suggesting that there will be extra losses. We already knew that there'd be losses, just not the scale. All the nama "profit" does is reduce the potential losses on the loans.

Well, I'm not getting lost in a meaningless discussion when I suspect we both know the point at issue. The losses are "extra" to what the taxpayer was told at the start.

The selling of NAMA to the public followed that old story of getting a cat to eat pepper by shaking it on the carpet in front of the fire, so it will lick it off its fur when washing later.

noodler

If NAMA makes a profit, then we get to decrease our national debt by an equivalent amount.

It would obviously be good news.

Idbatterim

The London sale would have you either laugh or cry, bloody idiots, probably several hundred million alone lost on that, if they waited another year or two. What was the rush with selling?! The hindsight being a wonderful thing comment is bull****, you dont need hindsight to tell you that selling at the height of a global **** storm might not yield the best returns, great to see the competence of the people we have looking after the largest property portfolio in the world :rolleyes:

The disposal was described by Kevin McCauley, senior director of research and consulting at CBRE in London, as "the deal of the century", for Malaysian buyer SP Setia.

why am I not surprised we are on the wrong side of the "deal of the century" also Id believe what the buyers have to say over anyone in NAMA, they run rings around them I have no doubt...

noodler

Idbatterim wrote: »

The London sale would have you either laugh or cry, bloody idiots, probably several hundred million alone lost on that, if they waited another year or two. What was the rush with selling?! The hindsight being a wonderful thing comment is bull****, you dont need hindsight to tell you that selling at the height of a global **** storm might not yield the best returns, great to see the competence of the people we have looking after the largest property portfolio in the world :rolleyes:

The disposal was described by Kevin McCauley, senior director of research and consulting at CBRE in London, as "the deal of the century", for Malaysian buyer SP Setia.

why am I not surprised we are on the wrong side of the "deal of the century" also Id believe what the buyers have to say over anyone in NAMA, they run rings around them I have no doubt...

With attitudes like this, they really couldn't win.

NAMA needs money to function lets not forget, it has been existence for almost 4 years and is only really making progress on selling Irish assets now. It also had a target fo 25% of its senior bonds to be repaid before 2013.

Idbatterim

With attitudes like this, they really couldn't win.

I am talking this particular sale, I dont know much about the rest of them, but selling probably their best asset and then having it described as "the deal of the century" for the buyer, why am I not surprised :rolleyes: It would be far too much to expect the taxpayer to be on the receiving end of the "deal of the century"...

Sand

@Idbatterim

This is one of the reasons I have always disagreed with the creation of NAMA. It leads to conflicting, and indeed contradictory policy aims. The Irish state is not a property investment fund. I have no interest in giving any money to Irish civil servants to take a punt at investing at my expense. NAMA was not created as a investment opportunity. It was created to crystallise losses on banks that are following your own "Hold on - wait, wait, wait, wait, wait..." strategy to managing losses. That's been to the detriment of Irish economic recovery where a tremendous amount of money has been invested and lost and there's been little progress made on recognising that.

Idbatterim

I have no interest in giving any money to Irish civil servants to take a punt at investing at my expense. NAMA was not created as a investment opportunity. It was created to crystallise losses on banks that are following your own "Hold on - wait, wait, wait, wait, wait..." strategy to managing losses. That's been to the detriment of Irish economic recovery where a tremendous amount of money has been invested and lost and there's been little progress made on recognising that.

what money has been invested and lost? In plain simple terms, we now own these assets, rightly or wrongly, should we not seek the best return possible? Im not saying wait forever and expecting these civil servants to be clairvoyants and call the next peak in several years and sell then, but his is serious money and it has serious implications. What was the portfolio worth? say it rises 10% on average for the first few years, and this isnt too ambitious in my opinion given the size of the crash (possible over correction?) I want us to be the main benefactors from here on in, not developers and investment funds to be creaming it off...

Sand

@ibatterim

In plain simple terms, we now own these assets, rightly or wrongly, should we not seek the best return possible?

No, we should seek the best possible economic return. For as long as NAMA is in the property game, there is an interest in the Irish government to try and artificially prop up property prices to the detriment of wider economic recovery. Upward only rental contracts for example - ought to be legislated for to allow business to continue trading and employing people, but the government is unable to do so because it would negatively affect NAMA's ability to generate a return. So instead business close, people go on the dole and premises stand idle waiting for someone else to try their hand with all the difficulties a new startup faces. NAMA could generate a very healthy profit and still be a loss for the Irish people due to the economic costs imposed on the wider economy.

The aim should have been never to have started NAMA in the first place. Failing that it should aim to dispose of the property/loans as quickly as is realistically possible.

Idbatterim

If you want to go down your route, fine sell the Irish stuff, the foreign stuff could be held until prices recover more... Also I dont see how you say the stuff should have been sold immediately, the tax payer was going to take a hit one way or another, either by over paying for the loans or through higher recapitalization of the banks...

Red Crow

What's so great about that? These are revalued figures and it should be expected that Nama will at least break even as you would imagine that there was a large element of prudence when they were revaluing the assets.

jmayo

Idbatterim wrote: »

If you want to go down your route, fine sell the Irish stuff, the foreign stuff could be held until prices recover more... Also I dont see how you say the stuff should have been sold immediately, the tax payer was going to take a hit one way or another, either by over paying for the loans or through higher recapitalization of the banks...

Ah now you couldn't be doing that.
It might negatively influence the "increasing" Irish property prices and you never know who is caught up in the ownership of such sites.
Anyway maybe best to leave them until a member of the developers family can come back in a few years to buy them back cheap and start the ball rolling again. :rolleyes:

I just love how some make out how great it would be if NAMA actually made a profit as if all the money spent on the recapitalisation of the banks and thus paying for the wrote off portion of the loans NAMA bought never happened.
Anyway you swing this, the taxpayer comes out a lot lot poorer out of this.

Idbatterim

One of the developers of the veterinary college in Ballsbridge had a few quotes in an independent article the other day (see below link), he was saying at one point a year or two back, they had no competition when bidding on sites, surely NAMA selling prime assets at this time was madness (I'm assuming they were, I am open to correction), competition is a good thing. I see building has now commenced on this site, they plan on charging E1,000 per sq foot for the development and see the Monaco and London comparisons and references, who cares whether its the infancy of celtic tiger mach 2, once they get out in time and the taxpayer doesnt take the hit (and actually benefits), it should be milked for all its worth... Given the billions that have been lost in the collapse, why not recoup some losses or even aim to profit as much as possible from the upswing? Would seem blatantly obvious to me anyway. I predicted on another thread that once again, developers some of the ones who cost the state hundreds of millions if not billions would once again be the main benefactors, hoovering up sites at maybe "market value" at the time, but at prices that would look stupidly cheap even 1 or 2 years down the road...

http://www.independent.ie/business/irish/cometh-the-moment-comer-the-developer-has-boots-on-d4-ground-30075775.html