Media failure of the Week
This week’s long-awaited legal clash between Treasury Holdings and NAMA promised to have it all: a judicial review with Michael Cush SC set to attack the very core of NAMA’s being, the colourful Johnny Ronan on the stand as well as NAMA’s owlish Brendan McDonagh being subjected to some fairly intrusive questioning. The judicial review hearing commenced on Tuesday and sure enough there was media reporting of Day One. On Day Two, RTE filed a report, so did the Irish Times courtesy of Mary Carolan (pictured top) and the Independent produced a remarkably similar report by Tim Healy (pictured bottom).
But after Wednesday, there seems to have been a media blackout. It’s potentially a critically important case for NAMA, because if the Agency is held to have acted unlawfully in its dealings with Treasury, there might be an avalanche of claims by other disgruntled developers whose loans have been foreclosed.
Runner-up this week must go to all the media organisations that turned up at the Battle of the National Library; that’s where TV3’s political editor Ursula Halligan is accused of “leading a charge” – sounds like something out of Crimean War! – on An Taoiseach, who is said to have nearly collapsed into a flower pot surrounded by the press pack, baying for comment on his stance on gay marriage. Sadly, there appears not to have been a single image from a stills photographer or cameraman or indeed a sound recording of the incident. Strange that.
Demolition (arithmetic) of the Week
The amount of money spent by NAMA on protecting and maintaining a 12-apartment block on the Gleann Riada estate in Longford between December 2010 and July 2012.
The amount of money put aside by NAMA to demolish the 12-apartment block on the Gleann Riada estate in Longford
The amount fetched at auction Friday, of the 14 part-complete houses at Castlemaine (pictured below), a ghost estate at Annagh Banks in Kerry.
The amount fetched at auction in May 2012 of an unfinished group of three houses in Cavan.
In fairness to NAMA, auctioneers have told me that some buildings they have seen will be beyond economic recovery but the fact remains in this case that NAMA didn’t even try, it seems, to sell the block. “It’s on a flood plain” seemed to be the NAMA deflector of choice, ignoring the fact that the rest of the estate is presumably also on a flood-plain, and if there are measures taken to protect the estate, they would presumably have been taken for the apartment block also.
Economic bright-spot of the Week
On Tuesday, the Department of Finance released the June 2012 Exchequer Statement, and, overall, it is revealing remarkably good news. Despite the State slipping back into recession in Q4, 2011 and both the domestic and international economies still facing considerable challenges,Ireland is on track to meet its deficit reduction plan in 2012. Not too shabby. Income tax and corporation tax account for most of the good news (see below), but it is encouraging that VAT is also on target despite the hike at the start of 2012. Minister for Finance, Michael Noonan says he is confident our deficit will in 2012, come in at less than the 8.6% agreed with the Troika. Not too shabby at all.
On Thursday, the National Treasury Management Agency managed to sell €500m of 3-month treasury bills at an interest rate of 1.8% per annum, the first such sale or issuance since September 2010. The issuance was oversubscribed with a cover of 2.8 times, and CEO of the NTMA, John Corrigan said most of the buyers of the bills were from overseas, market sources indicate overseas buyers might have represented 90%. The issuance was reported from New York to London to Frankfurt, and presented as a small sign of Ireland’s recovery. ECB president Mario Draghi did say (with emphasis added) “Ireland is a euro area country that, through extraordinary efforts, has run a programme which is on track – so much so that Ireland returned to the markets today, if I am not mistaken. This is much earlier than anybody could have expected until two or three months ago. Even though this might not yet be part of a regular extended programme for a long period of time, I think that this success should be properly celebrated, and it is a testament to the determination of the Irish government and the capacity of the Irish people to understand and “own” this programme and make the needed sacrifices. I think this is very important. Actually, it is so important that an event like this could be one of the factors that are making the financial environment nowadays a little less tense than it was a month ago. I think this ought to be taken into account.” and there might be some concern at the interest rate paid when Ireland has access to cheaper funding, but overall it was a positive. And it is noteworthy that at the end of the week, Ireland has the second lowest yield amongst the PIIGS on its bench-mark bond and at 6.3%, is just 0.3% above top-of-class Italy at 6.03%.And we are now back to rates last seen in late October 2010, just before the Troika bailout.
Economic low-point of the Week
For a couple of months on here, there has been confusion at the apparently upbeat claims by the Government about unemployment on the one hand, and, on the other hand, the evidence from statistics and anecdote, and this week the Central Statistics Office confirmed that unemployment in Ireland had reached a record in the present crisis of 14.9% equating to around 310,000; this, despite apparently high emigration. It seems that some spectacular job announcements like the 1,000 jobs at Paypal in Dundalk are being offset by a high volume of layoffs that are not making the national headlines, plus some of the job announcements actually refer to recruitment over a period of years. There are approximately 450,000 on the Live Register which captures all recipients of employment-related benefits. The unemployment rate in Northern Ireland is 7.1% and is 8.2% overall for the UK.
Banking Shockers of the Week
In theUK, they are navel-gazing at the manipulation of interest rates by Barclays, and potentially others. Here in Ireland, we had a couple of court cases to shed even poorer light on the state and practices of Ireland banks
“In that regard, it is possible that the expert on behalf of Anglo has not yet fully appreciated how abnormal a bank it was…” High Court in Dublin judgment published this week where Anglo’s lending practices were examined, with stinging criticism from the judge. The case involved Belfast developer Peter Curistan and the Parnell Centre in central Dublin and the Odyssey centre in Belfast. Anglo lent money on terms which included a 25% profit share and a CB Richard Ellis valuation of the Parnell Centre that was bizarre. A couple of email messages reproduced in the judgment are unkind to other Colossuses in the world of Irish property development.
“About this time Mr McDonald [Bank of Scotland (Ireland)] told Mr Walsh that he was coming under considerable pressure to lend more money due to increased lending targets imposed by the bank and the bank was keen to expand the loan book to key customers and Mr Walsh was identified as a key customer or a preferred customer. Mr McDonald advised that the bank had received particulars of Direct Line House in Leeds and it was proposed that Mr Walsh should acquire this property” High Court in Belfast judgment published this week where BoS(I)’s lending practices came under the spotlight. There were allegations of bankers driven to increase lending and informally waiving standard banking terms. The case involves Northern Ireland developer Chris Walsh and is set for a full airing in 2013.
And lastly – and although this is a month old – this little line from the sixth Troika review of Ireland hasn’t received any publicity. The condition of the four state-guaranteed banks – AIB/ESB, Bank of Ireland, IBRC and Irish Life and Permanent – deteriorated last year with the % of non-performing loans across all four rising from 12.1% to 19.5%. The Troika sounds a warning note about the immediate prospects for the covered banks with the continued de-leveraging of quality assets. Sobering.