We learn this morning that Permanent TSB has finally awarded the contact for the asset management of a portfolio of €2bn loans relating to Irish commercial property located across the nation. The contact has gone to an agency. And before you ask why is the stilted language above being used in this blogpost, it is because the obvious candidate to take over the asset management of property loans is NAMA, which we own, which we have spent vast amounts of money and time setting up and whose profits, if any, will entirely come back to the State.
So which company did PTSB chose to asset manage its €2bn commercial property loanbook?
Certus of course, where the former Fine Gael politician Pat Cox is now a “special adviser”
Certus won’t be providing its asset management services free of charge of course, and it will hope to generate a nice little profit on asset managing the €2bn of loans.
Why was NAMA not used?
Well, when it was first announced that PTSB was tendering for the service last October 2012, the Sinn Fein finance spokesperson Pearse Doherty posed a series of parliamentary questions to Minister for Finance Michael Noonan. We got the usual gibberish in response.
PTSB is not a NAMA participating institution – well designate it as one. The State owns 99.5% of it for chrissakes.
The €2bn of property loans are not “land and development” – (a) NAMA can acquire any systemically important loans and it swore blind in the Paddy McKillen case in Dublin’s High Court that even if Paddy’s loans weren’t development, they were still systemic because they came to about €2bn (b) NAMA is already asset managing bucketloads of property that is not “land and development”. What were One Warrington Place, the €800m Maybourne hotel loans, 107 Cheapside, the Morrison Hotel, 22-25 Finsbury Square, Updown Court, the Smurfit Kappa offices in Clonskeagh, the Montevetro Building, 1 King William Street and countless others – they’re not “land and development”, that’s for sure.
So, yet more gibberish from the finance minister and meantime, NAMA loses out on whatever profit would be generated by the contract that PTSB now has with Certus. The expression “you don’t buy a dog and bark yourself” just doesn’t do this latest goof justice.
These are the complete parliamentary questions and responses from 23rd October 2012.
Deputy Pearse Doherty: To ask the Minister for Finance further to a report in a national newspaper that 99.5% state-owned Permanent TSB is considering entering into a loan management contract with a private-sector company (details supplied) for the management of €2bn of commercial property development loans, the reason PTSB is not a National Asset Management Agency participating Institution, the reason these loans were not transferred to NAMA in 2010 and the reason these €2bn loans are not being transferred to NAMA now.
Deputy Pearse Doherty: To ask the Minister for Finance further to a report in a national newspaper that 99.5% State-owned Permanent TSB is considering entering into a loan management contract with a private-sector company (details supplied) for the management of €2bn of commercial property development loans if he will provide an estimate of the fees that will be paid by PTSB to the company over the proposed life of the loan management contract..
Deputy Pearse Doherty: To ask the Minister for Finance if he wil provide an assessment of the effect of the National Asset Management Agency acquiring €2bn of commercial property development loans from Permanent TSB, the management of which loans PTSB is reportedly contracting out to a company (details supplied).
Minister for Finance, Michael Noonan: I propose to take questions 162, 163 and 165 together. Permanent TSB confirms that a tendering process is underway in relation to third party servicing of its portfolio of commercial property loans and that the party referred to is among the parties that the bank has spoken to in this regard. The bank has not completed the tendering process, nor has it signed a contract with any party in this regard and even if such a contract is signed in the future the bank has confirmed that the fees would not be publically disclosed as they would be commercially sensitive.
As the Deputy will be aware Permanent TSB is not a participating institution under the NAMA Act 2009 as it did not make an application for such a designation. As a result none of its commercial property loans were acquired by NAMA in 2010.
The Deputy will also be aware that only Land and Development loans in the participating institutions were acquired by NAMA from those institutions.
The NAMA Act does not allow for a scenario where NAMA would service assets which have not been acquired by it.
Permanent TSB is not currently selling its commercial property loan assets and therefore an analysis of the impact of an acquisition of Permanent TSB’s commercial property loans by NAMA would have limited value.