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Archive for February 7th, 2010

It is a depressing reminder that if NAMA pays less to the banks than thought last September (remember the 30% “haircut” and the €47bn market value and €7bn “long term economic value” premium? Well the news is the first loans may have a 40% haircut) then the public coffers will again be raided to make up the shortfall. Good news on NAMA for taxpayers = band news on recapitalisation for tax payers.

Whereis the competition from outside the State? And will the EU approve the NAMA scheme which will deter foreign banks from opening up shop here?

By the way, I really see no difference in my Main Street having a Bank of Ireland and AIB or a Sberbank (Russian) or Industrial and Commercial Bank of China or ICICI (India). I would hope that staff at the two “Irish” banks could be employed and not lose their jobs but frankly what responsibility do citizens have towards the shareholders and bondholders of BoI and AIB?

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A little noticed piece of clarification in the recent Finance Bill will see the 80% windfall tax apply to practically all development land. This includes development land of more than 1 acre and/or worth €250k or more. Whilst it is not known what proportion of NAMA toxic assets will be development land, this windfall tax must surely render the value of any development land at a small fraction of what it was 2-3 years ago at the height of the boom.

Separately we learn that 10s of thousands of mortgage holders are either in arrears or have restructured their loans so that they can be paid back over a longer period and that the size of repayments in the short term can be reduced or indeed deferred. Whilst this would appear socially responsible by the banks, what it does to the cold property market is it defers Judgement Day when a true account is given of values. If the banks were to act in a purely capitalistic way they would repossess the home and sell it as a distressed asset. To this author the banks’ actions could be interpreted as an attempt to stop the market falling further until they have unloaded their assets onto NAMA…

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