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Archive for February 20th, 2010

Yesterday came the absolutely horrifying news that “DEVELOPMENT LANDS in Athlone, Co Westmeath, valued in 2006 at €31 million have a current value of €600,000, Bank of Ireland told the Commercial Court yesterday in a dispute with a developer over unpaid loans.”, a 98% fall in value and if banks had advanced the average NAMA-estimated LTV of 77% then the bank would have lent €24m and even with a 15% “long term economic value” built in the haircut would be

current value  €600k

LTEV 15%        €90k

Consideration to be paid to the bank   €690k

Gross value of bank loand (assuming no rolled up interest)  €24m

Haircut €23.310m or 97%

It is likely that there is rolled up interest so the haircut is likely to be more than 97% in this case! I’m sure the banks are praying this is an isolated case and not generally applicable to NAMA loans!

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