NAMA: a secretive organisation that leaks like a colander (revisited)

A couple of weeks ago I remarked in a blog entry here that apparent leaks from NAMA were damaging to the nascent reputation of one of the world’s biggest property funds and a daring Irish experiment to confront the banking crisis. Although we can be grateful for any news from NAMA, today’s articles by Simon Carswell (and others) in the Irish Times which quotes “informed sources” again gives rise to concern that a leviathan organisation like NAMA that can fix and even move markets with its actions is incapable of securing its information.

We learn today that NAMA’s due diligence costs will come in at €100m instead of €165m and because there is, apparently, a fixed contract with the banks for a charge of €125m, NAMA have made a profit of €25m! (that must be the very first bit of good news I’ve heard about NAMA in some time). Very interesting but is the Irish Times or any select media outlet the correct forum for this type of news to be released. Surely it should come from NAMA, whose last update on its website is months old or the Department of Finance.

Perhaps of more interest is that we learn that the foreclosure discount of 5% (up from 2.75% last September 2009) is going to be applied to every single loan.  And possibly of even more interest is that the good folk at NAMA are only now discovering what anyone in the property legal industry could have told them, that large property companies use SPVs (with ringfenced liabilities) oftentimes incorporated offshore (Luxembourg is a favourite – though Delaware is mentioned today also – let’s hope that Panama and the BVI don’t start cropping up). This information has a direct and significant impact on the NAMA business plan 20% default rate which I will deal with in another blog entry today.

However, none of this (which has magnified interest when set beside the pronouncements of the taciturn NAMA) should emerge from select media. It will damage NAMA’s reputation for professionalism and may give support to those who dismiss NAMA as a cronyist exercise. Because of NAMA’s prominence in the property and banking markets, leaked information may also move markets which would have ugly consequences.