Anglo to transfer €36bn of loans, up from €28bn in September 2009

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Anglo to transfer €36bn of loans, up from €28bn in September 2009

March 19, 2010 by namawinelake

So claims today’s Irish Times which updates us with some precise detail on the present status of the transfer of the first tranche – again wonderful to have any news but concerning it comes out through select media. The question that is begging to be asked is why Anglo’s loans have increased by €8bn since last September 2009. We understood the figures in September 2009 to be draft and indeed would naturally move with increased interest on the loans and repayments, but an €8bn increase cannot be thus explained. Why was the Anglo analysis so far out? Given the reported concerns about Anglo and the quality of its loan book and indeed the value of its loan paperwork, have the finances for NAMA changed markedly? Is there any relationship between this major change in Anglo’s loans and the arrest of its former chairman yesterday? We have become used to throwing around billions of euros in discussions of NAMA but do we sometimes forget that the NAMA operation is effectively underwritten by our National Debt? Surely a ministerial statement or an Opposition question is called for if these claims are correct?

Posted in NAMA | 6 Comments

6 Responses

on March 20, 2010 at 9:01 pm Mank The Merciless

I cannot absolutely confirm this right now but I understand that certain private equity schemes were looked at carefully. Then they were looked at REALLY carefully. Finally they were ground through line by line.

If the ‘seniority’ of Anglo loans was in any way questionable it was deemed prudent that these be transferred immediately. There are many billions of loans backing a myriad of hare brained private equity schemes on Anglos books. Most are property plays in one way or another but are not developer loans but portfolio loans.

It is thought that certain banking syndicate members would consider themselves senior to Anglo and who would happily litigate to make it so may baulk at trying it on with NAMA.
- on March 21, 2010 at 9:06 am namawinelake
  
  What an enigmatic post!
  
  What do you mean by “seniority” and also in what context were “certain private equity schemes looked at carefully” – by whom? you mean a scheme to invest in Anglo or buy Anglo loans? Who looked at the proposals “CAREFULLY”? Anglo? The Dof? Others?
on March 23, 2010 at 11:55 pm Mank The Merciless

In a financial structure like a €1bn Syndicate to but a block of the City of London any loss is taken by the junior parties first and by senior parties last.

This apportionment of loss taking is part of how the structure is put into structured finance.

It was assumed that Anglo normally secured its interest as part of the senior debt pool. Seemingly this is not the case and Anglo are generally holding the Middle tier of the structure.

Many of these private equity syndicates are under water. The junior members are wiped out 100% and much of the next tier where Anglo is generally represented is also gone.

The latest loss figure is supposedly €15bn. We shall hear soon.
- on March 24, 2010 at 8:07 am namawinelake
  
  So what you’re saying is that the Anglo loans transferring to NAMA may have large haircuts as a result of Anglo’s position in the tier of a private equity scheme Anglo had invested in as part of a loan Anglo granted?
on March 24, 2010 at 10:33 am Mank The Merciless

Yes. If the debt is not senior and if the asset underlying the pool is underwater then the debt is structurally unrecoverable in full or in part because senior means senior means senior.

The possibilty of it being written back on, in full, remains possible but on a CURRENT valuation and with regard to the position in the debt pool the current value of teh loan is perfectly clear.
- on March 24, 2010 at 10:53 am namawinelake
  
  Well, I guess the next few days will give us a picture of Anglo’s condition – either there’ll be disquiet if NAMA pay a higher than expected price for Anglo’s loans or possibly revolution in the streets if NAMA pays a very low price and Anglo has to come with the begging bowl to the public purse (again) for a larger than expected recapitalisation.

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