So we learn at the stroke of a pen or a key at the Independent today who quote Minister of Finance, Brian Lenihan as saying”I understand that, to the general public, the numbers involved are frightening. But I would ask people to bear in mind that the Nama project is set up over a 15-year period and that there will no immediate cost in 2010 to our balance sheet.”
We are still without a “final” business plan for NAMA. We have the draft in October 2009 and Mr Lenihan has repeated on more than one occasion that a business plan will be produced in June or July 2010. Whilst some will have sympathy for the reason given for the delay – NAMA are getting to grips with actual transactions and only then can they assess the finances with any degreee of finality – the reason will not win much sympathy with those who have had to produce business plans where there are significant unknowns.
Are there any other significant changes to NAMA’s character besides the extension of the lifetime to 15 years? Well we do know that Patrick Honohan, the newly-installed Governor of the Central Bank did say on Tuesday last that he thought that NAMA had a “fair shot” of breaking even despite the draft business plan indicating a €5bn profit over 10 years. Also there has been debate over the haircut applied in the first tranche of loans – according to the traditional definition of haircut (1-LEV/Loan value which in October 2009 was 1-54bn/77bn or 30%) the haircut on the first tranche will be 34.5%, not 47%. There has been no conclusive resolution of the mystery of the difference between LEV (€10.5bn) and consideration to be paid (€8.5bn) in respect of the first tranche – attempts at explanations using the EU discounts haven’t proved conclusive.
The one thing we do know about NAMA is that Mr Lenihan has undertaken to come back to the Dail if the cost of the loans exceeds €54bn. Whilst balancing the need to expedite the resolution of our banking crisis and avoiding getting bogged down with consultation and political machinations with accountability, we would ask the Minister to direct the early publication of the NAMA plan.