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Archive for April 5th, 2010

When we had the announcements last Tuesday which cleverly disguised the fact that NAMA had only paid out a measly €370m to EBS and INBS in NAMA bonds on the first tranche, we were given firm figures for AIB and BOI in terms of the first tranche. We were given estimates “subject to audit” for Anglo and the estimates looked almost snowflake-like perfect in their roundness – €10bn of loans in the first tranche and a 50% “haircut”, though the goalposts seem to be moving in terms of the definition of haircut (Anglo’s haircut on the first tranche would appear to be 34.5% using the “old” definition of 1-LEV/Loan value but in the first tranche the LEV for Anglo is €6.55bn and the consideration to be paid is estimated at €5b leading some to quantify the haircut as 50%, clarification is presently being sought from NAMA). Anglo’s figures were to be finalised in “early April” and we’re still waiting.

Anglo’s numbers in NAMA take on particular significance because of the vast sums being spent by the State in maintaining Anglo’s solvency (in this case defined as positive shareholder funds). The Anglo “annual” report published last Wednesday indicates that Anglo has gross assets of €85bn, gross liabilities of €81bn and shareholder funds (what the State would get in a liquidation) of €4bn – this was after the State had given Anglo €12.3bn including €8.3bn last week. Anglo assumed in its report that NAMA-bound loans of €35.6bn would be subject to a 30% haircut (using the old definition). Some observers have commented that this may be on the low side given the 34.5% or 50% estimated discount on the first tranche. If the NAMA haircut was truly 50% across the whole €35.6bn then the shareholder funds would be wiped out and another €3bn would be needed from the State immediately to preserve solvency.

So all eyes will be on NAMA as the first Anglo tranche is crystallised. There are widespread calls for at least full disclosure of information on the liquidation option at Anglo if not summary calls to liquidate now, as for example by David McWilliams today.

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