Archive for May 28th, 2010

NAMA website costs revealed!

On a light note to finish the week and for those of you who think the NAMA website looks like it was put together by a class of senior infants, you might be interested to know that it was revealed in the Oireachtas yesterday that the annual cost of maintaining, operating and monitoring the five NTMA web sites, including NAMA’s,  is €2,457 – so I suppose €500 a year or thereabouts for the NAMA.ie website.

For one of the world’s biggest property funds, it looks a little basic and if NAMA is going to attract investors to marry up with distressed developers or promote itself overseas or sell off property (albeit through third parties) then it might be worth throwing a few bob at it to bring it up to a standard that won’t unsettle its intended audience. NAMA of course will execute much of its business through third parties, but even so…

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A few years ago I remember the elder statesman of BBC foreign-correspondent journalism, Martin Bell, reminiscing about his experiences with Arkan, the Serbian warlord and gangster, who had just been gunned down in a “hit”. Now Martin Bell is a very well regarded journalist, widely travelled, educated and from all accounts a decent person. Arkan was accused of torturing, raping, terrorizing his way through the new states forming from the crumbling Yugoslavia and given he was indicted by the UN for crimes against humanity, there was probably more than a little truth in the accusations. It came as a bit of surprise then to hear Martin Bell talking about Arkan as a “friend” and that “I don’t think that you necessarily have to feel moral approval for people whose company your enjoy”

I am reminded of this incident today when reading NAMA Chairman, Frank Daly’s speech to the Association of Compliance Officers yesterday in which he described the origin of the term “Groupthink” and then applied it to borrowers whose loans are being transferred to NAMA. Whilst you wouldn’t expect NAMA to dehumanize developers, you would expect NAMA not to lower any stated standard in recovering loans which might involve NAMA being tough to the point of ruthlessness in pursuing borrowers. Some of these borrowers are big personalities, as genuinely charming and affable as you could hope to meet. They have in the past enjoyed (and indeed some in the present also enjoy), wealth beyond the previous horizons of the NAMA CEO or Chairman. It is to be hoped that NAMA personnel develop sustainable boundaries in dealing with developers. It wasn’t though Frank Daly’s description of groupthink as applying to “otherwise intelligent, well meaning and moral individuals” which gave rise to concern but the following:

“In essence, NAMA’s core objective will be to recover for the taxpayer whatever it has paid for the loans in addition to whatever it has invested to enhance property assets underlying those loans. It is expected that NAMA will have a lifespan of seven to ten years and when it has achieved its core objective, it will be wound up.”

Does this mean that NAMA has ditched the objective of trying to recover the nominal value of the loans and will now only focus on recovering the sum paid for the loans? Given the State’s expected €22.3bn dead-money injection into Anglo (and possibly €20bn of that will be to make up the haircut NAMA applies to Anglo loans), the public would be outraged if NAMA were moving goalposts and effectively writing off a large part of the original loan. Hopefully this interpretation is incorrect, and that NAMA will leave no stone unturned in pursuing the recovery of loans.

UPDATE: 30th May, 2010, The journalists Alan Ruddock and Ronald Quinlan go further in today’s Independent with their unequivocal headline ” NAMA: the truth it’s a bailout for developers”. They don’t, however, have any additional evidence to NAMA Chairman, Frank Daly’s perhaps ill-judged sentence reported above.

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Minister for the Environment John  Gormley is reported in today’s Irish Times to have replied to a question in the Oireachtas to confirm that loans relating to the Irish Glass Bottle (IGB) site have been taken into NAMA. It was widely speculated, eg here though never confirmed by NAMA, that developers Bernard McNamara and Derek Quinlan were amongst the top 10 developers whose loans across up to five institutions would pass to NAMA in tranche 1. Bernard McNamara and Derek Quinlan have previously been reported as being heavily involved in the IGB site and Tranche 1 was completed at the end of April 2010.

Yet John Gormley has apparently said that the Business Plan will be produced by the end of July, ie possibly three months plus after the loan was supposedly acquired by NAMA. Why has NAMA apparently abandoned its 30-day rule, that developers produce Business Plans within 30 days of NAMA taking over the loans? Is it because of the government-owned Dublin Docklands Development Agency’s involvement in the project?

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