Archive for July 3rd, 2010

Maeve Dineen, Business Editor for the Independent brings us today’s leaks from the NAMA Business Plan which has still not been published. Today’s article places a heavy emphasis on NAMA’s social character and claims NAMA (effectively one branch of government unless and until the identities of the Ultimate Beneficial Owners of the €51m NAMA SPV investment are revealed together with the circumstances in which they parted with their cash for such apparently anaemic investment returns) will sell other branches of government, eg local authorities, some NAMA assets to be turned into schools, hospitals, leisure centres – you know community stuff. NAMA will apparently seek to recover its costs but no more (“It is understood NAMA will be happy if the properties sold to the State cover the initial purchase price plus costs.”) which might have implications when pursuing developers for the shortfall – in normal lending relationships the forecloser would have an onus to secure the best price for a repossessed asset. There is an implication that these assets will not be available to the private sector who may be able to offer better terms. The proposal, assuming Maeve has got her facts right of course, would appear to have thorny Competition issues (which might be pursued by borrowers seeking to derail NAMA’s pursuit of their own separate debt) not to mention the optics of letting the developer “off” with the rest of the loan because the developer may claim in any recovery action that NAMA failed to get the best price for their asset. Lastly if this initiative is frontloaded then there will be comment from the construction industry that will see capital expenditure by government (on which the construction industry now depends more than any time in the last decade) drop sharply as that new school project becomes a far cheaper conversion and fit-out for a former NAMA hotel.

NAMA may attract approval from some quarters if it does indeed don the social mantle as suggested in today’s leaks but if that threatens the return to the taxpayer or indeed spancels NAMA’s ability to recover debts in full then overall it might not be a wise move for NAMA.

Full coverage of the NAMA Business Plan when it is made public will be carried on here. You can see a preview here.

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