Archive for July 18th, 2010

NAMA, suffering from an image problem?


Operating out of rented offices in Treasury Buildings, a website at which Nigerian 419 fraudsters would turn up their noses, no branding worthy of the name and a tiny staff, a “back of the envelope” business plan, pretty opaque operations – they all contribute to a fairly shabby image of NAMA . However is NAMA’s biggest problem that in most peoples’ minds, be they the general public or those closer to the project (journalists, academics, politicians, estate agents, lawyers) NAMA is known as a “bad bank” or a “toxic bank”? Time Magazine, the BBC, the Financial Times, the Wall Street Journal, the London Times and at home the Irish Times, the Independent and RTE have all labelled NAMA “the bad bank” or “the toxic bank”. Even the EU have referred to NAMA as being an institution for impaired loans. Speculation in the press and elsewhere that any good NAMA-bound loans are being redeemed or possibly sold at less than their nominal value has not undermined this image. Paddy McKillen is reported to believe that NAMA is bad for your commercial reputation and tomorrow in the High Court there might be some more about that.

And yet NAMA will have a proportion of good loans that will be discharged in accordance with their agreement terms – although it represented a tiny proportion of the future total NAMA portfolio, the quarterly accounts to the end of March 2010 indicated that 40% of loans by both volume and value were performing. NAMA has said that in respect of the first tranche overall 25% of loans are performing, though it is not exactly clear what that means.  NAMA has up to €54bn to buy loans and once it has acquired the €5m+ loans from Anglo, AIB and BoI, it can widen its net to loans with a value of less than €5m if it so wishes (there is no minimum limit for INBS and EBS). There has even been talk of NAMA taking over loans from institutions other than the existing five. NAMA can raise up to €5bn additionally which is likely to be used to build out and maintain developments. And although not quantified in any plan, NAMA does have the capacity to attract serious third party capital. With those kind of numbers, NAMA, far from being seen as some demimonde debt collection agency should perhaps have an image more befitting the realities of its position in Irish and UK property finance – a financing powerhouse with access to significant government-backed and private finance.

The fact that NAMA is reported to have a 7-10 lifespan might militate against building a serious brand. Though in the end winding down NAMA might involve floating the company or selling it – after all if NAMA can successfully deliver, then that grouping of people and organisations, experience, contacts, processes and indeed residual assets might be attractive to investors. At this point however, if only to better equip it to meet specific legal challenges NAMA might consider promoting the fact that it is not just a “toxic” bank.


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