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Archive for July 20th, 2010

Simon Carswell in today’s Irish Times reveals further evidence from the Paddy McKillen v NAMA case, now set down for four days hearing from 12th October, 2010. His piece concludes with saying that Paddy has €5m of land and development loans in California and Budapest and a “connection exposure” of €800m.€5m is of course the NAMA self-imposed limit for determining eligibility of borrowers for transfer (for Anglo, AIB and BoI – there is no limit for INBS and EBS) and a consequence of transfer is that all loans with NAMA financial institutions get pulled across as well. Of particular interest from the article is the revelation that Anglo wrote a letter to NAMA in June 2010, just before Paddy lodged his application for a judicial review, in which Anglo claimed NAMA had made “factual errors” in its representations to Paddy’s solicitors  in stating that neither Anglo nor the agency objected to the purchase of any of his loans on grounds of eligibility. Of course Anglo’s “factual errors” in 2008 are well-documented, its November 2009 restructuring plan contained fanciful projections and there is much debate about whether €22bn of unrecoverable State-aid will be the “upper limit” of what it requires.

This objection from Anglo to transferring Paddy’s loans begs the question : why would massively insolvent Anglo, a company that has needed unrecoverable State-aid of €10.3bn since December 2009 and is likely to need billions more in *the very near future*, why would such a company object to transferring loans (“good quality and performing” according to Paddy’s spokesperson) which would presumably attract a slight haircut and would swell Anglo’s coffers with nice and clean ECB-redeemable bonds? Why is State-owned Anglo acting in a way which will increase State-aid, at least in the short term?

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