Central Bank report for Quarter 2, NAMA’s resident and non-resident borrowers

The wide-ranging quarterly Central Bank report and forecast published yesterday contains some interesting nuggets on NAMA and Irish property in general. On NAMA, it publishes information on the first tranche which hasn’t been publicly seen before, namely a split of the first tranche loans between resident and non-resident borrowers and also gives the provision the banks held for the loans transferred. The information is on page 39 of the report and is summarised here.

Of note is that the writedown by NAMA on the loans (49.6% in total) comprises a writedown by the banks themselves (23.7%) and NAMA’s additional write-down (26.0% – rounded) – given that Anglo’s accounts were published on 31^st March, 2010 and INBS’s accounts were published on 9^th April, 2010 and they each contained the government’s recapitalisations announced on 30^th March, 2010, it is indeed amazing that they were showing their provisions at such a low level – was it a case that the accounts were produced many months earlier and only amended for the government’s injections of capital – wasn’t there any attempt to show the imminent NAMA haircuts? As to the split between resident and non-resident, I’m not sure how much can be deduced. For information the following were reported by the media (not confirmed by NAMA and indeed Paddy McKillen’s spokeswoman has denied that Paddy was in tranche 1) as being the Top 10 developers in the first tranche – spot the non-residents!

Liam Carroll

Bernard McNamara

Sean Mulryan

Derek Quinlan

Paddy McKillen

Treasury Holdings

Michael O’Flynn

Joe O’Reilly

Gerry Gannon

Gerry Barrett

As to what the Central Bank say in their report on page 39 about the write-downs with respect to residents and non-residents they are talking rubbish – the figures show that the resident loans had greater write-downs at both the banks and at NAMA.

Elsewhere in the report the Bank predict new house registrations will be 12,000 in 2010 (at most) and 10,000 in 2011. Construction in the commercial sector is also seen as declining this year and next. On the economy the Central Bank are predicting an 0.8% rise in GDP in 2010 (GNP minus 1% in 2010) and a 2.8% rise in 2011 – for 2010 GDP this is considerably up on the recent ESRI scenarios which projected a -0.4% fall in 2010 (0% change in GNP). For GDP it is also up on the recent EU stress test which projected between -1.4% and -2.1%  for changes to GDP in 2010. The striking change to the GDP forecast for this year does will not it seem translate into a reduction in unemployment which is seen as averaging 13.5% this year and 13.3% next year. Wage costs are forecast to fall by this year by 2.7% before rising next year by 1.1%. Inflation is likely to fall by 1%-odd this year and rise by that amount next year.ECB rates may creep up marginally.

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