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Archive for August 22nd, 2010

Whilst politicians seem to be taking seriously the ban on lobbying NAMA – Willie O’Dea was unusually concerned last month about approaching NAMA regarding health and safety issues with a site in Limerick and Tourism Minister Mary Hanafin first trumpeted a forthcoming meeting with NAMA to discuss the hotel sector, only to go very quiet subsequently about whether any meeting had in fact taken place – it seems politicians are queuing up outside the Anglo CEO’s door to lobby on behalf of borrowers.

In today’s interview with the Independent, Mike Aynsley confirms that politicians across the spectrum have been making representations on behalf of borrowers. In respect of Anglo’s dealings with Arnotts recently (which saw Anglo along with Ulster Bank take an equity stake in Arnotts after the Dublin department store ran up debts reported at €300m) he does not deny that the government had lobbied him. He does go on to say that Anglo takes decisions on commercial grounds.

So let’s get this straight. A politician, particularly a government politician, cannot pick up the phone to NAMA CEO Brendan McDonagh to lobby for certain treatment in respect of a loan in NAMA but that same politician can do exactly that with Anglo. And Anglo is totally dependent on government support for its survival, look at the 2009 Anglo accounts to practically see the extent of that support (€12.3bn at that point) and the gratitude of Anglo for that support. Of course the NAMA Act prevents certain actions by Anglo which might impact a loan. Section 71 of the NAMA Act is designed to stop certain activity by the banks that might damage NAMA but there is nothing to stop a bank foregoing recovery action or making additional loans.

So perhaps Willie O’Dea and Mary Hanafin should have been lobbying the NAMA banks themselves for action in certain areas before the loans transfer to NAMA. It certainly seems to be open season and given Anglo’s dependence on the State for support they are likely to be offered a receptive hearing before Anglo makes a commercial judgement – and remember “commercial” judgements can involve many different considerations on Anglo’s commercial prospects.

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