Who are the owners of the NAMA Special Purpose Vehicle? Pop into any branch of AIB to meet them!

Well done to David Clerkin at the Sunday Business Post who reveals today that AIB has confirmed in a “recent” filing (in fact it’s from May 2010 and is available here – section 18.6 on page 150 is what you’re looking for) that of the €17m that AIB has invested in the NAMA SPV, €12m is from the staff pension fund and €5m is on behalf of other clients. The NAMA SPV has initial capital of €100m so it seems current (including retired) members of the AIB staff pension fund own 12% of NAMA. Perhaps someone should ask them are they happy with the financial terms of their investment. UPDATE: 7th October, 2010. NAMA has in fact stated in the June 2010 Business Plan (Page 15) “In order to achieve its objectives, NAMA established a special purpose vehicle (SPV), National Asset Management Limited, which is responsible for the purchase, management and disposal of loan assets from participating institutions and financing such purchases through the issuance of debt securities. The SPV is owned
jointly by private investors (51%) and NAMA (49%) through an investment holding company, National Asset Management Agency Investment Limited. NAMA maintains a veto over all activities of the SPVs. The annual return to the private investors is capped as it is linked to the Irish Government 10 year bond yield at the time it is declared with the potential upside of 10% of capital invested to be paid at maturity if NAMA meets its objectives. All other profits and losses accrue to NAMA.”

Section 18.6 of the AIB filing above says “18.6 National Asset Management Agency Investment Ltd. (“NAMAIL”) In March 2010, a subsidiary of AIB made an equity investment in 17 million “B” shares of the NAMAIL, a special purpose entity established by NAMA. The total investment amounted to A17 million, of which A12 million was invested on behalf of the AIB Group Irish pension scheme with the remainder invested on behalf of clients.”

There are two noteworthy points in David’s piece in the SBP  – firstly he claims that in respect of the reward available from the investment “this dividend can be no more than the prevailing rate applied to 10-year bonds issued by the Irish government.” I wonder is this speculation on David’s part because the EU Decision in February 2010 which approved the NAMA scheme redacted the details of the rewards available to the SPV investors though it had previously been reported in October 2009 by RTE that SPV dividends would be capped at the 10-year rate (6.47% at close of business on Friday last by the way).

Secondly he claims that there were “extensive efforts” to find overseas investors in the SPV but eventually it was four Irish financial institutions that ponyed up. Given that ratings agencies and others (eg the Economist magazine) are already regarding NAMA bonds as part of general government debt, I wonder if all the jiggery pokery with giving the impression of having private investors in NAMA was worth it – the idea being that if NAMA was a private enterprise its bonds would stay off the national balance sheet. At the time it required a willing suspension of disbelief, now it just looks tawdry and embarrassing (and futile).

There is a major entry on the NAMA SPV investors and their rewards here.