Although McDonalds suffers criticism (unwarranted or not) for its product and entry level jobs, it is a company widely admired in the business world. And when McDonalds managing director in Ireland offers his views, they deserve attention. Yesterday the Sunday Business Post carried not one but two stories on McDonalds plans to expand their number of restaurants from 77 today. Their managing director, John Atherton, used one interview with the paper to explain that he and his franchisees are ready to move on four restaurants which would employ 250 people, not to mention various people needed to get buildings to an opening condition. His problems are to do with planning and developer delays. And on the developer side he is ultimately blaming NAMA. This entry examines if NAMA is resourced to deal with the monumental task of managing assets worth nearly €40bn.
Just to finish the McDonalds story, the Irish MD is concerned that developers are distracted with the NAMA process and may not have funds to complete developments in which McDonalds wants to operate. Of course no-one should be too concerned if there are delays to a development which might be 95% vacant when completed even if McDonalds lose out on selling a few burgers and shakes. On the other hand, if the delays are to feasible developments because of administrative or procedural delays at NAMA or because NAMA doesn’t have the quantity or quality of staff to deal with these matters then that is a more general concern.
It was on 23rd March, 2010 when Fine Gael leader Enda Kenny raised NAMA’s manpower resourcing in the Dail. How could NAMA operate with 65/70 people when Goldman Sachs, a company with a similar scale asset management operation needed 3,000 people. Unfortunately his question was part of a debate and was rhetorical and didn’t get an answer.
So what resourcing has NAMA? NAMA will have 100 employees at the end of December 2010. In addition according to Graham Emmet last week some 400 people are working at the banks on NAMA loans – that may be to do with due diligence at the moment but is likely to have some continuing element once the loans have transferred to NAMA but are administered by the banks. NAMA also gets support services from the NTMA (accounting, HR, IT and facilities). What I think is confusing at the moment is that NAMA has engaged on contract an army of third party service providers. However other than Capita, the firms employed are in the main only concerned with the acquisition of NAMA loans. And it is probably worth remembering that at this stage NAMA’s assets are loans and very little foreclosure activity has taken place. But there is a reason Goldman Sachs employ 3,000 people and to an extent in the early years NAMA’s assets are even more exotic than Goldman Sachs’s.
In short it is very difficult to see how NAMA with just 100 core employees can manage a €40bn portfolio of loans and in the near future a substantial amount of assets. So perhaps we can ignore McDonalds’s lone voice, authoritative as it is, but the McDonalds MD refers to other businesses waiting for NAMA to make up its mind and get on with its business of managing loans and assets. NAMA may have employed the best but there are only 24 hours in a day. Of course NAMA is concentrating on valuing and transferring the loans but it should be able to juggle the acquisition role with the management/disposal role and it seems that it is encountering delays.
So will NAMA employ more people or will complaints from various parts of the economy of delays at NAMA preventing employment and growth become a common occurrence?
NAMA Wine Lake 
Hi NWL, I expressed concern about likely management and staff problems at Nama in a blog entry back in December 2009 at:
http://www.planware.org/briansblog/2009/12/management-of-nama.html
This followed a message sent to *all* TDs and Senators on 4th October 2009 which stated:
“After market risk, the key variable determining the success of a venture is usually managerial risk. In Nama’s case, the former will be addressed largely by the size of the so-called haircut. To address the latter, Nama’s senior management team must have extensive direct experience of world-scale asset recovery and portfolio management. Reliance on local secondments, expensive advisers and delegation of anything but basic administrative activities back to covered institutions should be minimised. The proposed staffing of Nama is only a fraction of that used by the Swedish “bad” bank operation which dealt exclusively with nationalised banks and had a loan portfolio far smaller than Nama’s. It appears that Nama’s inhouse staff of under a hundred people people will be managing a highly fragmented, complex portfolio worth €77 billion and covering 20,500 loans linked to almost 2,000 developers’ business plans. Such an approach is penny wise and pounds foolish and is equivalent to sending a boy on a man’s errant. Accordingly, the management resources and expertise within Nama must be appropriate to managing one of the largest property portfolios in the world even if this entails much higher operating costs than envisaged to date.”
Needless to say, not a blind bit of notice was taken to my concerns. But that doesn’t surprise me (with hindsight) as it suits some people for Nama to be under-resourced like the ODCE and related bodies.
Thank you for that Brian and for the link to your message to TDs. NAMA are considerably behind schedule with acquiring loans and I think they will struggle to meet their Feb 2011 deadline if the maintain the valuation and due diligence standards applied to the first two tranches. And NAMA had 64 firms of lawyers and 30-odd firms of valuers to assist with the acquisition!
For management and disposal they seem really exposed. They have Capita providing some asset management services but beyond that it’s really down to NAMA, and even with Capita NAMA retain top level decision making. And the top 100 developers are supposed to be managed by NAMA.
I just don’t see how they can cope and I can see developers, shopping centre tenants, contractors, CIF and even politicians venting their frustration in coming months with NAMA’s apparent slowness with management their portfolio. A key concern with NAMA is that the organisation becomes process – obsessed and loses sight of what it is there to do. It will be a theme that will be returned to in coming weeks.
As you say “NAMA had 64 firms of lawyers and 30-odd firms of valuers”!!!!
Imagine running a property asset business with just lawyers and valuers. Where are the dozens of project managers, commercial and construction people, architects, QSs, security people, facilities managers etc. etc. etc. needed to make things happen and ensure things are done properly?
It’s an emergency rescue job and they are making it up as they go along. As with Anglo bailout it is inexplicable if you accept that the primary purpose of these choices is the wellbeing of the polity as a whole.
The tailback has already begun… and the Nama disposal train has not even left the station. Tranche 3 has now been severely “cropped” and out of it is born tranches 4,5 and 6.
The reason? The files are in a mess, security is missing and there is such a backlog in tranche 3 that it is impossible to meet this weeks deadline.
So what do they do? Answer – fudge it. Take whatever is complete and ready into tranche 3, divide and delay the rest into new tranches and feed the public some more bullsh*t about being on time and on course.
Not an auspicious beginning!
Extend and Pretend. Pray and Delay. Kick the Can down the road. Guess what, we are out of runway. I hear the IMF sirens screeching in the background.
Funny you mention the IMF. I had this odd feeling yesterday when I saw Jay Leno mocking Brian Cowen on his “Late Night” show. I haven’t seen Leno for years and I do remember him regularly mocking US presidents and politicians. It’s perhaps my selective memory but I can’t recall him mocking foreign politicians so much and God knows he has rich pickings in Europe from little Sarkozy (once also tired and emotional at a video press conference), the antics of Silvio, the backwood thinking of the Polish Kaczynski twins, the controversial Dutch ultra-blond anti-immigration Geert Wilders – seriously take your pick.
I can’t recall Leno lampooning foreign politicians very much at all. There have been recent claims that funds are betting that Ireland will default on its debt. And of course political instability could only add to the risk. It would be complete paranoia, right, to suggest that Leno’s army of researchers were in any way influenced by the money men in NY who have more than a few contacts in LA. As I say, it was just a funny feeling I had, probably something I ate.