It is unclear exactly how much NAMA is spending on staff and contract services. The draft Business Plan suggested it was €240m in the first year and €2.6bn over the 10-year expected life-span. On 29th, September 2010, Minister for Finance Brian Lehihan told the Oireachtas that NAMA would spend €215m on third party contracts in 2011 – “Details in relation to the breakdown of these fees will be published in the NAMA quarterly reports. I am advised by NAMA that fees payable by NAMA will be approximately €215m for 2011 and are expected to decline significantly as the portfolio reduces”. The June 2010 Business Plan gives even less detail than the draft but suggests that the figure might be €1.6bn over 10 years. Regardless it’s a lot of spondoolicks – €240m equates to 5,000 people at €48,000 each per annum. This entry examines how you might get your ticket to the gravy train (though it should be stressed that NAMA has vigorously defended the value-for-money terms under which it has engaged employees and services).
(1) Employees (including directors)
Recent statements from NAMA have suggested that by the end of this year the agency will have 100 or so employees including nine board members (including the NAMA and NTMA CEOs). The fees of the chairman, Frank Daly, have been confirmed at €170,000 per annum and the six other members are reported to be paid €50,000 a year. The NTMA CEO John C. Corrigan was reported last week to be paid €490,000 as a basic salary and has a bonus arrangement that could see him earning an additional 80% which would give a theoretical maximum of €882,000 – it is not clear if any part of his costs are charged to NAMA. It is not known how much Brendan McDonagh earns but the Sunday Tribune in June 2010 claimed he earned more than €500,000. Whilst salaries and benefits at NAMA are not published there has been informed speculation that the pay is good, for example Shane Ross recently claimed the pension benefits at NAMA were “gold-plated”.
(2) Work for the National Treasury Management Agency (NTMA) and provide services. NAMA occupies the same building as the NTMA and buys in these services
(a) finance
(b) IT
(c) treasury
(d) market risk
(e) communications
(f) HR
(g) office service
Salaries at the NTMA are confidential. The former head of the NTMA, Dr Michael Somers justified this confidentiality in a recent interview with Simon Carswell in the irish Times : he “was asked “endless times” about how much he and his staff were paid. He refused, he says, claiming this would have increased the agency’s pay bill, as employees on individually negotiated deals would have sought more, to match their colleagues’ pay”. Dr Michael himself earned a cool €1m in 2008, his last year as head of the NTMA.
(3) Work at NAMA banks on NAMA loans
Graham Emmet, NAMA’s Head of Lending said in the UK last week that there were some 400 staff at the NAMA Participating Institutions (the PIs – AIB, Anglo, BoI, EBS and INBS) working on NAMA business. Of course some of these will be working on due diligence connected with the transfer of loans to NAMA and once that activity is concluded later this year or early next year, some of these people will be without NAMA-related jobs. That said, NAMA will only look after the top 100 borrowers and the remaining 1400 will be managed in the banks so the banks will need some staff to deal with NAMA loans though it is unclear how many will be employed directly by the banks and how many will be employed by NAMA’s loan services provider, Capita.
At the outset NAMA was being very transparent in advertising for services. Its contracts were available through the State’s e-tendering system and NAMA were very clear (if sometimes a bit tardy) with stating the services required and the firms awarded the contracts.
As examined here earlier this week, it seems incredible that NAMA is not engaging help with managing and disposing of properties given the immense size of the NAMA portfolio. With NAMA’s 100 and the banks’ 400 and Capita be able to manage €40bn of loans and underlying assets?
(5) Untendered NAMA contracts
It is unclear who undertakes NAMA’s Public Relations though Gordon MRM seem to have spoken on behalf of NAMA on at least a couple of occasions (here and here). UBS appear to be overseeing the recently announced €2.5bn euro commercial paper programme. Recently the NAMA CEO said that local auctioneers would be involved in the disposal of NAMA property – there has been speculation on here recently (UK and Ireland) that that process has already begun and if that speculation is founded then how were the auctioneers selected?
(6) Secondment fees
In the first NAMA Quarterly report and accounts for the period ending 31st March, 2010, NAMA had spent €2.45m on secondment fees with Pricewaterhouse Coopers. PwC staff helped with the setting up of NAMA at the end of 2009 and start of 2010 apparently. There was no public tendering for these services.
(7) Advisers/”briefers”
Darling consultant to the public sector, Peter Bacon, was described as an adviser to NAMA in the literature promoting the Business and Finance “Corporate Restructuring Summit 2010” event this month. Of course Peter was responsible for a report which recommended the NAMA project in 2009 but the claim that he is now an “adviser” was nonetheless interesting.
The Independent does a bit of a puff-piece today on Frankie Whelehan, hotelier and man behind Choice, Clarion and the Gibson hotels in the State and some Comfort Inn hotels in Germany. The article claims that Frankie briefs NAMA on the market. That’s a new term to me in the context of NAMA – a “briefer”. It is not totally clear if Frankie gets any reward from NAMA for his briefing services, I would guess he does but could be wrong.
Does NAMA advertise or competitively tender for “advisers” and “briefers”, and if so where?
(8) Beneficiaries of the NAMA development pot
The NAMA Act allows NAMA to have up to €5bn outstanding for working capital and development. The betting is that NAMA will go up to this limit quite soon and in fact has recently launched a €2.5bn euro commercial paper programme for short-term financing with details of medium term financing to be published in quarter 4 of 2010.
So there appear to be quite a number of ways in which money can be made from NAMA, and the above excludes profits available from trading in NAMA loans or property, a subject that will be examined here soon.
NAMA Wine Lake 
Hi NWL
You forgot to mention that the biggest beneficaries of Nama will be thousand or so borrowers who could end up only paying about 50% of their debts. Based on loans o/s of €80 billion, that averages a possible benefit of €40 million per developer (with some benefiting far more and others far less).
And the biggest lossers (by far) are the taxpayer who will be left short by €40 billion unless Nama changes its weakkneed approach and starts to properly recognise (e.g. in its published accounts) the true level of loans outstanding and lays out clear plans for maximum recovery, however long and however difficult. Every billion of discount retrieved by Nama above its breakeven point is a billion more returned to the taxpayer as compensation for baling out Anger etc.
Hi Brian, yes I would agree with you and will be returning to the subject from making money from loans and the assets in the near future as NAMA deals with its first disposals of loans, property and developer business plans (some of which may see writedowns though it remains unclear how NAMA is going to manage these).
I’m sorry for going on about this but the writing down of loans from the outset by the discount rate is tantamount to fraud or theft by the “establishment” on taxpayers. It will be interesting to see whether the Anglo bad bank will adopt this approach. I doubt it as the bondholders will have a vested interest and will seek to keep their eye on the ball and to maximise repayments and interest due.
This just in – shd make its own thread:
Chair of NAMA’s Northern Ireland Advisory Committee speaks at Belfast Conference
Estimates that NAMA will acquire loans secured on NI assets of approximately STG£3.35 billion [€4 billion][1].
Embargo: 2.00pm Wednesday 29th September 2010. NAMA expects that the nominal value of loans of loans which it will acquire which are secured on Northern Ireland assets will come to approximately STG£3.35 billion (€4 billion). The figure was revealed today by Peter Stewart, NAMA Director and Chairman of the NAMA Board’s Advisory Committee on Northern Ireland. Mr. Stewart was speaking a conference on Northern Ireland’s economy held today in Belfast.
Loan Make-Up
Mr. Stewart said that the final figure would not be confirmed until the loan acquisition phase for NAMA was completed and therefore, the STG£3.35 billion (€4 billion) was a “qualified estimate”. He also indicated that the agency expected that the make-up of this figure would be broadly as follows:
Undeveloped Land – STG£2 billion (€2.4 billion);
Investments – STG£1 billion (€1.2 million)
Property & Land
in course of development – STG£350 million (€400 million).
Total – STG£ 3.35 bn. (€4 billion)
Undeveloped Land
Mr. Stewart noted that Northern Ireland had its own particular property bubble in undeveloped land. He quoted estimates from CBRE in Belfast which suggest that the normal market for land sales in Northern Ireland in the years 2000 to 2005 was approximately STG£100 million per annum but that this figure spiked to STG£750 million in the years 2006 and 2007.
Mr. Stewart said that while NAMA did not have to sell “today, this month or this year,”…it does have to operate to a ten year time scale. He warned; “even over such a period of time it is likely that we will see what was previously viewed as potential development land being sold to go back to farm land. For those builders, developers and also land traders and speculators who got caught up in the frenzy, unfortunately there is going to be financial pain.”
Property + Land in course of development
However in respect of residential development properties, Mr. Stewart said that unlike the South; “in this part of the island [NI], there does not appear to be a huge supply overhang of residential properties.”
Investments
In respect of Investment properties, Mr. Stewart said that the investment property market echoed the experience of the undeveloped land market with a rise in the normal value of transactions from a typical STG£200 million per annum to a peak of close to STG£1 billion in 2006 and 2007. Speaking on this, Mr. Stewart said “it is clear that the NAMA secured supply side of the market is significant in terms of normal turnover levels and there will be challenges in realising these assets.”
Mr. Stewart said that NAMA will be prepared to consider structured financing proposals that could involve joint ventures, mezzanine debt, shared security, phased transfers of ownership and so on; “we expect that the investment community and their financial advisors will, in due course, develop such proposals.”
Developers
Mr. Stewart indicated that the choice facing debtors was to work with NAMA or to face enforcement; “these debtors have an opportunity through working with NAMA to make some amends for the damage that has been done and to avoid enforcement proceedings.” But he warned where it was necessary to take go through the full process of enforcement proceedings, “they will be taken – regardless of jurisdiction.”
Mr. Stewart said that NAMA was acutely aware of the particular sensitivities of the Northern Ireland economy and market; “What we must do, and which is in our interest as well as that of the Northern Ireland economy, is to carefully manage the impact of the ending of the false boom in property values.”
Many thanks JP, and there are a few newsworthy items in there. Any link?
Scratch that, have picked up the two documents from NAMA – the press release and the speech. No wonder that NAMA is being particularly attentive to sensibilities in the North – I wonder how many acres (or what proportion of Northern Ireland) €2.4bn represents. Of course that is the par value of the loan and the land would have been originally valued presumably with development potential.
No wonder NAMA is keen to point out that there is great congruence between its objectives and the wider objectives of the Northern Irish economy, and that firesales and hoarding are not on the agenda. If there was concern over ESB’s plans, then what potential for panic with the Irish State effectively buying loans secured by what would seem like large swathes of Northern Ireland. Now I understand at least why NAMA is going out of its way to communicate its mission in Northern Ireland.
There is a technical and political argument here, but beyond that:
Everything is set up in such a way that the only real big money potential, with a good career, in Ireland is to engage in the actual destruction of Ireland. Take your pick, as a banker, a tribunal whizz or if you are really lucky work for NAMA. Either way, Ireland tops earners are actually being paid to destroy Ireland. It’s a growth business.
And it is absolutely relevant to this discussion to mention that service to intellectually disabled children are cut, hospital services are cut and education funding is pathetic.
So to escape this one must get a job as a banker, a tribunal whizz or if you are really lucky work for NAMA. And then destroy the country.
So who’s getting paid zillions to look out for the kids?
What a messed up scenario. It appears the general popualtion is waiting to see what happens next, unable to even decide which way to move.
Like a deer in the headlights.