It seems that NAMA may on one hand benefit from the imminent bailout as its mothballed €5bn fundraising programmes can be substituted with funding from the EFSF/EFSM/IMF and our friends in the UK and Sweden (and now Denmark). On the other hand it is reported by the Independent today that options are under consideration that might see NAMA’s scope considerably expanded to include
(a) tracker mortgages (these are mortgages which track the official ECB interest rates, currently 1% plus a premium of typically 1-2%. As banks are presently paying 5%+ for funding these mortgages are loss-making for banks)
(b) impaired mortgages, some 5% of Ireland’s 790,000-odd residential mortgages are in arrears for more than 90 days, An estimated 45-60,000 mortgages have been restructured and up to 16,700 mortgages are in receipt of some form of social assistance
(c) impaired commercial lending
(d) land and development lending which is presently not being absorbed by NAMA (>€20m exposures for land and development at AIB/BoI, >€5m at Anglo, in the case of EBS and INBS all land and development loans are being absorbed)
Expanding NAMA’s scope is a theme examined on here previously (here and here for example) because a flaw in the NAMA principle is that it potentially leaves significant impaired loans in banks which would drag on any recovery in the banks, not to mention leave suspicion that unprovisioned loss landmines would remain which might require emergency unplanned injections of State funding. A recent entry on here examined banks’ non-NAMA lending and the summary tables are shown here.
And the breakdown of the non-NAMA loans
NAMA was primarily set up to absorb a particular class of lending – land and development. Land and development assets are believed to have fallen by 75-90%+ from peak in Ireland and plainly that has left many such loans impaired. It was a consequence of the way NAMA does business that “associated lending” is also absorbed – that’s why Paddy McKillen’s London hotels are NAMA-bound (pending an appeal) even though they would not be classed as land and development loans, they are subject to lending and Paddy has some other development loans.
Of course there is other lending in Irish banks – mortgages, credit cards, personal lending. And there is also commercial lending both for property (which didn’t have any land and development element and wasn’t associated with land and development lending) and for normal business. In fact NAMA is only going to absorb some €73bn of loans and that will leave some €250-300bn of lending in NAMA Participating Institutions (PIs – Anglo, AIB, Bank of Ireland, EBS and INBS) which is roughly broken down as follows:
(a) Mortgages – €105bn
(b) Other personal lending – €12bn
(c) Commercial property – €71bn
(d) Other commercial lending – also €71bn
Bloomberg is reporting that NAMA claims not to have been contacted by the government with respect to expanding its scope. However I get the impression that the patience of our friends elsewhere in Europe at the opaqueness of losses in our banking system is wearing thin. NAMA is acclaimed for having realistically valued land and development and associated lending in the banks’ balance sheets even if that has also caused a capital hole. I can understand why some might believe the NAMA process could also realistically value other lending and put an end to the uncertainty of losses in our banks. The government has thus far seen any extension to NAMA’s scope as an unnecessary complication which would slow down the transfer and management of the most badly impaired loans – it may be that the latest twist to the crisis is prompting a review of the official position.
NAMA Wine Lake 
NAMA was a scam dreamed up by a property developer to help other Property developer’s. Full stop end of story.
The IMF will see through this and wind it down.
My guess is that Anglo bad will be merged with NAMA.
The rest will be sold to International Banks ASAP.
@southofdub
Which property developer had the wet dream then?
Peter Bacon. were you not aware that he was involved in property development?
Sorry for the mispelling that should read
Bea”CON”
40bn to be pumped into our banks but Alan Dukes maintains that “every cent we borrow should be pumped into our banks”?
Honesty, should not be seen as a panacea for solving our banking ills, especially if the the Irish with our flair for self deprecation and sackcloth are the only ones in Europe prepared to do self immolation.
Why is the spotlight not on the other banks in the EU? Answer, it is because they do not have a NAMA.
What is the point in borrowing this IMF money, putting it into banks and then having to turn around and sell them for 1 Euro? The whole country has an insolvency problem and not a bank liquidity problem. That is what the “honesty” will reveal it will bounce us into debt restructuring, if that is what we want then maybe we should go for it.
NAMA to be expanded? Surely, this is a joke? NAMA must be got rid of and fast.
I see from the tenders page that the Nama insolvency panel has finally been appointed.
Many thanks JP – I see that the receiver appointed to Michael McNamara and Company by NAMA was FGS (Farrell Grant Sparks), which I’d imagine will be the recipient of a lot of the predicted workload.
My nordie interest tells me there are two local NI firms on the panel, Cavanagh Kelly and Keenan CF. Keenan’s are already handling some significant property insolvencies including the administration of McDaid Developments and the receivership
of various bits of Jermon.
They don’t have a clue, do they? First, they cancel the passing of sub €20 million loans (from BOI, AIB etc.). Now, they are talking about putting the kitchen sink into Nama. I suppose that they think that they will be able to bury things there. Unfortunately, the IMF are well used to seeking out scams – some of the technical team in Dublin acquired these skills in Afganistan.
@Robert
“What is the point in borrowing this IMF money, putting it into banks and then having to turn around and sell them for 1 Euro?”
It is the same point as buying loans with par value of €73 billion for €37 billion and then selling them on for about €30 billion. Crazy. The people who thought up, operated and supported these scams should be in Mountjoy.
Great web-site and well-motiviated.
Giving up on irisheconomy.ie as its denegerating into a self-congratulatory vanity project instead of driving agenda of real transparency and anlysis.
Wish I’d known of this web-site before now
you’d have to try very hard to think up…
an up front blanket bank guarantee;
an asset management company that takes on dodgy/woeful bank loans (& a few good ones for optics) in exchange for TAXpayers IOU with which a bank can then cash in/recapitalises itself with at the ECB (naturally this bank is ‘covered’ under the original up front blanket guarantee, naturally this asset management company would be run by civil servants, naturally a total hames would be somehow made of it);
Announce, Re-announce, and oh yea Re-announce again the ever increasing cost (well it would if the bank kept telling us politicians lies – a politician that cant spot a lie, hmmmn) of the Bank Guarantee (which is essentially private debt being transferred to sovereign debt);
But if you really really tried you’d manage it.
To reiterate BF’s point, do we want a viable state or viable banks? (irish owned, with ireland in the name – not for us the FAI query – Well if the guy has a Irish Red Setter we don’t care where his grandmother came from, we want a proper Irish one)
Or put it another way – the last time you walked into a AIB/BoI branch did you pause and look at the name over the door? would you care is it said SantanderBoI/AIB?
Do these people in power FF/mandarins etc ever stop to think “this is wrong, I need to come clean and stop this madness before it becomes irreversible”.