I have never seen an official statement from any government department or agency which uses such brutalising language in reacting to what is understood to be a report by a credible research company. But today NAMA has issued a statement reacting to the Construction Industry Federation (CIF) report on NAMA commissioned by CIF at some expense from the British consultancy, Lombard Street Research.
The 22-page report is not yet in the public domain but I hope to bring you detailed reporting on any points of interest. Press reporting (here and here and here for example) has suggested the report is highly critical of NAMA and blames NAMA for wider economic problems with the banks and the construction sector.
That NAMA should publicly respond to the report is in itself of interest. NAMA didn’t respond to the Minister’s statement on 30th September, 2010 which modified NAMA’s remit or indeed on the statement from last Sunday night which expanded its remit. NAMA hasn’t provided any update on its funding programme or on what some consider important aspects of its operations. But it has reacted forcefully to the CIF-commissioned report, using quite loaded and reactionary language. That NAMA should be robust and not a pushover is one thing – provocatively attacking a stakeholder (and CIF representing many of NAMA’s borrowers is a NAMA stakeholder) is another and I think NAMA might have communicated its message in more neutral but equally forceful language.
UPDATE: 3rd December, 2010.Having seen the CIF-commissioned report, it is easy to see why NAMA might have adopted a robust position in responding to it. The report is entitled “NAMA – a flawed concept and a failure” so NAMA was hardly going to embrace the report. I was puzzled why NAMA responded to the report in the first place and vanity/personalities aside, it might be because CIF has a representation role for many of the developers whose loans are now transferred to NAMA. But if it was this recognition that coaxed the normally taciturn agency into producing a press release, it is still confusing as to why NAMA would select such provocative phraseology. Anyway the highlights from the CIF-commissioned report:
(1) The report strongly criticizes NAMA’s pursuit of “every red cent” “to the ends of the earth” and claims this is not economically efficient and that NAMA should dispose of loans at a profit by reference to the value NAMA pays, as opposed to the par value of the loans.
(2) NAMA’s €5bn development pot is too little and should properly be €15bn according to the report.
(3) NAMA is deterring third party investment, and is insisting on being the sole provider of credit and funding
(4) NAMA is too conservative and is only back dead-cert development projects
(5) Senior NAMA personnel are heavily criticized (not by name)
(6) NAMA is criticized for being too slow
(7) NAMA should not be taking on unimpaired loans because that is only hurting the banks further
NAMA Wine Lake 
“NAMA has no problem with accepting bids in excess of what the Agency paid for assets. The bids have been for loans. To suggest otherwise is a nonsense. This is at variance with the CIF previous position when they sought assurances from NAMA that loans would not be sold to third parties.”
A couple of questions from the above statement:
1)Does NAMA therefore have a problem accepting bids for loans that are in excess of what it paid for them? Has it already rejected bids for loans in excess of transfer value?
2) Has NAMA given assurances to the CIF or is it policy that loans will not be sold to third parties?
I think the IMF/EU may think it is a nonsense if NAMA is refusing to sell assets or loans at prices in excess of what the Agency paid for them…..
NAMA makes a distinction between loans and assets. If it sells the loans it loses any right to pursue the guarantor of the loan as the guarantee moves with the loan. It’s all about political perception- or possibly not seeing the wood for the trees. Loans are sold all over the world and generally is the purchase method of choice for the acquirer for tax reasons.
NAMA’s response shows them to be acting “the schoolyard bully”. Not an edifying sight. Lombard Street Research are a credible, well respected company. If they have a problem with the criticism they should answer in a civilised manner with logical responses.
The ignorant and cretinous bully attitude demeans both them and their argument.
NAMA is a flawed concept but I can understand some of the rational behind it. Irish bankers have proven to be so inept and dishonest that NAMA was forced to take all loans above a certain dollar amount. I believe Irish bankers could not be trusted to determine whether a a loan was impaired or not. Also, if it was impaired they wouldn’t have the ability to work it out.
The best solution, instead of NAMA, would have been to sell the Irish banks to foreign banks with a loss sharing provision. For an example, see:
http://www.fdic.gov/bank/individual/failed/lossshare/
Ireland doesn’t need indigenous banks.
Given that the LSR report was paid for by the CIF, you’d hardly expect them to publish a third-party report which wasn’t supportive of its negative perceptions of Nama. Having a go at Nama would be in keeping with its role a lobbyist on behalf of members who overborrowed during a self-induced boom and who, as a consequence, may be Nama-bound.
As a taxpayer, I welcome evidence that Nama is using plain speaking to respond to lobby group spin.
I cannot see how CIF is a stakeholder in Nama. I would have thought that, in the context of this discussion, it is funded by members to extract maximum benefits from Nama for its members.
Hi Brian, by stakeholder I was referring to the various groups that have a say in how NAMA is run. In a broad sense that includes the general public, the European Commission and developers. I examined stakeholders in an entry linked to at the bottom. I would have said that CIF were reasonably important to NAMA though that doesn’t mean their position and prejudices have to be accepted and NAMA should of course deal with CIF and developers robustly but the language in the press statement just invites petty retaliation and I think undermines NAMA’s authority. I would contend that many of the words used are loaded when they don’t need to be and they imply an emotional (cf professionally detached) reaction in NAMA.
https://namawinelake.wordpress.com/2010/06/08/the-nama-stakeholders-and-why-you-shouldn%e2%80%99t-be-surprised-if-you%e2%80%99re-feeling-ignored/
Thanks NWL. I had forgotton that you wrote this extensive piece on Nama stakeholders which places your reference to CIF as a stakeholder in context. Mind you, I’d place CIF’s importance on your matrix as relatively low – somewhere close to Unions.
Maybe, we are not used to telling things as they are and blunt talking still grates. Look at how long it took for the establishment to speak of “lying bankers”.
Agreed Brian that we could do with plain speaking but there are in my opinion better substitute phrases that would have the same meaning but not be so provocative towards CIF. Despite the rhetoric, NAMA’s prospects will be enhanced by having strong relationships with developers (not cozy relationships, not compromised relationships but ones where there is mutual respect as long as both parties act according to their duties) and attacking the developers’ representative organisation is not constructive with respect to that objective. If things at NAMA are so pressured that they have to issue a press release that is only a notch up from “f*ck off CIF” then that’s not good.
In their intemperate report NAMA states:
“NAMA has worked with borrowers and other Non NAMA banks to dispose of €1 billion of property assets since March 2010.”
I’d like to see the proof of that as it is in direct contradiction to the statement made last month at the Oireachtas meeting where the figure given was €500 million (if I remember correctly).
This is more typical spin from government quangos that believe that the truth is not something that the public are entitled to hear.
One needs to look carefully at the wording. “It has worked … to dispose” is not the same as “it has disposed”. And I am aware of properties that have been declared as “disposed of” where the sales have fallen through and the properties haven’t been disposed of at all yet.
Further they need to define “€1 billion of property assets”. Is this at the original par loan value , or is it at the true market value today?
Weasel words, seeking to deceive.
Actually WSTT I was just thinking the same. How come a month ago it was €500m and now it has doubled to €1bn… More miraculous numbers when I read NAMA’s statement on the approval of Tranche 2 loans by the European Union.
The press release states that 11,000 individual valuations have been approved by the EU. However, NAMA states on it’s on Tranche 1 and 2 data that only 1,756 loans were transferred in Tranche 1 and 1,762 or a total of 3,518. If the EU have only approved Tranche 1 and 2 how is it approving 11,000 loans? Methinks that NAMA is beginning to feel the pressure to justify it’s existence. The sooner the IMF and EU exert their influence over this farce the better
Well spotted BaNAMA Republic and because it is likely to be a mistake and later corrected let’s record here what the press statement says. Not a good day for NAMA with press releases (the accuracy of this one and the language used in the other)
“Tuesday 30th November 2010. The Chairman of NAMA, Frank Daly, has welcomed the
confirmation from the European Commission that it has approved the valuations made by the
Agency in respect of loans acquired by the Agency in Tranche 2. This follows the earlier approval by
the Commission of the valuations set for loans acquired in Tranche 1 and brings to 11,000 the
number of loans whose valuation by NAMA had now been approved by the EU.
Speaking today, Mr Daly said that the EU approval confirmed that the NAMA valuation and due
diligence process was working effectively and well. He said the EU approval was particularly
significant in the light of recent suggestions that NAMA should have paid more for the loans it was
acquiring in order to protect the banks which had advanced those loans; “I’ve been struck in recent
days at suggestions from some quarters that NAMA has compounded the problem of the banks by
virtue of the amounts it was paying to acquire relevant loans. This EU decision confirms that we
have adopted a prudent, consistent and fair valuation policy in respect of these loans and that the
valuation is in accordance with EU approval. ”
Further Information
Ray Gordon
Gordon MRM
Ph: 01 6650452/087 2417373”
Sorry that should read…. 1,756 loans were transferred in Tranche 1 and 1,762 were transferred in Tranche 2 giving a total of 3,518 loans transferred in Tranches 1&2.
There is no way that they have individually valued 11,000 loans. Is it actually a mistake or are we again back to the mentality of fudging information. Does the “11,000 individual valuations” include the block transfers in Tranche 3?
The claim that NAMA has made that they have approved a number of developers’ plans is also questionable. I have spoken to most of the top 10 developers and not one that I spoke with has any knowledge of any plans approved – neither theirs nor anyone else’s.
Apologies for the grammar – don’t know singular from plural!
Snip “Finally, it is worth pointing out that in recent days, the remit of NAMA has been expanded by request of the Government and Regulators in Ireland and the troika of international agencies including the IMF, the ECB and the European Union.” end snip
troi·ka /ˈtrɔɪkə/ Show Spelled[troi-kuh]
–noun
1. a Russian carriage, wagon, or sleigh drawn by a team of three horses abreast.
2. a team of three horses driven abreast.
3. any group of three persons, nations, etc., acting equally in unison to exert influence, control, or the like.
“Acting equally in unison to exert influence”. Indeed.
Snip “Current plans to expand role of NAMA testifies to international confidence and credibility in its operations.” end snip.
cred·i·ble /ˈkrɛdəbəl/ Show Spelled[kred-uh-buhl]
–adjective
1.
capable of being believed; believable: a credible statement.
2.
worthy of belief or confidence; trustworthy: a credible witness.
“Capable of being believed”. Indeed.
The CIF report is perfectly timed! The CIF NAMA team is headed up by Michael O’Flynn, the guy who was caught playing golf with Enda Kenny in the K Club recently. The CIF are not best pleased with NAMA, as it is keeping very tight control of proceedings and is not prepared to accept unrealistic business plans, hence a developer has been challenging the legality of same through the Courts, whilst other CIF members have started the early lobbying process to discredit NAMA to give Enda ammunition to change it to suit developers needs when he assumes office! The reason for setting up NAMA may be questionable but NAMA has shown itself to stand up for the tax payer & if that means putting people that are good mates with the likes of Biffo & Enda into liquidation, so be it!
NAMA yet again misses another deadline. Laura Noonan reporting in the Indo today (http://www.independent.ie/business/irish/nama-has-most-of-anglos-land-loan-book-2444752.html) that it hasn’t finished the transfer of Anglo loans by the end of October (as we were told by Brian Lenihan on 30th September) and information on final discounts will not be published until “early 2011”. McKillen loans not transferred yet pending court case.
In the same paper it is reported that NAMA will take on an extra 10,000 borrowers effectively doubling it’s workload. Yet it continues to state that it will be adequately staffed. To put NAMA’s staffing in context Lloyds Group in the UK has a £30bn Real Estate business support unit (read toxic loans) which employs 425 people, Nama with €35bn employs less than 100. The Agency in its current form is simply not fit for purpose.
Also what is laughable and a waste of money we don’t have is the Garda investigation into the banks providing false information to NAMA. I really hope that no more time is wasted on this than is necessary to give McGrath the grandstanding opportunity he so obviously craves. I hope he still looses his seat in the election….
@BR
Bit surprised at “Also what is laughable and a waste of money we don’t have is the Garda investigation into the banks providing false information to NAMA.”
Surely this is a very serious issue and, if proven correct, could be one of the biggest attempted bank robbery in history. Sounds as though teams of forensic accountants/ lawyers should be brought in from o/seas (no locals need apply) to do a scoping study.
Agree absolutely with your concerns about staffing of Nama. See third point at http://www.planware.org/briansblog/2009/10/nama—three-suggestions.html
Hi Brian, I tend to agree with BaNAMA that the investigation is laughable. Of course if any law has been broken that should be promptly and effectively investigated and prosecuted. But having seen the Oireachtas Committee exchange as it happened, I must say I would have asked NAMA why it didn’t verify the numbers in its business plan. NAMA got its own operating costs 40% wrong so it seemed a bit rich to beat up the bankers again. Also some of the higher discount will be due to the market continuing to fall from Summer 2009 to 30th November, 2009.
But the serious point is that if a law has been broken then sure pursue it but that’s not my impression.
Brian, I agree that it is a serious matter and I also believe that the banks “put a gloss” on their loan books( to borrow a phrase from Paddy Neary) in their presentation to the Government.
My point is that it is a laughable and futile investigation as there is no way that you can prove that banks deliberately misled NAMA or can expect any convictions arising as a result of the investigation. Also the data that NAMA initially relied on was audited by PwC across the institutions. Are they too part of the conspiracy?
The banks will say that was the best information available to them at the time and will cite that they based their assumptions on values ‘in a normalised market’. They will then say that the NAMA valuation was carried out in a period of no property transactions where only ‘fire-sale’ values would be applied. They may also argue that they had valuations from the time of purchase of the underlying assets (2004-2007) that show the values to be robust.
I agree IF we had an external investigation team to review they may find something. But this is still Ireland and here is a bit of political grandstanding (by both NAMA and McGrath) and that the investigation will not uncover any wrongdoing at any institution just maybe poor judgement.
Your summary is funny. It sounds like the CIF is pining for the Anglo days and wishes NAMA was more like Anglo was in the good old days.