Since the Guardian drew attention to the story last week, the nation has been gripped by the apparent brazenness of Allied Irish Banks (AIB) scheduling the payment of €40m in bonuses this week. Having followed the story casually for a few days and since the operation of NAMA is at a quiet phase just now where developer business plans are being hammered out that will lead to fireworks in the very near future with disposals/demolitions/developments/foreclosures, I have dug a little and must say that I am unclear with the position of the AIB bonuses. Having studied the background some questions suggest themselves:
(1) Have John Foy and the other 90 employees that took legal action over deferred bonuses from 2008 at AIB already been paid their deferred bonuses (estimated at €10m) or is that part of the €40m what was scheduled to be paid on Thursday? John Foy won his uncontested case at the High Court on 3rd November, 2010. Wouldn’t he have been paid already? Have the other 90 been paid? Have others that didn’t take legal action but were engaged on the same contracts with the same bonus provisions been paid?
(2) The Minister says that 2,869 AIB employees were paid €58.65 million in deferred bonuses this year and last year. Who were these employees? Were these the only bonuses paid? Does this €58.65 million include the estimated €10m over which John Foy and the other 90 staff who took legal action?
(3) What is the wording of AIB’s contracts? The bonuses are variously described as discretionary and contractual. Wouldn’t a contractual bonus be more properly called “commission”? Shouldn’t the wording of the contracts provide for “supervening events” (to use the language in the Minister’s letter yesterday) like the group becoming insolvent as a reason for abandoning the payment of bonuses?
(4) How much expense has AIB incurred with defending the legal action by the 90 employees this year. The expense will comprise the legal fees of both AIB and those of the employees as the High Court has seemingly ordered AIB to pay all costs. In addition AIB was ordered to pay interest at 8% per annum on John Foy’s unpaid bonus and that presumably applies to the other deferred bonuses also. That would bring John Foy’s payment up from €160,000 to €188,000.
(5) The statement from AIB yesterday suggests gratitude that the Minister has now intervened. What were the three public interest directors on the AIB board doing up to now? How is it that last week the Minister was powerless to stop the €40m in bonuses being paid and the proposed 90% supertax on bank bonuses would only apply to future bonuses. Yet today he seemingly has the power? The AIB statement says “however the letter from the Minister conveys a decision by him to legislate which overtakes this obligation.” Retrospective legislating away personal rights? This is just downright confusing.
So you thought Minister for Finance, Brian Lenihan’s letter to the board of AIB yesterday has put a stop to a €40m bonus payout scheduled for Thursday this week and that no bonuses will be paid to staff in the bank which is only capable of opening its doors this morning as a result of a soft-terms investment of the nation’s pension reserve fund and a commitment to future “investment” of €9.765bn? This entry examines bonuses paid by AIB since the introduction of the State guarantee in September 2008.
First of all, a timeline of the State’s provision of assistance to AIB
September 2008 – Guarantee on the liabilities of six Irish financial institutions (including AIB). The guarantee was given effect with the CREDIT INSTITUTIONS (FINANCIAL SUPPORT) ACT 2008 though it was a subsequent Statutory Instrument (SI 411 of 2008) that started to get to grips with bonuses for “directors and executives” as it required the submission of remuneration plans and presaged the establishment of Covered Institution Remuneration Oversight Committee (CIROC).
December 2008 – Department of Finance installs two public interest directors on the board of AIB – Dick Spring and Declan Collier.
February 2009 – CIROC publishes its report which addresses the remuneration (including bonuses) of “directors and senior executives”. Last week, Minister for Finance, Brian Lenihan told the Dail “as the House will be aware, the legislation introduced on foot of the bank guarantee specifically prohibits the payment of any performance bonuses to senior bank executives.” I must say that apart from the CIROC recommendations that really seem to be confined to board members, I cannot see an explicit banning of performance bonuses. Perhaps there is some Statutory Instrument with a relevant provision but I have not been able to locate it.
9th March, 2009 – enactment of the Investment of the National Pensions Reserve Fund and Miscellaneous Provisions Act 2009 which allowed the State to direct the NPRF to invest its funds into banks as required by the Minister for Finance.
12th May, 2009 – Minister for Finance, Brian Lenihan, directed the National Pension Reserve Fund to invest €3.5bn in 8% yielding preference shares in AIB. In May 2010, AIB gave 198,089,847 ordinary shares to the NPRF in lieu of a cash dividend, which equates to about 18.6% of AIB’s ordinary capital. In simple terms today, the State owns 18.6% of AIB plus has 3.5bn of preference shares. The recent PLAR plan issued by the Financial Regulator anticipates the State investing a further €9.765bn in the bank.
November 2009 – Department of Finance installs an additional public interest director, Dr Michael Somers, formerly of the NTMA. That brought to three, the number of public interest directors on the AIB. So you would have thought that AIB was more than capable itself of dealing with this matter or making representations to the Minister for legislative changes.
December 2010 – Financial Regulator releases report on remuneration practice and policies in Irish banks and concludes in damning terms that banks are failing to put in place practices to mitigate financial and market risks.
Next a timeline of bonus payments by AIB
2008 – Bonuses for non-board members are not separated out in the annual report. They will presumably be an inclusion in Personnel expenses (under Note 9 to the accounts administrative expenses).
2009 – According to AIB’s annual report “no bonuses were paid in AIB generally in 2009 in respect of 2008 performance. Bonuses were paid to staff in our Polish subsidiary BZWBK (which was not covered by the Irish Government’s Deposit Guarantee Scheme) and in AIB’s Channel Islands based business. Some bonus schemes were also triggered in the Capital Markets Division in respect of 2008 performance.These bonuses have not been paid in the Republic of Ireland but were paid to staff located outside of Ireland on foot of threatened or initiated legal challenges. On the basis of legal advice, we have made an accrual against the future payment of outstanding, deferred 2008 bonus amounts, the timing of which will be subject to the approval of the Board and the Department of Finance in the Republic of Ireland. Bonus schemes in relation to the Group Executive Committee, executives and managers across Group Supports, Operations & Technology,AIB Bank ROI and AIB Group (UK) plc were not renewed for the 2009 performance year. No bonuses will be paid in these areas or in Capital Markets in respect of 2009, however, a provision has been set aside in the 2009 financial statements to meet any legal obligations arising.”
2010 – The Irish Times reports that Minister for Finance, Brian Lenihan “said in a response to a parliamentary question that some 2,869 AIB employees were paid €58.65 million in deferred bonuses this year and last year. Some €35.5 million was paid this year following legal action and a further €3.7 million was paid to staff in AIB Capital Markets in respect of deferred bonuses relating to work in 2006 and 2007. Some 62 executives shared €11.11 million, or an average of €179,000 each, for 2009, while 674 managers shared €30 million or an average of €44,000 each.”
Next a timeline of John Foy’s legal action
Who is John Foy? According to the Irish Times, he is “an AIB foreign exchange options trader” resident at “Newhaggard Lane, Trim, Co Meath” who joined AIB Capital Markets in 2005 on a basic salary then of €75,190 (his present salary does not appear to have been published). His Capital Markets division in AIB has been very profitable indeed with reported profits of “€585 million in 2008, €531 million in 2009 and €134 million in the first half of this year” and indeed €532m in 2007 and €589m in 2006 (pg 40/282 2008 Annual Report). He is one of 90 staff that took legal action in 2010 over unpaid bonuses for 2008. He is the public face of the 90 because his case was a test case and the ruling (not yet published) at the High Court on 3rd November, 2010 paved the way for the payment of not just his bonus but the bonuses of another 89 staff. The Independent report that “it is understood that Mr Foy no longer works for AIB. He first joined the bank in 2005, having graduated from UCD in 1995 with a commerce degree and a masters in business”
January 2009, John Foy’s line manager at AIB, Michael Cronin, writes to him to advise that he will receive a reported €160,000 as bonus for 2008 in the February 2009 payroll. He was later told payment was being deferred until further notice and then that payment was being deferred indefinitely.
April 2009 John Foy is reported to have claimed that the then head of AIB Capital Markets, Colm Doherty told staff that 2008 bonuses would be paid. Colm of course was subsequently promoted to be managing director of AIB. The hapless Colm was then “stepped down” in September 2010 being reportedly stunned at the revised and much increased capital requirements for that bank.
13th July, 2010 – application to the High Court (2010 3281 S) by John Foy – it is reported that 24 other staff issued proceedings in the High Court (which has a minimum value claim threshold of €38,000) and additionally, up to 65 staff issued proceedings in the Circuit Court. The Irish Times report that the aggregate value of the bonuses claimed in the courts to be less than €10m (average of less than €111,000). It is understood that John Foy himself was seeking €161,000 (sometimes reported as €160,000) . Law firm Byrne Wallace represented AIB. McDowell Purcell represented the 90 employees.
3rd November, 2010 – the Master of the High Court, Edmund Honohan, enters a judgment in favour of John Foy as AIB did not contest the application. In addition to the claim for the bonus, John Foy is awarded interest of 8% per annum (which will apply for nearly two years) and his legal costs.
Has John Foy already been paid the bonus and interest and legal costs? Media reporting (for example here where it is stated with my emphasis “Mr Foy will still get his” and here “Mr Foy will be paid his bonus in spite of the intervention last night by Mr Lenihan”) suggests he hasn’t yet been paid the bonus and that the €40m that was penciled in for payment as bonuses on Thursday this week includes John’s €160,000 which might then mean that €10m of the €40m was in respect of the 90 staff that launched legal actions and whose position was upheld following John Foy’s test case.
I must say I have mixed feelings about the bonus. I think John Foy was correct in arguing that it wasn’t the Capital Markets division of AIB that contributed to the bank’s downfall – it was reckless property-based lending. And from what I can see John Foy did his job well and earned a lot of real money for his employer. A lot of others who were more responsible for the crisis still command colossal salaries (having given up another €14,000, the Taoiseach is still paid €214,000, Secretary General at the Department of Finance, Kevin Cardiff still gets paid €228,466, former INBS chief executive Michael Fingleton received a bonus of €1m for his performance in 2008 and former Financial Regulator Pat Neary was famously paid a €630,000 not-so-secret golden handshake after his ruinous tenure at the helm). So from his personal point of view I can see why John Foy would feel justified in pursuing his bonus – by all accounts he earned it and he wasn’t responsible for the mess at the bank. Of course the position of the majority is that AIB wouldn’t exist today without massive State support on soft terms and against a background of austerity measures that see the weakest and lowest-paid in society having to contribute to bailing out the banks (including AIB), it is scandalous that those same banks pay an individual bonus that is now some 10x the minimum wage (following its 12% reduction to €7.65 an hour last week for new employees). So the position here would be to have sympathy for the man himself but in the context of his employer’s position and the sacrifices by society in general to sustain AIB, paying such a bonus would be unjustified (though it may well be the case that it has in fact been already paid).
NAMA Wine Lake 
Dear Nama Wine Lake,
We will all leave soon as Nama/Nazi Liquidation Agency is about to destroy thousands of property developers, builders, sub contractors, Architects, Engineers and QS etc etc etc and
their families.
The Developers Nama plans and more importantly the Nama response to the developers plans are designed to destroy the individual and take all their assets. There is no logic to their methods.
The politics and destruction of the individual seem to trump the idea of creating value or a market in the assets. Nama and its very inexperienced staff intend to destroy thousands of individuals in the coming months.
They will attack the easy targets by bullying, threatening, and using the Nama act to take their assets, houses, contents, cash and future earning ability. Note the prison
terms outlined in Nama act. This is war time legislation akin
to Nazi Germany.
Nama’s onerous terms and conditions which will be imposed on every individual (and families) are designed so that all will be never be allowed to recover. It will be Nama jail for the rest of their lives. Many will die from the stress, cancer, and heart attacks. By chasing the debtors and not protecting the asset and trying to increase asset value, Nama are completely failing in their mission to make money for the Irish taxpayer.
The staff met to date have no property development experience, are incapable of making the simplest of decisions, and already have created a civil service mentality. They will act at all times in the interest of Nama and not protect and create value in the asset they acquired.
Nama will serve up the heads of property developers on a regular basis for the baying Politicians and Public but will not be able to make profit on the loans they recovered at steep discounts. Quite an incredible to think that Nama are that
incompetent.
Early next year BoSi will start selling off loans at massive discounts and other non Nama banks will follow which will mean Nama will be playing catch up. How will Nama react?
Will they offer steep discounts on loans to free up the market or chase individuals to pay debts. At the very least some liquidity may return to the market and Nama will not be able to stop this from happening.
Its important to state that not one Nama developer plan has been signed off by either party. The terms of latest one
issued by Nama are so onerous that suicide is a better option. There is now a general feeling in the Property Developer community that its not possible to trust or work with Nama because they are effectively out to destroy thousands of individuals, including many of the Professional Classes and a huge section of the Irish middle class.
The fee’s Nama are paying to a small number of Legal and Accountancy practices are beyond belief. Hundreds of millions of euro’s have been wasted on duplication of work, quadruple valuations, and multiple formations of Nama plans. The EU/IMF memorandum of understanding has virtually wiped out all the financial assumptions that Developers would have used in their Nama plans.
All the money that has been spent on producing and evaluating the plans has been wasted as a result of Nama’s misguided instructions to Developers.
The plans and assumptions were impossible to achieve even before the IMF / EU memo so at least that now that can be openly acknowledged. The memo changes everything.
It is impossible to pay back loans in three, five, ten or even twenty years as there is no market or solvent banks and Ireland is broke. There are very few loans in Ireland that are making capital repayments and the some that are making repayments are only because of hugely over rented buildings and on low bank margins.
Its also important to note that capital repayments creates a tax liability problem for individuals that Nama or the Government has not even thought about. Selling assets in the coming years will also create CGT liabilities another issue that Nama or the Government have not addressed.
Its only a matter of time before the high rents come down (EU/IMF memo) and many loans will be lucky to cover the interest. So its important to re-state that the Nama repayment plans from day one have been a lie created by Nama and the Government to deceive the Irish taxpayers.
Everyone in the Property Development community know this is a fact so why is Nama continuing to lie to everyone?
Nama is clearly a liquidation agency of the debtors and slowly destroying the assets they acquired.
There is no easy solution except to change the way Nama is operating. The CIF/Lombard Street Research report is a place to start but many more changes need to made.
Should Nama not change and proceed with their current methods and speedy pace, there is a clear solution to all the individuals associated with Nama and that is file for bankruptcy in the UK. Its their final solution and not the Nama final solution.
We remember the fallen, the victims, the horrors they taught us about, and the love and laughter that helped them survive it.
Your sincerely,
NamaJew.
Near destruction of the European Jewish people = developers living in smaller houses and not having an X5? Hmmmm.
JP its obvious some Irish people want revenge and pay back
but wiping out an entire industry for this reason makes no
economic sense. Do we not need Property Development in
the future, Builders, Architects, Engineers, etc?
We need a much much smaller professional and well managed industry. I would have thought that it makes sense for Nama to work with some Developers who are open, honest and are making capital repayments on their loans for example.
But no, Nama wants to wipe out everyone(and families) which is akin to the Nazi’s and the Jews. They are run by a group of low calibre civil servants who see themselves as purifying the Irish bloodline of the evil dirty Property Development egged on by a blood thirsty media.
Nama have lied to everyone and will turn into a monster.
They do no know how to manage, market, or run a property development industry. Asset after asset will be mismanaged.
Values will drop further and more money will be lost in paying fees to large Legal and Accountancy practices. There is a better way. So start by reading the CIF report.
I am delighted to be paying back my loans but cannot do so
over three to four years as the big lie in all the Nama plans state. This is the elephant in the room which was created by Nama. They have lied to everyone.
We need a Nama to create a market by selling assets which at least will set a floor. We need Nama to work with some honest developers and not one a Nama who are wiping out everyone. Not one plan has been signed off by any party and the last plan I have seen from Nama makes suicide a better option.
This is not logical and makes no economic sense but if your in a revenge kind of mindset its just perfect.
Hi NAMAJew, if I understand you correctly your main issue with NAMA is their insistence on debt repayment in 3-5 years. NAMA would probably say that after 5 years you are getting into a future which is unpredictable as regards property prices. Will commercial prices in Ireland (which are down nearly 60% from peak) be worth more in 7 years than today? Given the low inflation outlook (mandated by the EU) and rents that are *still* dropping by an annualised 20%, what confidence could NAMA or anyone else have that prices will have returned in 7 years? And by the way that is the most significant story in Irish commercial property today – rents dropping by 20% per annum presage capital values that might be 50% of what they are today in 3/4 years.
What terms would you have preferred as a minimum to have seen in the NAMA offer?
Hi Nama Wine Lake and congratulations on your excellent and well informed blog.
I and others believe that Nama’s main aim is to make the Nama plans and terms so onerous that its not possible to sign the documents.
Its important to note that not one Developer in any tranche has signed off on their Nama plan. Everyone now has been asked to forward an asset and liability statement to aid Nama to liquidate every individual and associated family.
This has to be submitted by Thursday or else the Nama act will be used in full force which involves 5m euro fine and 5 years in prison.
The meetings with Nama officials are held in an atmosphere of menace and threat of liquidation and the Nama plans from the start were unworkable. This is important because the lie was created from the day Nama sent out their first Nama plan template.
Since the IMF/EU memo it is now clear that all the assumptions made in the Nama plans by developers are wrong. Developers were working on plans ranging from 8 to 12 years. Now as we know commercial rents will be falling across the board so how does one pay capital let alone any interest.
What happens when the ECB starts to raise interest rates in a few years and rents are still falling in Dublin? We for example are paying back 200K per quarter in capital repayments after interest on a 20m loan. You can work out the maths on how long this will take to pay back the loan.
However there is a break clause and an a massive reduction in rent due in the the next five years so what then ? Nama do not have the experience to manage this situation. I would propose that the tenants rent is reduced now to remove the break and therefore preserve the tenant and some form of capital reduction. Nama have been asked and their response is silence.
There are only a few executives involved in property in Nama with any experience and even some of the senior ones were people who really achieved little in the last ten years and dare I say are a little bitter and jealous. So for them this is a wonderful opportunity for revenge. Obviously there are ex-Cab and Revenue officials. So their modus operandi is blanket liquidation of one and all.
I think the real story in the entire Nama strategy is based on a lie and the big lie is that its possible to pay back all of the loans in the short term. It may be possible to pay back part of the loans in the next tens years but not if they wipe out the Property Development community. Its a bit like the US dismantling the Iraqi army after Sadam and we all saw that chaos that followed. Note there is also evidence that Nama are telling Developers to tell small sub-contractors to reduce their bill or risk not been paid.
Nama should pick 30% of the development community where there is trust on both sides and ask them to work out the projects that are viable, discard the fields, and manage the assets that are producing rent. Any Developers who do not co-operate should be wound down in a managed way and not by appointing Receivers and Liquidators. Any Developers who are driving new Bentley’s and behaving as if nothing has changed should be liquidated immediately.
Nama’s fundamental aim should be to sell some product into the market in early 2011 to set a floor. BoSi have recently offered an asset in Dublin for less that 20% of its loan value. In 2011 there will be more of this type. Ulster Bank will follow. However Nama will be in full force analysing their wonderful unworkable plans, paying huge fees to a couple of big legal and accountancy practices and of course liquidating individuals.
It is totally insane and completely at odds with their mission to make money on the assets. You saw the very personal and defensive reaction to the CIF report and Public Accounts Committee. Think of the HSE and multiply to the power of n. This entity will turn into a monster and will mismanage and destroy any value in their assets portfolio and along they way they will pay billions in fees to the very same professionals who are as culpable as everyone else.
Its very bleak future for all. Happy to self liquidate by the way of bankruptcy if thats what Nama want and many many of people will follow that same route in 2011.
I would prefer to try manage and try to make some return on our assets to try reduce the loans but we need a partner not a liquidating agency.
I hope to keep this blog fully informed of the Nama methods to let other judge if their actions are correct. Will also supply Nama documents where and when I can.
Yours sincerely,
Nama Jew.
Hi NAMAJew, €20m owing to NAMA and a quarterly capital repayment of €0.2m (plus interest presumably)? I can see how this will be a problem for NAMA. Presumably the asset is worth nowhere near €20m? It sounds like your loan is one which might be a candidate for sale by NAMA to another party that can see repayment over a longer period underpinned by a decent rent roll? Have you spoken to NAMA about that avenue or indeed have you sought out a party that might be willing to acquire the loan? I know that for Irish assets it will be tough to get substitute terms at anywhere near a margin of 2.5-4% (Blackstone were looking for 30-40% per annum returns on loan investments though that doesn’t automatically equate to an interest rate).
But ultimately if you can’t map out a loan repayment in accordance with the original agreement or the NAMA 3-5 year horizon or re-finance outside of NAMA then why should NAMA continue to finance the loan particularly if it is located here and may face a challenging future? Given that NAMA is acquiring €90bn of loans at par value, I can’t see NAMA having the expertise or management time to delicately fashion a customised approach to a €20m loan. And I would have sympathy with you there – NAMA has 100-odd employees and there are another 350 working on NAMA in the banks and there is the Master Loan Service Provider, Capita, but NAMA is woefully underresourced to maximise returns from its management of €90bn of lending.
Isn’t CIF providing some leadership and co-ordination here on legal and commercial issues?
There are many assets like this which pay only interest and no capital repayments. Its interesting that Nama think high rents can just be conjured by magic. Going rents in Dublin are 15 to 20 euro per square foot. You can work out the yields and values. I would think that one loan that
pays nearly 1m euro back per year at least until the break in five years would be in the top ten of the Nama portfolio. Namas insistence on producing plans which show loans repaid in 5 years or so are just a lie to everyone but then they know this and if they don’t then they should. The optics for Joe Public will be liquidations and humiliations and Nama are then a wonderful success.
Terms? NAMA should stay within the law. Bullying wives and family like a thug and abusing its position to the level of blackmail in order to lever legally held assets from third parties is not staying within the law.
Selling assets at any time is a commercial decision – getting personal with innocent (in commercial terms) family members is not.
Hi WSTT, whether justified or not there is the public perception that developers (like any other entrepreneurs) sought to protect their wealth by transferring assets to spouses and other family members and related parties. Most marriages see the sharing of income and intermingling of assets and that is true whether you’re a Garda, nurse or developer. The more wealth and income you have the more likely it will be that there will be significant intermingling of income and wealth. Some intermingling must surely be accepted. NAMA seems to be taking the position that all transfers were effected so as to deprive creditors. And the public would probably support NAMA in taking that position. But surely developers can access legal advice to help them support legitimate transfers? Isn’t this something that CIF could do on behalf of developers generally to avoid duplication and cost? And in that sense can’t developers and their families effect the protection of their rights?
NAMA on the other hand seems to be approaching this in a more sophisticated way. Whilst accepting that certain transfers might have been legitimate and might be upheld as such if the matter was tested in court, NAMA seem to be offering continuing financial support in return for sacrificing what might be legitimate property rights on the part of spouses and other family members. NAMA only have the lever if the loan is impaired – if it’s good then surely the borrower can rely on the loan agreement to protect their rights. So reducing the matter to its bones – the developer must ask himself if the sacrifice of legitimate transfers is worth the benefit of continuing support and avoiding the consequences of default. If the answer is no it’s not, then presumably they freely accept the consequences of default?
I think there is more than a little of Frank Daly’s influence in this approach (tough and very knowing of human nature) but ultimately this is about a deal. Will developers roll back transfers and put the funds on the line in what is still a risky market (especially here in Ireland) or will they resign themselves to the consequences of the reality which is that their loans are in default and the market is very difficult and foreclosure/bankruptcy is the natural conclusion?
Hi NWL,
Rolling back asset transfers that were made fraudulently is one thing. Blackmailing the wives to transfer an asset that has been legally held for decades (as they are doing) is something else entirely. I accept that the public might like to see that happen, but then the public also liked to watch lynchings and the guillotine. I know what I would do in similar circumstances… and it isn’t to succumb to this type of thuggery.
NWL you have explained the position of Nama perfectly. One question is why bother unless the asset is unencumbered and worth millions? What is the point in chasing a family home for 500K when the debts are 20 / 50 / 100 million euro. The deal with Developers should be about partnership not extracting a pound of flesh. If Nama persists on the maximum pain route most people will walk.
Lets go back to the Nama plans which have always been unworkable only more so now. If the agency starts off by making its clients submit a plan which is unworkable what is
the motive? Having seen various Nama plan signoffs its clear that is simply not possible for any Developer to sign the document. Is this not an indictment on Nama’s track record skills and property knowledge to date?
There is only one answer to my questions and that is Nama in the last couple of months has changed it mission statement and motives and is now intent on the liquidation of the entire Property Development community. This will effect many thousands of people associated with the industry including Architects, Engineers, Building Contractors, Sub- Contractors.
So Frank gets his pound of flesh and can say job well done. The good assets flounder, values drop, fees are paid and the whole project become one self perpetuating monster. Feeding the Agents, Lawyers, Barristers and Accountants will
be what Nama does become it has little skills to do anything else.
Hi NAMAJew, NAMA has said that it will pursue debts to the maximum extent feasible (and by “feasible” I think they are talking about the cost/benefit of pursuing the debt or part of it – it just mightn’t be worth the cost and risk of going to court over a €5k watch gifted to the wife). If there is a €500k house that has €100k of equity I can see why NAMA would pursue that as they are fulfilling their mandate. It’s brutal and upsetting but that’s at the heart of any insolvency debt recovery.
Not seeing the specific plan and NAMA’s proposal prevents detailed consideration but NAMA has an estimated lifespan of 10 years so presumably in some cases it will be allowing 5 year+ repayment horizons. And again if you have a decent asset and a reliable rent roll then why not seek another financing option (I realise that’s difficult to say the least)
And CIF is supposed to be marshalling forces so that developers aren’t victimised. What are they doing to assist you and co-ordinate a response. Individual developers can be picked off but shouldn’t the representative organisation be pursuing the strength in unity approach.
No-one wants to see the disappearance of a sector that has always been a solid contributor to economic activity in this State since its foundation and even today employs nearly 7% of the workforce (12% of the male workforce). And the position on here is that as a nation we have acquired significant expertise and contacts and that should not be thrown away. All of that said though, you’re going to have to deal with NAMA or find a substitute source of funds or deal with the consequences.
BTW, there will be no continuing financial support. This is a self liquidation process that involves the developers working for pittance for the benefit of NAMA. There is nothing in this deal for the developers. If they or their family have personal assets they will be taken from them, so they are better off protecting those assets belonging to the family. If they don’t have any – what’s the point in delaying the inevitable. They are better off forum shopping a bankruptcy in the UK and coming back (if they want to) in 12 months clean of NAMA.
In ancient Egypt, after the pyramid was created and the workers were trapped inside they did not get out, they were killed . This is the fate that awaits the developers, compliant or not.
Their best option is to turn poacher as opposed to staying on as gamekeeper.
As for NAMA, if it walks like a duck (acts as a thug)…..
BTW WSTT, if NAMA is dividing and conquering by imposing strict confidentiality penalties, why don’t borrowers simply consult with their representative organisation (CIF presumably) which can effect a co-ordinating role that could put an end to perceived victimisation? Thugs and bullies can only sustain themselves if their victims are divided and weakened, no?
Correct- as usual :-)
P.S. Confidentiality clauses….. in Ireland? What planet are they on!
P.S. You could name this blog Namaleaks…. problem is they might throw you in jail on sexual perversion charges and set the bail at a million! We’d keep it going for you until you got out though.
Also, NAMA have still not published the new cashflow format which was due on their website on 13th December. Signs of pressure due to work overload impacting on efficiency?
Are NAMA not subject to the terms of the bailout? Unfortunately for NAMA it is now a case if you can sell the loans, then go sell the loans. The IMF will not be too interested in retribution or revenge just cash.
Who nows NamaJew, maybe your new task master will see sense. They will certainly need experienced people. But you are correct NAMA is a liquidation vehicle. Now more than ever
The die is cast.
Each individual needs to make a personal decision to protect their family and fall on the sword. History will show whether Nama acted in a reasonable manner and if its decisions were right or wrong. Thousands of targeted individuals will be hounded and chased for every last cent.
All other members of society who are equally culpable and full of blame, the Government, the Civil Service, Bankers, Lawyers, Accountants, Agents, the Media and many many more will walk away free to be citizens. Its a very interesting story which someday will be written.
Presently you have more chance in this country of walking free as a Child rapist in the Catholic Church than as part of the Property Development community. On Thursday I would be surprised if 10% of the A&L forms and sworn statements will be returned to Nama.
I would suggest that nobody should co-operate, no more information, meetings, discussions, or plans. Let them waste more fees on professionals and court proceedings.
Obviously this will not change anything but you will have saved your family if nothing else.
Lets end with a couple of fun quotes which may or may not suitable,
Ethnic cleansing “is a purposeful policy designed by one ethnic or religious group to remove by violent and terror-inspiring means the civilian population of another ethnic or religious group from certain geographic areas. (Commission of Experts Established Pursuant to United Nations Security Council Resolution 780)”.[1]
or maybe this one,
“There’s a long road of suffering ahead of you. But don’t lose courage. You’ve already escaped the gravest danger: selection. So now, muster your strength, and don’t lose heart. We shall all see the day of liberation. Have faith in life. Above all else, have faith. Drive out despair, and you will keep death away from yourselves. Hell is not for eternity. And now, a prayer – or rather, a piece of advice: let there be comradeship among you. We are all brothers, and we are all suffering the same fate. The same smoke floats over all our heads. Help one another. It is the only way to survive.”
— Elie Wiesel (Night)
Lots of interesting stuff here, but seriously using a Holocaust analogy is almost unbelieveably tasteless. Bad as Nama might or might not be there are not going to be bands of Sonderkommando touring the country and machine gunning people in ditches.
Relax NamaJew and hold your nerve.
Don’t sign anything – this problem is too big for nama to handle (no dis-service to nama personnel intended, this problem is too big for any ‘asset management agency’ to handle)
Base Logic and market force will (in due course) have their effect. This effect will not happen in the real world whilst the crazed political decision makers continue to put pen to paper to embolden nama etc. We have been living in limbo for 30 months now with no ‘real world’ solution in the pipeline, limbo is a positive word, we’re in rapid decline.
If you can’t handle the head wrecking and want to move-on then the UK is a potential solution – you need good advice in that regard, a sample…
http://www.liquidation.ie/Personal_Bankruptcy/Personal_Bankruptcy.683.html
http://bankruptcy.org.uk/8798/bankruptcy-articles/can-i-just-move-to-the-uk-to-go-bankrupt/
A number of people I know have ‘gone’ already, Me, well no pension or inheritance to protect so no ‘immediate’ reason to go. I can perfectly understand the financial motivation, the head space motivation and the short bankrupt period motivation to ‘take action’. I left once before during a recession, that was enough for me. I’m staying. Someone has to help rebuild, may as well just be me :-)
“I think there is more than a little of Frank Daly’s influence in this approach (tough and very knowing of human nature)”
Hmmm, NWL… not sure I would fully agree with that assessment of Mr Daly. I think that in part it fits his actions when he was in the Revenue and wanted to scare the bejaysus out of the widows and farmers who had stashed a few bob away in the Isle of Man or Jersey. Rattling the cage and acting like a bully left them rushing to empty their accounts and hand over the cash, especially with the threat of swingeing penalties. He was knowing of human nature in those circumstances.
However, those same tactics are highly unlikely to work with the developers, most of whom are willing to forum shop bankruptcy in the UK (or Newry – which of course is also in the UK) rather than succumb to the cage rattling and bully boy tactics. Most of them will reach for their lawyers. Paddy McKillen is only the beginning. There’s going to be a lot of receivers, a lot of fees expended with insolvency professionals and few solutions. Mr Daly is not that knowing of the nature of developers.
It’s very doubtful that they are going to give up the family home. It’s far more likely that the will continue to live in it if they so choose. Developers by their nature are entrepreneurial animals. They would rather become poachers and make money for themselves than submit to rule by NAMA. They will leave and look to international markets where they don’t need to answer to the trustee in bankruptcy.
Of course, NAMA is trying to clean out their bank accounts to ensure that they won’t have any funds to defend themselves, but by this stage any developer with anything between his two ears has already made sure that his legal fighting fund is safe.
Where Mr Daly fails to understand human nature is that it is smart to encourage people rather than bully them. It would help create employment. His method is full of negativity and just causes resentment.
P.S. Everyone’s gone completely off topic here. We obviously need a “NAMA and the developers’ business plans” thread ^.^
WSTT, you’re right! This needs its own thread and there will be an entry on “NAMA and the developers’ business plans” later today.
JP, you’re right! Though I see Paddy McKillen is invoking the McCarthy era again in the context of his own treatment at the hands of NAMA. I have recently become aware of Godwins Law or the “reductio ad hitlerem” though I call it the Lord Voldemort (“he-that-shouldnt-be-mentioned”) syndrome and regard the singularity of avoiding one particular comparison to be censorious. As long as commenters avoid racist content, I think it’s alright for people affected one way or the other by this crisis to invoke whatever comparisons they see fit – be they developers now required to hand over legally held assets or the majority that are paying for the bailouts with higher taxes and reduced public services.
NAMAJew, whilst much of the developer community in Ireland is relatively close knit at one level, it is a fact that many developers operate in isolation. I blame the mammies and daddies for getting the kiddies Monopoly (Waddingtons) for Christmas and not Diplomacy (Gibson Games). Ireland’s property sector had almost no equity framework, unlimited companies, €bn+ sole traders, non-open limited companies – yes Monopoly has much for which to answer. Doing nothing by yourself is likely to lead to your financial liquidation by NAMA. CIF should be providing a co-ordinating role and not just for the O’Flynn group-type titans but the smaller-scale developers also (€20m would be smaller scale). I am sure there are deals to be done with NAMA – the 5 year deadline will be relaxed in some cases, you’re not alone with having an asset paying interest and some capital, just not enough capital but if you don’t combine with others you are likely to be washed away by NAMA’s €90bn loans policies.
JR – thanks for that. Given that Ireland has less than 15 (that’s right, fifteen) personal bankruptcies per year the 12 months ahead will be interesting and there may be some choreography required to extend matters until the new bankruptcy laws are introduced.
Patrick Hegarty took the personal insolvency plunge a couple of months ago
http://www.bbc.co.uk/news/uk-northern-ireland-11848669