NAMA has now published its pre-Christmas update. The highlights –
(1) NAMA claims to have convinced developers (three according to Laura Noonan in today’s Independent – that would be 3 out of 850 by the way) to reverse the transfer of €130m of property which will be used for future development. Who valued the transfers at €130m? When will the transfers be reversed? As commenter JR below asks, why will this property not be used to offset loans due and why is it being risked on future development spending by NAMA.
(2) €1.6 billion in assets held by Nama developers has been approved for sale under NAMA’s auspices since March 2010 with proceeds being used to repay NAMA and non-NAMA loans. I’d guess that the €1.6bn includes Derek Quinlan’s €200m-odd car park on South Audley Street, the sale of which seems to have stalled though is likely to be continued in the New Year.
(3) 11,000 loans held by 850 developers with a nominal value of €71.2 billion have been acquired. There are likely to be another 10,000 smaller loans worth another ~€18bn.
(4) NAMA has issued bonds with a total value of €30.2 billion and applied an average 58% haircut. With the smaller exposures remaining to be acquired and with betting that they will attract deeper discounts, I would guess the final haircut will be in the 60-65% range.
(5) The agency has now concluded its review of the business plans of the top 30 developers the statement said. Information reaching here suggests that not one single agreement has been signed by both NAMA and the developer.
(6) NAMA has individually valued and conducted due diligence on 43% of the €71.2bn par-value loans acquired (NAMA say the 43% relates to acquisition value which is €30bn approx) AND that the 43% has been approved by the EU. Well done to NAMA on that. In addition NAMA has undertaken the same detailed work with a further 17% of loans though the EU has not yet approved these valuations. That leaves 40% which has been acquired at estimated valuations that will need be validated in Q1, 2011. Plus NAMA needs acquire a further €18bn of smaller exposures. I’d guess that the transfers will be completed with granular valuations in Q3, 2011.
Keywords: Christmas message 2010 Frank Daly
Here’s the full statement
It is up now and is as reported.
Many thanks Dreaded and JP, what Frank Daly actually said was a little different to the IT’s (apparently premature) reporting and I have updated the entry.
Note the language “NAMA has approved the sale of €1.6bn of assets” this does not confirm that this total amount has been sold and how much has been repaid to NAMA. “Concluded its review of business plans” not agreed. 60% of the assets acquired have been due diligenced and the remainder will be due diligenced over the next 3 months. When will we see the institution-by-institution breakdown as per tranches 1&2. And to only have 30 of the 850 plans reviewed does not bode well for the commerciality of the Agency.
its worth reading the sept 30 statement again referred to in Frank D statement.
http://www.finance.gov.ie/viewdoc.asp?DocID=6515
…
NAMA will continue to focus on realising maximum value for the taxpayer from the higher-value loans transferred into it.
…
The overriding benefit of the NAMA process is the recognition of losses upfront by the participating institutions and the cleansing of the balance sheets of our banks of their most toxic loans. Otherwise this lending would remain on the banks’ books representing a major source of risk and instability in the years ahead which would prevent the banking system from playing its essential role in providing the finance required to underpin our economic recovery and fiscal sustainability.
The transparency and clarity achieved through the operation of NAMA has been recognised internationally as a significant strength of the government’s strategy for the repair and the restoration of the banking system.
….
From Franks.
Since March of this year, NAMA has approved the sale of an estimated €1.6 billion in property assets held by NAMA borrowers in order to pay down debts either to the Agency itself or to the relevant banks. Some of the funds realised are also being used to pay down debt owed by Borrowers to non NAMA banks where they had co –
lent on relevant developments.
I wonder is this 1.6B the initial loan value, the value after haircut, another value that reflects market prices that could be above/below the after haircut value i.e. it tells nothing of the performance of the Assets nor of NAMA. This is point No. 4 in Franks statement, surely this should be the one and only point of how well the Assets and NAMA are doing, all else is noise. And of course the point is already well made that approving something ‘for sale’ doesn’t convert dirt to cash.
Difficult to square those pegs.
incidentally…
30 Devs = approx 27B or approx 900M each.
130m (or reversed transfers) between 30 Devs is 4.3M each or .0047% of their respective approx 900M.
And of course these 30 Devs account for some 38% of the 71.2B. Jaesus, the devs have been in different DIRT longer but “These assets will now be used to support the execution of the agreed business plans.” and not to “realise maximum value for the taxpayer”.
Lisa O’Carroll has a few bits and pieces
http://m.guardian.co.uk/business/ireland-business-blog-with-lisa-ocarroll/2010/dec/20/ireland?cat=business&type=article
No verifiability… just obfuscation and spin. More weasel words from an agency (and its chairman) that is becoming more discredited by the day.
I’ve just re-read it in detail. Basically, other than acquiring loans and valuing 60% of them, they’ve done sweet FA.
Not sure that I agree with you. No fan of Nama but they appear to have gotten near to the truth about the banks’ loan portfolios and to have isolated problems that have been building up for several years.
I believe that, having got a handle on the issues, Nama should up its game in terms of dealing with the developers and seek to maximise the repayment of loans. I have loads of sympathy for the small developers who got into things over their head but none for the significant few who for greed and ego reasons ramped up their activities to unsustainable levels. These guys with the support of their auditors/advisers/bankers built empires that were illiquid/insolvent. As seen on Prime Time last night, they still think that they are Masters of the Universe. If I were Nama, I’d give them just one attempt to put all their cards on the table. If they don’t respond, I’d throw every legal book at them including enforcement, tax audits, and investigations into possible fraudulant prefrence and trading while insolvent. Clearly, not to be trusted and with proven incompetence, I’d change the locks and appoint professional managers. If Nama followed this route and took a long term view on realising values then I believe that it would be seen to perform a useful service. Just three major qualifications:
1. It should draw in more resources especially from outside the State who are not connected in any way with their borrowers.
2. Its operations must be very transparent and opened up to FOI. Rules about client confidentiality need to be changed.
3. Shadow proforma accounts embracing the nominal value of loans should be published alongside its existing accounts.
End of rant.
The job of NAMA is as the graphic on this blog expresses:
Hold land until the value recovers and by holding the land, ensure that prices do not overshoot, even if it means that it creates a false market in land.
The last is not a problem in Ireland, as with the help of the banks, that has been the case since 1974.
Oooops, did I say with the help of the banks? Now, that may be a continuing problem for a decade or two. But then, that is why we have NAMA.
Paradoxically, while wages fall, yet are taxed to boot, making them less competitive as an attraction for FDI, land taxes are being imposed, at last, which acts to decrease the sale price of land. A touch of tension between taxation and NAMA!
Guess who wins?
I suppose that the end of the year is as good a time as any to rate NAMA’s progress. So (very subjectively):
Transfer of loans: 5/10 Most transferred at this point, but “granular” (what the hell does that mean?) valuations abandoned before transfer and the separation of the loans from the banks is still grossly incomplete. Securities still imperfect and contamination of loan management by the PIs is likely to continue for the foreseeable future.
Public relations: 3/10 Seems to have made enemies of the CIF, the banks, the developers (and wives), Lombard Research, and the venture capital funds. Loved by lawyers, valuers, receivers and insolvency specialists (hence the 3/10).
Disposal of assets: 0/10 The main task remains an abysmal failure so far.
Staff: 7/10 Difficult one this. The staff seem to communicate by dialing into message minders and leaving messages. They seem to receive communications by the same method. It would appear to an outsider that this is policy, but it does save time shooting the breeze or listening to developers’ bullsh*t. In any event they deserve a decent rating for lulling their first developer clients into a false sense of security and relieving them of the numbers of their bank accounts.
Executive: 1/10 Being charitable here. They have tripped up a few times. Drinking champagne and partying on yachts with old mates and lying to Committees of Enquiry doesn’t cut it when you have to be above reproach. As for Frank, I would give him a respectable period of (say) 3 months after the appointment of the new government before he is removed from his position. A square peg in a round hole and the wrong talent for the entrepreneurial and people skills required here.
Overall: Room for improvement and could definitely do better.
P.S. While we are at it, lets look at the other side:
The Developers: 0/10 Disorganised, bad public relations, sucker punched by NAMA, the first 10 are going to be demonised and made the poster boys of the property bust. They will be liquidated by NAMA for public relation purposes and to set an example for the rest.
CIF: 0/10 Impotent, a complete waste of space.
my 1.853 cents:
taking on an impossible job with dangerous bravado 10/10
PR 0/10
clarity of purpose 2/10
powerpoints 1/10
website 1/10
cleverly engaging a blasphemy ( sorry I meant ‘no lobbying NAMA”) strategy 10/10
providing endless reasons to log on to NWL 10/10
hopes for achieving primary goal of making money for the taxpayer 1/10 ( the obligatory freebie point)
Overall:
impossible job, done poorly.
@sf ca writer. Nice one :-)