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Archive for March 22nd, 2011

The NAMA chairman (for the time being), Frank Daly, delivered an interesting progress update today to the Licensed Vintners Association (Dublin bar owners and operators). At some eight pages in length, the speech continued quite a number of snippets including

(1) NAMA has now absorbed €72.3bn of loans at nominal value in return for NAMA bonds of €30.5bn. This is up €1.1bn at nominal value from the February, 2011 update and up €0.3bn in terms of NAMA bonds which indicates that the latest AIB mini-tranche of €1.1bn of loans was acquired for €0.3bn or a 73% haircut, which is considerably more than the final estimate for AIB’s overall loans of 60%. NAMA has not provided a detailed update on tranches acquired since 23rd August, 2010. It is noteworthy that such a significant tranche of AIB loans attracted a 73% haircut.

(2) NAMA is directly managing the top 175 developers representing €61bn of loans at par value which means that the banks/Capita are managing the remaining 675 debtors representing €21bn of lending at par value.

(3) NAMA may acquire another €3.5bn of loans at par value, presumably representing Paddy McKillen’s €2.1bn of loans and €1.4bn of other objectors’ loans.

(4) “The Agency has already concluded its review of business plans from the largest 30 debtors which account for approximately €27 billion (40% of portfolio) of acquired loans.” This seems not to have moved for three months.

(5) Agreement in the form of Memoranda of Understanding has “been completed with eleven debtors” and “agreement is at a final stage with six more” and there are still negotiations with another eleven. In order for there to be an agreement NAMA has said that there will be three documents (1) Memorandum of Understanding (2) Heads of Terms and (3) Final Agreement and these documents will need be signed by (1) NAMA and (2) the developer and (3) potentially the developer’s wife. It is not clear if any agreement has seen all three documents signed by all three parties.

(6) NAMA has appointed receivers in 41 cases so far. These may have been appointed by the banks under NAMA’s direction. It appears that NAMA has appointed receivers in two cases itself, presumably referring to Bernard McNamara and Liam Carroll.

(7) NAMA has acquired loans which are secured by 83 hotels in Ireland – 30 in Dublin, 24 in Leinster (ex Dublin), 17 in Munster, 9 in Connaught and 3 hotels in Ulster. Three of these 83 hotels are closed and more are likely to close if they cannot demonstrate their viability

(8) NAMA thinks that the residential market had already dropped by 50% in November 2009 even though PTSB/ESRI said at that time that the drop from peak was less than 30%. Given NAMA’s position in the market, this is quite startling and frankly means that the ESRI has questions to answer if NAMA is correct. The ESRI is a partly government-sponsored body though presumably the PTSB index is produced on a commercial basis. Doubts in the accuracy of the house price series have been expressed on here several times because of the seemingly small sample sizes.

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