In addition to the 2010 Annual Report, NAMA has also published this morning the report and accounts for the first quarter of 2011. The report is here and the accounts are here.
Comment and analysis here later.
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Note 7 (55) (6) (B).
I note that 89% of the nominal value of all loan are in the +120 days overdue or foreclaose catagory. That is €49 billion out of a total of €55 billion. Just to emphasise 89%. 89%. 89%. That must be a world record for a debtors book.
Clearly NAMA has grossly overpaid for the loans.
One hopes the collateral is worth something, because otherwise these loans are not coming back.
There are obviously horrendous losses hidden in the NAMA monster.
That said I think that economically these losses are irrelevant. They are gone. NAMA should start to become a rental income company only. Forget sales. They are not going to happen.
Just put receivers into all the properties and spend whatever resources that NAMA has in making them ready for the rental market.
General:
I was looking for the detail in the accounts for the main asset that NAMA has, its €27 billion ‘loan book’. The kind of detail one would expect from the accounts of a bank. Very, very poor. No information.
Apart from some charts in the report, there is no detail.
eg.
No split between company and sole trader. This is a very relevant spilt.
No split between type of loan. development land/ unfinished/completed property.
No split between country.
Maybe these are somewhere but I did not see them.
In general:
All the detail on the various companies is being used to camouflage the reality.
These loans will never come back.
@Joseph, just a quick response as I am still studying the statements. The nominal value of the loan is the original value on the banks’ books, there is then the NAMA value which is what NAMA paid for the loan. So you can’t conclude from that note you cite above that NAMA has overpaid for the loans.
@NWL
I aploogise. I have to take back some numbers. The 89% relates to the % of non performing which is in the 120+ or foreclosure catagory,
So taking the NAMA values of the loans less impairment, the correct figures are: (I hope, I am hurrying)
59.7% of all loans are impaired (€19.2/27.9). And of the impaired:
86% of all impaired loans are in the 120+ or foreclosure catagory,
Realistically only €8.7 billion of NAMA total loan book- the performing catagory- is collectible.
I got the initial figures wrong.
My conclusions still stand.
@Joseph Ryan
You are right to question the collectibility of NAMA’s loans. We are in a structural deflationary bear market. We are not in a downturn the likes of which many of us have experienced and which normally fades after 18 months as the inventory cycle corrects.
We are in a debt driven downturn with no functioning banks. That type of downturn is much more extreme and takes 10 to 20 years to repair.
That’s what NAMA hasn’t yet recognised. And that is why its hope of recovering the money it paid for the loans is just a pipe dream.