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Archive for December 28th, 2011

You would have thought this would be a quiet week for news reporting at NAMA, but it seems the Irish Independent has discovered a few nuggets which seem to cast NAMA in an uncharacteristically benign light. But stick the nuggets under a microscope and they start to look just a leeettle suspicious.

Yesterday the Independent reported that NAMA had “tipped-off” the Revenue Commissioners (Irish tax authorities) about “possible tax evasion” by “dozens” of the 850-odd developers whose loans NAMA is managing. Dig a little deeper and you will see that NAMA was doing no more than its duty in notifying suspicious transactions or assets to the Revenue; some or indeed many, of these suspicions might previously have been notified to the Revenue by the original banks – NAMA is not saying and the Independent doesn’t include such detail.

Of course, if you were of a cynical persuasion you might think that NAMA was trying to resurrect a weapon in its original arsenal – the sharing of information by the Revenue with NAMA. The EU “decommissioned” that particular weapon because if the Revenue was to share information with NAMA, that would place NAMA in a better position to recover debts than other banks and institutions in the State – credit unions, guaranteed banks like AIB and non-guaranteed banks like Ulster Bank – and the EU was keen to minimise NAMA’s effect on competition in Ireland.

And today, it is reported in the Independent that  NAMA “has reversed or is close to overturning” more than €160m of asset transfers by NAMA developers. “Wowaweewa” as Borat would say, very nice! Except in his pre-Christmas (2010, that is, 12 months ago) update NAMA chairman Frank Daly said that “as a result of the Agency’s insistence, a number of borrowers whose loans have been acquired by NAMA have reversed or are in the process of reversing transfers of over €130 million worth of assets which they had previously sought to transfer beyond the reach of NAMA or the relevant Banks. These assets will now be used to support the execution of the agreed business plans.” So in the past 12 months, despite completing the acquisition of billions of euros of loans and examining hundreds of business plans, NAMA has managed to “reverse” or “get close to reversing” a measly additional €30m of asset transfers.

But there’s more: NAMA is reported to have secured €221m (a very precise figure I must say!) of additional security on its loans to developers. This additional security according to the Independent “was largely achieved from the agency’s biggest clients, and involved cases where borrowers were compelled to grant NAMA charges over unencumbered assets in exchange for the agency’s support.”. Again very impressive. But hang on a second – “in exchange for the agency’s support” – is this the support which involves the agency advancing an additional €950m to the developers? So – to get this straight – NAMA may have advanced €950m to developers who offered up €221m of assets as additional security? Surely that’s not right.

And lastly the Independent today reports that “a spokesman for the toxic loans agency confirmed the figures’ accuracy and said the combined €380m [€160 reversal of asset transfers and €221m additional security] benefit to NAMA would cover “most” of NAMA’s €500m running costs over its ten-year lifetime.” Now hang there a second! €500m running costs over its ten-year lifetime? Whatever happened to the €1.6bn operating costs that NAMA referred to in its official business plan in June 2010? Here was what NAMA told us last year about its €216m projected costs in 2011 (that is, the 12 months of 2011).

The implication from today’s reporting is that NAMA’s Herculean efforts will to a large extent offset its cost. Hmmm. By the way the €500m referred to in today’s report  is likely to represent the staffing costs at NAMA for its 10 years life (particularly if it doubles in size to a staff of 400, as seems likely), though that’s not stated in the Independent.

And to think that most of us were going to get back to the gym and the spinning classes next week!

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