An Taoiseach Enda Kenny is in London today for another bilateral meeting with an EU leader – the second leader in 10 months having met with Angela Merkel in October 2011 and David Cameron a number of times. He took part in a Thomson Reuters news event where he gave a presentation on Ireland and the Irish economy with a particular emphasis on the upbeat aspects of which there are genuinely quite a few. After his own presentation, he had a brief Q&A session. One question related to NAMA, and Enda was asked by a questioner who used about six words about the future ownership of the Agency – an issue of currency given the erroneous media reporting in December 2011 about the findings of the Geoghegan review but also because it was a FG commitment to farm-out the management of NAMA to “3-4 asset management companies”.
Enda and his advisers really need to work on Enda’s performance in dealing with questions. In the Dail and perhaps even with the domestic audience generally, Enda might be able to get away with a response which seems focussed on avoiding “dead air” but which oftentimes ignore the question, except for the most tenuous linking. But internationally, where there’s little familiarity with An Taoiseach, the responses come across very badly indeed; this Wall Street Journal interview is typical, and it does not go down well internationally.
In response to a simple question on the future of NAMA’s ownership, Enda talked about NAMA’s engagement with Priory Hall where 37 properties were made available by NAMA and its developers to some of the 187 households who have had to evacuate their apartment block in north Dublin following the uncovering of fire safety concerns. Enda also referred to NAMA making housing available for social housing. But all he said in respect of the question about NAMA’s future ownership, was that Minister Noonan had arranged a review, that NAMA’s objective was to maximise the return from its portfolio and that it would be for Minister Noonan to bring any proposals to Cabinet. There was nothing about the plan for the establishment of an advisory board, which might well be abandoned, there has certainly not been any Direction forthcoming from Minister Noonan’s finance department.
So for the international audience, and remember that NAMA is one of the biggest property asset management companies in the world with a concentration of assets in Ireland and the UK, and remembering the FG commitment to farm-out part of NAMA’s operation and after a review which took place four months ago, Enda has practically nothing to say. And the waffle about Priory Hall – as domestically and politically important and current, as it may be – just irritates serious people who want to know how the Government will govern.
NAMA Wine Lake 
Nama is going to be sold off at a massive loss to the taxpayer.
Based on the losses in the BOI sale (~80%), I estimate that Nama will be sold off for perhaps €6 billion or so leaving the government to pay off the remaining €24 bn of the €30 billion Nama bonds on its own. We can argue about the overall percentage, but I seriously doubt that Nama will be sold for much over €10 billion in total.
I’m standing by these estimates until I see good evidence to do otherwise.
(By the way, I’m not even sure about the €30 billion Nama which have been issued. McWilliams claims Nama has paid €43 billion so far. Any comments NWL? )
@OMF, NAMA has paid approximately €32bn for €74bn of loans at face value. The figures in your link appear to be out of date. In June 2010 NAMA said it was projecting it would pay €42bn for the loans it was acquiring, maybe this is where the information is sourced but no, the figures shown are not correct.
@ NWL,
A couple of weeks back you had a post describing 2nd loans being used to make payments on primary loans. Were these “2nd loans” transferred to NAMA? Also, have NAMA provided a total for the amount of capitalised interest for the €74bn?
We’d probably need to strip both of these items from the €74bn to get an idea of the discounts applied to the supporting assets.
@Ahura, yes these 2nd loans associated with the 1st loans would almost definitely have been acquired by NAMA in all cases. No, NAMA has not given any analysis of capitalised interest in the €74bn, it is one of the many accounting and transparency weaknesses in NAMA’s way of presenting information.
Thanks NWL,
It would be useful to get a handle on the amount of debt that doesn’t have any assets backing it up. It more it is there is, the lower the discount applied where actual assets exist.
On selling NAMA: I take it this would cause the immediate repayment of NAMA bonds with the government having to make good on the guarantee. Ouch! gov borrows at x% versus Nama bonds at 6m euribor(?). You’d want a very good price for NAMA. Hard to see anything but a Pray and Delay strategy.
@Ahura, remember it was the media that, in December, reported that NAMA might be sold off. This was erroneous reporting and when the Geoghegan review was published, it merely talked about the rump of NAMA being dealt with as it approached the end of its planned life (2017-2020).
@ NWL,
Fair comment re press reporting.
The ‘rump’ could be quite substantial. It doesn’t seem that capital will be injected to cover shortfalls. You’ve analysed likely falls in asset values and these not being fully reflected in official accounts (apologies if lossely worded). It may simply be the case that hiding losses is cheaper – 6m euribor versus gov borrowing. And makes the debt to gdp look a little better. If this is policy and, for example there are 10bn of losses, the ‘rump’ might be 12bn. In such a scenario, it might be better keep the spv going :)
The NAMA Act identifies NAMA’s core objective as “obtaining the best financial return for the State”.
So what he should have said:
That he would restructure NAMA as an owner of investment funds rather than as a warehouse for loans.
That NAMA would work with their borrowers with a view of creating profitable loan portfolios that would attract international equity investors into Ireland.
That he would review the culture within NAMA to ensure that it was more commercial and transparent
That he was bringing international property and banking expertise to the Board.
That he would ensure that NAMA is funded adequately and that this funding would reflect the size of its task and the complexity of its portfolio.
That NAMA would become more open in its accounting methods and reject the artificial recording of sales “successes” on an annual basis while not recording the substantial erosion of values in the remainder of its portfolio.
That NAMA would accelerate its disposal programme.
And lastly, that he was commissioning an updated valuation of all NAMA’s assets, in order to assess the current capital loss that it secrets within its belly.
@ wstt
What you see is what you get I am afraid. Priory Hall is about the height of it.