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Archive for January 13th, 2012

It is being reported by Neil Callanan, now at Bloomberg, this evening that NAMA’s Head of Lending, Graham Emmett is to leave the Agency. The news has apparently been confirmed by NAMA’s spokesman, and so marks the third high profile resignation from the Agency in almost as many months. In October 2011, the principal Northern Ireland representative on the NAMA board, Peter Stewart departed saying that the Geoghegan review which he was apparently instrumental in initiating would mark a watershed moment for NAMA (something subsequently downplayed by the NAMA chairman, Frank Daly) and then in November 2011, NAMA lost its most senior banking man, board member Michael Connolly, who left without issuing a statement which is generally not a good sign. Both board members left the Agency before their tenure was due to elapse.

Graham Emmett might be best remembered for two public pronouncements which NAMA had later to soften by saying Graham was speaking in his own capacity. There was the claim in 2010 that NAMA might embark on a rental strategy for 6,000 apartments in the Dublin area and the suggestion that NAMA would dispose of all its UK assets by the end of 2013.

Funnily enough, NAMA has not issued a statement – at least not yet – in contrast to the relatively junior appointment announced yesterday of a Relationship Manager, Martin Whelan.

No word yet on Graham’s next move but Bloomberg say he is returning to London.

UPDATE: 11th February, 2012. According to Graham Emmett’s  LinkedIn profile which appears to be an authentic profile given the number of connections and what appears to be an accurate career history, NAMA’s former head of lending is “gone fishing and gardening”

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Without citing sources, RTE is reporting that Priory Hall developer Thomas McFeely was declared bankrupt in London today. No reference is made to the court which granted the order, and no details are given as to the size of debt or the address of the bankrupt. There is no record presently on the UK Insolvency Service.

Thomas McFeely has developed a prominent profile in recent months following the debacle at the Priory Hall apartment complex in Donaghmede, northDublin where residents of 187 apartments were forced to evacuate their homes in October 2011, following the discovery of fire hazards. The residents have since been living in temporary accommodation including hotels. Works required to bring the apartment complex “up to code” have stalled. Dublin City Council is going to the courts next week to escape paying any additional accommodation expenses for the evacuated residents after February 2012. It remains unclear where liability for the plight of the residents will lie – Thomas McFeely, his contractors, Dublin City Council and its inspectors.

It should be stressed that Priory Hall is not in NAMA, even though loans advanced to Thomas McFeely and his partner, Laurence Mahony, on other developments, are. So NAMA has intrinsic relationship with Priory Hall at all, though it did make 37 homes available to the Priory Hall evacuees on arms-length commercial terms.

NAMA had seemingly appointed administrators to Thomas McFeely’s apartment complex in Stratford, east London according to the November 2011 foreclosure list, so he’s not exactly one of NAMA’s model developers in any event.

Today’s report, if confirmed, means that four NAMA developers have now been declared bankrupt in the UK – John Fleming, Ray Grehan, his brother Danny and now, apparently, Thomas McFeely.

Bankruptcy typically lasts 12 months in the UK, and typically five years in Ireland(as long as preferential creditors are paid in full, otherwise 12 years). The Government is required to table new insolvency legislation by the IMF/EU by 31st March, 2012.

UPDATE: 13th January, 2012.  This looks set to be an intriguing bankruptcy case. On Monday next, 16th January, there is a case scheduled at the High Court in Dublin–  at 11am before Mr Justice Dunne in Court 6 – where Thomas McFeely was expected to be declared bankrupt in this jurisdiction. Has the bankruptcy in London, which was apparently applied for yesterday 12th January and granted today, trumped proceedings in this jurisdiction? There is likely to be some discussion of “centres of main interest” or COMI, and it is to be noted that Thomas McFeely has building developments in London though some might think he is ordinarily resident on Ailesbury Road in Dublin. And then there might be questions as to whether the COMI was discernible by creditors.

UPDATE (1): 19th January, 2012. The insolvency record for Thomas McFeely is now available from the UK Insolvency Service, and an extract is shown below.

It is interesting that the address is shown as “Flat 44, Athena Court, 186 High Street, LONDON, United Kingdom, E15 2FD” The reason it is interesting is that NAMA is showing foreclosed property “certain units at High Street” in “Stratford, London” on its November 2011 foreclosure list. Emmet Oliver reported at the start of November 2011 in the Irish Independent that NAMA had taken control of the Athena tower block, which looks incomplete from the picture in the Independent (though it’s not clear if the photograph is recent). It is also interesting that no Irish address is given – in the recent Ray Grehan case, two addresses were given, one in Kildare and one in London.

UPDATE (2): 19th January, 2012. NAMA is not commenting on the Thomas McFeely bankruptcy, and specifically not commenting on the address shown on the UK Insolvency Service. NAMA is also not commenting on the address details shown in its November 2011 foreclosure list. It is understood however that the Agency keeps all of these cases under review in order to maximise returns to the taxpayer.

UPDATE: 2nd March, 2012. This is a UK court case and the hearing was at the start of November 2011 with the judgment issued on 9th December 2011, but it  is only today that it has come to light on here. Thomas McFeely (in fact Thomas Bernard McFeely to give him his full title as one of the two defendants in the case) and his brother Conal were sued by a pair of property companies Quest Advisors (BVI) and Sharriba Limited in the UK’s High Court and the judgment was appealed to the UK’s Court of Appeal, and this is the judgment that was handed down last December. It’s a long running case about the McFeely’s purchase of a property in Stratford east London, which as far as I can see is now subject to a NAMA receivership, and this case involved a dispute over McFeelys’ alleged agreement to grant a lease to the applicants and there was also a dispute over a sum payable to the McFeelys. In summary the applicants won their appeal and rights to leases on commercial units in the development but the McFeelys were awarded GBP 136,396.46 (nearly €160,000).

UPDATE: 19th July, 2012. The UK’s High Court has upheld its decision to overturn the bankruptcy order for Tom, though he is given liberty to appeal the decision.

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For those of you wondering what the CEO of the National Treasury Management Agency (NTMA), John C. Corrigan does for his salary of €490,000 plus 80% bonus, you might find some assistance in the NTMA’s “Results and Business Review for 2011” published this morning. In fairness to John, for 2012 he has agreed a 15% cut to his annual salary for this year only, which brings him down to €416,500, and he has reportedly waived any bonus that might have been due for 2011. So what did John do in 2011 to justify his €9,400 per week basic?

PlainlyIrelandwas out of the traditional debt markets in 2011, though there is still limited activity in short term debt. We are in an IMF/EU programme which funds the country in return for compliance with a Memorandum of Understanding agreed amongst us all. So the main function of the NTMA, managing the national debt has diminished considerably in complexity.

This morning’s report provides the following nuggets on the NTMA’s activity last year

– achieved a 1.6% return on the so-called “discretionary” – meaning the NTMA has discretion in how it invests – national pension reserve fund. Before you all roll around on the floor laughing, the NTMA claims that the average return inIreland’s private pension industry in 2011 was minus 3.5%

–  made presentations to over 300 investors around the world

– it provided advice on burning subordinated bondholders which has resulted in a total of €15.5bn savings in state guaranteed banks, of which €5.6bn arose since 31st March 2011

– the NTMA has hedged against currency and exchange rate risks. “Hedging” means buying insurance so that when we come to repaying the IMF which will be in a mix of currencies including the US dollar, we don’t encounter any nasty shocks. Ditto for interest rates, “hedging” means buying an insurance so that if interest rates adversely change, you don’t get burned.

– there’s no mention of the €3.7bn boo-boo in the calculation of the national debt, which seems to be mostly the Department of Finance’s fault anyway, though it is unclear to me why the matter wasn’t raised up the line at the NTMA when the DoF continued to incorrectly calculate the debt

– the NTMA claims that the fall in the 10-year bond rate from a high of 14% to “currently stand at 7.5%” – not sure where the 7.5% comes from, rates are presently 7.84% mid-point and looking at the past six months I can’t see any day on which rates went as low as 7.5% – is in part due to “increased investor confidence”

– in August 2011, banking systems functions in the NTMA were transferred to the Department of Finance

– the NTMA announced in November that it would invest €250m in infrastructure but that apparently depends on other investors ponying up €1bn, and progress with getting that funding seems slow and uncertain

– from September 2011, the NTMA has an additional function – NewERA – which is manage the Government’s stake in semi state companies

– the NTMA has overseen some Government capital expenditure in schools through the National Development Finance Agency

– and finally there’s an update on NAMA which also falls under the NTMA umbrella “NAMA has approved sales of assets totalling €6.6 billion. A large proportion of the sales proceeds will be used to pay down NAMA’s borrowings and the Agency has used its strong cash flow to redeem €1.25 billion of bonds in issue and repay €299 million in advances made by the Minister for Finance. At the end of 2011 NAMA had total cash and liquid asset balances of €3.8 billion and is on track to meet its target of repaying 25 per cent of its outstanding debts by the end of 2013.”

UPDATE: 26th January, 2012. The NTMA has at last released its investor roadshow presentation “Ireland on Recovery Path 2012“. It’s well worth a read, it summarises the economic position of the country and our projections. It has a small section on NAMA which really just summarises all that we know. The NTMA thinks commercial property is at the bottom, that commercial rents have overshot on the way down and that residential property still has some way to fall, but no quantification is provided.

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Figures released by the Central Bank of Ireland (CBI) this morning show that in the month of December 2011, the reliance by Irish banks on central bank funding grew for the first month since June 2011. Overall central bank funding rose from €148.6bn in October 2011 to €151.4bn at the end of November 2011, a monthly increase of €2.8bn, the first increase since June 2011, and the largest monthly increase since February 2011. Central bank funding comprised funding from the ECB of €107.2bn, up from €102.9bn in October, and funding from the CBI understood to be Emergency Liquidity Assistance (ELA) of €44.2bn which is actually down from the €45.7bn in October.

What does this mean for Irish banking and the wider economy? If our banks are to return to some degree of normality, they will rely more on deposits from customers and lending from other banks. So today’s figures indicate (though don’t absolutely prove) that deposits and inter bank lending continue to decline as a proportion of overall bank funding. That’s not good.

On the other hand, funding from the ECB directly is understood to be cheaper than funding from the CBI, so today’s figures indicate that banks have access to more cheap funding at the ECB and are less reliant on more expensive CBI funding. That might ease pressure on bank interest rates very slightly.

Most of the increase in December 2011 is attributable to the ECB making nearly €500bn available right across the EuroZone for Long Term Refinancing Operations (3 year funding), and the decision by many banks to take up that funding.

We will get deposit information on Irish banks for December 2011, at the end of January. Deposit analysis for Irish banks for November 2011 is available here.

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