Archive for February, 2012

This morning, the Central Bank of Ireland (CBI) has released its monthly snapshot of the state of Irish banks focussing on deposits and lending. The data covers the period up to 31st January 2012 and shows that during the month of January 2012, deposits by ordinary households and businesses actually increased at the so-called “covered” or State-supported banks – essentially the two pillar banks, Bank of Ireland and AIB, and also Permanent TSB. The increase of €104m from €102.5bn in December 2011 to €102.6bn in January 2012 was smaller than the €1bn+ increase in December, but it nonetheless marks the second month of increases and means we are now back at deposit levels seen in July 2011, and that is in general terms, positive news. On this blog the key focus each month is on the movement in private sector deposits at the covered banks, as this is seen as a signal of banks returning to sustainable financing. Private sector deposits fell at covered banks in the past 12 months by €9bn from €112bn to €103bn, but most of that fall took place in the first six months of 2011 and the final six months has looked stable despite the ongoing crisis in the EuroZone. I think it is fair to say there are signs of stabilisation, but it would be a gross exaggeration to claim “deposits were flowing” into Irish banks.

The CBI doesn’t provide an analysis of deposits at the covered banks – about the only analysis it doesn’t provide – but in terms of all banks operating in Ireland including foreign and IFSC banks, Irish household deposits fell by €0.1bn in January after a rise of €0.6bn in December. Household deposits at all banks are now back at August 2011 levels. Total deposits from all sources in all Irish banks fell €3.8bn in January, mostly as a result of a decline in €4.3bn in deposits held by MFIs (see below for an explanation of MFIs)

Here is the full set of deposit statistics for the different categories of bank operating in Ireland.

First up is the consolidated picture for all banks operating in Ireland including those 450-banks based in the IFSC which do not service the domestic economy.

Next up are the 20 banks which do service the domestic economy and include local subsidiaries of foreign banks like Danske, KBC and Rabobank. There is a list of all banks operating in Ireland here together with a note of the 20 that service the domestic economy.

And lastly the six State-guaranteed or “covered” financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS – Anglo and INBS have now been merged to form the Irish Banking Resolution Corporation, IBRC)

(1) Monetary Financial Institutions (MFIs) refers to credit institutions, as defined in Community Law, money market funds, and other resident financial institutions whose business is to receive deposits and/or close substitutes for deposits from entities other than MFIs, and, for their own account (at least in economic terms), to grant credits and/or to make investments in securities. Since January 2009, credit institutions include Credit Unions as regulated by the Registrar of Credit Unions. Under ESA 95, the Eurosystem (including the Central Bank ofIreland) and other non-euro area national central banks are included in the MFI institutional sector. In the tables presented here, however, central banks are not included in the loans and deposits series with respect to MFI counterparties.

(2) NR Euro are Non-Resident European depositors

(3) NR Row are Non-Resident Rest of World depositors (ie outside Europe)

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(The new properties added in January 2012, click to enlarge)

NAMA has today published its now regular monthly list of properties subjected to foreclosure action – the list shows NAMA foreclosed properties at the end of January 2012. The full list is here, the list of new properties added is here, and you will find previous editions of the monthly list which was first launched in July 2011, here. It is hoped to have the list in an spreadsheet format shortly, available here.

You should read the full list of NAMA’s terms for accessing the lists here. But in summary, this is what you’re looking at:

(1) Real estate property subject to loans in NAMA to which receivers have been appointed. The receiver’s website is shown against each property.

(2) This is all the real estate foreclosed sorted by country, and then region.

(3) Not all of the property may be for sale.

(4) Contact the receiver with enquiries or expressions of interest in the first instance. Only pester NAMA if you’re not getting any response from the receiver and make allowances for receivers being busy with queries, particularly after a new release of foreclosed property.

(5) If you think there are mistakes on the list, contact NAMA.

According to NAMA “the list includes 35 properties which were added in January. The total number of properties now listed is 1,119 (some of which are multiple properties such as apartment blocks). The properties to which receivers were appointed during January include a mix of residential, development, commercial and agricultural assets located in both Ireland and the UK.”

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It seems these days that not a week goes by without the name of some new foreign outfit hitting the domestic headlines, as international investors look to Irelandfor opportunities in the wake of the property and banking collapses. And that is to be expected with the destruction of wealth at home, and the fact we have both a property and a banking overhang – in the sense that our banks are required to “deleverage” or in simple terms sell loan-books and non-core assets. This time last year an American company called BlackRock was making headlines as it had been engaged by the Central Bank of Ireland to conduct credible stress testing of Irish banks. Before then, Blackrock was just an upmarket district of Dublin.

Another American company that has been getting a foothold in Irish business is Blackstone – both are “black” or “schwarz” in German, but it is Blackstone that is headed up by Steve Schwarzman, though I see Enda Kenny is calling him “Stephen”. You might recall Steve on here for his injudicious speech he gave in December 2010 on the opportunities in Europe – “we’re basically waiting to see how beaten up people’s psyches get” and best of all, “you want to wait until there’s really blood in the streets”. Now before we take too much umbrage at foreign investors salivating over Irish assets, let’s not forget that massive wealth has been destroyed here, the economy is at best stabilising and the banks are still weak and are not in lending mood/mode and foreign capital and investment is essentially a “good thing”.

But having said that, Blackstone’s inroads into Irish in the past year are remarkable and have gone largely unnoticed. It was in America that Blackstone made its first bid for Irish state-owned assets when it went after Anglo’s USD 8bn (€6bn) loan-book which Anglo eventually sold to Lone Star, JP Morgan Chase and Wells Fargo. In October 2011, the managing director of the Blackstone group, Tom Kelly was one of the participants invited to the Global Irish Economic Forum at Dublin castle. Another attendee at that conference was Gerry Murphy, the managing director of The Blackstone Group LP. In October also, Blackstone took over a company with Dublin links – Harbourmaster Capital is an asset management company with €8bn under its wings, and two of its directors Alan Kerr and Mark Moffat are based in Dublin, and the back-office functions of the group which employ some 40 people are expected to remain in Dublin. On 8th November 2011, An Taoiseach Enda Kenny together with Minister for Finance, Michael Noonan met with the chairman of the Blackstone group, Stephen “Steve” Schwarzman in Dublin. On 12th February, 2012 it was reported by Ronald Quinlan in the Sunday Independent that IBRC (“Irish Bank Resolution Corporation”, the resultant entity from the merger last year of Anglo and Irish Nationwide Building Society) had retained Blackstone to advise on the disposal of its remaining UK and Irish loans – worth €30bn at nominal value. And let’s not forget unconfirmed reporting that the Minister for Finance had appointed Gerry Murphy – visitor to theDublin castle conference in October last – to the new NAMA advisory board.

“Blackstone”, a name you won’t have heard much about before.

Now last week, the Minister for Finance faced a batch of questioning on state involvement with Blackstone. Minister Noonan confirmed that Blackstone may indeed bid for Anglo loans in future, and the Minister dismissed concerns about conflicts of interest claiming that IBRC had engaged an advisory division of Blackstone to advise on the disposal of its UK and Irish loan books, but it would be a completely separate division of Blackstone, the investment division, that could potentially bid for IBRC’s loans. Not only that, but the Minister has it that another company you may not have heard of, FTI Consulting, has provided “independent advice” to IBRC on the matter. And to cap it all – “my [Minister Noonan’s] officials sought assurances from the bank that no conflict of interest existed in relation to the appointment and these assurances were provided by the Chairman of the bank.”Well that’s assuaged those concerns then!

Minister Noonan declined to disclose what money IBRC is paying to Blackstone for advice on itsUKand Irish loanbooks, citing confidentiality. So we won’t know how much we, and “we” own IBRC 100%, are paying Blackstone to get advice on a sale of assets whose buyer might well be….Blackstone!

And what about Gerry Murphy’s involvement with the NAMA advisory board? Minister Noonan said “I have appointed Mr Michael Geoghegan to chair a small group of advisors to advise me on the future strategic direction of NAMA. Mr Geoghegan has agreed to carry out his role on a pro bono basis. I am currently considering the names of potential candidates who have the appropriate experience and background to work effectively on the group of advisors with Mr Geoghegan. I expect to announce the other members shortly. At that stage, I will also announce the group’s terms of reference, as well as its reporting framework and arrangements in relation to costs.”

The above is unusually obtuse language from a man who is probably the most articulate in Irish, or indeed most countries’, politics. It’s obtuse because Minister Noonan doesn’t confirm that Gerry Murphy has been appointed though he says “I expect to announce the other members shortly” and “other” refers to current or future members of the NAMA advisory board whose names are not being currently considered because presumably they have already been appointed.

Presumably Blackstone will be allowed bid for NAMA assets on the same basis as IBRC’s assets. And remember this is taking place on the watch of a political party whose 2011 Election Manifesto commitment was to do something about “the same small network of professional advisers, accountants, lawyers, financial advisers or other consultants are linked NAMA, the NTMA, the bailed-out banks, the Central Bank and the Department of Finance. This presents an obvious conflict of interest which undermines confidence in Ireland’s public and private sector governance.”

This morning the Sinn Fein leader Gerry Adams asked An Taoiseach about the potential for conflict of interest in the State’s engagement with the “vulture capitalist” Blackstone – the video of the record-short five minute question and answer is here – but Enda Kenny declined to address the matter directly claiming that disposals of Anglo’s and indeed NAMA’s assets would be subjected to the highest ethical standards and suggested Minister Noonan provide a more detailed answer. An Taoiseach did say that “sections of major groups like Blackstone are legally separated”. Hmmmm.

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The case in Dublin’s Commercial Court between Treasury Holdings and NAMA, and others, continues later today for what will be Day 6 of this preliminary hearing where Treasury is now just seeking a judicial review of its dealings with NAMA, having dropped the application for an injunction against NAMA’s receivers. Yesterday the parties started their closing arguments, and Mary Carolan at the Irish Times has a good report on yesterday’s proceedings which included KBC, which is a notice party in the case, making its contribution. Meanwhile on here, most of the Treasury Holdings affidavits have been obtained and are attached as follows:

Richard Barrett (Group Managing Director, Treasury Holdings) – affidavit here
John Bruder (Managing Director, Treasury) – Part One here and Part Two here
Niall O’Buachalla (Group Finance Director, Treasury Holdings) – affidavit here
Michael Cragg (economist, The Brattle group) – affidavit here

So what do we learn? Not surprisingly we get a different perspective on the deals brought to NAMA. Treasury had been, and NAMA alledgedly knew since 8th November 2011 that Treasury had been, in “active and ongoing negotiations” with third party investors, though it is implied that Treasury only told NAMA the names of the investors on 10th January 2012.  Elsewhere Richard Barrett says that it will be “at least 5 years” before any bank resumes development funding in Ireland. Yikes! It is Treasury’s suspicion that NAMA’s QIF initiative indicates that the Agency has its eyes on Treasury’s assets. And any developer out there should read Part Two of John Bruder’s affidavit for a good sense of the detail of NAMA’s interaction with developers on the verge of foreclosure. There will be a separate blogpost on Michael Cragg’s affidavit.

Richard Barrett describes the CIM deal as “frustrated” and claims it was NAMA’s “inexplicable” raising of the TAIL transaction which scuppered the deal. CIM first approached Treasury in June 2010, and Treasury says that on 3rd March 2011, it received “confirmation that the NAMA board had agreed the term sheet”. On 7th March 2011 NAMA raised the TAIL transaction and demanded it be reversed and CIM subsequently cancelled meetings with Treasury but regardless CIM submitted a new offer in May 2011 after conducting due diligence, and seeing the Irish market was continuing to tank and that Fine Gael’s Alan Shatter was pursuing changes to Upward Only Rent Review leases, the revised offer was much lower.


Approached Treasury via NAMA in mid 2011. The deal was comparable with CIM’s according to Treasury given what it claims was a 20% decline in Irish property prices in the 17 months between September 2010 and January 2012. Macquarie offered NAMA 35% of the value of “the development company” but presumably that means 35% of any profit on top of what Macquarie was paying. There is a claim that NAMA was also offered 7.5% on any value realised over €1.2bn.


There is little new detail given on the Hines approach. The negotiations between 10-25th January 2012 are derided as no more than requests for clarifications and Treasury complains at being excluded from interaction between NAMA and Hines.


Treasury had contacted 220 potential investors, according to Richard Barrett who also believes NAMA acquired the loans for Battersea at a 20% haircut. Treasury say an investment offer from SP Setia had been secured to pay “the full 100% face value” of NAMA loans – elsewhere said to be GBP 124.4m (€147m) with interest accruing daily – but that NAMA/Lloyds decision to appoint administrators in December 2011 scuppered that deal. A swipe is made at Sean Mulryan’s development in adjacentEmbassyGardensin Battersea where Treasury say they “understand that NAMA have chosen to finance an adjoining site which is (sic) less attractive development prospect”.

Treasury’s finances
Allegedly on foot of NAMA’s decision to appoint receivers, “further demands under guarantees totalling hundreds of millions of euro have been served, all of which has the potential to impact on the remainder of the group with the loss of at least 45 jobs in Dublin” (Treasury employs 400 people worldwide, of which 300 are in Ireland). NAMA’s action may impact on the Chinese operation whose assets are owned by “hundreds” of parties, but which are managed by a company owned by Treasury in Dublin. Elsewhere we get an insight into Treasury’s engagement with other creditors which are ranked according to their importance to the business and dealt with accordingly.Bizarrely it seems that as late as December 2011, Treasury had unencumbered income over which NAMA “had sought but not yet taken a charge” REO is now 50.7% owned by Treasury. The company leased or sold 400,000 sq ft of office, retail and residential space in 2011 in addition to selling the 200,000 sq ft Montevetro building in south Dublin docklands to Google.

Interaction with NAMA
Treasury expresses some frustration with NAMA’s processes eg the Agency requires a so-called “Creditor Strategy” from developers but gives no guidance as to what such strategy should contain. Treasury say that changes to their projections in Nov/Dec 2011 came about as a result of what Treasury “was told by NAMA” in respect of accruals and non NAMA debts. So the implication on the NAMA side that Treasury’s abilities caused “considerable alarm” are a “distortion” as far as Treasury is concerned. Treasury’s main beef is that NAMA decided on 6th December 2011 to pull the plug, and indeed that decision might have been committed to even before that. Yet Treasury provided their finalised creditor strategy numbers on 7th December and were given the impression subsequently that the relationship was smoothly proceeding – though not so smoothly that the NAMA CEO didn’t return calls in December. It’s NAMA’s position that the Creditor Strategy was in fact received on 18th November.

The Gossip
Treasury told NAMA in October 2011 that it would need make redundancies but NAMA refused to “deal with this issue until John Ronan repaid money to the Company which he had legitimately received as part of his remuneration” The legendary Form A used by NAMA to approve spending and which is now the stuff of developers’ night terrors are supposed to be dealt with by NAMA in two weeks but, according to Treasury, “in most cases however decisions took very substantially longer than 2 weeks and unfortunately in many cases decisions were never forthcoming despite Form A’s having been submitted as long ago as June 2011”. And in one case, a payment to a supplier, Treasury recently took the decision to pay an invoice without NAMA’s consent because of the time it alleges it takes NAMA to deal with Form As.

The Courts.ie service indicates that affidavits were filed by each of the following, but there are not yet available on here.

RORY WILLIAMS (General Counsel, Treasury group)

And where is, you might ask, the affidavit for the colourful Johnny Ronan? There isn’t one, and you’ll recall that Johnny stepped down from Treasury Holdings in 2010 after his tabloid antics made the headlines. Having said that, he attended what seems like a crucial meeting with NAMA on 8th November 2011 along with Richard Barrett.

I leave you with Richard Barrett’s concluding statement in his affidavit : “Given our impeccable behaviour towards them, the early support and encouragement and my refusal to aid disgruntled NAMA debtors, I would have expected respect and a willingness to proceed and negotiate in a straightforward fashion”

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It was May 2011 when the NAMA chairman and the NAMA CEO first mooted the proposal that NAMA would introduce a scheme which would allow it to sell residential property in Ireland with built-in protection against future price falls. The product was to be unveiled in Autumn 2011, then that slipped to Q4,2011 and the latest from the NAMA chairman is that it is expected to be launched at the end of March/start of April 2012 after receiving European Commission approval, largely with respect to competition issues.

In response to an enquiry asking for information from the Commission on the details of the NAMA scheme, the European Commission last week refused to disclose any NAMA documentation, on confidentiality grounds. The letter from the Commission – available here – states that NAMA did submit documentation in December 2011 and January 2012, which begs the question why it took so long – seven months after the first announcement in May 2011 – for NAMA to get around to seeking Commission approval. Furthermore the letter confirms that the Commission was still considering the NAMA proposal on 22nd February, 2012.

The enquiry was from an individual named Richard Ryan – nothing to do with this blog – and was made through the useful service asktheEU.org which allows citizens to seek information from EU organisations, including the ECB, with the website sending the request to the appropriate contact at the organisation, citing the law under which the information is sought. The refusal to provide the NAMA documentation may be appealed.

NAMA’s negative equity mortgage – referred to as a “Deferred Consideration Initiative” by the Commission – is controversial and has sparked concerns domestically that NAMA may get a competitive advantage in shifting its portfolio of underlying security in 10,000 residential properties.

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This morning’s house price statistics from the Central Statistics Office show that house prices nationally are continuing to decline, and in fact have declined by each of the last 52 months – months, not weeks, though in June and July 2010 the index did remain flat. In not one month since September 2007 have prices nationally risen. And there is a body of opinion which says that Irelandhas so many supports and distortions in place in the property market that what we are seeing is a torturously long-drawn out adjustment to prices. Whilst none of us has a crystal ball, I would say the consensus is that house prices will continue to fall for some time, maybe a year, maybe two to three. According to the DAFT.ie 2012 Consumere Attitudes Survey , most people think prices have a ways to fall with more than 90% thinking that prices in five years time will be lower than today.

So faced with the old dilemma of rent versus buy, we show here today two properties in Dublin. The first property, a 620 sq ft home in excellent condition is for sale and its asking price of €199,000 is close to the average price for a Dublin home indicated by the CSO indices, that is €194,918 in December 2011, using the Permanent TSB/ESRI peak prices and applying the % decline from peak recorded by the CSO. If you had bought this property in December 2011, then according to the CSO the average price of a Dublin house fell by 4.1% which equates to €8,159 in the case of a €199,000 home and assuming you are paying 3.5% net annual interest on a 100% mortgage, you would have seen your wealth decrease by a total of €8,739.

The second property is for rent at €7,000 per month. This is the highest asking price in south Dublin city. You get a five bedroom furnished top spec home at one of Dublin’s best addresses.

Whilst the experience of one month isn’t necessarily probative of subsequent months price changes, it does show in a snapshot the disparity between renting and buying, and suggests renting provides better value for money. You should also bear in mind that individual properties and individual transactions may not be reflective of the market in general.

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This morning has seen the publication of the CSO residential property price indices for Ireland for January 2012. Here’s the summary showing the indices at their peak (various months in 2007 depending on type of property and location), the NAMA valuation date (November 2009), annual (December 2011), last month (December 2011) and January 2012

Now that the Permanent TSB/ESRI has abandoned its quarterly house price index, the CSO’s isIreland’s premier index for mortgage-based transactions. It analyses mortgage transactions at eight financial institutions : Allied Irish Banks, Bank of Ireland, ICS Building Society (part of the Bank ofIrelandgroup), the Educational Building Society, Permanent TSB, Belgian-owned KBC, Danish-owned National Irish Bank and Irish Nationwide Building Society. The index is hedonic in the sense it firstly groups transactions on a like-for-like basis (location, property type, floor area, number of bedrooms, new or old and first-time buyer or not) and then assigns weightings to each group dependent on their value to the total value of all transactions. The index is an average of three-month rolling transactions.

Cash transactions: there is increasing concern that although the CSO captures data from the mortgage market, it omits cash transactions. The latest figures from the Revenue Commissioners are for 2009 which show that just 6% of transactions (by volume) were in cash. Last week, estate agents DNG claimed that cash made up one third of the market. At the start of January 2012, Sherry FitzGerald said that 29% of its registered buyers were cash buyers, and mortgage expert Karl Deeter said on here that “what Mark Fitzgerald [of Sherry FitzGerald] said at the AIB meeting in December (we were at the same table) is that 30% of purchases were cash – I’d take that as being completions unless this is a case of crossed wires”. In addition, the Sunday Independent reported the former acting CEO of the Irish Auctioneers and Valuers Institute saying that “I would say a quarter of deals at present are being done in cash”. The Allsop Space auctions won’t be representative of the general market but the latest analysis from it says that almost three quarters of its auction transactions were in cash. The CSO expects to have monthly data from the Revenue Commissioners from mid-2012 and it expects that it may subsequently be able to show the market size with its monthly release of the residential index. The perception is that cash transactions will be at keener prices than mortgage transactions because the buyer can move quickly and doesn’t need credit. If that perception is correct then the CSO may be understating – and potentially, understating substantially – the decline in prices.

As for the key questions:

How much does property now cost in Ireland? The CSO deliberately doesn’t produce average prices. The former PTSB/ESRI index did, and claimed the average price of a property nationally hit the peak in February 2007 at €313,998, inDublin in April 2007 at €431,016 and outsideDublin in January 2007 at €267,987. If, and it is a big “if”, you were to take PTSB/ESRI figures as sound and comparable to the CSO series, then these would be the average prices today:

Nationally, €162,653 (peak €313,998)

In Dublin, €186,827 (peak €431,016)

Outside Dublin, €151,471 (peak €267,987)

I don’t think the CSO would be happy with this approach but it seems to me that the PTSB/ESRI series as represented by its historical indices closely correlates with the performance of the CSO indices.

What’s surprising about the latest release? Apartment prices nationally were down 4.3% in the month of January 2012. Prices inDublin took a battering again, with house prices down 4.1% in the month and apartment prices down 3.5%. Price drops outsideDublin continue to be more modest, with non-Dublin houses down by just 42.7% compared withDublin houses of 55.4%.

 Are prices still falling? Yes, and the 1.9% monthly decline nationally in January 2012 is up from the 1.7% decline in December 2011 and 1.5% decline in November  2011 but in the same range as the 2.2% decline in October 2011, the 1.5% decline in September 2011 and the 1.6% decline in August 2011.

How far off the peak are we? Nationally 48.2% (49.8% in real terms as inflation has increased by 3.2% between February 2007 and January 2012). Interestingly, as revealed here,Northern Ireland is some 45.2% from peak in nominal terms and 52.6% off peak in real terms. Are forbearance measures by mortgage lenders, a draconian bankruptcy regime and NAMA’s (in)actions distorting the market? Or are cash transactions which are not captured by the CSO index so significant today that if they were captured, the decline in the Republic would be even greater?

How much further will prices drop? Indeed, will prices continue to drop at all? Who knows, I would say the general consensus is that prices will continue to drop. You might find the DAFT.ie 2012 Consumer Attitudes Survey published today of interest though its scientific accuracy is questionable. This is what I believe to be a comprehensive list of forecasts and projections for Irish residential property [house price projections in Ireland are contentious for obvious reasons and the following is understood to be a comprehensive list of projections but please drop me a line if you think there are any omissions].

What does this morning’s news mean for NAMA? The CSO index is used to calculate the NWL Index shown at the top of this page which aims to provide a composite reflection of price movements in NAMA’s key markets since 30th November 2009, the NAMA valuation date. Residential prices are now down 28% from November, 2009.  The latest results from the CSO bring the index to 828 (20.7%) meaning that NAMA will need see a blended average increase of 20.7% in its various property markets to break even at a gross profit level.

The CSO index is a monthly residential property price index. Ireland does not yet have a publicly available register of actual sale prices, but one is expected in mid-2012 following the passing of legislation last year – read the latest on the House Price Register here. There are three other residential price surveys, based on advertised asking prices or agent valuations – for the latest see here. Lastly the Department of the Environment, Community and Local Government produces an index based on mortgage transactions, six months after the period end and not hedonically analysed, it is next to useless.

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The Treasury Holdings bid to seek a judicial review of NAMA’s dealings with its loans is set to be resumed in Dublin’s Commercial Courtthis morning at 11am before Ms Justice Finlay Geoghegan in Court 14. The case was originally supposed to have concluded last week, and you’ll recall that Treasury was seeking an injunction against the appointment of NAMA’s receivers, and furthermore, a judicial review is being sought of NAMA’s dealings with Treasury’s loans. Treasury abandoned the first of these two strands at the end of last week, so the Court will continue to hear why it should or should grant leave to Treasury to pursue a judicial review.

Meanwhile on the other side of the world, in Singapore where a company of which Treasury Holdings is the “trustee-manager”, a company called Treasury China Trust (TCT),  is listed on the Singaporean stock exchange, there have been some developments overnight. TCT issued a statement to the stock exchange in Singapore after a 10% fall in its stock price was linked to the ongoing court case in Dublin. The TCT press release is here, and it says

“Treasury Holdings is beneficially owned and controlled by Mr Richard Barrett and Mr John Ronan. Treasury Holdings is the ultimate corporate legal entity that owns, indirectly, all of the interest of THRE, the trustee-manager of TCT. TCT owns and operates the properties of TCT, through a number of project companies in the People’s Republic of China”

Clear as mud? So does Treasury Holdings inDublinown TCT, and could the assets or activities of TCT be affected by the financial problems at Treasury Holdings? It seems the purpose of the statement is to assuage fears in TCT being dragged into Treasury Holdings’ plight, but from the statement, I cannot see a certain financial liability break between Treasury Holdings and TCT.

Elsewhere the statement says “Treasury Holdings has informed the Trustee-Manager that the issue of Treasury Asian Investments Limited (“TAIL”) has been raised by NAMA in the Irish Court Proceedings. The Trustee-Manager further wishes to clarify that (i) the history of the TAIL matter was disclosed in full in the Introductory Document issued in relation to TCT on May 21, 2010, and (ii) NAMA’s requirements of Treasury Holdings in relation to TAIL were agreed unequivocally by Treasury Holdings.”

The TAIL transaction was reported here last week and involved €20m of assets of Treasury Holdings being transferred to Messrs Ronan and Barrett for consideration that was deemed inappropriate by NAMA. Reading the NAMA affidavits last week, you might have difficulty reconciling the NAMA statements therein with the statement above from TCT that “NAMA’s requirements of Treasury Holdings in relation to TAIL were agreed unequivocally by Treasury Holdings”

You might recall Ronald Quinlan’s reporting of the transaction in the Independent on Sunday, from which the following is extracted:

“Commenting on Nama’s supposed unhappiness with the deal, Ms Birmingham said: “Nama has at all times since the start of its dealings with Treasury sought the reversal of this transaction as its clear effect was to diminish the assets available to creditors of Treasury Holdings including Nama, by far Treasury’s biggest creditor.

“At no stage has Nama accepted the propriety of what was done in the TAIL transaction,” Ms Birmingham added.

While Nama’s version of events in relation to the TAIL transaction dominated the front page of The Irish Times last Thursday morning, things took something of a twist in the High Court later that day when the agency’s Senior Counsel Paul Sreenan conceded, on foot of an interjection from Ms Justice Finlay Geoghegan, that Treasury had in fact agreed a specific pre-condition concerning the deal with Nama.

According to the Memorandum of Understanding (MOU) signed by Treasury Holdings with Nama on December 13, 2010, Nama, amongst other things, provided its consent for the transaction to proceed once it was granted specific security over the group’s charge over the TAIL shares, allowing Nama to benefit from the net proceeds of their sale.

Interestingly, the pre-condition contained in Treasury’s MOU with Nama also stipulated that 33.3 per cent of all future post-tax profits in excess of the €20m in TAIL shares would be remitted to the developer on the basis that the money would be used exclusively to repay its Nama debt.”

So then, what’s the big deal with the TAIL transaction if Treasury has, as it claims this morning, “unequivocally agreed” to NAMA’s requirements. The Memorandum of Understanding referred to above was signed in December 2010 – 14 months ago – so why is TAIL even an issue now? Or is it the case that although the MoU has been agreed, that Treasury hasn’t – 14 months later – complied with its requirements in terms of providing NAMA with security and undertakings in respect of the TAIL transaction, this after NAMA has advanced €103m to what seems like a deeply insolvent company. And if that is the case, was TCT being entirely frank in the implication of its statement which was that it was at one with NAMA in respect of the TAIL transaction.

NAMA was asked for a comment this morning, but given the ongoing court case, I wouldn’t hold my breath for any clarification.

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About ten months ago I first heard about the weekly bondholder protest in Ballyhea in county Cork. I must admit couldn’t even find the place on a map, and even thought it was being mis-spelled by one of its local residents and that its correct name was Ballyhay, but no, the village and community of Ballyhea just south of Charleville is real enough and for the past 51 weeks, it has been marching week-in, week-out on a Sunday around the 11 o’clock mass. The Ballyhea-ers joined up with a similar march in Charleville in the second half of 2011, and they now march each week, alternating between Charleville and Ballyhea. A modest march, it takes about 10 minutes, no loud-hailers or chanting, with two simple signs at the front and rear of the marches, the one at the front saying “Ballyhea/Charleville says No to bondholder bailout” In July 2011 one of the marchers, Diarmuid O’Flynn launched a website, Bondwatch, which is a service to the whole country and which shows what bonds are being paid in Irish banks.

The 52nd weekly march is being held this coming Sunday, 4th March 2012 in Ballyhea at 11.30am. It’s a small enough place, the locals would tell you it’s hardly even a village, but the gathering will take place again in the church car-park before doing what they’ve done each week for the past year, stepping off the footpath into the road, to march in protest at the payment of the nation’s income to bondholders, and to redeem promissory notes. You can see photos of all their marches here, the seasons change, the white hawthorn comes and goes but except for a couple of families that have emigrated, the marchers have remained resolute, They’ve had a few special guests in their marches during the year and they’ve hosted RTE, Australian, French and German TV, they’ve hosted the Sunday Independent and Guardian. And on Sunday next they will again be joined by a few special guests including Dr Constantin Gurdgiev. The protesters seem generous to a fault in not wanting to claim any limelight and the biggest compliment you could pay them is to start your own local protest, but on this Sunday they’d welcome your support and presence in Ballyhea.

What follows is a brief interview today with one of the organisers of the marches, Diarmuid O’Flynn

NAMAwinelake: You maintain two Facebook pages, one for the Ballyhea protest, one for tracking bond repayments, you maintain “bondwatch Ireland” which is updated each week with the forthcoming bond repayments, you maintain a blog, the chattering magpie14, you march each week, in rain, hail or shine, you’ve run/cycled/crawled all the way from Ballyhea to Leinster House to hand in a petition, you’ve fasted for a week, you’ve had two sit-down protests on the Ballyhea to Charleville road – pictured here – you’ve dealt with the media, both domestic and international, to explain what is happening. After one year of marching, how do you generally feel and has it been worth it?

Diarmuid O’Flynn: It’s been worth it, yes, unequivocally, unqualified. It’s taken time and effort but when I look at what those across north Africa and in the Middle East are risking and sacrificing to right the injustices they are suffering, what we’re doing here pales by comparison.

NWL: What is it that has kept you and the communities in Ballyhea/Charleville persevering in your protest?

DOF: Even within our own parishes we’re a small group but this fight is on our own behalf, on behalf of our families, on behalf of our communities, on behalf of our fellow-residents in this Republic. We know the wrong that’s being done to us. Just as Ghaddafi and Assad and all the other despots were prepared to use their military might against their own people, so the ECB is using its financial muscle against us, so the Merkozy duarchy using its political muscle against us, forcing a debt that isn’t ours on the weak government of a weakened nation, extorting tens of billions from us. It’s as wrong now as it was a year ago – we’re a stubborn bunch!

NWL: You’ve published an article setting out how you organise your protest in Ballyhea/Charleville. Why do you think other towns, villages and communities haven’t copied your protests? [Bystander Syndrome or Effect is described here]

DOF:The Bystander Syndrome, the phenomenon whereby the more people there are who witness a crime (and extortion is a crime), the less likely someone is to intervene; the lack of media coverage of the real issue – Assad is bombing his own people and in outrage the media cry for him to stop; a government minister here, Leo Varadker, speaks of a metaphorical bomb going off in Dublin if we don’t do as ordered by the ECB and pay these bonds, but where is the outrage, where is the cry for the ECB to stop crushing the people of this Republic? Does the media here call on the people ofSyria to accept the dictatorship of Assad and thus avoid their suffering? No, they call on Assad to stop his brutality. Does the media here call on the ECB to cease its bullying of the Irish people, to stop its extortion of tens of billions, its infliction of more and more austerity and suffering on the Irish people? No, instead it focuses on what they’ve been assured the consequences will be if we DON’T pay up. Those are the two main reasons – bystanders, where they hope/believe someone else will intervene; the thrust of the media coverage, where fear and confusion has been spread wide.

NWL: Now that most of the unsecured, unguaranteed senior bonds have been fully repaid at Anglo and Irish Nationwide, do you have any plans to wind down the protest or change the focus of the protest to the promissory notes?

DOF: We will focus on the Promissory Notes from Anglo, for the coming month especially – burn those Promissory Notes, that will become the cry for March. But €55bn in bonds being taken from the Irish banks and by extension taken also from the Irish economy over the four years 2012/13/14/15, that too has to stop. Is that not hurting us? With that massive debt on their books, how can those banks function as normal banks? What have they got left to lend? ALL guarantees should be pulled, all bets off, all bonds treated on their individual merits/demerits. The ECB was worried about contagion if the Irish banks defaulted, the ECB should have itself assumed the debt, in its entirety.

NWL: What do you see as the future for the marches? Do you see yourself marching in a year’s time?

DOF: The future? A year ago we certainly didn’t see ourselves still marching this week, what can I say now? We will not give up, we will not just stop, that I can say for certain. Burning the Promissory Notes is a must – in fact I’d go so far as to say that we should now throw down the gauntlet to this government; burn those Promissory Notes or resign.

NWL: Your protests are non-politically aligned. Do you have any views on the role of politics in dealing with the bondholders or promissory notes?

DOF: I believe that at this stage we need another general election but one that returns a national government, a government which – without having to be in any way arrogant or confrontational – will stand firmly and immovably against the bailout of banks at the expense of its people, starting with the burning of the Promissory Notes.

NWL: You have been covered in the media, locally and internationally. What is your view of the media coverage of the bondholder/promissory note issue?

DOF: The Irish media have been abysmal, have actually been complicit in the extortion by the ECB. Lies, half-truths, misinformation, disinformation, these are the weapons of a propaganda war, these were the weapons perfected by Goebbels for the Nazis during the Second World War, these are the weapons still being used in getting the people of this Republic to accept what’s being done to them, to accept their own enslavement by the ECB. ‘We have no choice; we all partied; economic Armageddon if we don’t pay; we’ll grow our way out of this in a few years; we’re working hard behind the scenes and it’s looking good’ – etc. etc. The simple – very simple – fact is this: that was bank debt, for-profit deals done between consenting adults in the private commercial sector, deals which, when they failed, should have been dealt with in the normal private commercial fashion. The blanket bank guarantee of September 2008 was given under false circumstances, bad law based on bad grounds – it should be undone. Since then, in using its financial muscle to blackmail our government – now simply the overseers for our new masters – into assuming this debt, the ECB and the EU have grossly abused their own power. This bank debt is not our debt, will never be our debt, and yes, it is that simple.

NWL: What was the high point of the year for you?

DOF: There hasn’t been a high point, and until we start to burn those bank bondholders – starting with the Anglo Promissory Note due this March 31st – there will be no high point.

UPDATE: 27th February, 2012. Dr Constantin Gurdgiev who has confirmed he will be attending on Sunday 4th March in Ballyhea has sent the following message about the march.

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This is Part Two of a three-part blogpost on political remuneration in Ireland. Part One was published last weekend, and is available here, it focuses on the detail of salary and benefits and has been updated with some new information since last weekend. It’s worth saying that the value of the Oireachtas pension which costs TDs and senators 6% of their salary each year, has yet to be calculated but with life expectancy for men at 77 years and women at 82 years, average returns on private pensions of 1.1% per annum between 2001-2011, a guaranteed 50% final salary scheme based on 20 years service, and a generous lump sum arrangement, I can’t see how it would cost less than 20% of annual salary in the private sector.

There is now going to be a Part Three following the acquisition on here of details of political expenses paid for by the grants provided by the State to political parties – politicians, it seems, aren’t limited to direct payments for their political income; the information is presently being analysed. Part Three will also examine the failure of the mainstream media in Ireland to report on the cost of the political system and the lack of transparency over how our money is spent, and with whom it is spent.

Part One allows us to, for example, challenge ministers when they claim their salary increments are justified because, upon being promoted to the office of minister, they lose the Travel and Accommodation allowance that applies to TDs, because in response, you can say “but then you get a new dual abode allowance which allows you to buy a Dublin home, an annual unvouched tax free allowance of up €6,500, plus two drivers plus a mileage allowance of up to €1.14 per mile plus hotel, service charge, overnight subsistence and even a gift allowance”; and judging by the Ruari Quinn mileage expense claim reported last Sunday in the Mail, the mileage allowance is not subjected to the tightest scrutiny. You can also ask someone like the affable Mick Wallace, what we get in return for a €92,692 salary, a gold-plated pension, a personal representative allowance of €15,000 (unvouched) to €27,000 (vouched), a travel allowance of €32,966 (Mick being 130 km from Leinster House), an independent’s allowance of €41,152, a secretarial allowance of €41,092 an €8,000 grant for a constituency office, termination payments, free facilities at Leinster House etc. And let’s not forget Mick’s well-publicised distractions in dealing with his own extracurricular businesses. And you might ask if the €250,000-plus potential annual cost of Mick, as unconventional and decent a man as he no doubt is, is good value for money.

Comparison UK

There has already been a blogpost on here comparing the cost of our politicians with those in our nearest neighbour, the UK, which of course is not in an IMF programme, is a sub-Superpower with nuclear energy, which has control of/responsibility for its fiscal and monetary policy, whose economy is 10 times bigger than ours and whose political constituencies are three times bigger than ours (average Irish TD looks after 27,500 citizens, average UK MP looks after 95,000). That the emperor has no clothes is not just apposite for Treasury Holdings.

Personal Reward (Sinn Fein and United Left Alliance)
Whilst messages from this blog to the two parties that comprise the United Left Alliance (ULA), namely the Socialist Party and People before Profit parties, weren’t responded to, it is claimed in the media that the four TDs from these two parties adopt a remuneration policy similar to Sinn Fein’s. I don’t wish to offend anyone’s political loyalties, but a general statement on the matter, perhaps on the two parties’ websites might clarify the matter. With respect to Sinn Fein, each deputy and senator is paid the average industrial wage of €34,000 and then, personal tax and PRSI is paid on this €34,000 – typically the TD will end up with about €25,000 net. The rest is used at a local constituency level for party activities and that typically involves the employment of political activists. Sinn Fein has no special policy on pensions, but that party has the dubious privilege of not having to deal with it – in this Dail there are 14 Sinn Fein TDs, in the last Dail there were only four (five when Pearse Doherty was elected in November 2010), and in the previous Dail there were five, and before that just one. As far as I can see, Arthur Morgan (now aged 57) is the only past Sinn Fein TD and we don’t know what his pension arrangements are, but with only nine years service between 2002-2011, a salary of 9/40ths of €92,672 will not be significant even at age 65. Sinn Fein claims actual expenses only, as opposed to vouched expenses.

So given the straitened times we live in, it seems that Sinn Fein and the ULA are heroes in their personal sacrifice. Having said that however, the gross cost to the State of Sinn Fein and the ULA is exactly the same as any other party. And the second aim of this blogpost was to highlight the cost of our political system.

Part Two
Part Two is aimed at placing these political costs in context and examining the damage done to society and the economy by our gobsmackingly overpaid politicians. Again, the country needs presently borrow €300m a week to fund the difference between tax collected and state expenditure. Even in 2015, if all goes to plan, and we have a 3% deficit, that will still mean we need borrow 3% of €170bn, or €5bn a year or €100m per week. We are facing into a further four years of austerity/reform and by comparison with 2011, we will need adjust our budget annually by €12.4bn in 2015. With respect, if anyone thinks we will avoid a substantial household charge, university fees, cuts to public sector salaries, cuts to basic social welfare rates, cuts to frontline services, increases in mortality rates/class sizes/crime and reductions in education standards/crime detection rates/ available hospital beds, not to mention tax-rate increases and a wealth tax, and perhaps even an increase in corporate tax rates, then I think you’re deluded. €12.4bn is the annual adjustment needed, and that assumes economic growth which is far from certain, and assumes we will be able to borrow money to fill the €100m-a-week deficit in 2015. And it should be said that this is required regardless of bank bailout costs.

With a €12.4bn annual adjustment needed, the three main criteria for individual adjustments will be that they are undertaken quickly, efficiently and fairly. “Quickly” is easy to understand and measure, “efficiently” is less clear because there will be argument about cause and effect – do you raise VAT which drives down demand? do you cut public sector numbers or can you employ the same number with lower salary? how much can you tax wealth without it emigrating? – but it is the term “fairly” about which there will be most argument, and each of us has our tribes and vested interests and corner to fight. But “fairness” might objectively balance “ability to contribute” with “damage to the economy”. So a wealth tax akin to France’s or Italy’s may be needed, but any tax needs to take account of consequent behaviour and if you tax too much, the income or wealth may absent itself from the economy and since we don’t have capital controls or a Warsaw Pact approach to the free movement of people, any changes need to be sensitively considered.

But in this war – and the fact that this country can’t pay its way is the greatest threat to our notion of sovereignty, so “war” is apt – to reduce the deficit, we need leaders. And our political leadership cannot continue to draw such plutocratic sums from the public purse whilst seeking to impose austerity on the rest of society. Or if it does, we end up with an unfair society, “the sow that eats her own farrow”, social unrest which at one end of the spectrum results in economic loss through days lost and low-level disorder and at the other extreme sees the collapse of law and order and loss of life and, mass emigration again and a place where the majority don’t want to live.

Turning to our leader, I should start off by saying I have no small amount of respect for An Taoiseach of the country, Enda Kenny. He leads a strong government not compromised by the whims of independents or dissidents at every turn. He has a rotten economic situation to deal with, and he hasn’t buckled under his responsibilities. He is the “father of the house” in the sense he is the longest-serving politician in the Dail, and that is no mean feat in this country. He seems to have a good sense of what is needed to keep his subordinates and his coalition partners in acquiescent equilibrium. And with respect to the theme of this blogpost, it should be remembered that one of the first actions undertaken by An Taoiseach in March 2011 was to reduce his own top-line salary and the salaries of An Tanaiste, ministers and junior ministers by 6.6%, which in An Taoiseach’s case meant a reduction from €214,187 to €200,000. And remember that only back in 2007, the top-line salary for then-Taoiseach Bertie Ahern was €310,000. And you might also have sympathy for the fact that An Taoiseach is meeting with people every day in this society and economy who earn a multiple of the taoiseach’s salary but with a fraction of the burden of responsibility.

But how can An Taoiseach ask for more from the nation, when his own rewards and those of his administration and his political system remain untouched? How will he answer critics in the US during his St Patrick’s Day visit when this year, he is likely to face questions on his salary from politicians in a country that is a big donor to the IMF, and doesn’t understand how a bankrupt country with limited options can afford to pay its political leadership sums which would appear excessive even in the world’s biggest economy and sole Superpower. In theUK, will opponents to the encroachment of Europe demand answers from their leaders as to why theUKis loaningIreland€4bn so as to pay such enormous sums. Perhaps this is the international agitation that is needed to focus politician’s minds here…

Part Three will be published next week.

(Graphic above produced by Japlandic.com, contact here)

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