This blog is neutral on the NAMA concept. In theory, sucking out the bad or uncertain loans from the country’s banking system, putting a certain value on those loans which was independently verified by the EU and replacing those dodgy loans in the banks – and remember it was the banks that made the original bad loan decisions in the first place – balance sheets with fresh crisp NAMA bonds which could be exchanged for cash at the ECB, then managing those loans on a developer-basis – which originally might have been at multiple banks which allowed developers pull wool over individual banks’ eyes – and making additional advances for finishing-out projects or maximising returns – all of this could theoretically be a success.
It’s not NAMA’s fault that the losses on the original loans made by the banks were so severe that even after NAMA had sucked the toxin out, the patient was so ill that it needed more transfusions from the State which brought most of the banking sector into public ownership. As for the rest, the jury is still out, but from reviewing the media (including the “new media” such as this blog) in the past couple of months, the picture being presented seems pretty monochrome, depicting NAMA as a failure. Well, that’s unfair; so in the interests of balance, it might be worth pointing out that NAMA is doing some things well. Here are 10:
(1) NAMA has valued and conducted due diligence on €74bn of loans, and received EU approval of €26bn of these acquisitions. It is a monumental achievement to have put a certain value on such loans. The banks have received NAMA bonds for the loans which they can exchange for cash at the ECB. If the original loss estimates for loans at the likes of Anglo had been correctly assessed, NAMA would now largely be seen as a success.
(2) NAMA has evolved from zero in April 2009 to an Agency of 200 today, plus an array of verified and tested third party suppliers. The 200 employees have undergone pre-recruitment testing that has been compared to that used byAmerica’s Central Intelligence Agency, and to date, none has left the Agency with egg on its face. Creating this Agency has been a monumental undertaking, which was necessary in the context of the role handed to NAMA.
(3) The NAMA CEO Brendan McDonagh is by all credible accounts I have come across, an honest, incorruptible, hard-working, diligent leader who leaves any ego outside the door. He has waived his bonus of up to 60% of salary for the first two years of NAMA’s existence. He has waived 15% of his salary for 2012, meaning he is earning €365,500 instead of €430,000. Yes, that is a huge sum, but is teensy by comparison with rewards on offer for similarly-sized asset management companies. The NAMA chairman Frank Daly has likewise taken a cut to his €170,000 fees and is now paid €150,000 per annum, and with a lifetime of public service under his belt and a fearsome reputation from the Revenue Commissioners, could NAMA have a better chairman?
(4) NAMA has scored bulls-eyes with at least three developers’ loans where it has apparently recovered 100% of the original face value of the loans – in the cases of David Daly, Durkan and Paddy McKillen (though there is a residual exposure on the McKillen loans). It may have scored more, but because NAMA is prevented from releasing details of deals, we may never really know.
(5) NAMA has changed the face of receivership in this country and acted to drive down professional services prices. NAMA saw that share receivers were being paid €800 per hour and have promoted the use of property receivers who charge a quarter of this rate and concentrate on maximising income from assets that were collateral for loans. Similarly NAMA defends the payment of salaries to developers with which the Agency is co-operating, saying the average payment of €75-100,000 is good value compared with the appointment of receivers. In two cases, developers are being paid €200,000 per annum but NAMA says this is for the management of multi billion euro portfolios.
(6) In the Paddy McKillen case, NAMA actually won on all points in the High Court, so NAMA’s decision to defend itself against Paddy’s legal challenge seems reasonable enough. At the Supreme Court appeal, it was a score-draw though the effect was that Paddy was entitled to be consulted before his loans were acquired and Paddy had his legal costs reimbursed. But NAMA had no real choice but to defend itself against allegations of unconstitutional behaviour, and despite the Supreme Court loss, NAMA has successful in its other cases.
(7) NAMA has stuck to its objectives, despite increasingly intense political interference. A couple of weeks ago on here, it was exclusively revealed that Minister for Jobs, Enterprise and Innovation, Richard Bruton had intervened in a NAMA decision on a lease involving BSkyB and the creation of 800 jobs. Now we can all criticise NAMA for adhering to its primary objective of maximising value, which may have meant in the Burlington Plaza case, holding out for a single tenant who might pay a premium, but NAMA is doing what it is supposed to do under the Act. Similarly today in the Sunday Independent there is criticism of NAMA’s delays in dealing with a south Dublin property which Google wanted to occupy and accommodate 230 new jobs, but reading the article, it seems to me that the property was still being managed by the “Ford Cortina and three bed-semi”-averse developer, David Agar and, based on the details in the article, it seems on here that it was David Agar who was dragging his feet. And although Minister Hogan might have gotten involved, it seems he didn’t deal with NAMA but with the local authority which was also apparently dragging its feet. Just why should NAMA be the target for criticism here?
(8) NAMA has talked the talk, and walked the walk, in its treatment of developers. It has not been backwards in appointing receivers to some of the best known developer names in the country – Ray Grehan, Sean Dunne, Paddy Kelly, Jim Mansfield, David Daly, David Agar, Paddy Shovlin. It has pursued Ray Grehan through courts in Canada, the USand Britainso as to secure assets which might be used to pay down the Grehan mountain of debt. It has not apparently displayed deference to wealth, connections or political affiliations, which is pretty amazing when you think about it. In fact the NAMA team is as close to The Untouchables – without the Armani wardrobe – as you’re likely to find in Irish society.
(9) NAMA, despite having an annual costs budget of €200m and managing €74bn of loans at par value, has, almost incredibly, avoided scandal. Yes, there have been allegations of conflict of interest, claims that assets have been disposed of below value to parties associated with debtors and a general narrative that NAMA is a gravy-train for professionals. But the conflicts have been explained away, no claim of below-value disposal has been proven and no-one has demonstrated that NAMA is wasting money – for example by comparing the cost of two courses of action.
(10) NAMA deals with an average of 12 credit decisions a day, every day. This blog receives an average of one complaint per week on the subject of NAMA’s bureaucracy in dealing with sales/leases. The standard response on here is to recommend to the prospective buyer/tenant that they write to the NAMA chairman, Frank Daly with their complaint – he is on record for inviting such correspondence. And here’s the strange phenomenon – not a single complaint has survived correspondence with Frank which indicates to me that NAMA is reasonably responsive, and is doing its work reasonably well.
NAMA is in court against Treasury Holdings this week, and it is clear on here, that big beasts are prowling about testing for NAMA weaknesses. At its core, the case that is set to commence on Tuesday is about NAMA’s freedom to act on loans in pursuit of the NAMA objectives as set out in the NAMA Act. NAMA has suffered from procedural error in the past – for example, failing to ratify pre-incorporation decisions in the Paddy McKillen case – but in general terms, NAMA has not been found at fault for pursuing the principles upon which the Agency was founded, and that includes making decisions to maximise income. Despite what now seems like an erroneous report on here on Thursday evening last, it seems that the Treasury case is going ahead even if there might have been overtures at a settlement, I see that affidavits have been filed for NAMA’s portfolio managers Mary Birmingham and Michael Moriarty and that on the Treaury side there is an affidavit from Dr Michael Cragg of the Brattle group who played a supporting role in the Paddy McKillen case at the High Court in 2010. The Agency might well feel it is embattled at present, but what else might it have expected as it sought to pursue its objectives which would result in losses to some of the most powerful and wealthy people in Irish society, and which would bring it face-to-face with politicians and others pursuing agendas which conflict with the NAMA role set down in law. As stated under the “About” section of this blog, this blog is neutral on the NAMA concept and concerns itself with implementation, and you can expect balanced reporting on the Treasury battle as it gets under way this week where you are likely to learn about a few more things that NAMA is doing right.
NAMA Wine Lake 
i dont care about what namas ceo is earning or about any of developers, what puzzles me in the treasury case is if there where or are investors wiling to put money into this country and take property off namas books why nama did not do this? surely that is what any taxpayer would want to see happen? apparently they didn’t even enter negotiations!
@Debbie, no-one is disputing the merit of getting investors to put money into this country, but at what price? NAMA says that in the early days, investors including international investors were rolling up offering what the Agency called “derisory” prices. NAMA says that more recently, there has been more realism about values. NAMA also says in relation to the Treasury case
“A spokesman for Nama said it had “engaged rigorously with Treasury Holdings since 2010. Unfortunately, it has not been possible to achieve a mutually acceptable agreement on the way forward with respect to the group’s Nama loans . . . Nama analysed the two proposals made and they were not commercially acceptable. The Nama board decided to proceed with the appointment of Receivers at the end of today’s standstill period.””
http://www.irishtimes.com/newspaper/breaking/2012/0126/breaking7.html
On the other hand, some investors have criticised NAMA’s dealings and there have been allegations of a slowness or unwillingness to seriously engage. NAMA might say that such criticisms are bound up in personal vested interest. Maybe we’ll get a better insight this coming week…
@NWL
In many ways a courageous post. While no fan of the Nama concept, I must agree that it has made substantial progress in the midst of a huge minefield and that your ten points are very valid (touch wood) and well made. We can be absolutely sure that there are some elements of our society who would like to see Nama cut down or fall on its face and who they will spin and spin “stories” about Nama faults and cockups till we are dizzy.
Rightly, you say that the die was cast before Nama came onto the scene to pick up the pieces. If Nama’s pricing is correct then 54% of the €74 bn was effectively lost pre-Nama. Of the balance of €32 bn, some people on this blog think that a further loss of up to €10 bn might arise over the next ten years. Who knows given the very uncertain economic outlook? It is very likely that most of this potential loss is completely outside Nama’s control due to demand factors, interest rates, forex etc. etc.
At the end of the day, an absolutely perfect Nama might improve things by a few billion at very best assuming it has a sound grip on its own costs and, with the benefit of hindsight, consistently gets its timing bang on. In a perverse way, the bigger the loss makes on its Irish stuff the better as this would be signal that commercial and residential property costs have declined, thereby improving national competitiveness.
You say NAMA stated offers came in at “derisory” prices from investors. However the indo article states the bid from the investor was €68m higher than a previous bid made by CIM and accepted by NAMA! Surely NAMA wouldn’t have accepted the original bid if it was not at the right price! What I got out of primetime was that NAMA are acting like a debtor collector rather than asset manager and I fear this maybe be through. Hopefully I am wrong and like you said we will get a better insight over the next few days….
@Debbie, this reporting in the Independent is not clear.
“In the case of Nama’s treatment of Macquarie’s offer, Treasury is expected to claim in court that the agency rejected an offer that was some €68m higher than a previous offer it had accepted from CIM.”
Putting aside the Mandy Rice Davies-esque, “Treasury would say that, wouldn’t it”, and the lack of clarity of who the “it” is in the clause “a previous offer it had accepted from CIM”, but if the “it” is NAMA, then why didn’t the deal with CIM proceed?
Also who or what is CIM? There’s a CIM group in the US which has USD$9bn of property assets under management but it doesn’t appear to have any assets outside the US.
Given the tenor of the article including the title “NAMA will be in dock at Treasury court case” – Treasury and the actions and abilities of some non-NAMA big beasts will equally be “in the dock” – you might take the claim with a pinch of salt for now. Though we might see more light shone on NAMA’s actions this week.
I will take your comments on board, as they say it will all come out in the wash!
As a long time lurker I thank you for the time and effort in providing the average Sean Mac Gabhann like myself with unspun facts.
#(5) “NAMA has changed the face of receivership in this country…..”
This alone could sustain an entire blog nevermined a single bullet point on a post.
“The Untouchables”? With apologies to Brian, who wants me to play the ball. Just who are these untouchables?
Let’s take the two making the affidavits:
There’s Mary Birmingham (with an i), who for the six years prior to joining NAMA ran the planning phase of Bray Town Centre pre-development project for Paddy Kelly’s Pizarro Developments Ltd. She succeeded in getting a planning approval to build on the Dargle flood plain on the second attempt after a spend of some €50 million in interest and consultants’ fees. The project is now in NAMA.
There’s also Michael Moriarty, Deputy Portfolio Manager, reporting to John Mulcahy. In a previous life, Mr Moriarty was the managing director of CB HOK Investors and set up syndicates and property deals on behalf of wealthy Irish clients. In other words, he participated along with the NAMA debtors that he is now overseeing in chasing the market up.
According to the Irish Examiner, Nama has said there is no conflict of interest after a photograph emerged of him on a cycling holiday with Vita Cortex boss Jack Ronan. Nama has seized several of Mr Ronan’s assets and is still in negotiations with him over the transfer of an unencumbered asset which could end the 54-day sit-in by 32 workers at the Vita Cortex plant in Cork.
http://www.examiner.ie/news/ronan-link-to-nama-boss-unsettling-182931.html
And speaking of John Mulcahy, his boss. This is the same John Mulcahy that advised Charlie Haughey and his family on the sale of Abbeville to Manor Park Homes for €38 million, just after he sold the front 10 acres to Treasury Holdings for €6 million! And where is Abbeville now? …… I’ll give you just one guess.
The Untouchables? I don’t think so!
@WSTT, untouchable doesn’t mean folks at NAMA haven’t histories. Do we really want amateurs learning on the job with €74bn of our money? Did we think we could find clean sleeves, in the UK or elsewhere that would understand the Irish property market? NAMA did recruit from the UK but there will necessarily be employees that have been at the heart of the Irish property bubble.
What you’re saying again is John Mulcahy advised on what seems like a very successful sale for his client, much as he did with the Irish Glass Bottle site. Seems like on both occasions, he did a great job, and is just the sort of person NAMA will want in the tent peeing out.
As regards the other two, both seem successful in what they did pre-NAMA, even though, like most involved in Irish property, some projects have gone sour with the collapse in the property sector.
But “untouchable” is a description of their roles and performance today, rather than their pre-NAMA CVs. The NAMA CEO and chairman exemplify that incorruptible character, and they seem to have inspired similar standards in their employees. That is evidenced by the absence of scandal in over two intense years of operation at the Agency, and it is one of NAMA’s wins.
@NWL. Any organisation is just the people who work there. No more, no less. So when Johnny looks across the floor of the courtroom, he sees poachers just like him. Not untouchables. These are people who turned gamekeeper – They were luckier than he was in so far as they found a nice new pigs’ trough to put their snouts into before he did. It was easier for them to jump ship. But poachers they all were – and when he faces them in court.. that’s what he sees.
Unlike Al Capone, who did not see ex-members of his gang when he crossed swords with Elliot Ness’s “Untouchables”.
BTW, Ness made a number of forays into the corporate world when he retired, all of which failed from his lack of business acumen. A lesson there perhaps for our “untouchables”?
@WSTT, wasn’t everyone a poacher during the property boom? The developers and their support services? The local authorities and their planning staff? The bankers chasing bonuses and commission? And if you weren’t red in tooth and claw, what real experience had you to offer NAMA? NAMA created the concept of gamekeeper, and unless you wanted clean sleeves who would have to learn on the job with €74bn of our money, then NAMA had no choice but to recruit former poachers.
But before it did recruit them, they were put through intensive vetting so that conflicts of interest could be nipped in the bud and that skeletons, which you would expect all experienced “mid-career” professionals to have, could be taken out of the closet and examined. And only then did they get the badge and shield, and get to be gamekeepers.
So Johnny may well look across the courtroom and see former poachers. They’ll look across the courtroom and see a developer, a talented and colossally successful developer at times to be sure, with loans whose underlying security has apparently collapsed in value in line with Irish property generally, and who is deploying instinct and a lifetime of experience to protect his position. But in that, he’s at heart no different to other big beasts in Irish property whose loans have been foreclosed.
So there may well be stares and glares in court and “I remember when you were only”s but NAMA’s gamekeepers are there to do a job, and if they are getting the appropriate support from Brendan and Frank, then they’re untouchable as far as these dealings are concerned.
@Conan, NAMA doesn’t do “briefings”. There was a period in early 2010 when the Agency appeared to be leaking like a colander but in more recent times, it is reasonably solid in how it communicates its message. The blogpost yesterday was to add balance to what seems like unremittingly negative coverage for a couple of months, and was inspired by Ronald Quinlan’s article in the Sunday Independent where NAMA was getting it in the neck for delays that, when you read the article, appeared to be the fault of a developer who has recently had receivers appointed or a local authority with whom Minister Hogan had to intervene.
@NWL, Leopards.. spots? :-)
@WSTT, when all else fails, get out your Bible where Saint Jerome says of a convert
“Though it is against nature the Ethiopian does change his skin and the leopard his spots”
@NWL, Nice one :-) Though I have never seen an Ethiopian change his skin. Old St. Jerome must have been on more LSD than Jerry Garcia (who has more drugs in his house than a Boot’s pharmacy)
Successes yes. But your list of ten items could essentially be categorised as administrative successes, if successes they be.
NAMA’s essential failure has been a failure of ‘business’ strategy.
1. Failure to take charge. Failure in its non-management of the assets that in theory at least are controlled by it. NAMA bought the loans at at a significant discount from the banks. Where those loans were not performing at the discounted value, NAMA should have taken charge of the underlying collateral as a first priority and managed those assets to full value for the taxpayer.
2. Failure adapt its ‘Route 1’ policy of sell the assets to the changing circumstances. This policy should have been changed to a rent/lease only as the market was unable to absorb the sale of assets.
3. Failure to define ‘Value for the taxpayer’. This is evident principally in failure to complete derelict and abandoned buildings.
4. Failure to insist of value for money in the recruitment of staff or in the purchase of services. In relation to you point on share receivers/ property receivers, NAMA should simply have recruited a few experienced share receivers. Problem solved.
I am sure that there are many in NAMA that work hard etc, but it is failing. That failure, as in many organizations, derives from a poor and rigid strategy that is set at management level or perhaps even dictated to management.
NAMA should have a simple strategy.
1.Take charge of property
2. Finish it
3. Rent it.
That strategy will pay off better than all the business plan BS that we have been hearing about for years now.
1-they overpaid .
2-not sufficient development or asset .expertise at senior level.
3-no interest in his personality,unlikely he would actually get his current position in private practice,he’s in house hire,NTMA.
4-expect one or to layoffs out of 70Billion,these represent less than 2%,yippee !
5-Only publicly available details indicated “fees” to Treasury,via REO of 16 million,we don’t even know who the two 200 grand a year chaps are,why not ?
6-that’s a”win” hate to see what a loss looks like.
7-that would be selling the family silver into a severely depressed market.
8-so who got the 1,000,000,000 someone has it,who ?
9-early days yet,not screwing up is a win,setting the bar a bit low there.
10-ask durkan.
@WSTT,thanks for that I firmly believe that people’s backgrounds,their choices including who they represented,how they conducted themselves during the “madness” are important.
I was mugged once, they guy did a great job, very professional, had a lot of experience, probably did at least 10 things right.
NWL…a few years in the US and you would be a changed man telling us NAMA need their asses kicked really badly, really hard.
40 billion gone, secrecy with taxpayer money.
Now that’s ‘context’.
I normally derive a lot from, learn a lot from and generally enjoy this blog.
This post begs one huge question though.
In what way has the operation of the NAMA process been better for the citizen/taxpayer than a standard set of bankruptcy proceedings?
The whole thing brings to mind Samuel Johnson’s remark recalling a dog walking on its hind legs wherein he says “It is not done well; but you are surprised to find it done at all.”
NAMA may be “walking the walk” but it is still arbitrary, awkward and perverse.
It has not achieved nor could it ever have achieved the stated primary goal of regenerating credit in Irish banks. It is not contributing to that process and by propping up property prices at still irrational levels it is delaying the readjustment and prolonging the pain for the population while making them carry an unfair share of the burden.
@NWL, Firstly, congratulations on a very well written appraisal. And your points about the previous lives of the inmates are well made…. But let’s see if some holiday on yachts this summer! Conflicts of interest arise when managers and employees of the “bad bank” obtain inside information that can be used for personal gain unless rules of ethics with respect to the use of such information are introduced. For many in NAMA there is a lucrative market for such information both before and after they leave. Because the evidence of such conflicts of interest has not been seen so far, does not mean that it does not exist.
To play the ball and taking your points in sequence.
1) NAMA gave up valuing the loans halfway through the operation and placed a blanket discounted value on the remaining loans that it had to acquire. It got lazy or ran out of time, by taking too long – a much repeated complaint against it. The early loans that it did value were overvalued, hence the difficulty that it now has in achieving the price it paid for the loans.
NAMA entered as a buyer and removed the uncertain assets from the banks’ balance sheets. The devil lies in the details, however. The valuation of the assets determined the extent to which tax-payers took over losses that contractually should be taken by shareholders and uninsured creditors of the banks. When assets are overvalued the greatest subsidy tends to go the shareholders and the creditors of the banks that should have been responsible for the largest losses. In this way NAMA failed because it overvalued and overpaid for the assets and burdened this overpayment directly onto the shoulders of the taxpayer. In so doing it also made it impossible for the Agency to make a profit. An outcome that didn’t dawn on the bright sparks running it.
2) Staffing of the Agency. Let’s face it, this is something that civil servants do in their sleep. Quangos, Committees, Tribunals…. You name it – they’ll set it up and staff it. If anything, one of NAMA’s problems will be seen to be that it was set up like the Revenue Commissioners and not like a commercial entity. As I wrote elsewhere, when Securum was set up, no civil servant was allowed to be employed there and it was staffed by experienced property and banking personnel. It is not surprising that this is the most salient point of Michael Geoghegan’s review of the agency.
3) I would concur that there has been little criticism of Brendan McDonagh, who by all accounts is a charming and unassuming man (although I do wish that he would learn how to pronounce “billions” – he must use the term a hundred times a day. Whether he or Frank (in particular) are the right people for the job, I would have to seriously question. I would not care how much they were paid if they knew what they were doing. But to me they are square pegs in round holes, learning on the job, uncertain as to how they solve the problems – MoUs with developers one week..gone the next, staple financing one week..gone the next, negative equity guaranteed loans one week..gone the next. Are these the sure footed acts of people who know what they are doing?
4) There is residual exposure to David Daly’s loans through the retention of the Albany Homes account; there is residual exposure to Durkans though Pizzaro and the less we speak of what will happen with McKillen the better for NAMA.
5) Receivers: Their performance has been abysmal to date. Phone them and try to get some information on properties that they have been appointed to sell. You will get the cold shoulder. The reason? Because they are busy putting together sweetheart deals for their pals and sometimes themselves.
6) Performance in the courts: The Paddy McKillen case is ongoing – some would say only warming up, and I can’t think of any really material case that NAMA has yet won… Possibly against the Grehans, but it backed off with David Daly. So I would have thought “a mixed bag” at best. The next month will answer the question though.
7) NAMA has stuck to its objectives: The main task of NAMA is to unwind its assets over time and to recover as much value as possible. The “bad bank” was never likely to play the role of a normal bank because the industrial expertise is lacking and even if it existed it would have to convince other banks that some of its assets were performing or potential buyers that businesses were viable at reduced debt ratios in spite of having been orphaned by the Irish banks. It is not surprising that those with loans that have been transferred to NAMA have difficulties finding new non-Irish bankers. (Sorry went off topic with a little rant)
The methods used by NAMA for selling properties is the same as the methods used in the United States, where, in the main, the RTC, sold single properties, piecemeal or in packages, but not companies or company portfolios. To a certain extent, RTC also used auctions of varying design. NAMA’s choice of methods needs to encompass those used by Securum if the intention is to prevent the liquidation dragging on over a long time. And they need to do more than just talk about it. Why has it taken two years? There can be no doubt that, just like in Ireland, it would have been difficult to sell large stocks of properties in Sweden piecemeal, without depressing price levels. The stock exchange introduction, on the other hand, which NAMA now talks about, makes it possible to sell a large stock of properties without much effect on prices, because this is a means of reaching a broader circle of investors, including investors who had no interest in owning properties as such. This is particularly so in Ireland where we have a situation where a number of the traditional investors and developers in the property market are still wrestling with liquidity problems.. and will continue to do so, even if they survive.
8) Actions against the developers: That’s what one would expect from a CAB / Revenue culture. It remains to be seen if it is productive or destructive. Will it add value? Eighty per cent of the RTC loans were repurchased by the original debtors with financing provided by new investment partners. NAMA has turned its back on this solution. Is that a good idea? Is it doing the right thing and fulfilling its objective?
9) Scandal; There’s scandal. It just hasn’t had a light shone on it yet.
10) 12 decisions a day, every day. That’s 12 Form As. Everything from buying office stationary to leasing a building. Just more spin from Frank.
Marking this report, I would hesitate to give them a “Pass” yet.
@WSTT, thanks for that, there’s a lot of truth in there but I think some of the criticism is unjustified. To take those points
(1) NAMA was directed by then-Minister for Finance, the late Brian Lenihan to accelerate the acquisition of loans in October 2010 – this is one of only three Directions issued to NAMA and you can read it at the back of the quarterly management report. So NAMA acquired 2/3rds of the loans using average discounts and the subsequent due diligence and valuation has still to be finally approved by the EU. I’ll ask NAMA how it is getting on, but from recollection, it has said that it expects approval shortly. NAMA was prevented by the Statutory Instrument on Long Term Economic Value from taking anything post January 2010 into account when calculating the LTEV premium. Again, that’s not NAMA’s fault. Where NAMA is at fault is not seeking to move the valuation date or at least notifying the Minister of the impact of not moving the date.
(2) Starting a 200-employee Agency from scratch is a challenge, and it seems to have worked because there doesn’t appear to be huge staff turnover, the original structure and people seem to have been reasonably well thought-out, NAMA hasn’t ditched departments or teams. Brendan McDonagh was reported to be spending hours per day in interviews and that care seems to have been rewarded with the appointments, none of whom has to date disgraced the Agency. Compare that with other government agencies where you get wrongly specified department sizes, offices that remain empty and shenanigans, reviews and frequent restructures.
(3) MoUs are different to heads of terms and final agreements and if NAMA judges non-compliance then the MoU is worth the paper it’s written on, if developers want more security then they need press for heads of terms and final agreement, is there much pushing going on though, on the part of developers? Staple financing is still there, is it not? The Negative Equity Mortgage product is supposed to be with us at the end of March/start of April from recollection, as it is being reviewed by the European Commission – yes NAMA might have thought this product through more thoroughly, announcing it in May 2011 and waiting until April 2012 for launch is not sure-footed, but again NAMA’s presence in the Irish residential market is not as dominant as many think with a max of 10,000 units in a country with 294,000 vacant units and a vacant overhang of around 100,000.
(4) Indeed there is residual exposure to the developers but in terms of the Daly and Durkan loans that have been refinanced, it looks like a 100% bulls-eye. Yes there is certainly a legacy issue with Paddy McKillen’s loans sold to the Barclays and we will see in March if NAMA suffers damages. But it wasn’t NAMA who shouted about the Daly or Durkan loans from the rooftops, so there may well be more bulls-eyes, though NAMA’ss reported profit on loan sales doesn’t fill me with optimism on that front.
(5)The point was about NAMA’s use of property receivers was that it is pushing down prices. But is there any evidence that Lisney or HWBC Allsop acting as receivers for NAMA property are any less effective than if they were working for any other creditor, like Ulster or Bank of Scotland? Are receivers not marketing NAMA property to the same degree as property to which IBRC or AIB has appointed receivers? Sure there are complaints against receivers, but not specifically NAMA receivers – above other creditors’ receivers – as far as I can tell.
(6)NAMA has had a few outings in court since 2010, and the only loss to date was at the Supreme Court appeal in the Paddy McKillen case where it drew 2-2 with one point not adjudicated, and having won 5-0 at the High Court. The David Daly case looks like a win in the sense the original injunction hearing was won by NAMA and the terms of the settlement as made it into the media in December 2011 suggest it was overall a NAMA win. But yes, other than the McKillen case where Part 2 rumbles on in London, NAMA has not had major court cases which tested its constitutionality in the way it is likely to be tested in the forthcoming Treasury case.
(7)If NAMA’s objectives or “architecture” were flawed then is that really something to hold against NAMA?
(8) NAMA’s ability to sell to developers who were previously in default is governed by the NAMA Act. NAMA will probably tell you itself that this will cost the Agency money, but the politicians insisted on putting that term into the Act to persuade a cynical public that this wasn’t a bailout for developers and that point seems to be still supported by the Sunday Independent reading Irish public. The main point though is that NAMA has been an equal opportunities persecutor of developers, and connections, political contributions and wealth haven’t stood up to the NAMA way of doing things. That’s a win in this country.
(9) In terms of scandal, a few months ago, I received a message suggesting NAMA was having a €70k Christmas party at a 5-star hotel. It sounded like the sort of shockingly insensitive use of public money that we have come to expect in this country, and carried a ring of credibility to it. As it happened, there was no NAMA-funded Christmas party in 2011 at all, either 5-star or Abrakebabra. It would shock me if NAMA got to 2020 without at least one good scandal, but more than two years into NAMA’s operation, there’s nothing of note in the public domain, and I would take the nudge-wink suggestions of scandal with the same pinch of salt that was appropriate to NAMA’s imaginary 5-star Christmas party.
(10) That may be a fair point, and you could point to the delays in getting EU approval of loan valuations, delays in signing full agreements with developers, delays in selling assets eg Anglo HQ in north Dublin Docklands and delays in generally dealing with the massive Irish commercial portfolio; having said that and maybe it’s not wanting to be disadvantaged in future dealings with NAMA, but has anyone come out yet with a detailed and verifiable complaint of NAMA holding up transactions? Certainly NAMA has rejected offers and has recently claimed that in the beginning, prospective buyers were offering “derisory” prices, but is there any credible evidence of NAMA sitting on “realistic” offers for unreasonable periods?
This is a challenging post as it confronts the Irish tendency to whinge about everything. We don’t know yet if NAMA is the greatest disaster ever or an utterly inspirational move to deal with – probably – one of the the greatest asset bubbles in history (and I recall studying the South Sea Bubble among others as part of a course in the History of Economic Thought many years ago). NAMA has generated a lot of professional fees in valuing loans moving to it from the banks and then when receivers are appointed, sales/disposals made, etc. but perhaps I’m just envious of its power. It may be that NAMA played an important part in generating a relatively soft landing for the Irish property collapse in terms of no mass evictions or repossessions of homes to date. If NAMA hadn’t been set up and allowed take over loans from bust banks, and paying with bonds that could be cashed at the ECB, then I think there really would have been blood on the streets in the past 2 years. The country needs NAMA to succeed. Equally it requires oversight and this blog, and the Dail Committee, is an important part of that.
Namawinelake gone over to the Dark Side?
NWL, NAMA is a sort of Pandora’s Box into which poorly itemised bad stuff was packed, in a terrible hurry. The box is not transparent so the citizenry cannot see what is inside it. We do know its very bad ju-ju in there and we’re hoping that its toxic half-life will have passed by the time we have to open it again.
Given the lack of transparency it is just not possible to be neutral on NAMA (either in principle or practice).
ps were you given a ‘briefing’?
10 questions that need to be answered by NAMA before a judgment can be made on its performance:
1) Why does it resist transparency? As the tax-payers are the “loss-takers of last
resort” surely they are entitled to full disclosure?
2) Instead of handing over its surplus cash to the ECB, why has it not used it to add value to its loanbook, thus minimising the effects of the credit crunch caused by banks’ need to build up capital?
3) Why does it state that it has an obligation to repay €7.5 billion of its bonds by the end of 2013, when there is a 20 year term to those bonds and there is no such obligation?
4) Why does NAMA give no consideration to risk management – particularly in relation to selling its loan portfolio in a balanced manner?
5) Does NAMA not realise that it is acting contrary to European Competition Law and is abusing a dominant position, in order to distort competition, by offering to underwrite any fall in value to prospective purchasers of residential properties within its portfolio?
6) Why is NAMA reluctant to face up to its losses to date and why is it trying to cover them up? The lack of transparency in marking its assets to current market valuation allows it to delay loss recognition.
7) Why is the compensation and remuneration of NAMA’s executives, credit officers and other risk decision makers not incentively biased to reflect the profitability of the Agency?
8) What efforts has NAMA focused on aimed at generating or enhancing value in the various assets it holds? What measures have been taken and how successful were they?
9) Contrary to its Act, is it making decisions on the future of its debtors prior to review and adjudication of their business plans, as is widely rumoured?
10) Does it view the close relationship between the Blackstone Group, the main government party and the Department of Finance to be a healthy one?
There is more….. but that will do for a start.
Well done NWL. I always regagrded this Blog as a polemic and that the only contributions welcome were those oposing NAMA. Balanced journalism is rare and while your post has been criticised by those who see only 1 side of NAMA, there are many of us who follow the blog seeking information rather than criticism.
I would like to applaud all the excellent analysis by NWL and the very informed and rounded comments by a person with enormous knowledge of the property business ” who_shot_the_tiger”. An excellent combination.
@HR Aw Shucks…. You’re pulling
my leg – right? :-)
So one positive article (one which the Sindo shamed you into) in a hundred makes you neutral. Don’t give us that old cobblers NWL. I can recall you ever having too may good things to say about NAMA.
This is an excellent site with excellent analysis but suggesting that you are neutral on the subject is quite humorous. I mean the very title of the site would indicated you have pre-conceived notions on the body, and they aren’t positive either.
Keep up the good work though..
@Paul, is there a story – positive or otherwise, relating to NAMA that has been missed on here?
Remember when other media have been criticising NAMA, you’ve had the facts on here
Eg Vita Cortex
https://namawinelake.wordpress.com/2011/12/14/the-vita-cortex-plant-in-cork-is-nama-being-unfairly-portrayed-as-scrooge/
NAMA debt forgiveness
https://namawinelake.wordpress.com/2011/08/25/the-truth-about-nama’s-debt-forgiveness-program/
NAMA’s initial victory over Paddy McKillen in Dublin’s High Court (partially reversed on appeal)
https://namawinelake.wordpress.com/about/paddy-mckillen-v-nama/
NAMA’s sale of €800m of Maybourne loans
https://namawinelake.wordpress.com/2011/09/29/nama-sells-e800m-loans-in-paddy-mckillen’s-maybourne-group-at-a-profit/
But if in your considered opinion, something positive has been overlooked, then I’d be very grateful to hear it. Otherwise you might have to accept this blog is neutral on the concept.
@nwl, A few “I LUV NAMA” t-shirts should do the trick! :-)
@nwl
You have a very high opinion of yourself and your site. Totally undeserved. You are not now or never were neutral. Your bias is pure poison.
@JC, Ball…. Man? You should know better, John.
@WSTT be thankful he did not buy a mine…..linked one of the more “balanced” ones on the Sago tradegy.
“He’s still tormented by guilt, however. “For the rest of my life, the memory of those who died at Sago will haunt me,” he says. “That will never go away. I know that the families will wonder whether there wasn’t something more I could have done to make sure their loved ones would still be alive.”
http://nymag.com/nymetro/news/people/columns/intelligencer/15561/
@jg. That’s eerie, John. I did not know that he was involved in mining in WV. And when we eventually meet up and have the pint, or two, in The Dubliner in Stone Street (or the Stone Street Tavern, if you prefer) I’ll tell you why. (May be be passing westwards through New York sometime towards end-March.)
@WSTT if it’s still open,one pub a day closing according to IT over weekend,yeah he must be loving the adoring press and fawning politicians.
Does not get it over here,that’s a really mild link by the way.Out west for a week,foot powder today,no not Ben Dunne type but snow,yes!
Back in city by then.
@JG, No, not Dublin, John. Stone Street, just off Wall Street. ;-)
I’m probably barred !!!
@jG, You might enjoy this one on the Wilbur love-in, aka “serious sucking up”
http://www.irishtimes.com/newspaper/finance/2012/0220/1224312049476.html
@WSTT cringe inducing,rivaled only by Enda’s tall tales about “lancer” the secret service moniker for JFK!
Also,what’s that other shop called …oh yeah Kennedy Wilson,now is it wise to align Irish interests so closely in a sure to be extremely close hard fought campaign,what if the chap Enda endorsed loses,his opponent I’m sure did not appreciate this!
http://www.examiner.ie/ireland/enda-plays-camelot-with-jp-kennedy-184301.html
I take to a few good bars,don’t have an early morning meeting following day !
[…] […]
Not NAMA, but its “step-mother” Anglo selling off an investment in Kensington, West London.
http://www.kensington-w8.com/kensingtonw8/en/page_56243.php
Conflicts of interest totally ignored as usual (one of the things NAMA does not do well), with Allsop acting as receiver and also as agent.
Don’t the Paddies get it? How thick is thick!