Archive for February, 2012

“If there is one key message I can ask you to take away from today it is: there is no point approaching us with an offer which is significantly below what we paid – it is a waste of your time and ours as it is unlikely to be entertained.”  NAMA CEO Brendan McDonagh speaking at the Corporate Restructuring Summit, September 2011

“In the case of property under the control of debtors, NAMA is precluded, under Section 202 of the NAMA Act 2009, from disclosing confidential information…However, in cases where NAMA receives enquiries from potential purchasers about specific properties under the control of debtors, it can facilitate contact with a view to enabling sales transactions to take place” Minister for Finance, Michael Noonan in a written reply to a question in the Oireachtas, February 2012

In recognition of tomorrow’s Oscars, it’s perhaps appropriate to remember one of the great films of the past that never got an Oscar nomination, The Parallax View. A great thriller of the 70s, it was part of a director’s trilogy which also comprised Klute and All The President’s Men, both of which got Oscar nods. Not only did The Parallax View provide you with detail of how to get an airplane to turn back – leave an anonymous note about a bomb, in a napkin in The Parallax View but I suppose scrawling it with lipstick in the wash-room would also do the trick – but the film gave public prominence to a great word “parallax” which means the changing direction of an object caused by you moving. It’s not quite Father Ted’s “this are small, those are far away”, but it’s close.

Its relevance to NAMA is that on one hand NAMA has inflexibly strict protocols for not disclosing the price paid to acquire loans or details of property under the Agency’s control unless it has been foreclosed. And on the other hand, NAMA and Minister Noonan are happy to act as if both details are in the public domain. In both cases there is a view of the Agency’s information disclosure at a fixed point which somehow changes as its CEO and the finance minister open their mouths.

Last year the NAMA CEO Brendan McDonagh took a swipe at bottom-feeding speculative buyers who were wasting their own, and NAMA’s time with unrealistic offers. Don’t come knocking on NAMA’s door with offers for property or loans below that paid by NAMA. But here’s the kicker – NAMA won’t tell you how much it paid for the loan and indeed is very protective of that information, and the debtor isn’t supposed to know and given the price included some convoluted calculations involving Long Term Economic Value and discounts for costs, plus there will have been due diligence on the security which won’t be generally available, how in God’s name are you, as a prospective purchaser of a NAMA asset, supposed to know what NAMA paid?

On Thursday in the Dail, the finance minister declined to provide a list of properties under NAMA’s control in a particular politician’s constituency citing confidentiality, though there is a public list of the small fraction of NAMA loans which have been foreclosed. Fair enough, NAMA has to abide by its own confidentiality rules. But then the Minister invites prospective purchasers of all NAMA property – both foreclosed and still controlled by the debtor – to contact NAMA directly to facilitate sales. How will prospective purchasers know what property is controlled by debtors but subject to a NAMA loan?

I think there are many that would like to see  a register of everything NAMA controls together with the price paid. Fine Gael promised a register of all loans that are in default, and given 80% of NAMA loans are not performing and the loan to values of the remaining 20% may also mean these are in technical default, you might think delivering that promise would give us that information. But like NAMA’s protocols on information, those manifesto commitments are also subject to a parallax view.

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I wonder will we ever reach a point when the army of consultants and advisers that worked with the late Brian Lenihan in 2009 will be eager to come forward and claim it was they who inspired NAMA? It seems for the time being at least that NAMA is a bit of an orphan with its progenitors muted in discussing their involvement in NAMA’s conception in 2009. Step forward Dr Alan Ahearne who was seconded from his role as economics professor in the National University of Ireland in Galwayin March 2009 to work with the former Minister for Finance, and who is likely to have had no small role in the conception of NAMA. Dr Alan has now returned to his old post and today pens a defence of NAMA in the Irish Independent.

He defends NAMA’s secrecy by comparing it with the five nationalised banks – AIB, EBS, INBS, Anglo and Permanent TSB. These are he says, now state-owned as NAMA is, and yet no-one seems all that concerned about the goings-on there. So if I get this line of argument correct, because we’re not clamouring for more information from IBRC, AIB and PTSB, we’re being inconsistent and perhaps even hypocritical in demanding it from NAMA. After all the five banks and NAMA are both state-owned, so why the difference in treatment? So why would we want a new entity with top heavy public sector and accounting direction, with untested procedures and to an extent, personnel, which oversees €74bn of assets, many of which are in distress, which gets its initial forecasts wrong, which still thought that its portfolio’s value was stable in mid-2010 – why would we want more oversight over this body than IBRC which employs over 1,000 career banking personnel, which disposes of large tranches of assets in pretty transparent bidding processes? Why don’t the two get equal attention?!

Dr Alan credits NAMA with stabilising deposits in Irish banks – “it is simply not plausible that the stability in bank deposits recorded over the past six months could have been achieved if toxic loans had remained on the books of the banks” Hmm, Irish private sector deposits in the so-called covered banks (AIB, INBS, Anglo, EBS, PTSB and Bank of Ireland) declined by 5.3% between May and October 2011, in Spain they declined 5%.  Now it is getting a little irritating that neither the Central Bank of Ireland nor the Department of Finance seems willing to publish private sector statistics on Irish deposits in Irish banks, because the DoF is claiming deposits are increasing, but DoF has declined to say how much of the increase is attributable to overseas branches which will be governed by local guarantees. But on the face of it, the stabilisation at Irish banks doesn’t seem materially different to Spain. Spain doesn’t have a NAMA, so isn’t it indeed “plausible” that Irish deposits might have stabilised in the same way Spain’s did? I use Spain because Spain had a property bubble similar toIreland, lending on land and development similar toIreland but has not seen the same collapse in banks (or indeed property) asIreland. Extend and pretend seems to have worked better forSpain in this regard.

Dr Alan defends NAMA’s €1m per working day cost by challenging critics to provide evidence that NAMA is either paying above market rates for its services or that NAMA is wasting money? That seems like a fair challenge and it is hoped that we can benchmark NAMA’s operating costs with comparable organisations on here in coming months. But having said that, Dr Alan hasn’t provided any justification himself for NAMA’s costs. Sauce for the gander?

Dr Alan says that critics have changed their tune on aspects of NAMA over time, that in the beginning the criticism was that NAMA would pay too little for the loans it was acquiring from banks – this was when it was suggested NAMA would pay 70c in the euro, and the upshot of the criticism was that NAMA was bailing out the banks. That criticism has now changed apparently after NAMA had paid 42c in the euro and the upshot is that NAMA has paid so little causing the banks to fall back on state assistance. This is rich, and it is particularly rich coming from an adviser on the NAMA set-up. Cast your minds back to the Wikileaks cables which claimed in relation to then-deputy Secretary General at the Department of Finance, Kevin Cardiff “On April 7 [2009], Econoff spoke with Kevin Cardiff (protect), Second Secretary General at the Department of Finance, who said that the pricing of assets should be finished within three months. Cardiff said he will need about 30 more staff members, who will come in on a contract basis, to set up NAMA and value the banks’ assets.  He hinted that, given the work he and his colleagues have already done, the assets will be discounted by around 50 percent.”  Perhaps Dr Alan, given he joined the Department of Finance in March 2009, a month before Kevin’s hinting, might give us the skinny on what the projections were, because from this perspective, it seems that it was considered a possibility if not indeed a probability or likelihood that the losses in the banks after NAMA’s work would be so severe as to require nationalisation, in which case, why have a new organisation called NAMA, why not do it at the banks?

And lastly Dr Alan says that NAMA’s critics are being inconsistent in saying on one hand that NAMA is a bailout for developers and on the other that NAMA is overzealous in foreclosing on developers. I think Dr Alan might find that different critics have different views, on here for example, you might find commenter Brian Flanagan consistently suggesting NAMA is still shielding developers from the reality and inevitable consequences of their losses, whilst others will suggest NAMA won’t be happy until every developer has a classic 1970s car, the Mark III Ford Cortina,  and living in a 3-bed semi-detached property!

NAMA has come in for unrelenting criticism over the past couple of months which seems unfair to an organisation with some success under its belt. However, you can always over-egg the pudding in the opposite direction also.

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We seem to have an amazing ability in this country with not being able to spot emperors without clothes – how many of us knew in 2007 and 2008 that residential property prices had inflated into a bubble, and still many didn’t act in recognition of that knowledge. And looking at Treasury Holdings’ financial position as set out in the NAMA affidavits – these two from Mary Birmingham are most significant, here and here – in the ongoing case in Dublin’s Commercial Court, you’d have to wonder what it takes to declare Treasury Holdings an utterly failed commercial entity, that this emperor has no clothes – perhaps Johnny Ronan and Richard Barrett’s genitalia swinging in your face, because it seems that NAMA’s assessment of the Treasury group as set out in its affidavits isn’t doing it.

What might be clouding our judgment is the apparent wealth of the company’s founders, in terms of perceived personal assets and also the vague talk about another entity in which the founders have an interest, Treasury China Trust (TCT) which is reportedly “worth” €1.5bn, in the sense of “having assets in mainlandChina valued at €1.5bn”. However examining the Treasury Holdings’ group position, as credibly claimed by NAMA it should be said, here’s what we know:

Cash is king for all companies, but particularly those in distress. And the cash position for Treasury as claimed in the NAMA affidavits is precarious, with the balance having dwindled – in relative terms – to €4.1m at the start of December 2011 and with an average burn rate of over €2m per month between November 2010 and December 2011 – a decline of €31.7m from €35.8m to €4.1m in 13 months – Treasury’s cash should be depleted at this point if the same burn rate continued. NAMA has conceded it has injected an additional €103m of its cash into Treasury, but presumably that cooperation is suspended with the ongoing legal proceedings.

Unsecured creditors
According to NAMA, Treasury had €13.6m unsecured creditors on 7th December 2011, and, additionally, accruals of €5.6m.  Again, according to NAMA, it is Treasury’s “strategy” to pay the unsecured creditors ahead of secured creditors like NAMA and the non-NAMA banks!

According to NAMA, Treasury is insolvent. NAMA claims that Treasury owes NAMA €1.7bn and in addition owes non-NAMA banks €1bn. NAMA says that the majority of Treasury’s loans are in default and that Treasury “appears to be significantly insolvent”. NAMA says that at 28th February, 2010 that Treasury was insolvent to the tune of €859m. By “insolvent”, the liabilities of Treasury exceeded its assets by €859m.

Founders injecting equity
Treasury’s founders have reportedly declined to inject any further funds into the Treasury group – “Mr Barrett had said in August 2011 there was no justification to inject funds as “no equity existed””. So even if TCT is worth €1.5bn and even if the founders have significant wealth tied up in TCT, it doesn’t look as if it will be coming anywhere near the Irish Treasury group.

Despite being asked several times, including at the public accounts committee, NAMA has so far declined to provide the cost of its ultimately failed legal proceedings with Paddy McKillen, NAMA has typically said it still doesn’t have the final costs total which gets less and less credible as we are now nearly a year since the case was finally settled. The media has speculatively filled the gap and the estimate of NAMA’s and Paddy’s costs, which NAMA is to pick up, is €5-7m. When you consider that the hearings at the High Court took seven days, an additional couple of days to deal with the appeal and costs and the Supreme Court hearing took five days and then there were another couple of days on costs – a total of about 16 days – that’s a pretty tasty cost, though that will ignore preparatory work and non-court time.

The ongoing Treasury Holdings case is lower profile but is still likely to be an expensive affair. Whilst the outcome of the case remains to be decided, people are asking how Treasury Holdings which is in poor financial health, can afford to put at risk perhaps millions in legal and other fees in fighting NAMA’s attempt to appoint receivers to the group which by NAMA’s account is severely insolvent.  Presumably the legal fees being incurred by Treasury are not secured or preferred creditors, so if Treasury loses the case, then those invoices from DAC Beachcroft and Michael Cush SC will stand at the back of queue, behind NAMA’s claim for €1.7bn. And if these legal fees will be added to the €14m of unsecured creditors, and if their payment is dependent on Treasury Holdings winning this case, then what does that say about a barrister’s primary duty being to the Court?

UPDATE: 24th February, 2012. As it’s Friday, you might appreciate the following which might arguably be representative of Treasury’s financial position as claimed by NAMA.

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The Department of Finance has this afternoon published the notice below, available here.


It is five months since Peter Stewart resigned from the NAMA board, suggesting at the time that NAMA had arrived at a watershed. It is three months since Michael Connolly suddenly resigned, without issuing a statement and receiving the standard thanks and good luck message from NAMA. These two resignations left the 9-member NAMA board with a complement of seven. It is curious that it has taken so long for the Minister to advertise for the roles and given a closing date of 6th March, 2012, a selection process and a possible notice period, it might be many months before the NAMA board is back to full-strength, which seems a little discourteous to NAMA and highlights the political interference in the operation of the Agency.

The notice is pretty threadbare with detail. For information, the NAMA Annual Report for 2010 showed that the standard fees payable for board membership were €57,641 but Michael Connolly received €146,374 because he was also “Chairperson of the Credit Committee”. It’s not clear how many recruits are sought, presumably two, as that is what is specified by the NAMA Act, which also sets out conditions attaching to Board membership in section 18 onwards.

Remember there is a separate NAMA advisory group about which there has been no official announcement though it is understood the members have been appointed (without advertisement).

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This morning Ireland’s Central Statistics Office (CSO) has released its inflation figures for January 2012. The monthly headline Consumer Price Index (CPI) was down 0.5% compared to December 2011, but up 2.2% year-on-year (down from 2.5% in December 2011). The biggest driver of inflation in the past 12 months continues to be the CSO category of housing-related costs, and within that, the most significant component is mortgage interest which has risen 7.8% in the past 12 months as domestic bank-driven interest rate rises take effect, though this is substantially down from the 15-20% increases seen in recent months. Energy costs in homes have risen by 11% in the past 12 months.

It should be said that in the month of January 2012, inflation on mortgage interest fell by 5.6% as ECB interest rate reductions and domestic regulatory and political pressure bore fruit.

Mortgage interest comprises nearly 6% of the CPI “basket” so the effect is significant.


Elsewhere private rents rose by 0.2% in the month of January 2012and over the past year, such rents are up by 3.1%. It seems that in our financial crisis, the big correction in rent took place in 2009 with a 19% maximum decline, compared to a decline of just 1.4% for all of 2010. Since the start of 2011 there has been a 3.0% increase (mostly recorded in February and October 2011). At the start of January 2012, the Department of Social Protection reduced its rent assistance payments by up to 29% (an average of 13%) and the Department says that some 40% of the rented market in the State is affected by rent assistance payments, which at the end of 2011, was paid to 98,603 households.  The Department’s 40% is derived from information provided to it by the Private Residential Tenancies Board. The Department is projecting it will save €55m in 2012 from its €500m budget for rent assistance, the saving comprising €33m to changes to the minimum contribution and €22m in relation to the new maximum limits.

Private rents have tended to fall in line with rent allowance even though many landlords will not accept rent allowance tenants. The betting on here is that private rents will come under pressure in the short term but it might take a couple of months for the changes to feed through as most renters will have a couple of months to renegotiate their rents or move.

The CSO has this month changed its format of presentation which is why you can now see private rents and public authority rents above. It is only private rents that is of interest on here as they represent market levels affecting private housing.

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In December 2010, fourteen months ago, and after NAMA had acquired most of the €74bn of loans which it was eventually to acquire, the NAMA chairman Frank Daly issued a pre-Christmas message in which he said “as a result of the Agency’s insistence, a number of borrowers whose loans have been acquired by NAMA have reversed or are in the process of reversing transfers of over €130 million worth of assets which they had previously sought to transfer beyond the reach of NAMA or the relevant Banks”. And remember that December 2010 was 7-9 months after NAMA had acquired the first tranche of loans from the NAMA Top 10 developers which were worth a staggering €15bn, and four months after the Agency acquired the second tranche with the 20 next-biggest loans which totalled €12bn.

It is difficult to put NAMA’s December 2010 figure in context – was €130m a “good” result for NAMA? The media would have you believe that developers were squirreling wealth away on an industrial scale, and that this malfeasance mostly involved putting property in the wife’s name (it is a feature of the Irish property world that developers are almost exclusively male). So €130m might be perceived as small in the context of loans for assets worth €74bn – surely borrowers of €74bn had at least a few billion of unencumbered assets to protect? And the view on here is that if developers who ran up debts of €74bn only managed to transfer €130m to their wives (or girlfriends or elsewhere beyond NAMA’s reach), then they were either too stupid to see the downturn coming or too honest to act so as to deprive creditors – neither seems likely, though there’s possibly a modicum of truth to both, so the implication is that spousal transfers should be far greater than €130m.

Fast forward 14 months to February 2012, and remember that NAMA has now examined 95% of the developers’ business plans, according to the NAMA chairman last week, and remember these business plans are required to disclose details of asset transfers in the past five years, and in the Dail yesterday, Minister for Finance Michael Noonan told the Fianna Fail finance spokesman Michael McGrath that NAMA had now succeeded in reversing €160m of transfers – in other words an additional €30m when compared with  December 2010. The €160m of reversed transfers represent 31 developers. Minister Noonan says there are another 17 developers being pursued. The Minister is reported to have said that NAMA is pursuing five “cases” through the courts for the reversal of transfers – it’s not clear if this is five developers or just five legal actions, remember that NAMA has initiated legal actions in Canada, the US and the UK against the Grehans, so there could well be “five cases” there alone. There are pending legal actions inIreland against Sean Dunne and the directors of Capel Developments, but it is understood that these are related to judgment orders, rather than reversals of any transfers. The David Daly case did have an element of spousal transfer of cash, but David Daly has now refinanced his loans, so that is no longer a NAMA issue presumably.

Again we have little context to be able to judge if this is a good or bad result for NAMA. If NAMA is indeed hounding developers and if the media image of widespread transfers is correct, and developers with €74bn of loans had a few billion of unencumbered assets to protect, then it somehow seems like a small number. In light of the TAIL transaction at Treasury Holdings which we learned about yesterday where €20m of shares were supposedly transferred to the founders of the company for what on the face of it appears to be well below value – disputed apparently by Treasury who seem to claim the transaction was at open market values – and two years after the transaction, NAMA has still not gone to the courts to reverse the transaction, despite referring to it in its affidavits as “a grave concern” and “making good of the financial damage caused to Treasury by the TAIL transaction has been a central requirement of NAMA at all material times” and “at no stage has NAMA accepted the propriety of what was done in the TAIL transaction” then you might indeed wonder if the €160m of reversed transactions is anything but a paltry start to reversing developer transfers.

Deputy McGrath’s question and Minister Noonan’s answer in the Dail yesterday should be available later today and will be published here verbatim when available.

UPDATE: 23rd February, 2012. It seems NAMA is sticking by its view expressed here, that there is “no pot of gold” in developers’ transfers. Deputy McGrath’s question was actually dealt with on Tuesdaythis week, not Wednesday, and can be found here, and is reproduced verbatim below. “Deputy Michael McGrath asked the Minister for Finance if he will provide details of the number of individual cases that comprise the €160 million of asset transfers by National Asset Management Agency debtors to family members which have been now reversed by the agency; if all of these reversals have been achieved without the necessity for court action; the number of individual cases in which NAMA is pursuing similar reversals; and if any court action is planned or currently underway to achieve this objective.

Minister for Finance (Deputy Michael Noonan): NAMA advises me that in the case of 31 of the 188 debtors under its direct management, it has secured agreement to reverse asset transfers with an aggregate value of €160m. In another 17 cases, assets transfers have been identified and NAMA is confident that its current discussions with debtors will conclude with additional transfer reversals or the granting of charges to it over unencumbered assets. In 5 other cases to date, NAMA has initiated legal action to reverse asset transfers. NAMA also advises me that in the case of 32 of those debtors, no asset transfers to relatives appear to have taken place in the past five years.

A number of directly-managed debtors have borrowings with no recourse other than the secured asset and in those instances debtors have no legal obligation to reverse asset transfers or offer additional unencumbered assets. Finally as regards the other debtors under its direct management, NAMA has either already enforced against the debtors concerned or is engaged in further investigation and legal review of possible asset transfers. Some of these cases will ultimately lead to additional reversals or the granting to NAMA of additional charges over assets which are currently unencumbered.

In the case of the 598 debtors whose debt is managed by the participating institutions on NAMA’s behalf (par debt of €13 billion), the business plan cycle is approaching completion. It is expected that the current engagement with these debtors will yield additional reversals of asset transfers to relatives by the time the process has completed.

NAMA has already stated that the maximum amount it expects to recover as additional security is of the order of €500 million.”

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Forgive the sexism – and remembering the always-entertaining Rumble in Ranelagh – but you would have to wonder how Treasury came up with a codeword – TAIL – for what looks like a controversial financial transaction in 2010 in which €20m of shares in a company called China Real Estates Opportunities (CREO) were transferred out of the Treasury group to the apparent benefit of Johnny Ronan and Richard Barrett in return for €100,000. NAMA has been trying to reverse this transaction for some time.

As it happens TAIL is an acronym, derived from Treasury Asia Investments Limited, and what happened was that Treasury sold €20m of shares in CREO to a company called Daylasin Limited. Now hang in here, it sounds more convoluted than it is! Daylasin Limited changed its name to Treasury Asia Investments Limited (TAIL) and TAIL sold the €20m of shares to Messrs Barrett and Ronan for a consideration that appears to be worth just €100,000. It’s not quite the sale of a €160m Moscow office block for the price of a laptop, but it seems to be in the same league, even if there hasn’t been any formal allegation of shenanigans by NAMA yet.

The transaction caused NAMA “grave concern” according to Mary Birmingham’s affidavit  (paragraph 54) because, to state the bleedin’ obvious, it diminished the value of Treasury’s assets. And that further, the “making good of the financial damage caused to Treasury by the TAIL transaction has been a central requirement of NAMA at all material times” and “at no stage has NAMA accepted the propriety of what was done in the TAIL transaction”

It seems that the Treasury position is that the TAIL transaction was “legitimate” and conducted at open market values, though how to square that with NAMA’s claims isn’t immediately obvious.

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“Other than to seek clarifications on certain matters, NAMA has not engaged in negotiations with the two potential investors.. We understand NAMA has said only that the offers made by the two potential investors did not meet commercial requirements but did not outline what those commercial requirements were. We find this course of action impossible to understand” Treasury spokesperson speaking on 26th January, 2012

It was reported by the Sunday Independent in January that Treasury was “understood” to have formally warned NAMA via a solicitor’s letter to stop putting out inaccurate information about Treasury. Looking at the NAMA affidavits in the ongoing court battle in Dublin’s High Court, it looks though as if it was NAMA that wasn’t being portrayed in the most accurate of terms. There are four NAMA affidavits available, two from Mary Birmingham, dated 3rd February and dated 13th February and two more from John Moriarty, also dated 3rd February and 13th February. The affidavits would seem to belie claims that NAMA had not engaged with two third party investors – more correctly termed “buyers” in this instance, Hines and Macquarie – who were interested in buying Treasury’s loans from NAMA.

The affidavits also provide NAMA with its first real opportunity to have a swing at Treasury and there is some biting stuff in the affidavits though these two quotations might sum up the NAMA position – “the Applicant’s affidavits are replete with mischaracterisations and incomplete accounts of what has occurred since NAMA’s acquisitions of their bank loans”  and “in seeking to lay the blame at NAMA’s door for such detriment the Applicants overlook the commercial reality that the loan facilities which have been demanded are in default and have been, in many cases for some time”

The Offers
The affidavits from the two NAMA staff show that the Agency formed specific teams to work with the two proposals, and that furthermore PwC Corporate Finance was engaged to provide a third party view of proposals. In the case of the Hines proposal, NAMA says it formed a team comprising four NAMA employees, John Moriarty, a senior NAMA portfolio manager, John Collison and Graham O’Hanlon from the NAMA credit department and Simon Lynch from the NAMA legal department. In the case of both offers, NAMA engaged PwC Corporate Finance as an independent third party to assist in its evaluation of the offers. NAMA seems not to be a stranger to weekend work, and the Hines offer was reviewed by the NAMA team on the weekend of 21st and 22nd January, 2012. The proposals seem to have been delivered late in the day and were heavily qualified, lacked detail and in the case of Hines wanted NAMA to put up 80% of the purchase price PLUS agree to provide development finance. The affidavits show that NAMA was seemingly seriously engaged with the offers, working weekends, and in the case of PwC into the night, to examine the proposals. And it seems that Hines criticised Treasury for not responding to queries in a wholehearted manner and demanding unreasonably high fees for engaging with the loans if purchased from NAMA. The Hines offer was also non-recourse to the portfolio of assets, and Hines wanted the purchase price to be apportioned to specific assets, with the loan and asset ringfenced without recourse to other assets.

The NAMA team which dealt with the Macquarie proposal was Mary Birmingham, Darren Cullen, Stephen Coffey (all from the NAMA portfolio management department) and Alan Stewart (NAMA legal department) but it seems that others including NAMA credit, Ronnie Hanna included as well as John Mulcahy himself and the PwC Corporate Finance team all participated in examining the proposal. TheMacquarie proposal does indeed carry a headline €622m but that includes €52m consideration for KBC’s loans.Macquarie was to put up €73m of “equity” with the implication that NAMA would staple finance the remainder (€549m or 88%). There would be no cross-collateralisation, as with the Hines proposal, so if one loan failed, then NAMA couldn’t seek recourse against another asset.  Macquarie wanted a margin of 12% on any additional funding required, presumably to finish off developments.Macquarie would be paying management fees of €6m per annum to Treasury PLUS €80m!

The CIM – “CIM” being the US property investment and management group – offer in September 2010 was even more hairy for NAMA as it was for a total of €805m, but of this NAMA was to provide 90% staple financing totalling €724m and CIM would put up €81m itself. That said, it seems the offer was acceptable to the NAMA board in March 2010 BUT subject to certain conditions which included a reversal of an asset transfer by Messrs Barrett and Ronan. However it was the fact, say NAMA, that a further revised offer, which was less than €625m – €180m less than the original offer – was submitted by CIM in May 2011 which took account of matters uncovered with due diligence and also the uncertainty introduced with the new Government’s commitment on Upward Only Rent Reviews and NAMA rejected the revised and lower offer.

Treasury’s financial health
For the first time, we get NAMA’s assessment of Treasury’s financial health, or rather ill-health. NAMA says it acquired €1.7bn of Group loans at par value. It says that the Group also owes €1bn to non-NAMA banks. So that’s €2.7bn of debt, it seems. The Group’s financial statements at 28th February 2010 show it to be “balance sheet” insolvent to the tune of €859m.  NAMA has provided €103m of new advances to the Group. In July 2011 Treasury said that it was going to run out of cash by September 2011.

NAMA advanced an additional €103m to Treasury including €30m to fund the Montevetro office building which was eventually sold to Google. It is intimated –para 47 of Birmingham affidavit 3rd February – that NAMA provided €75m of staple financing to Google on the Montevetro building which was sold for €99.9m in February 2011.

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Screengrab below reproduced with permission from Politics.ie and the original thread is to be found here.

Although we don’t yet have the details or context of the matter, it seems that yesterday in Laois, a linked group of 30 people faced down an attempted eviction. On politics.ie there are photographs which purport to show an official, said to be the deputy Sheriff with a Garda seemingly attempting to gain possession of a country property, and on the other side of a closed iron gate is a group which includes Joan Collins TD from the People before Profit party. The group is said to consist of People before Profit (which unites with the Socialist party and others in the Dail to form the United Left Alliance which is in turn part of the Dail Technical Group), the Anti-Eviction Taskforce and the Defend Our Homes League. A representative of the groups is said to be talking with the Irish Examiner which may publish a story tomorrow; it is said that a TV3 film crew and an Irish Times reporter arrived at the scene of the attempted eviction, but after the confrontation had ended and the bank and Sheriff had withdrawn from the property.

Now although we might not have the facts in the case above, we do know from reporting of mortgages by the Central Bank of Ireland last week that some 600 properties are repossessed each year, most by what is termed “voluntary surrender/abandonment”. Here are the statistics for the last quarter, the three months ending 31st December 2011.

Will scenes similar to those in Laois yesterday become a common feature as banks take action against tens of thousands of households – two months ago there were 53,086 mortgage accounts that were in arrears for more than six months, a threshold where it is believed the account is at severe risk of default.

UPDATE (1): 21st February, 2012. A video of yesterday’s civilised confrontation between the deputy Sheriff for Laois and protesters at a family home is now available on youtube.

UPDATE (2): 21st February, 2012. The Laois Nationalist newspaper has reported on this story, and gives details of the owner and his mortgage history with Ulster Bank.  The owner is Lee Wellstead, the address of the property is Knockanina, between Mountrath and Castletown in County Laois. His original mortgage was €80,000 topped up to €110,000 – it’s not clear how much is owed today. Ulster Bank was apparently granted possession at the start of 2009 and was granted an eviction order in August 2011.

UPDATE: 15th March, 2012. It is reported by Deputy Clare Daly – whose colleague in the United Left Alliance Deputy Joan Collins was part of the protest group last month – that the eviction at the above property was effected yesterday. According to Deputy Daly  “a large force of Gardai sealed off a country lane leading to the home of Mr Lee Wellstead and then, according to neighbours, forced entry by kicking down the front door. The repossession of the property and the eviction of Mr Wellstead and his young daughter were carried out on behalf of Ulster Bank” The deputy goes on to say that the Defend Our Homes League will be holding a protest at 10.30am at Ulster Bank on Lower O’Connell Street in Dublin.

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No-one will blame Minister for Jobs, Enterprise and Innovation, Richard Bruton for getting involved in the BSkyB initiative to set up an Irish call-centre which will create 800 jobs; with unemployment at 310,000, representing 14.2% of the workforce, and a total of 440,000 on the Live Register, the country desperately needs such initiatives. However Minister Bruton’s intervention with NAMA remains shrouded in secrecy with the Department not commenting on the claim here that the Minister intervened directly with the NAMA CEO Brendan McDonagh directly or the claim in the Sunday Independent where the Minister is said intervened with the NAMA decision via the IDA. Whether or not the Minister realised it, his intervention was conferring an advantage on BSkyB who otherwise might not have been able to secure their preferred premises.

Politicians lobbying NAMA are supposed to make such lobbying public in order to prevent the shenanigans – imagined and real – that have characterised the Irish political landscape in recent decades.

On Sunday last, the Sunday Independent reported that the environment minister, Phil Hogan intervened in a transaction involving a building subject to a NAMA loan. And although the thrust of that newspaper’s reporting was that the Minister’s intervention was with NAMA, in fact it seems he merely intervened with the local council.

Yesterday in the Commercial Court, there was a directions hearing in a case where NAMA is pursuing money from companies in the Moritz property group. And according to the Independent, the barrister for the Moritz group claimed “a government minister made representations to NAMA after it initiated the proceedings” Sadly the minister is not identified in the reporting, but the context of the reported comment suggests the minister’s intervention might have resulted in conferring some advantage on the Moritz group.

Politicians have a dedicated email address to contact NAMA – in fact, thanks to Minister for Finance, Michael Noonan, that email address is in the public domain – oir@nama.ie – and politicians are encouraged to make contact with NAMA at that email address in pursuit of matters within a politician’s remit which seems to include drawing NAMA’s attention to hazardous property, anti-social behaviour or criminality. That’s all fine and dandy, but what about political contact that might be ambiguous and may conceivably be intended to gift some advantage to someone connected with the politician? The NAMA anti-lobbying legislation seems to have anticipated such an eventuality and forces the politician to make public their representation.

To date, I am aware of Stephen Donnelly contacting NAMA with respect to Greystones Harbour and he has dutifully published that communication on his website; so also has Simon Harris who was concerned at a NAMA site attracting anti-social behaviour and again that communication was published on the politician’s website. And in both cases, most people will commend the politicians for their intervention.

But recent reporting gives the impression that more politicians, and particularly ministers are intervening with NAMA, and are not making that contact public. And although there is no evidence of shenanigans at present, such apparent contempt for the provisions of NAMA’s anti-lobbying legislation is worrying, and if allowed to go unchecked may in future migrate from worthy issues like employment to venal issues like donations and influence. It is to be noted that it is also a criminal offence if a NAMA employee fails to notify Gardai of lobbying in breach of NAMA’s lobbying rules.

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