Archive for March 2nd, 2012

It was noteworthy earlier this week when Minister for Finance Michael Noonan provided an analysis of NAMA’s 2012 projected expenditure to Sinn Fein’s Gerry Adams that the Agency had reduced its projection of 2012 receivership costs from €75m to €33m. For anyone who thought this presaged an easing in the NAMA position on developers, today’s announcements in Iris Oifigiuil show that the NAMA foreclosure machine continues apace without let-up. And perhaps “slew” is the correct collective noun for developers!

It’s a motley collection of developers. First up, and possibly to commemorate the scheduled release from jail of its directors, NAMA has had Simon Coyle of Mazars appointed to two Wexford companies, Goff Developments Limited and Montfield Properties (Wexford) Limited. Two directors of Goff, Damien Goff and Francis Goff were jailed last September 2011 after failing to pay pension contributions in their building company. They were sentenced to five months, which presumably expired on Wednesday  this week when NAMA had receivers appointed. [CORRECTION 17th December 2012. The sentences were reportedly dropped following an appeal to the Wexford Circuit Court in 2012, according to the December 2012 edition of The Phoenix. This was after the court heard that Francis Goff had repaid €30,000 to the pension scheme.]

Elsewhere NAMA has had Luke Charlton and David Hughes of Ernst and Young appointed as receivers to Albion Enterprises Limited, the south Dublin docklands-based developer which racked up a string of residential developments across the capital in the last decade including Belmont Hall in Gardiner Street, Temple Hall in Parnell Street, Shrewsbury Lodge in Cabinteely Village, Dublin and Heath Square in Finglas, Dublin 11. This is an unusual receivership in that NAMA had reportedly gone to court after another creditor MCR Personnel had apparently petitioned the courts to haveAlbion wound up. NAMA was obviously successful in blocking the winding-up attempt.

Next up we have what seems like tidying up loose ends at former Irish residential building giant McInerney with Michael McAteer/Gearoid Costelloe of Grant Thornton appointed as receivers to McInerney Contracting Limited.

Then we have Park Avalon Developments Limited, a Clare based developer.

And lastly we have a group of what appear to be companies associated with the Limericksolicitor/developer, Paul O’Brien. Michael McAteer/Gearoid Costelloe of Grant Thornton have been appointed as receivers to Whiteband Investments and Newreed Taverns Limited. Last month, NAMA had receivers appointed to other companies controlled by Paul O’Brien and indeed in January 2012, NAMA had receivers appointed to still more companies controlled by the solicitor whose partner in his law firm, Denis McMahon was reported by RTE in January 2012 would be tried at a future sitting of the Limerick Circuit Court in a fraud case, which it was said “would be fully contested”.

Remember you can see a comprehensive list of Irish foreclosure actions by NAMA here and in this regularly updated spreadsheet.

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In the Beginning – which was only in mid-2009 – NAMA was projected to have a complement of 50 staff, that rose to 100 at the end of 2010 and by the end of 2011 the Agency had “just under 200” when it employed the former CIF communications chief to become the Agency’s relationship manager. The Agency is now set to substantially increase its complement after Minister for Finance, Michael Noonan responded to a question from Sinn Fein’s Gerry Adams in the Dail earlier this week in which he signalled the Agency is to hire new staff. The new staff are needed to manage smaller loans currently managed by staff in the participating NAMA banks – technically referred to as “Participating Institutions” or “PIs” and which comprise IBRC, Bank of Ireland and AIB. The new staff will be on NAMA’s payroll but may be physically located on the banks’ premises. Here’s what Minister Noonan said

“I am informed by the Chairman of NAMA that the Board has given its approval to the establishment of dedicated teams which will monitor and supervise intensively the management of the 600 NAMA debtors which are currently being managed by Bank of Ireland, AIB and IBRC on NAMA’s behalf. The teams concerned will be situated within the institutions and will ensure that the highest standards are applied by the institutions to the management of the €5 billion of NAMA debt which is involved.”

At present there are 400+ staff working in these banks on NAMA-related lending for 600 of the smaller-scale developers, NAMA itself manages the top 180 developers directly. These 400+ staff are on the banks’ payroll but NAMA is paying €74m per annum to the banks for their services; that €74m also includes a payment, estimated at less than €5m to a company called Capita to oversee their work. It is not clear at this stage if NAMA is just employing staff to “monitor and supervise intensively” existing staff at the banks or if NAMA is recruiting replacement staff to do what the 400+ existing staff do – the former seems to be what Minister Noonan is saying, the latter is what was recommended in the Geoghegan review.

Following the review of NAMA’s structure and operation in Sept/October 2011 by former HSBC banker, Michael Geoghegan, a recommendation was made that NAMA would take back the administration of many of the smaller loans which are presently administered by the 400+ bank staff. Michael Geoghegan’s statement on the matter is reproduced above but it makes clear the view that failure to take over the management of these smaller loans may expose NAMA to financial risk, though like much of what is contained in the Geoghegan review, there is little or no tangible support given to the view by the career banker.

NAMA was asked for a comment on the Minister’s statement and if one becomes available it will be published as an update here. There are a considerable number of loose ends – presumably the €74m paid to the banks each year will be substantially reduced if NAMA recruits substitute new staff, and given the banks are charging NAMA a profit element for their work, presumably the reduction will be greater than the €25m indicated. What will happen to the 400+ staff at the banks? Will some or all be made redundant? Perhaps NAMA will recruit some but that is not clear, and it would obviously conflict with the objective of the exercise if, to illustrate, Jim was employed at Bank of Ireland for 10 years and is managing NAMA loans but is now recruited by NAMA, he still sits in his old office at Bank of Ireland, it’s just that he is paid by NAMA. How would this change bolster NAMA’s financial performance and would NAMA not be deterred from employing existing staff? And why does Minister Noonan say the new staff will “monitor and supervise intensively” – does this mean the new NAMA staff will be additional to the existing staff? And if so, will the real additional cost be up to €25m? If the additional cost is indeed €25m per year for the next nine years – or €225m in total – is that money well spent in the context of €5bn of loans? What happens to the Capita contract? No doubt that if the NAMA board has approved the new initiative and recruitment, it has all these answers…

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