[The transcript of the hearing is now available here]
The NAMA CEO and chairman, the owlish Brendan McDonagh and hawkish Frank Daly, appeared before the Oireachtas Committee of Public Accounts today to answer questions following the publication of a special report by the Comptroller and Auditor General in May 2012. The opening statement from Brendan is available here, the transcript of the hearing should be available early next week and will be linked to here.
I’m afraid I have just dipped in and out of the hearing which was broadcast live, and there doesn’t appear to be much new for the audience on here. I see the fact that NAMA is liaising with the Gardai over non-disclosure of assets by one developer is making headlines, but that was covered in depth on here a month ago.
The opening comments from Brendan do contain some new information
“The report has been interpreted by some commentators as implying that we paid more for the loans than we ought to have done. I reject this categorically. The report refers to the State Aid component of the NAMA Scheme which was €4.96 billion by reference to the first five tranches and which proved ultimately to be €5.6 billion for all tranches. The report points out that NAMA, under the Act, had discretion to pay a price for loans which was less than their long-term economic value. The reality is that the State Aid is a function of the discount rate used: the EU-approved discount averaged just over 5% whereas, in an open market, buyers would have discounted the loans at a rate of about 15%.”
Brendan might want to acquaint himself with the meaning of the word “categorically” because he seems to be conceding himself that NAMA paid more than the assets were worth. I am not aware of any commentator suggesting NAMA used a methodology other than was agreed with the European Commission for the acquisition of loans. But the state aid – confirmed now at €5.6bn following due diligence on all €32bn of loan acquisitions – represents the difference between what NAMA paid for the loans and what the loans were worth on the open market.
After the recent additional capital injection of €1.3bn into Irish Life and Permanent which brings to €4bn the amount given to that organization, we have now injected €64.1bn directly into the banks and we learn today that NAMA has given them €5.6bn of state aid, so to date, the bank bailout has cost us €69.7bn. That excludes any additional losses that will be made by NAMA and any additional capital requirements though on the other side it excludes the bank guarantee fees paid by the banks, and the residual value of our shareholdings in the banks.