Image of the Week
Vincent Browne – image screengrab above via TV3 Tonight with Vincent Browne – not looking at all happy with his little chair whilst interviewing the NAMA chairman Frank Daly after the publication of the 2011 NAMA Annual Report. Or maybe, he’s just not happy with NAMA’s adoption of Hope as a policy.
Non-image of the week goes to the former Anglo chairman Sean FitzPatrick who, when transported from the Bridewell garda station to court was allowed drape his blazer over his cuffed hands. Yes, a former banker was in handcuffs this week.
Quinn saga programme highlights of the Week
“Never before have I seen such conduct on the scale demonstrated here nor with the deviousness with which this scheme has been operated” Mr Justice Peter Kelly commenting on the Quinn family scheme to place assets beyond the reach of Anglo
“I work in Joe Duffy part time — it’s important to remember that” Karen Quinn (nee Karen Woods) defending the €320,000 she reportedly received since April 2011 from a Russian company connected to the Quinns. She is reported to be working part-time at a Dublin car dealership, where at present there is an advertised vacancy for a full-time receptionist paying €21,000 per annum. Still, there’s more to job satisfaction than just money…
NAMA will now say anything quotes of the Week
“Now what I think you are glossing over is that there is another seven or eight years to go in NAMA, and in that seven years in aggregate, property prices recover by something like seven, eight, nine, 10% which is not an unreasonable proposal, remember recently the Central Bank indicated that property prices may have actually fallen below their economic level.” NAMA chairman Frank Daly, July 2012
“Some commentary has suggested property market will need to recover to 2004-2007 levels for NAMA to break even. The scale of recovery required is, in fact, a more modest 10% over the lifetime of NAMA taking into account the 5% of subordinated debt (€2bn)” NAMA chairman Frank Daly, September 2010
Irish residential property has declined 23% between September 2010 and June 2012. Irish commercial property has declined by 20% between September 2010 and June 2012. Yet NAMA now needs just 6-10% of a recovery to break even, whilst in September 2010 it needed 10%. Outstanding! And by the way, in September 2010 they were “taking into account the 5% of subordinated debt” which NAMA doesn’t need pay if it makes a loss, no such reference in July 2012. In actual fact, NAMA will need a blended increase of around 24% to existing property prices – see figures at top of this page – AND it will need cover its operating and interest costs, if it is to break even.
But NAMA is now saying that an increase as low as 6% will do the trick!
“What I’m saying is that based on our projections, our analysis, we are confident. And that’s an objective view of projections, figures, macros and not all our own.” NAMA chairman Frank Daly, July 2012.
You can’t blame an Agency for trying to build trust in the property market. After all, the Agency deals primarily in the property market and a loss of trust would be very punishing indeed. Truth be told, the CSO says mortgage-sales prices are down 50% at present. Others say they are down by 60% but if they are right, that indicates that cash transactions are down by 80%-plus if you think cash comprises 30% of the market, which doesn’t seem plausible as presumably valuers wouldn’t sign off on such high mortgage valuations knowing that cash prices were so much lower. Professor Morgan Kelly predicted falls of up to 80%. Commercial property is down by 67% according to both the JLL and SCSI/IPD indices but prime Dublin still costs twice as much as prime Belfast and the National Competitiveness Council said earlier this year that commercial property was still overvalued. The view on here about property prices over the medium term is who knows, but recoveries cannot be accurately predicted with spreadsheets or spreadsheet macros – if they could, we’d all be billionaires!
On the face of it, it looks as if Simon Carswell has made a true hames of this NAMA report. €1bn profit a year? Meaning €9bn between 2012-2020? But, in a detailed interview with the NAMA CEO, we get the following “we are probably going to be producing pre-impairment profits of well over €1 billion a year so we would believe at this stage – with a cumulative impairment taken of €2.75 billion, absent anything that has taken place in the market – we are probably reasonably provided for at this stage”
NAMA made a pre-impairment profit of €133m in Q1, 2012 and given Irish residential property has declined 6% so far this year, and Irish commercial is down 4%, it is likely that post-impairment, there won’t have been any profit. So €1bn a year?
Shock of the Week
NAMA has spent just €23,000 on legal fees and €355,000 on receivers in the first three months of 2012, according to its Q1, 2012 management accounts published this week. Given that the Agency has a budget in 2012 of €25m for legal fees and €33m for receivers, the figures look distinctly odd. Mind you, NAMA continues to keep the accounting profession in German cars and has spent a more typical €562,000 on audit and accountancy services during the quarter. Still though, a measly €23,000 on legal fees? Does this mean there are desperate hordes of besuited and bewigged ones now relegated to stalking the streets of Dublin chasing ambulances?
Paradox of the Week
The Broadcasting Authority of Ireland issued a statement about its intentions for investigating Denis O’Brien’s control over Irish media. At present, his Communicorp vehicle owns radio stations which have about a 15% national radio listenership share. But it is his interest in Independent News and Media, publishers of the Independent, Sunday Independent, Sunday World, Belfast Telegraph, Evening Herald and others that is causing concern. Denis owns nearly 30% of INM and is perceived to have recently emerged victorious over the O’Reilly family in the struggle for control of the group. Now “control” in this sense might not be what the BAI regard as “control”, but the BAI does conclude that Denis has a “significant interest” in INM though not what it regards as “control”. The paradox? The BAI says it has a statutory obligation to consider “the desirability of allowing any person, or group of persons, to have control of, or substantial interests in, an undue amount of communications media”
So if the BAI has concluded that Denis O’Brien does have a “substantial interest” in INM then why is the BAI not under a statutory obligation to consider the desirability of allowing Denis O’Brien have “substantial interests” in an undue amount of communications media? Or maybe having 15% of radio listeners and having a “substantial interest” in the most powerful newspapers in the country doesn’t count in the BAI’s eyes as “an undue amount of communications media”. A head-scratcher. “Desirability” has become a particular issue with Denis O’Brien after the Moriarity Tribunal made so-called “adverse findings” against him, findings which he has disputed but which nonetheless stand on record. Control of media might help soften that record however…
Runner-Up goes to NAMA and its legal action with the Information Commissioner, Emily O’Reilly in her role as Commissioner for Environmental Information.
This is the legal case that NAMA doesn’t want to talk about. The heroic Gavin Sheridan at thestory.ie has been trying for more than two years to have NAMA declared to be subject to environmental information requests on account of its status as a public body. NAMA has fought Gavin tooth and nail every step of the way, and even though Ireland’s guardian of transparency, the Information Commissioner has sided with Gavin, NAMA has continued its resistance in the courts, where this week it spent a couple of days trying to convince the courts that NAMA is not in fact a public body and was accordingly not subject to environmental requests. According to Gavin, he expects a decision “in the Autumn”, which means from September onwards and he is “50/50” about the outcome. NAMA uses the misdirection of being forced to hand over commercially sensitive information, should it lose the case, but the rules already provide for bodies to exempt themselves from providing such information. If Gavin, or more correctly the Information Commissioner wins then we might be able to force NAMA to provide us with a list of all its property – not just the foreclosed stuff – and we might also see what remedial work it has done on ghost estates, or – as in the case of the Gleann Riada block in Longford that it is presently demolishing – it has done nothing and spent nothing in securing, protecting and maintaining these estates. The paradox is that NAMA keeps on telling us it is transparent and supports transparency as long as it doesn’t offend the NAMA Act. However the NAMA Act is not being used very much in these proceedings and NAMA is now scaremongering that a victory for Gavin here, would mean other bodies become subject to environmental requests. The spectacle of the State spending considerable sums in suing itself hasn’t gone unnoticed on here either.
If Gavin wins, maybe the first information request might be how much NAMA has spent on legal fees in resisting being classified as a public body…