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Archive for September 21st, 2012

There had been a slight relenting in the pace of NAMA foreclosure action since the end of August 2012, but courtesy of today’s  edition of Iris Oifigiuil we find that NAMA has had receivers appointed to eight companies, all ultimately majority owned by NCB Stockbrokers. How serendipitous that there was a blogpost on here today about judges and politicians in NAMA – the betting would be that it is this type of professional – if that’s the correct term for a politician – whose money went into the developments controlled by NCB. There is a ninth receivership announced today also which is totally unrelated to NCB, and it is detailed at the end of this blogpost.

The eight NCB companies are

(1) AKLEY PROPERTIES LIMITED On 18th Sept NAMA had Mr. Kieran McCarthy of Hughes Blake, Joyce House, 22/23 Holles Street, Dublin 2 appointed as receiver. The company is based in Sandyford Dublin. Its directors are William Mulrooney (67) and Patrick Shine (57). The company is 100% owned by owned by Ardawn Developments PLC whose directors are Shane Hassett (42) Greg Dilger (52) and Patrick Shine (57). Ardawn Developments PLC is in turn owned by Cova Properties Limited (5%) and NCB (Development) Nominees Limited (85%). Cova Properties Limited owned by Cova Property Holdings which is ultimately owned by Brendan Fizsimmons, Patrick Shine and William Mulrooney and NCB Development Nominees Limited is owned by NCB Stockbrokers Limited.

(2) ARRYTON PROPERTIES LIMITED On 18th Sept NAMA had Kieran McCarthy of Hughes Blake appointed as receiver. The company’s directors are William Mulrooney (67) Patrick Shine (57) owned by Ardawn Developments PLC. See (1) above for Ardawn’s pedigree,

(3) ATARA PROPERTIES LIMITED On 18th Sept NAMA had Kieran McCarthy of Hughes Blake appointed as receiver. The company’s directors are William Mulrooney (67) Patrick Shine (57) owned by Ardawn Developments PLC. See (1) above for Ardawn’s pedigree,

(4) AYERS PROPERTIES LIMITED On 18th Sept NAMA had Kieran McCarthy of Hughes Blake appointed as receiver. The company’s directors are William Mulrooney (67) Patrick Shine (57) owned by Ardawn Developments PLC. See (1) above for Ardawns pedigree,

(5) BRATTICE PROPERTIES LIMITED On 18th Sept NAMA had Kieran McCarthy of Hughes Blake appointed as receiver. The company’s directors are William Mulrooney (67) Patrick Shine (57) owned by Duskhill Properties Limited which is in turn owned by three companies – (1) Astonbridge Limited which is in turn owned by Ardbawn Developments PLC (see above) (2) Belcanto Properties Limited which is in turn owned by Ardawn Developments Two PLC (see above) and (3) Dayjeur Properties Limited

(6) DAWNHILL PROPERTIES LIMITED On 18th Sept NAMA had Kieran McCarthy of Hughes Blake appointed as receiver. The company’s directors are William Mulrooney (67) Patrick Shine (57) owned by Duskhill Properties Limited which is in turn owned by three companies – (1) Astonbridge Limited which is in turn owned by Ardbawn Developments PLC (see above) (2) Belcanto Properties Limited which is in turn owned by Ardawn Developments Two PLC (see below) and (3) Dayjeur Properties Limited

(7) FYNBOS PROPERTIES LIMITED On 18th Sept NAMA had Kieran McCarthy of Hughes Blake appointed as receiver. The company’s directors are William Mulrooney (67) Patrick Shine (57) owned by Bolero Properties Limited (80%) [which is in turn owned by Ardawn Developments Two PLC which is ultimately owned by Cova Properties Limited (5%) and NCB Development Nominees Limited (85%) – Cova Properties Limited owned by Cova Property Holdings, owned by Brendan Fizsimmons, Patrick Shine and William Mulrooney and NCB Development Nominees Limited owned by NCB Stockbrokers Limited] and Sean Lyons (20%)

(8) WINDHILL PROPERTIES LIMITED On 18th Sept NAMA had Kieran McCarthy of Hughes Blake appointed as receiver. The company’s directors are William Mulrooney (67) Patrick Shine (57) owned by Duskhill Properties Limited which is in turn owned by three companies – (1) Astonbridge Limited which is in turn owned by Ardbawn Developments PLC (see above) (2) Belcanto Properties Limited which is in turn owned by Ardawn Developments Two PLC (see below) and (3) Dayjeur Properties Limited

NAMA also had receivers appointed to another company in the Cleary Doyle group, NAMA had receivers appointed to this group back in .

(1) CLEARY & DOYLE CONTRACTING LIMITED On 12th September NAMA had  Siobhan O’Dwyer of O’Dwyer Property Management Limited appointed receiver. The company incorporated in 1991 is based in Larkins Cross, Wexford and its directors are Eugene Cleary (73) John Doyle (72) Brian Byrne (49) – it is 100% owned by Cleary and Doyle Limited

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

 

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A proper Irish joke

With poor old Professor (and senator) John Crown in the wars over his joke about the waiting list for abortions in Ireland being 10 months, we might do with the distraction of an economic joke. To appreciate this joke, you need to be aware of the following

(1) IBRC says that it will have wound down its loan book by 2020.

(2) IBRC is no longer a bank, doesn’t have branches, doesn’t take deposits and doesn’t advance new loans, it exists to wind down its loan book

(3) NAMA has paid the banks a total of €5.6bn of state aid, NAMA lost €1.2bn in 2010 and in 2011 made a €12m profit before deciding to claim a €235m tax credit. So to date, NAMA is sitting on a €1bn cumulative loss but the state aid paid, indicates it would have a much bigger loss if wound up today.

(4) Since November 2009 by reference to which NAMA valued the loans it acquired, property in Ireland has declined 24-31%. Ireland comprises two thirds of NAMA’s loans. The UK including Northern Ireland where NAMA has most of the other one third of loans has seen 2-8% average increases since 2009.

(5) NAMA says that it expects to break even by 2020 but – Heaven forfend! – if NAMA makes a loss by 2020, the NAMA Act says that it can claw back the loss from the banks in the proportions in which it acquired the loans. NAMA acquired €44bn of its €74bn of loans from INBS and Anglo, now merged into IBRC.

Right, got all that? So here’s the joke.

Minister Noonan says* that if NAMA has made a loss by 2020 then it can still recoup more than half that loss from IBRC, a bank that will have its loan book wound down by 2020 and which has no other assets or business.

Boom Tish!

I hope you get this joke because if – again Heaven forfend – NAMA does make a loss in 2020, then there is not a chance in Hell of the loss being clawed back from IBRC which means that you and I will be paying for it. And as things stand in 2012, you would certainly not be confident that NAMA can break-even. Remember the value of property underpinning its loans has generally declined, NAMA has only 17% performing loans, and NAMA is running up annual costs of €200m, needs pay interest on its bonds and has already sold much of its “low-lying fruit”.

Maybe Professor Crown’s joke is funnier.

*Earlier this week the Sinn Fein finance spokesperson Pearse Doherty asked the Minister for Finance Michael Noonan how any ultimate loss would be recouped from IBRC. The full exchange is here.

Deputy Pearse Doherty: To ask the Minister for Finance in view of the recently published report and accounts for the Irish Bank Resolution Corporation for the six months ending June 2012, which state that IBRC will be wound down by 2020, the way the claw back of any ultimate losses at the National Asset Management Agency pursuant to section 225 of the NAMA Act will be affected by this; and specifically the way NAMA will clawback any losses from IBRC in view of the fact that IBRC accounts for €44billion of the €74billion of loans acquired by NAMA, when section 225 of the NAMA Act provides for losses to be clawed back from participating institutions proportional to the value of loans originally acquired..

Minister for Finance, Michael Noonan: I am advised by NAMA that, earlier this year, its Board completed a review of its strategy and re-affirmed its expectation that NAMA remains on course to recoup for the taxpayer, at a minimum, the Senior Bonds issued as consideration for acquired loans, in addition to recovery of its carrying costs and the working and development capital expenditure it has advanced to debtors.  Based on the Agency’s record to date, I have no reason to doubt that the Agency will achieve its targets over its lifetime.
In relation to Section 225 of the National Asset Management Agency Act 2009, the Deputy will be aware that a surcharge may be applied to the participating institutions only in the event of underlying losses being incurred by NAMA over its lifetime. The provision does not operate until the conclusion of NAMA’s operations and the overall position of the taxpayer will be taken into account when considering the application of any surcharge.
As indicated in the answer to PQ 38494/12 the 2020 date referred to the winding up of the loan book not the winding up of the bank.  At this stage, I would regard it as premature to speculate as to the respective dates on which NAMA and IBRC may be dissolved and on the mechanism by which a surcharge would be applied if IBRC were to be dissolved first. This is particularly the case given, as I have indicated above, that there is no reason to expect that it will be necessary to invoke Section 225 of the Act.

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John C. Corrigan (pictured above), the CEO of the National Treasury Management Agency (NTMA) is one of the best paid civil servants in the country with a basic salary of €480,000 plus an annual bonus of up to 60% of this. It should be said that for 2012 only he has agreed to waive 15% of his basic, bringing him down to €408,000 and he has waived any bonus entitlement for 2011. But he is still a very well rewarded civil servant. How well is he doing in 2012? With Ireland’s notional long term cost of borrowing now at 4.8%, how wise were the bond issuances and swaps earlier this year, and have the actions of the NTMA needlessly cost this country billions of euro?

Here is the complete list of the NTMA’s issuances and swaps of bonds/treasury bills this year

(1) January 2012, €3.53bn of bonds due for redemption in January 2014 were extended to February 2015 at an interest rate of approximately 5.15%
(2) July 2012, €500m of 3-month treasury bills were issued at an interest rate of 1.8% per annum
(3) July 2012, issuance of  €1.344bn of bonds due for redemption in October 2020 at an interest rate of 6.1% per annum, issuance of €3.889bn of bonds due for redemption in October 2017 at an interest rate of 5.9% per annum, purchase of €1.04bn of 2013/2014 bonds.
(4) August 2012, issuance of €1bn of 35-year amortising bonds at an interest rate of 5.91% per annum
(5) September 2012, issuance of €500m of 3-month treasury bills at an interest rate of 0.7% per annum

So, in summary we have issued €10.5bn of bonds/treasury bills so far this year at a weighted average interest rate of 5.25%.

And what is the NTMA doing with this expensively acquired cash? Something fiendishly clever you’d wager given the €800,000 a year available to be earned by the NTMA CEO. According to Minister Noonan (see below), because that the State is sitting on a cash balance – approximately €25bn at present – the funds are actually “held in the Exchequer account at the Central Bank where they earn the Euro Overnight Index Average as set by the European Banking Federation on a daily basis.” – currently 0.09%. Yes that’s right, we have borrowed €10bn at a weighted average 5.25% and we have put it on deposit at the Central Bank where it earns 0.09%. You probably have difficulty understanding the logic of this, but chances are, you are not on a €800,000-a-year package.

You might have further difficulty understanding the wisdom of this year’s actions given the current notional interest rate of 4.8% on our 8-year bond. If we had issued the €10bn today, the notional weighted interest rate of this years issuances/swaps would be approximately 4.2% rather than 5.25%. Or in other words, we would be saving over €100m per year on €10bn of debt issued, compared with the path followed by the NTMA.

The actions of the NTMA this year have been defended with the claim they were needed to get the interest rate on our bonds on a downward trajectory as we re-entered the bond market from which we were frozen-out in September 2010. Even if that claim were valid, what the bould John has done is get us to an interest rate which now threatens to jeopardise any prospect of a deal on our bank debt. Think about it, why would any German or French politician consider a request from Ireland to make our debt more sustainable when they see that we are back in the market with interest rates at levels which predated the crisis in October 2010 and the subsequent bailout? If the shoe were on the other foot and Greece came with the begging bowl – and because this Government and the previous administration failed to deal with bondholder issues, that is what we are reduced to, the begging bowl – why would Ireland agree to write off Greek debt when they can borrow at what are now sustainable or close to sustainable rates?

Earlier this week the Sinn Fein finance spokesperson Pearse Doherty asked the Minister for Finance Michael Noonan about the NTMA’s actions this year – the full exchange is below – and the main defence seems now to be that we avoided a so-called “funding cliff” in January 2014 when €11.9bn of previously issued debt fell due for repayment. So at between 16-24 months ahead of when the money was needed, when we would have had continued access to c3% ESM funding in 2014 if sustainable rates were not elsewhere available, the NTMA has decided to issue expensive bonds, place the proceeds on deposit at a derisory rate and has arguably jeopardised the ongoing debt negotiations.

I wonder what the 2012 bonus will be for the NTMA CEO?

Deputy Pearse Doherty: To ask the Minister for Finance further to the issuance on 26 July 2012 of new five-year and eight-year bonds and the exchange of bonds maturing in 2013 and 2014, the reason for the bond issuance and exchange at this time in view of the healthy cash position and remaining Troika programme funding available; the use to which the new funding will be put in the short term, and if the funding is merely placed on deposit or used for the purchase of treasury notes, the interest rate that pertains to such uses..

Minister for Finance, Michael Noonan: In order to enable Ireland to successfully exit the EU/IMF programme, the NTMA’s working plan through 2012 has been to begin to return to the markets on a phased basis, mainly through shorter-term issuance, while also taking advantage of any opportunities to issue longer-term debt.

The EU/IMF programme provides funding to the end of 2013. As at the end of 2011 the Irish State was faced with €11.9 billion of bonds maturing in January 2014, commonly referred to as the funding cliff.

Addressing this funding cliff has been a priority for the NTMA. The transactions to which the Deputy refers are among a number of successful capital market operations the NTMA has taken in this regard during the course of the year so far. In total these long-term capital markets operations have effectively reduced the 2014 funding cliff from €11.9 billion to €2.4 billion. This has removed a major obstacle to full market re-entry and should, in tandem with continued progress on other fronts, help us achieve lower yields.

Proceeds of debt issuance are used to fund the ongoing operations of the State and the balances are held in the Exchequer account at the Central Bank where they earn the Euro Overnight Index Average as set by the European Banking Federation on a daily basis.

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We found out from the Irish Independent this week that three judges including a “prominent High Court judge” are amongst those unfortunate clients of Custom House Capital who are set to lose substantial sums of money following the collapse of the Dublin based investment company last year. Separatelym we have known for some time that some judges invested heavily using borrowed money during the property boom in the mid-2000s and indeed the Independent reported last year that “it is understood that a small number [of Irish judges] are to [sic] trying to prevent loans being transferred to NAMA” In addition, there are 166 TDs in the Dail and 60 senators in the Seanad and the Register of interests reveals that several of them own property other than their homes, though the Register does not require politicians to provide details of associated loans. Remember that at INBS and EBS, NAMA acquired most development loans regardless of value, at Anglo the threshold was €5m and at AIB/Bank of Ireland, it was €20m.

So it may well be the case that our law makers and law administrators have loans in NAMA, something which might colour their views on NAMA transparency, property prices, debt forgiveness and a host of other prickly issues. NAMA says it has 1,000 individuals who comprise its 850 debtor connections. How many of them are judges and politicians? Earlier this week, the Sinn Fein finance spokesperson Pearse Doherty asked the Minister for Finance Michael Noonan that question, and the exchange is shown in full below. NAMA won’t say how many judges and politicians are amongst its 1,000 debtors, citing section 202 of the NAMA Act which prevents the disclosure of confidential information. But unless the answer is a number which represents a very high proportion of the sets of judges and politicians, it is hard to see how disclosing that say – strictly for the sake of argument – three TDs and two senators are in NAMA, or that two current judges are in the Agency.

Deputy Pearse Doherty: To ask the Minister for Finance of the 1,000 debtors/850 debtor connections controlled by the National Asset Management Agency, if any are currently active judges within the Irish judiciary.

Deputy Pearse Doherty: To ask the Minister for Finance of the 1,000 debtors/850 debtor connections controlled by the National Asset Management Agency, if any are current members of the Oireachtas.

Minister for Finance, Michael Noonan:I propose to answer question 293 and 294 together.

I am informed by NAMA that its debtors include a wide range of occupational groups.

However, NAMA has legal obligations of confidentiality in respect of information relating to NAMA debtors. Section 202 of the National Asset Management Agency Act 2009, which legislation was passed by this House, specifically states that an officer shall not disclose information that he or she knows or ought reasonably to have known is confidential information.

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