Shame on RTE yesterday for headlining with an extract from a radio interview with Minister for Social Protection Joan Burton, an interview in which Minister Burton said she regretted her party and former Cabinet colleague, Roisin Shortall’s decision to resign. Yes, the Minister Reilly controversy is in the news but if the embattled health minister decides to have a boiled egg and soldiers for breakfast this morning, that hardly warrants a headline. And what was Minister Burton supposed to have said? She was delighted Minister Shortall resigned? Worse still for RTE, during the same interview on the Marian Finucane radio show on Sunday 30th September, Minister Burton let slip that NAMA faces a loss of upto €15bn. The Minister said at 1 hr 22 mins onwards in the following – click play yesterday’s show – that in relation to the bank debt shouldered by the nation
“… Not counting, by the way, another €30 billion that we’ve committed on NAMA, at least half of which we will get back”
Having a senior minister around the Cabinet table let slip such an admission surely ranks as more important news than stating the bleeding obvious, that she regrets the resignation of her party colleague. But this is RTE, a broadcaster which today would appear (again) to be ignoring the departure to bondholders of €1bn from this shores – and evidence in the public domain suggests bondholders are in the main foreign investors – at AIB, a bank into which we have poured €21bn so far and which, without taxpayers’ money, would be utterly bust. Mind you, this is the same RTE which failed to report the €50m loss in its pension fund in 2011 and instead broadcast headlines about a “deficit” of €16.8m as opposed to a fully recognised loss for the year of €70m.
So, unless the Minister was expressing a personal opinion on RTE radio yesterday, she is likely to be repeating a view which has circulated in Cabinet meetings. Of course the official line from Minister for Finance Michael Noonan is that NAMA is “confident” it will recover €30bn of the €32bn it paid for the €74bn of face-value loans plus NAMA is “confident” it will recover any additional advances and the cost of operating NAMA. It is an “aim” of NAMA to also recover the €2bn of the €32bn consideration for the loans it paid with subordinated bonds which will only be honoured if NAMA makes a profit at the end of its lifetime, scheduled to be in 2020. However, even NAMA itself is not expressing “confidence” that it will in fact make a sufficient profit so as to pay the €2bn, which means the taxpayer will be on the hook for this. And remember whatever “confidence” is being expressed by NAMA, that confidence is based on NAMA’s projections which have not been fantastically accurate up to this juncture. The view on here is that if the economy does return to normality and grow at a steady 3% per annum pace in the second half of this decade, then there is a chance of NAMA breaking even or perhaps making a profit. But who knows.
I can tell you neither NAMA nor Minister Noonan has a crystal ball capable of predicting the future, and if NAMA thinks it has spreadsheet macros which can predict future property values, then NAMA should just give away all its assets and have its 220 staff focus on selling the bloody macro to asset management companies around the world who would pay more than €30bn to be able to predict future property values.
What is absolutely dumbfounding is the fact – confirmed by Minister Noonan in a response to a parliamentary question from the Sinn Fein finance spokesperson Pearse Doherty – that there has been no attempt to get the risk inherent in the NAMA operation transferred off the nation’s shoulders as part of the ongoing bank debt negotiations.
This omission represented unforgivable incompetence even before Minister Burton let slip that NAMA may face a €15bn loss.
NAMA Wine Lake 
I was only half-listening to the interview yesterday, but Joan Burton’s clanger still registered with me.
The way she said it, she actually sounded proud that half the money would be recovered. As in we should be delighted with losing just 15bn euro.
Beggars belief……….. and shame on all of us, given our children go hungry to school, have little or no SNA’s and should they become ill, have to wait to be treated in our stressed hospitals due to lack of funds! Not to mind that they are cutting social welfare payments/medical cards/pensions/homehelp services and increasing taxes! However, we do nothing, but take it and hand over ONE BILLION today to unsecured bond holders! This is so immoral at best and robbery in reality!
I nearly choked on my toast when I heard Joan Burton’s admission. This has to be the informed opinion around the Cabinet table. I do not know why she slipped it out on the show. She must have known it would be picked up – I don’t think that she is stupid.
We have predicted a loss of this magnitude on here for the past 12 months or more – so for visitors to this blog, the news is hardly a surprise. It’s just the Minister leaking it on a “popular” Sunday morning radio show that was a shock.
@wstt
I don’t know about you wstt, but I have been personally insulted for daring to suggest that this loss was imminent.
Misdirected emotions to say the least, people do rally around govt run entities though, maybe they are a reflection of the society after all.
If people eventually accept NAMA is sitting on a 10-15 billion dollar loss, maybe they will be mobilized to at least ask for some transparency and accountability.Right now it’s all to easy for NAMA, in feudal Ireland. Sure when the first 40 odd bill disappeared nobody batted an eyelid. Grand. What’s another 15.
I listened, but somehow missed this piece (papers sprawled across the coffee table probably something to do with it). But is it really that much of an *admission*? A few months ago we had a shift from making a profit with NAMA to breaking even; and we all have known for some time that the success or otherwise of NAMA is largely subject to the performance of the Irish property market (and London, Portugal, Bulgaria, Ukraine…). That means that there remains a possibility of breakeven or better, but any prudent examination of the economy would suggest it’s improbable. By extension, any comment from anyone on the likely profitability or otherwise of NAMA is merely an observation on the state of the economy, and its likely performance, both domestic and global. So I wouldn’t be too harsh.
@anthonybehan one the more important Irish transactions NAMA,has been involved in was the ‘sale’ of the “Anglo” shell and site to the Central Bank.
Both semi-state organisations,the new building is required by NAMA to kick start development in the immediate area.
You would think this would be relatively straight forward right,its a half finished building,hire a GC start building………….
If NAMA were any good they would do a design build for the bank and make some fees.
Oh no someone is engaged in a ‘pi**ing contest’ over management fee’s,perhaps its the Central Bank playing hardball for once,but this is becoming a pattern of behavior for NAMA.
Not exactly the message you want to send out to international investors,never mind the proposed 250 construction jobs on ice.
“However, the Central Bank has been unable to agree with Nama how much it should pay in annual management fees for maintenance of the surrounding site, despite signing heads of terms on May 31.
The Central Bank plans to invest €50m in the building which was half-built by developer Liam Carroll. About 250 construction jobs will be needed to complete the project which will add significant value to the surrounding land which Nama also hopes to see developed.”
http://www.independent.ie/business/irish/anglo-hq-sale-stalled-over-fees-row-3244285.html
Its called asset management,NAMA should try it some day.Just one recent example,they can not control the direction of the overall market,but they can do a much better job managing and enhancing the value of the Irish taxpayers assets.
This Irish character flaw of accepting and applauding mediocre performance should not be applied to NAMA,they can do a lot better.
@john gallagher
Has the Central Bank got €50m to invest that it earned somehwere or is it printing money on our behalf to cover this “investment”? I thought Ruairi Quinn said the country was bankrupt?
Given their (and the FRs) track record in approving 100%+ mortgages, Interest only mortgages, whacky tracker rates (the latter I confess I took up – how could I lose?), I would suggest they would be better packed off to one of the many empty office buildings in an outer suburb and told to buy their furniture and fittings from Donedeal… and if they want relo expenses tell them to get on their bike!
@Jeromek,NWL actually broke this story it resulted in many contributions,at this stage its a done deal,save an except for the actual closing!
With the ongoing discussion in Europe that going forward(after Ireland has paid ALL the bondholders),the ECB will supervise European banking,the question of whether the CB will actually require this state of the art headquarters is worthy.
But apparently the poor sods are spread over three locations,having employees in multiple locations often leads to low morale and loss of libido.
But the CEO of NAMA,Brendan was concerned that taxi drivers were driving overseas visitors by it,and creating the wrong impression of Ireland !
In fairness,good to have it finished,creates some jobs,enhances the ‘hood’ but yeah did it really have to be the Central Bank,vacating Dawson St. will have significant negative impact and that building will most likely be subject of arguing/discussion for years while it sits vacant and deteriorates.
https://namawinelake.wordpress.com/2012/04/16/central-bank-to-buy-anglo-hq-shell-from-nama/
https://namawinelake.wordpress.com/2012/03/24/exclusive-nama-sells-former-anglo-hq-shell-to-the-central-bank-of-ireland/
@anthonybehan, “I wouldn’t be too harsh”???? I think that you are being very kind.
This entity is about to lose us another €15 billion. It is on-course to doing so. It was obvious to anyone with a rudimentary knowledge of maths this time last year. It acquired assets with a face value of €74 billion for €32 billion, took control of the sector in Ireland and will recoup some €15 to €16 billion in total – equivalent to 20% of the original face value of the loans.
It’s an appallingly incompetent performance. The disastrous result is already certain.
Minister Burton was just telling us that “Grandma’s on the roof…..
P.S. For those who don’t understand the association with Grandma:
“The boy’s parents are away on holiday.
His father phones up to ask how things are going. The son replies “the cat is dead”.
The father gets a fright and is really upset. So he says ” Son, you could have put that a bit more subtly. For example, you could have said that the cat climbed onto the roof. He slipped, and fell. And oh, no, he hit the ground and died”.
Anyway, how’s grandma?
Son replies… “grandma’s on the roof….”
@WSTT and NWL
“We have predicted a loss of this magnitude on here for the past 12 months or more – so for visitors to this blog, the news is hardly a surprise”
Could Joan’s source be this blog?
You are right though Noonan should have tried to get Nama risk included in negotiations.
I think I’m correct in saying that from the outset it was a requirement that NAMA be set up as a Special Purpose Vehicle so as, among other things, to not have NAMA included as part of the national (sovereign) accounts at the behest of Europe/Eurostat. Hence 51% private shareholding in NAMA?
Course, this doesn’t take account of the fact that it is the irish taxpayer who’s left to underwrite any/all losses at NAMA.
@GD, Another great deal, courtesy of the Irish taxpayer! “You take 51% of the profits and we’ll cover all the losses”. Is that it?
Talk about “making an offer that you can’t refuse”
The Sindo reports today that the Minister has stated that “she had been referring to the original €40bn discount that had been applied to the loans when Nama took them over from the banks”. This is quite clearly untrue.
It does not match, in any way, the statement she made on the Marian Finucane show which was “not counting by the way another €30bn that we’ve committed on Nama, at least half of which we’ll get back”.
She let the cat out of the bag. And that explanation defies credibility.
http://www.independent.ie/national-news/nama-queries-burton-on-her-15bn-loss-remark-3251595.html
From the Sunday Independent:
“She informed them that she had been referring to the original €40bn discount that had been applied to the loans when Nama took them over from the banks. She wasn’t referring to the €30bn or so that makes up Nama’s current loan book.”
Contacted by the Sunday Independent for her views on the matter, Ms Burton said: “I was clearly talking about the total loss to the State and the taxpayer. I thought I made that clear. Nama was structured to break even at least. But because of the bank guarantee, one way or another, citizens took the hit.”
So, according to herself, the Minister was saying that NAMA will recoup €15 billion of the €40 billion original discount – i.e. €47 billion in total. Not a snowball’s chance in hell.
Oh, what a tangled web we weave……
@WSTT, Indeed she might have simply said that she misspoke and had meant something else, but instead we have total rejection and denial.
What Minister Burton said on RTE Radio
“The bank debt that Irish citizens took on in total is roughly about €64bn, not counting by the way another €30bn that we’ve committed on Nama, at least half of which we’ll get back.”
What Minister Burton is saying now
“She informed them that she had been referring to the original €40bn discount that had been applied to the loans when Nama took them over from the banks. She wasn’t referring to the €30bn or so that makes up Nama’s current loan book….I was clearly talking about the total loss to the State and the taxpayer. I thought I made that clear. Nama was structured to break even at least. But because of the bank guarantee, one way or another, citizens took the hit”
To these seasoned eyes, what Minister Burton is now saying just doesn’t make sense. She said on radio that the bank debt we took on was €64bn which is true, €64.1bn to be precise is the total of cash and promissory notes shovelled into the banks. But she then says “not counting by the way another €30bn that we’ve committed on Nama, at least half of which we’ll get back”
The only sense in which we’ve committed €30bn to NAMA is the State has guaranteed the €30bn of NAMA bonds as part of the €32bn consideration paid for €74bn of loans from the banks – the other €2bn is in subordinated bonds which the State has not guaranteed.
Minister Burton says of the €30bn “at least half of which we’ll get back”, so what happens to the other half or less than half of €30bn? As many have suggested – Professor Morgan Kelly, Deputy Peter Mathews and a number on here – NAMA is facing a €10bn-plus loss.
But Minister Burton is frankly treating us as idiots by now saying “She informed them that she had been referring to the original €40bn discount that had been applied to the loans when Nama took them over from the banks.” This is a non sequitur and totally unconnected to what she did in fact say.
If she had simply said she misspoke, then the matter might rest. But her nonsensical rejection of a plausible loss at NAMA has the potential for the matter to escalate.
@NWL. I just wish that when politicians tell lies they would credit the public with some intelligence and, at the very least, try and make them credible.