Archive for October 15th, 2012

This hasn’t been a good year for Limerick solicitor Paul O’Brien – pictured here with former Taoiseach Brian Cowen and former Fianna Fail and current independent TD, Mattie McGrath – with NAMA having receivers appointed to a slew of his property development companies, and then suing the once-mighty solicitor personally on multiple occasions – the latest application was at the start of October 2012 – in the High Court. His partner in Limerick solicitors, McMahon O’Brien, Denis McMahon has also had a bad year and was being prosecuted for fraud, a charge which he denied, though the latest news on the case appears to be from the start of 2012 when he, Denis McMahon, was being sent forward for trial at Limerick Circuit Court.

Today, RTE was in the Commercial Court division of the High Court to hear the judge, Mr Justice Peter Kelly grant judgment orders against Paul and a Kerry businessman, David Crowe and a Kerry-based property development company, Oyster Developments Limited which is owned by David Crowe (56) and Bernadette Crowe (56) – the judgments were on foot of applications made by NAMA in March 2012. The judgments reported by RTE are €11.5m against Paul, €11.9m against David and €11.5m against the company.

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RTE was in the Commercial Court division of the High Court today to hear the judge, Mr Justice Peter Kelly, grant judgments orders against John McCabe and members of his family, in favour of NAMA, for sums totalling €270m comprising:

€100m against John McCabe senior

€31m against Mary McCabe, wife of John McCabe senior

€36m against son, John McCabe junior

€29m against daughter, Angela McCabe

€29m against daughter, Pauline McCabe

€29m against daughter, Sandra McCabe

€18.3m against daughter, Helen McCarthy (nee Helen McCabe)

NAMA is said to be “fuming” at recent events involving the McCabes with accusations that €6.2m had been “misappropriated or dissipated” by the McCabes. This led to an application by NAMA last month to have the McCabes’ assets frozen. It is unclear if this order has been continued, RTE doesn’t say but the betting is, with such substantial judgments, that it has.

Judge Kelly today granted European Enforcement Orders to NAMA which facilitates the Agency in enforcing these judgments orders elsewhere in Europe – the McCabes have an apartment in Mayfair in London and had dealings with a Swiss (Bahraini/Dutch) company called Western Gulf Advisory.

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Despite the fact that the Property Price Register seems to show muted results for the NAMA deferred mortgage product launched on 8th May, 2012, NAMA insists that the pilot scheme has been a success, and the Agency has today announced it is extending the scheme to an additional 180 homes in 12 counties – remember the pilot scheme announced in May 2012 only applied to 115 properties in three counties.

The NAMA scheme which NAMA calls a “deferred payment initiative” involves buyers getting a normal mortgage from one of NAMA’s designated banks – AIB/EBS, Bank of Ireland and PTSB. After five years, the value of the property will be assessed and NAMA will knock any decline in value, up to 20%, off the original purchase price. The scheme was designed to give reassurance to buyers that if prices continued to fall, then NAMA would bear the risk up to 20% over five years.

NAMA has said that it eventually hopes to extend the scheme to a total of 750 homes. The extension of the scheme announced today applies to the following properties:

Phase II[1]_Page_1

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Permanent TSB is not a NAMA bank. It was originally intended to be, but in the summer of 2009, the bank claimed to have no loans of the type NAMA was acquiring – land development loans. So PTSB stayed out of NAMA, though bizarrely, PTSB today holds NAMA bonds as a result of buying the deposits, and associated assets which included NAMA bonds, of Irish Nationwide Building Society in early 2011. PTSB has so far received a €4.1bn bailout from the State, of which €1.3bn was for the purchase by the State of Irish Life which may eventually be worth something when sold off.  PTSB is 99.5% owned by the State.

And then this morning, we learn via the Irish Times, that PTSB is now seeking a manager for €2bn of what the newspaper calls “borrowings linked to office, retail and industrial developments – this is now a non-core segment of Permanent TSB’s business as a result of its plans to create a leaner, smaller bank free of the “legacy” issues of the property bubble” Aah, but isn’t this the type of loan for which NAMA was established?

You’d think.

Laura Slattery goes onto report the PTSB has decided the loans in question “commercial property loan portfolio should be outsourced, as the loans are not only non-core but they are typically stressed, meaning much of the portfolio will require the specialist skills of distressed debt managers”

The “specialist skills of distressed debt managers”? Isn’t this really the type of thing for which NAMA was established.

You’d think.

So it is weird that these loans weren’t previously transferred to NAMA which was set up to manage exactly this type of loan. And remember that NAMA has nearly €30bn of unused allowance for issuing nice cheap clean NAMA bonds to acquire these loans. And practically all NAMA’s profits are returned to the State. So, bearing all this in mind, you might have thought NAMA would be a dead cert to acquire these loans. But instead, the loans are set to be transferred to….

Certus, a private company set up in 2009 to specifically deal with Bank of Scotland (Ireland)’s legacy loans after that bank decided to exit the Irish market. Since its creation, it has taken on loan management contracts for mortgages at IBRC and AIB.

But why on earth would 99.5% state-owned PTSB use a private sector company, Certus, to manage loans for which 100%* state-owned NAMA was established? And why wouldn’t Minister for Finance Michael Noonan and his Department of Finance use this opportunity to reduce PTSB’s balance sheet and use the nice cheap unused NAMA bonds to bolster PTSB, which is not one of the two pillar banks?

It is not clear how much the contract is worth to Certus but it would not be unusual for an asset manager to charge 1-2% for loan management, or €30-60m per annum.

The spokesperson for NAMA and the spokesperson for PTSB, coincidentally one and the same company, public relations company, Gordon MRM – which gets two whole paragraphs in the new Shane Ross/Nick Webb book “The Untouchables – the people who helped wreck Ireland and are still running the show” – was asked for comment this morning….

* There’s a charade whereby 51% of NAMA is supposedly owned by independent third party investors, but the terms of the “investment” are secret and evidence coming into the public domain suggests that the “investment” is no more than a sham to avoid NAMA’s debt being classified by Eurostat as part of the national debt.

UPDATE: 2nd February, 2013. There is no press statement at present from PTSB but the Independent today reports that, as expected, the €2bn commercial property loans have in fact been outsourced to Certus, NOT NAMA.

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