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?
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.
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.