We learn this morning that Permanent TSB has finally awarded the contact for the asset management of a portfolio of €2bn loans relating to Irish commercial property located across the nation. The contact has gone to an agency. And before you ask why is the stilted language above being used in this blogpost, it is because the obvious candidate to take over the asset management of property loans is NAMA, which we own, which we have spent vast amounts of money and time setting up and whose profits, if any, will entirely come back to the State.
So which company did PTSB chose to asset manage its €2bn commercial property loanbook?
Certus of course, where the former Fine Gael politician Pat Cox is now a “special adviser”
Certus won’t be providing its asset management services free of charge of course, and it will hope to generate a nice little profit on asset managing the €2bn of loans.
Why was NAMA not used?
Well, when it was first announced that PTSB was tendering for the service last October 2012, the Sinn Fein finance spokesperson Pearse Doherty posed a series of parliamentary questions to Minister for Finance Michael Noonan. We got the usual gibberish in response.
PTSB is not a NAMA participating institution – well designate it as one. The State owns 99.5% of it for chrissakes.
The €2bn of property loans are not “land and development” – (a) NAMA can acquire any systemically important loans and it swore blind in the Paddy McKillen case in Dublin’s High Court that even if Paddy’s loans weren’t development, they were still systemic because they came to about €2bn (b) NAMA is already asset managing bucketloads of property that is not “land and development”. What were One Warrington Place, the €800m Maybourne hotel loans, 107 Cheapside, the Morrison Hotel, 22-25 Finsbury Square, Updown Court, the Smurfit Kappa offices in Clonskeagh, the Montevetro Building, 1 King William Street and countless others – they’re not “land and development”, that’s for sure.
So, yet more gibberish from the finance minister and meantime, NAMA loses out on whatever profit would be generated by the contract that PTSB now has with Certus. The expression “you don’t buy a dog and bark yourself” just doesn’t do this latest goof justice.
These are the complete parliamentary questions and responses from 23rd October 2012.
Deputy Pearse Doherty: To ask the Minister for Finance further to a report in a national newspaper that 99.5% state-owned Permanent TSB is considering entering into a loan management contract with a private-sector company (details supplied) for the management of €2bn of commercial property development loans, the reason PTSB is not a National Asset Management Agency participating Institution, the reason these loans were not transferred to NAMA in 2010 and the reason these €2bn loans are not being transferred to NAMA now.
Deputy Pearse Doherty: To ask the Minister for Finance further to a report in a national newspaper that 99.5% State-owned Permanent TSB is considering entering into a loan management contract with a private-sector company (details supplied) for the management of €2bn of commercial property development loans if he will provide an estimate of the fees that will be paid by PTSB to the company over the proposed life of the loan management contract..
Deputy Pearse Doherty: To ask the Minister for Finance if he wil provide an assessment of the effect of the National Asset Management Agency acquiring €2bn of commercial property development loans from Permanent TSB, the management of which loans PTSB is reportedly contracting out to a company (details supplied).
Minister for Finance, Michael Noonan: I propose to take questions 162, 163 and 165 together. Permanent TSB confirms that a tendering process is underway in relation to third party servicing of its portfolio of commercial property loans and that the party referred to is among the parties that the bank has spoken to in this regard. The bank has not completed the tendering process, nor has it signed a contract with any party in this regard and even if such a contract is signed in the future the bank has confirmed that the fees would not be publically disclosed as they would be commercially sensitive.
As the Deputy will be aware Permanent TSB is not a participating institution under the NAMA Act 2009 as it did not make an application for such a designation. As a result none of its commercial property loans were acquired by NAMA in 2010.
The Deputy will also be aware that only Land and Development loans in the participating institutions were acquired by NAMA from those institutions.
The NAMA Act does not allow for a scenario where NAMA would service assets which have not been acquired by it.
Permanent TSB is not currently selling its commercial property loan assets and therefore an analysis of the impact of an acquisition of Permanent TSB’s commercial property loans by NAMA would have limited value.
NAMA Wine Lake 
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Jaynie @nwl You couldn’t make this up. These shenanigans make the Circumlocution Office in Dickens’ ‘Little Dorrit’ look like a well-run operation: http://www.teachingenglish.org.uk/sites/teacheng/files/Little%20Dorrit_Circumlocution%20Office_worksheet%202.pdf
It would be funny…except…it isn’t.
I would rather see anybody getting the contract for the asset management of property than NAMA and I have to compliment my former lecturer for spotting a good opportunity to make serious money he was always good at the networking. As for NAMA doing things for the good of the tax payer? Please remover the hook, line and sinker.
Do you not think expecting logic in any of this after lord knows how many years of the economics of a rotten borough is expecting a but much. The real shocker would have been had they went all ‘reason’ on us. Or grew a pair.
certus are recruiting. closing date 9/2/13.
Certus, as I’m sure you’re aware, was set up by former Bank of Scotland (Ireland) managers, including Joe Higgins. Here’s Shane Ross on Joe and BoS(I) in 2010: “When Joe Higgins rings in the New Year this Friday, he had better be in the mood to move on — with Bank of Scotland Ireland (BoSI) winding down for good that day, he will no longer be chief executive of the once bolshy bank. Only a year-and-a-half after Higgins took over from then chief executive Mark Duffy in February 2009, Halifax –the retail arm of BoSI, announced that it would be pulling out of Ireland with the loss of 750 jobs. Halifax shut up shop last June — and BoSI’s business banking arm will be gone by the end of the week. The retreat of BoSI this year was a far cry from the bravado it once exuded. As part of the launch of its Halifax brand in 2006, television adverts showed disgruntled rival bankers barging into one of its branches for a fight — with one eventually being hurled through a window. The message was clear — Halifax was here to take on the incumbents by offering us cheaper credit cards, current accounts and mortgages. A few years later, the bank couldn’t get out of Ireland quick enough after the Irish recession and property meltdown came knocking on its door. At the end of this month, BoSI will be no more — its assets and liabilities will be transferred to its British parent, Lloyds Banking Group. Higgins then becomes chief executive of Certus, which will manage and wind down BoSI’s €32bn Irish loan book.” Of its directors (see here: http://www.certus.ie/index.jsp?p=101&n=109) Tom Fitzgerald was in Bank of Ireland from 2000 to 2006, when he joined BoS(I); Gavin Lyng spent 19 years in BoI before joining BoS(I) in 2006; Siona Meghen joined BoS(I) in 2008; Mark Mohan joined BoS(I) in 2009. Matin Akers is the odd man out, as he’s former Barclays (1994 to 2007) and Lloyds TSB (2007 to 2010). Certus has been picking up some nice little earners: AIB (http://www.irishtimes.com/newspaper/finance/2012/0113/1224310193453.html); Irish Nationwide (http://www.irishtimes.com/newspaper/finance/2012/0901/1224323460543.html); and, of course, IRBC (http://www.irishtimes.com/newspaper/finance/2012/0901/1224323460543.html) And here’s an interview with Joe: http://www.irishtimes.com/newspaper/finance/2012/0420/1224314963422.html)
And there’s Mark Duffy, who preceded Higgins in BoS(I): “Duffy’s timing was spectacular when stepping down in February 2009 as the Irish banking sector was still in denial over its problems. Bank of Scotland clocked up billions in loan losses before shutting its Halifax operation with the loss of 700 jobs. The rump of the bank is in run-off mode. Duffy set up a company with property investor Kevin Warren to bid for property loans from the banks. He is now understood to be based in Stockholm, Sweden, and is involved with risk management firm Algo Risk, Gibraltar online gaming business GIbGaming, distressed asset fund Svenska fund and Spanish-focused investment group Iberica Agri.” (http://www.independent.ie/business/irish/all-gone-but-not-forgotten-2817702.html) And here’s Ross on Duffy: “Seized with the zeal of a late convert, Duffy started to make up for lost time in the development game. Aping his UK parent, he left no opportunity unexplored. Right at the top of the property boom, he closed enormous deals with the now deeply indebted Bernard McNamara when he funded much of the €288m Burlington Hotel purchase. He even tied up €1bn with the troubled developer Liam Carroll on the south Dublin Cherrywood site. The bank that had invaded Ireland as the consumer’s champion was now wooing greedy developers. By the end of 2007, Bank of Scotland (Ireland) had bet more than half its Irish loan book on the flagging property frenzy. Its lending for property stood at €16bn, nearly 11 times its 2001 exposure.” (http://www.independent.ie/opinion/columnists/shane-ross/shane-ross-good-riddance-to-invaders-2062773.html)
Sorry about all this cutting-and pasting, and I know it was probably inevitable, but there is something utterly obscene about the sight of people from the industry that essentially Titanic-ed the Irish economy making a profit from cleaning up the mess that they themselves made…
@Jonathan the really obscene part is the taxpayer picking up this tab…
When the stock market crashes…market participants simply go back to work…why should experienced RE professionals be singled out and prevented from exploiting opportunities?
Before Mark Duffy stepped down from BOSI he took a group of 5 or 15 so for a nordic ‘curling’ trip. Interestng agenda.
Now; on Cherrywood Block F; it was envisaged that 500 or so BOSI employees would be accomodated there. Back of house activities; massive floor plate.
At that time in parallel; Danninger [Liam Carroll] and BOSI stafff entered into a temporary lease agreement for Dublin 1 for some BOSI staff in a building occupied by Danninger.
BOSI upends; Cherrywood is suspended; joint monies between Danninger and DLRCC are in question.
David Torpey who was Liams right hand man forms Property Asset Management Enhancement Services Ltd with John Poe and Noel Murray.
http://www.irishtimes.com/newspaper/commercialproperty/2012/0509/1224315795036.html
They gain finance to complete Block F in Cherrywood……Fortsetzung und Detail folgt….
Good timing or being in the right place at the right time is a skill.Most self made or successful people,have left cleat marks on x partners/regulators backs whilst climbing.
More than good timing @jg.
Property ads 2006 included a lot of Bank properties. Although they] were lending; they knew the game was up. Common knowledge now.
Look at Jurys group in the era when they were getting out of property and laughing at the clowns buying up the old Hotels in 2005 ish.
John and Bernie Gallagher and Pat MCann played a longer game plan with that one and more. They were and are ahead of the game. Tidy profits for Jurys after site selloffs
http://www.independent.ie/business/irish/jurys-post-35m-profit-after-key-site-selloffs-1498988.html
I would also mention estate agents selling out. I commented on this at the time in 2006 http://www.planware.org/briansblog/2006/06/property-prices.html
@Dorothy…not uncommon to have cashed out,quite a few did.Some sellers biggest concern was ‘make sure this idiot can’t sue us’…,
Well @jg some of us move to deserts and create things out of dust:
-This below is my home for the next 5 yrs or so. Property bubble Deutschland. Same stuff different year. Desert in Hafenstadt; dense buildings in hand:
http://www.welt.de/reise/article3281421/Ein-Rundgang-durch-die-Grossbaustelle-Hafencity.html
-After I lived by the Berlin Wall in 89 our work was on the desert behind the Brandenburg Gate and this happened:
Ihttp://www.bundestag.de/kulturundgeschichte/architektur/kaiserhaus/index.html
New Government quarters
-Our work was on a new town beside Potsdam before that:
http://de.wikipedia.org/wiki/Drewitz_(Potsdam)
I-reland was and is and will remaina desert; instead of building and repairing built fabric and infrastructure; the landscape is a mass of layers of number crunchers; Schmarotzer
http://www.dict.cc/german-english/Schmarotzer.html
@Dorothy,my German is non existent,looking forward to reading the links and responding…it’s Super Bowl Sunday here ,regards as always.
@jg enjoy!
Ahh, Dorothy, you’re showing off. All they ever taught me in school was Gaelic, which was as much use as the proverbial ashtray on a motor cycle.
@WSTT my wife is a German speaker,and normally I use google translate just that I’m on a iPhone and the lucidity of my posts,is related to my beer intake…it’s been a fun but long day.
Dorothy looking forward to reading the links,they are always very informative.