It’s not often that we see the financial performance of Irish financial asset management companies so AIB UK Loan Management Limited’s report and accounts for the period ending December 2011 – available here – which were filed in the UK last September 2012 is of interest as we get a full set of accounts showing how AIB in Northern Ireland and Britain has dealt with its problem loans, we also see that NAMA valued loans acquired from this AIB “NAMA” at values in excess of the valuation at AIB. Could this be the reason why there have been troubling delays in the approval by the European Commission of the later NAMA tranches eg the €19bn tranche 3 and 4 acquired by in June 2011 still hasn’t been approved by the EC, nearly two years later?
The accounts show that some GBP 4.1bn (€4.8bn) of par value loans which were “vulnerable, impaired and other non-core” were transferred into this AIB “NAMA” by the parent company, AIB, in 2010. AIB valued these loans at GBP 2.6bn and it is working them out in much the same fashion as NAMA. Coincidentally it sold GBP 843m of par value loans to NAMA in 2011, and NAMA paid GBP 42m than the loans were worth, which is interesting because the UK property market had been generally improving after November 2009, NAMA’s valuation date and although NAMA paid a 10% long term economic value premium, it also paid for 5% of the loans with subordinated bonds which will only be honoured if NAMA makes a profit when it is ultimately wound up. So why did NAMA pay AIB GBP 42m more than AIB’s valuation?
The AIB “NAMA” made a loss of GBP 41m in 2011 but this was mostly driven by a tax charge of GBP 113m and an impairment of GBP 97m as the UK bounces along the bottom of its economic cycle. The company had operating expenses of GBP 22m or 0.8% of the loan valuations, compared to NAMA’s €200m on €30bn of loans or 0.7%, which seems to show that NAMA’s costs are around the right level.
Compared with NAMA, the accounts are not blighted with derivatives and foreign exchange losses and hedging.
NAMA Wine Lake 