“The Irish market is very difficult, the economy is taking longer to recover than anybody expected and the financial institutions not in Nama are deleveraging as well. It’s a very competitive marketplace” NAMA CEO Brendan McDonagh, speaking in Madrid on 17th April, 2013
The NAMA CEO Brendan McDonagh was in Madrid last month at an event organized by the Irish embassy and moderated by the Financial Times. On 17th April, 2013 Brendan held forth on the Irish experience of NAMA, which is of particular interest to a Spanish audience given Spain’s inclusion of a so-called “bad bank” to deal with its banking problems. The joke on here before the seminar was whether Brendan would need an interpreter so that the audience would understand “billen” meant “billion”, “millen” meant “million” and “break even” meant a total loss of up to €15bn. There has been little reporting on the seminar which took place on 17th April but over the past day, Bloomberg has filed this report.
The audience in Spain is interested in the no-bullshit experience of NAMA because it now faces similar challenges with its bad bank, SAREB. And whilst NAMA seems to tell the domestic audience in Ireland at every opportunity that things are stabilizing, and that property prices are even increasing, the Spanish audience didn’t want that propaganda, it just wanted it straight.
And it seems Brendan told them “the Irish market is very difficult” which of course can cover a variety of factors including declining prices and lack of credit. But NAMA has announced €2bn of staple finance and is offering up to 75% loans to buyers of its property – mostly commercial but there have been instances of residential sales having staple finance also.
Back home in Ireland, NAMA talks about buyers participating “in the continuing recovery of the Irish commercial property market” – this is the market where prices were down 0.6-1% in Q1,2013 and rents declined by 3% in that same quarter. NAMA has been talking about stabilizing property prices since 2009, and since then, residential is down 32% and commercial is down 27%. And NAMA has been saying since 2010 that the property market is stabilizing. And although Brendan didn’t use the R-word in his reported words – sorry, no transcript of a speech has been made available – he did say that “the economy was taking longer to recover than anybody (sic) expected”.
Brendan also made reference to competition, which is not something we are used to hearing in Ireland – remember Minister Noonan telling us that NAMA didn’t compete with IBRC? – but the fact is that NAMA is competing with Bank of Ireland, AIB/EBS, Permanet TSB, Certus, Lloyds/Bank of Scotland Ireland, Ulster Bank/RBS, who have been deleveraging at a rate of knots. And it might not have been acknowledged by Minister Noonan, but NAMA is also competing with these companies for resources, like employees.
Sometimes, it is easier to be truthful with strangers.
UPDATE: 9th May, 2013. The presentation by Brendan on 17th April, 2013 is available here. It’s the stock NAMA presentation but a few slides are new. Haven’t seen this one before: