There may not be any legislation yet but NAMA has a website. It provides an example of how NAMA will buy loans from the banks using a “purely illustrative” example of a 25% discount. It has been widely reported that AIB would be selling €30 billion in loans to NAMA. A writedown of €7.5 billion would wipe out essentially all core Tier 1 (shareholder) capital, so this is an interesting illustrative example.
Update: Patrick correctly points out that the illustration is of a €25 million writedown of a €65 million loan for a property originally worth €100 million. So indeed it’s a 38.5% discount. I know it’s just an example but it’s interesting all the same.
5 replies on “NAMA Website”
Actually, the example provided in the NAMAmetrics document indicates an even larger 38.5% discount — discount of €25 million on a loan of €65 million. This is also consistent with the NTMA’s earlier illustrative figure of €50 billion as the amount it would pay for the €80-€90 billion of loans to be transferred.
So how then , in the name of all that is holy , can anybody say with a straight face that there will not be defacto nationalisaiton ? Tell me? Anybody?
Does anybody think that developers were putting up 35% of the equity for developments in the 2006-7 period in particular?
@Brian Lucey. I recently heard it referred to as ‘deprivatisation’ and, of course, ‘conservatorship’. These words don’t seem to have the same Bolshevik overtones as the n-word.
The bank’s position as private institutions ceased when they needed the government guarantee. The have continued since as PPP hybrids.
Since September we have had creeping recapitalisation coupled with creeping deprivatisation. The point at which the banks stopped being private institutions has long passed, the point at which they become defacto nationalised might not be so easy to spot..
I think 25-30% would be more accurate, its important to remember how developers were striking deals and setting them up, their collateral was sometimes other property, and often there were syndicate investors with the developer as promoter, each development was a separate limited company. They were not all carrying the can individually. If you take a look at the land reg for any of the recently rezoned areas you’ll see that its never (other than in the case of a one off house) a single person on the cert, its a few, the developer was only the ‘face’ of the deal in most examples.