NAMA and Zoe-Related Developments

One of the key questions relating to how NAMA is going to operate is the price that will be paid for the assets it acquires.  Last week’s Sunday Tribune reported that

The National Asset Management Agency (Nama) plans to impose discounts of between 25% and 33% on the most devalued loans contained among the €80bn of property assets to be transfered to the state-owned organisation.

The Tribune story speculated that discounts of this size would help NAMA to break even or perhaps make money over its ten-year life cycle. Of course, one of the problems that we have had when thinking about this issue is that these discussions are happening in the abstract without reference to detailed knowledge about specific loans.

For this reason, the ACC-triggered High Court examinership of Liam Carroll’s Zoe Group is very helpful in giving us a specific example to discuss.  In Monday’s Irish Times, John McManus reported the following:

Applying for court protection Zoe said that if the group of six companies, which have total debts of €1.2 billion, was liquidated, they would have a deficit of €900 million. Based on this writedown value, properties on which it has borrowed €1.1 billion from eight banks would fetch €275 million if they went on sale this morning.

That means a 75 per cent writedown for the banks.

Ok then, let’s have a write-in competition. What do readers think is the correct price at which the Irish taxpayer should purchase these Liam Carroll property investments?  The €275 million they are worth today, the €550 million they’d be worth if they doubled in price or the €737 million (one third discount relative to €1.1 billion) that the Tribune reckons would be the lowest possible price that NAMA would pay?

In interpreting the various answers put forward, it might be helpful to keep in mind that AIB has over €24 billion in pure development loans and has core equity capital of about €8 billion.

44 thoughts on “NAMA and Zoe-Related Developments”

  1. Do you think ACC are trying to establish unfair state aid? Could NAMA be forced to take toxic debt from foreign owned banks?

  2. It is not clear is the €1.1bn is the previous market value of the land.

    It could actually be only a percentage of the value of the lands if the banks were operating a 75% LTV for example.

    On the other hand it might exceed the value of the lands if it includes construction costs (e.g. the famous building on the Quays attacked by Sean Dunne in the High Court) or if it includes a lot of rolled up interest.

    It would be very interesting to hear the expert evidence on the valuations and the arguments made by the barristers in that regard. Did one barrister argue that there was no prospect of the value of the property recovering in the medium term. We could learn a lot fom this.

  3. The continuous use of SELECTIVE snippets of reports and rumours is only value to supporting one side of arguments.
    Todays IT has two reports which would give a much more positive view of possibilities. 1. Solicitors for Carroll paint a scenario that within 3 years the Zoe Group could have net assets of 290million having cleared all debts. 2. Fleming Group report that over a 5-10 year period it can repay most of its 900 million debts to Banks.
    Continuous stoking of “Fire” with possible half truths is not helpful to getting country back on a least one foot.

  4. @Tadgh O’Laighin

    Don’t forget that it is an adversarial process in the Courts!! Selectively referring to the arguments made by one side is no great improvement.

    However, it is correct to say that the initial figures may be flawed. Another scenario is that borrowings to buy shaes were cross collateralised against property securities and now the share losses are showing as property loans.

    On the 20% haircut, some Estate Agents, Valuers and politicians are now saying that prior to the global economic shock they thought the real value of property was 20% below the market value. The necessary corollary of that is that the real value must now be well more that 20% below market value. The more I think about it, the more I see the 20% haircut as an opening gambit in the asset valuation process with the intent of making a greater discount look like a good deal.

  5. Tadgh : within one day I could have 15 or 16m, if I win the euromillions lottery. I confidently suggest that that is more likely than the rosy scenario posted by hte paid legal agents of Mr Carroll.

  6. @ Tadhg

    A couple of points,

    a) Casy McGrath are accountants, not solicitors

    b) They are described in the Irish Times as independent. The firm has acted as advisors to Liam Carroll for many years. Any view given by them is clearly not worthy of serious consideration in particular when it uses the words “could be worth”. There is also the issue of working capital required. Why finish developments which are not necessary?

    c) The Carroll assets are probably as good as it gets. They are generally located close to urban areas. There are thousands of acres of farmland included @ valuations of €100,000 per acre instead of €6,000.

    d) A valuation of 25-30% of the values quoted/prices paid is probably excessive on much of the assets.

    e) The issue before the Court over the last week or so is one of cross guarantees. In other words, a person acting as guarantor for another person. The courts have basically ruled that a guarantee from another person is not legally enforcible. Failing to allow for the enforcement of those guarantees is a retrograde step.

  7. Brian,
    Just home from Leopardstown —-Two odds on certainties trailed in down the field and two nohopers win out; so better go and get your Euro Lottery ticket for tomorrow..

  8. I would go for the mark-to-market value. It’s only worth what it’s worth today. What’s that old saying? “Units can go down as well as up”. If you’re playing with someone else’s money (i.e. the taxpayers) why should you take the risk (unless that somebody else is asking you to do that and you KYC) and assume it might be worth more tomorrow when indications are against that. …….Because you might have to let a couple of second rate banks go to the wall? Not a good enough answer. If they had done that last year it would have been sorted by now and the dust settled. Coulda sold em to a yank bank.

  9. 1.1 billion in 15/20 years time.If Liam’s securities can cover the Interest for this period,sure wont everything be grand.Storm in a teacup all of this worry about property.I’ll be back from Australia in 20 years time and Karl can buy Me a pint and tell Me how right I was.

  10. @ Ahura Mazda (probably some rank, high ranking civil servant)

    ACC can be bought off, they are not truly in this as a crusade! If badly drafted, by accident, they could be covered quite successfully. Let me know how much it is worth to you and I can arrange it for a finders fee!

    @ Rest

    The war chest was mentioned a few months ago on this site. To fight any attack on the assets of the great and the good. It can buy a few journalists by now. Nails (Tommy McFeely to strangers) is very handy with a nail gun. Intimidation does not only occur with criminal juries….. I am well aware that no jury actions still exist at law execpt in defamation cases. But they die with the plaintiff! Between the carrot and the nail there will be little of any veracity making itself known in this Most Corrupt Republic! More of the truth will be on this site than in any newspaper in Ireland.

  11. Is it naive of me to think that opening NAMA to foreign banks (headline on IT website this morning) is a bid to get ACC to stop rocking the boat? And is Brian Lenihan’s comment last night – ” it is not inevitable that the Nama process would result in the State taking a majority share position in the two largest banks, AIB and Bank of Ireland” – the clearest indication yet that the haircut won’t be too severe and therefore they won’t have to pump further money in to recapitalise the banks?

    Who is supposed to be scrutinising these actions? I don’t hear too much noise on that front.

  12. @zhou_enlai

    Thanks for that – I have to say, you always seem to be one of the most sensible and ‘thought it through’ commentators on this site.

    The bit that worries me most I guess is the whole business of ‘oversight and transparency’. We shall just have to see how that turns out over the next few weeks.

  13. I think its fairly obvious that “opening NAMA to foreign banks (headline on IT website this morning) is a bid to get ACC to stop rocking the boat?”

    In fact I would assume that outcome was exactly what ACC/Rabo were looking for when they brought their cases to the courts.

    Is there no limit to the generosity of the government towards the developers?

  14. Oh sorry, In answer to your question Karl.
    I would not like to single out an individual. I would do the following.
    Nationalise BOI and AIB.
    Allow the bond holders to take a hit and force mark to market on the rest i.e. cause them to admit to their corpse like states and let them fold.

    I still recon the consiquences of these actions will be less bad than the consiquences of trying to keep the current show on the road.

  15. Thanks Joseph. Unfortunately my post has since disappeared. At least I know one person read it 🙂

  16. We are witnessing a heist of epic proportions being carried on under our noses.

    Some people claim that it doesnt really matter how big the discount is because we have to recapitalise the banks anyways if we get a decent discount….

    That is ignoring who benefits from the high price paid to the banks…The net may be the same but I guarantee that the price paid will make or break certain individuals.

    The ACC case clearly shows that instead of a 20% haircut, the correct value of the assets is around 20%, i.e. an 80% haircut. They bring this up in a court case and within 48 hours suddenly they are allowed into NAMA… I presume the quid pro quo will be to stop the cases and get in line to shag the taxpayer.

    Who benefits?

    My guess is that the game is now rigged so the state picks up NAMA, A few years go by and NAMA reports it needs a bailout as ‘sure everybody knew’ we overpaid to save the banks. Meanwhile, the banks are not quite healthy as they still owe bondholders billions….

    Who are these bondholders?

    Is there a guarantee that none of these have any connection to the debts in NAMA? Or connections to guaranteed banks?

    I suspect that along with internation bondholders there are dirty tricks being played in the halls of Anglo etc and the regulator to ensure golden circles have been protected.

    If Seanie Fitzpatrick and his ilk are bondholders….

    Everybody knows the dice is loaded, everybody rolls with their fingers crossed.

  17. it is clear that we are being set up for the biggest wealth transfer in the history of the state = to banks that are reported to be ready to then buy back the pref shares so the state is left with tiny stake. The cost was set out yesterday by Dr Somers when he gave a figure of 18% of receipts going to service debt. What genius did the deal for the refinancing – should have talked to warren buffett or the bondholders who organised the recent CIT rescue.
    “it is not inevitable that the Nama process would result in the State taking a majority share position in the two largest banks, AIB and Bank of Ireland” appears to be a thinly disguised signal by the Minister that he is determined to go this route barring unforeseen events. A good indicator of REAL value is the shell office block in Sandyford now said to be worth less than 1m or if 6m is spent would be worth 9m. In a recent report an English property portfolio of prime office buildings, where banking covenants were breached, the value was reduced from 1.8b to 900m. It is reported that we are set to take on 22b of such English properties. If the suggested haircut is followed then it seems inevitable we are set for an immediate gigantic loss on these foreign properties.
    We seem to be blindly accepting the inevitably of this madness.

  18. To Answer Liams Question I would:

    1) Purchase at mark-to-market value
    2) Make a non-binding commitment that for each bank, any net profits from NAMA sales of that banks assets will be returned to the bank at some future date (2030?) minus some percentage for NAMA costs etc. [I am working on the assumption that a non-binding commitment like this will not show up as an asset for the bank!?! A binding commitment would keep uncertainty regarding the value of the commitment on the banks books I presume…]

    3) Recapitalise the banks as neccessary. [I think it is better to seperate recapitalisation from the value of these assets for various reasons: Overpaying for assets allows banks to quickly forget that we recapped them as we ‘got’ something for our money – overvalued assets. Secondly, using NAMA to re-cap will allow banks to get rid of really bad assets without ever needing to admit how bad they really are (as NAMA will overpay by an uncertain amount)….

  19. I have been looking for somewhere to express my anger as a PAYE taxpayer over this NAMA farce.

    Brian Lucey – if you are The Brian Lucey, from TCD, then thanks for your sterling work in exposing the fraud that is NAMA. Your critique of NAMA is ‘spot-on’. NAMA is a system whereby the massive losses in the property market are transferred from the corrupt, cronyism, banks to the PAYE taxpayer. The media are in on the scam, because when it is over the banks will spend a fortune trying on ‘brand awareness building’ in the media. Lenihan’s has talked about ‘joined up thinking’. This means that banks who do not want to be part of the corrupt little consensus of saving AIB and BOI from a severe humiliation, are going to get ‘accomodated’. (The PAYE taxpayer will fund this – in the best interest of the taxpayers – well this is the sort of spin that is produced, because it is directed at the greatest fear in the public mind).

    NAMA is a semi-state ploy to safe the Ballybrit Tent Boyos. NAMA is unconstitutional. McAleese, of the pretend smile, was very disturbed about the Criminal Gangs Act. Maybe she would prefer if West Dublin grew into one massive no-go area, like has been happening for the last two decades. But McAleese had no reservations about signing the Bankers Bailout, and the Builders bailout into Law. In fact she couldnot make it happen fast enough. So much for upholding the Consitution.

    The entire NAMA thing is completely unconstitutional. Read Article 45 of Bunreacht na hEireann. It is a complete farce.

    This government has no mandate. In fact, based on recent election results the Green Party have absolutely no mandate – not even a mandate to sit in the audience of a micky-mouse Urban District Council. Yet we have idiots talking about the ‘SMART Economy’. We have liars talking about the ‘Knowledge economy’. The hypocrisy of these crooks is breathtaking.

    This country would have been much better off if Anglo Irish Bank was allowed to fail. In the process it would have resulted in the failure of Irish Life (the Permo) also – thanks to that corrupt loan between the two of them when Anglo was going under. And INBS and the EBS would have also failed. The state would have been forced to fork out 20 billion Euro to dpositors. AIB and BoI would have been forced to fire their bloated hierarchies (full of neophytes and cronies). AIB and BoI would also have been forced to sell their shares in all the other companies in the ISEQ where they are minority shareholders. But it would have been over. And that is the key. Thanks to Lenihan, it will never end for another forty years.

    I hope you enjoyed the boom.Because your children will be paying for it for a very long time !!!

  20. The ACC/Rabo thing shows us how different bankers are in Northern Europe compared to Ireland. In Ireland the bankers meet and do a deal with the politicians which will preserve the bankers. The Dutch have clearly seen that they are on the outside in all of this, and that the networks of cronyism are so strong, that they have absolutely no hope of being treated fairly. Therefore they are bypassing NAMA and using the Courts system, in full view of the Irish public.

    It is a pity the bank shareholders would not launch class action suits against the careerists and cronyists who caused the problem. It is also a pity that none of the opposition parties has chosen to launch an action on behalf of the taxpayers against the government over NAMA, or against the regulators over their failure to regulate.

    1000 employees of the Central Bank of Ireland plus the Financial Regulatory Authority (IFRSA). What have they been doing for the past decade ??? Why doesn’t McCarthy start with them instead of picking on welfare recipients ????

  21. @podubhlain

    “it is clear that we are being set up for the biggest wealth transfer in the history of the state = to banks that are reported to be ready to then buy back the pref shares so the state is left with tiny stake”

    Oh crikey – I had forgotten about their ability to ultimately reduce the %holding the taxpayer has and reduce their stake. We just can’t let them get away with this. In the words of my Dutch neighbour “what am gonna do?”.

  22. We all want to know who the bondholders are. Can this become a mainstream question? Yes it can.

  23. Call it Ozzy curiosity but I’d like to know something and its this “If the ECB has provided cover for Irelands credit rating by taking the flak over the suspension of coupon payments on Anglo’s Bonds,thus leaving Anglo with in essence free loans via these Bonds,then why o why would this Nationalised entity want to buy back these Bonds under the present circumstances,given that Ireland is borrowing large sums to fund its Budget deficit.Why borrow at rates that well exceed the German bund rate to clear free loans in Anglo among other curiosities which I will refer to in good time”.

  24. Dutch Bankrupt Poolbeg Polder?

    http://galwaytent.blogspot.com/2009/07/dutch-bankrupt-poolbeg-polder.html

    Right beside the ZOE/Fabrizia site on Sandymount Strand is the 450 million Euro and NAMA-ready Irish Glass Bottle site. Do our Downtown Niggers(*1) use their disposable cellphones to do business with Anglo-Irish Bank and the Dublin Developers Autocracy (DDDA)? Or is it exclusively with NAMA?

    A few hundred metres from these spec-sites is Europe’s, and Africa’s, largest planned waste-to-toxins incinerator – to be run by a New Jersey outfit which has been fined for dioxins pollution and six thousand other violations.

    The Purple and The Pinstripe of the Banana Republic.

  25. @Garry and @ EC
    It is a matter of public record that Seanie is a bondholder in Anglo – about 10-15 million from memory.
    Quelle surprise!

    @Joseph
    You asked:
    And is Brian Lenihan’s comment last night – ” it is not inevitable that the Nama process would result in the State taking a majority share position in the two largest banks, AIB and Bank of Ireland” – the clearest indication yet that the haircut won’t be too severe and therefore they won’t have to pump further money in to recapitalise the banks?
    NO.
    You need to process this statement through a LenihanTranslator.
    “not inevtable”= this outcome is by far the most likely.
    It is actually the clearest indication yet that the ACC action has forced the authorities hand over NAMA, forcing a realistic valuation on many near worthless assets.

    @Karl.
    Your hint:
    In interpreting the various answers put forward, it might be helpful to keep in mind that AIB has over €24 billion in pure development loans and has core equity capital of about €8 billion.
    Absolutely on the money.

  26. @podubhlain

    Bloomberg reports that the bondholders who put up $2 billion in financing for CIT Group Inc. last weekend, made an instant $100 million on an investment analysts say is almost risk free.

    CIT, the 101-year-old commercial lender struggling to retire $1 billion of debt maturing next month, agreed to pay a 5% fee to the creditors and annual interest of at least 13% – – 25 times Libor – – the London Inter-bank offered rate. On top of that, the New York-based company pledged assets worth more than five times the amount of the loan as collateral.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aiJwhWb4QleU

    Even if CIT fails, the bondholder group will probably make money because of the collateral. The lenders have “virtually 100 percent assurance” they’d be able to recoup all their money in a bankruptcy, said Sameer Gokhale, an analyst with Keefe Bruyette & Woods Inc. in New York.

    So no Santa Clauses there!

    Irish land value

    The State will have a direct interest in maintaining a corrupt land development system in a country with plenty land, at a time when it seeks to make the economy more competitive.

    It’s not an accident that Irish housing size is among the smallest in Western Europe, even though there is a large percentage of detached houses.

    As for Zoe, I recall passing the Gas Works development near the Dart Barrow Street station in 2006 and seeing bicycles on the balconies. The pattern during the boom was to provide minimum storage space and less car spaces than units.

    The apartment market will take years to recover.

    In 2006, the National Roads Authority said the cost of land for roadbuilding in Ireland, accounted for 23% of project costs compared with an average of 12% in the EU.

    Nama will have data on the small number of owners of the landbanks in the Dublin area for example.

    Bernard McNamara bought the Burlington Hotel and adjacent Allianz building in 2006 for €388 million. Also in 2006, a consortium led by Bernard McNamara and including the State-owned Dublin Docklands Development Authority, paid €412 million to buy the former Irish Glass Bottle factory in Dublin.

    When will funding for developments to complement the site costs, be available? Ditto for Dunne and Grehan in Ballsbridge.

    Site costs as a percentage of total selling costs were about 15% before the boom.

    As in the US, site costs moved towards 50%.

    A Fed study says it took a full ten years for the real land price index to return to the level at its previous peak in many cities. In a number of large cities — including Los Angeles, Philadelphia, Providence, RI, and Sacramento — real land prices did not reach their 1990 peaks until 2001 or 2002, well into the current housing boom.

    So with domestic funding impaired for at least a decade and the UK also struggling with debt, how will the debts be repaid if projects cannot be completed?

    Fed study:

    http://www.federalreserve.gov/Pubs/feds/2006/200625/200625pap.pdf

    Summary of Morgan Stanley report on various scenarios for Ireland:
    Legacy of banking crisis likely to be long-lasting if not permanent increase in net public indebtedness

    http://www.finfacts.ie/irishfinancenews/article_1017250.shtml

  27. @Maurice O’Leary
    “It is actually the clearest indication yet that the ACC action has forced the authorities hand over NAMA, forcing a realistic valuation on many near worthless assets.”.

    Excuse my cynical view of the world Maurice but I will believe it when I see it.

  28. I would confidently wager that there will NOT be anything like a current market value paid for the loans. Some fudge has been signalled “long term value” “through the cycle” sorta stuff.
    There will be a lot of money to be made “advising” on the above valuations. Im also pretty confident that few of the 20 signatories on NAMA v NAtionalistion will be involved.
    the fix is in

  29. @Brian Lucey

    Regrettably, it appears Brian Lucey is spot on. In an “exclusive” in the Sunday Independent today, Jody Corcoran sets out just how much we are about to overpay.
    He states that the 90b of assets are worth 30b and we are about to pay 60b as the so called “long term economic value” of the impaired assets. So we lose an immediate 30b with the prospect of a further loss of up to 30b over ten years. Add on the interest cost and the State is facing a bill of epic proportions.
    Jody Corcoran obviously has sources for this information; it appears we are being conditioned.
    Can any accountancy or legal experts inform us as to the legitimacy of the concept of “long term economic value” being used in valuing assets being acquired by the State. If you tried this in the High Court you would be very quickly shown the door.

  30. Current market value ? If there was even the slightest chance that NAMA would turn a profit on toxic assets / bad loans / non conforming etc etc the private sector would be all over it in a flash .
    When any property bubble anywhere in history has burst losses have been up to 80 % or a return to pre boom levels .
    We Irish have this obcession with property . We used our ‘ Irishness ‘ as an excuse to opt out of basic economic boom to bust cycles with the Tiger and we are doing it now in not accepting the true value of property .
    Not only will we have estate agents talking up property we wil have the goverment and all the vested interests at it also .
    We have to accept that NAMA is going to be very very expensive and will not turn a profit .
    Unemplyment is at 12 % and could rise to 16 % or even higher . Those people will not be buying houses anytime soon . Thousands are in negitive equity and they will not be buying houses either . Only a fool would buy a house now and only a fool would buy a house with the government distorting the market .

  31. http://www.tribune.ie/business/article/2009/jul/26/anglo-irish-could-be-troubled-fleming-groups-white/

    The title says it all… The thought of Anglo being a white knight to anyone or anything is laughable.

    Lets assume this is true and Anglo are fronting some cash in this… That is some of OUR cash. (Borrowed by us to keep these scumbags in overpaid jobs)

    What is their real agenda? Why are they doing this?

    We know Anglo are morally bankrupt and if it wasnt for crooked or incompetent politicians they would be actually bankrupt also…. So why, are they loaning for property development when they are overexposed to exactly this type of ‘investment’

    Could it be to maintain the fiction that values havent collapsed 80% and pay off ACC so Anglo etc can pass on ‘assets’ at grossly inflated prices to NAMA? With the tazpayer as usual carrying the can.

  32. Scott Rankin is a mite peeved at all this nonsensical talk by “experts” .
    dont have a link, but its in the Property Pin. http://www.thepropertypin.com/viewtopic.php?f=50&t=23349&start=15
    Heres the quote

    “Latest media speculation on NAMA
    Scott Rankin

    There were a few more snippits on NAMA over the weekend. The Irish
    Independent reported that Minister for Finance, Brian Lenihan, will meet senior executives from the UK banks on July 29th to discuss NAMA. While NAMA legislation, which will possibly be published on July 29th or 30th, will be drafted in a way that does not preclude overseas lenders being involved, the conditions for inclusion will be sufficiently arduous as to effectively eliminate them from participating.
    In The Sunday Tribune, there was speculation that the discounts to be paid on loans would be far greater than the 15-20% that we and others have speculated on, possibly averaging 27-28%. The article quoted ‘experts’, rather than NAMA officials it would appear. There is always the risk this could be the case of course.
    However, one should also keep in mind what the Minister indicated last week: that based on the information he has seen to date, it was ‘not inevitable’ that the process would result in the state taking majority ownership of ALBK and BKIR. As we said last Friday, working off a minimum core equity of 5% post-NAMA, the haircut that would give the state 50% ownership in BKIR is around 26% (our model has 16%); for ALBK, it is around 18% (our model has 20%) assuming M&T is sold but Poland is retained (note BZ stocks is up 5% year-to-date now).”

    so to summarise Mr Rankin….

    1) well, the legislation might ALLOW the foreign banks to come in but sure they wont. To which my question is this : ACC can get 70c on the euro by coming into the scheme. They can whistle dixie until they get a judgement mortgage by staying out. Scott, the onerous conditions would want to be fierce onerous altogether before the lads in Rabo head office would walk away from that

    2) Soi-disant experts say one thing while insiders say another. Scott prefers to believe the insiders, who are of course totally unbiased. Scott, the experts are working on publically traded debt figures and information coming out on the commercial courts. See frinstance http://trueeconomics.blogspot.com/2009/07/economics-25072009-nama-presentation.html and of course the very article on which this comments.

    Its entirely probable that the banks will be “saved” from nationalisation, to the snide and shallow mutterings of “hah, thatll show them experts”, but at what cost to the taxpayer who seems to have nobody at the table articulating her views.

  33. To me it seems Davys are starting from a completely different viewpoint than trying to put a value on the assets.

    Davys have came up with a price that the assets “must” be worth in order for the banksters to emerge from this with their independence and capabilities to make future huge profits intact.

    And then suggesting that is the value NAMA should pay, irrespective of how much the shit is worth…

    Its saying the banks need to screw the taxpayer for X and then they can walk away and wash their hands of the mess they have created… And get back to making huge profits and bonuses.

    Which is very different to actually putting a fair value (short or long term) on the assets.

  34. @Garry
    Yeah, its a different approach all right. But it may be the one that is going to be used in reality. We need to be aware that there are different constituencies here with different bottom lines and different objective functions.
    The key issue here from the economies perspective is to pay a fair price as otherwise we take on more debt than is needed which will divert resources from the productive part of the economy.

  35. Davy’s are actually suggesting that the Government will work backwards to achieve a given level of recapitalisation requirements rather then follow the EU guidelines on asset valuation. This is quite scandalous. I am sure the Department would not take this lying down if it didn’t suit them to try and drag more private capital into the banks.

    The irony is that Davy publishing this may make it less likely to happen as the application of a writedown bell curve (in the sense of university results) would be a tad obvious now!

  36. It’s quite remarkable that the various Irish stockbrokers are coming up with similar results. Perhaps it adds credibility. However it reminds me of how rating agencies came up with very similar results for credit enhancement required for AAA ratings on US subprime. And somehow they were all similarly wrong.

  37. The stockbrokers are working off the same hymn sheet. The reverse engineering accountancy method is obviously being used to ensure the least unpalatable result for the stockholders. It would not suit the stockbrokers for the State to own a majority of the two main banks where they have very strong connections. This nonsense is being constantly foisted on us as being reasonable.
    Interesting that ACC has changed its stance from outright opposition to “guardedly neutral” on the Zoe application for examinership. Looks like your earlier contributor was right- NAMA will give them considerably more money for the toxic stuff.

  38. @ Micko
    Talking about constitutionality nama despite being the mother of all bailouts (54 billion) we are told, is not a “money bill” Amazing from a man that munches on garlic to keep the warewolves at bay!

    NAMA and the constitution!
    Article 6 Section 1
    “All powers of government, legislative, executive and judicial, derive, under God from the people whose right it is to designate the rulers of the State and, in final appeal, to decide all questions of national policy, according to the requirements of the common good.”
    “To decide all questions of national policy, according to the requirements of the common good” And how on in Gods name is NAMA by any stretch of the imagination for the common good? Article 33 section 1
    There shall be a Comptroller and Auditor general to control on behalf of the State all disbursements and to audit all accounts of moneys administered by or under the authority of the Oireachtas
    “To control on behalf of the State all disbursements” and how exactly does he intend to fulfill his statutory function in this regard? is he going to control NAMA disbursements as he must and can he sign off on figures which are blatantly wrong or at best mere guesstimates which expose the tax payer to billions of Euro in losses.
    Article 45 Section 2 subsection iv
    “That in what pertains to the control of credit the constant and predominant aim shall be the welfare of the people as a whole”
    Not the welfare of bankers, bond holders or developers who have embraced NAMA with religious zeal for obvious reasons.
    Article 45 Section 4
“The State pledges itself to safeguard with special care the economic interests of the weaker sections of the community”
    This surely is good news for ordinary mortgage holders who, presumably even before the banks are sorted, must according to our constitution be safeguarded “with special care”
    Finally, Article 28 states
    “The Taoiseach shall keep the president generally informed on matters of domestic and international policy”
    And has he bothered to keep you informed? When was the last time he discussed SPV’s with you?

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