NTMA Review of 2009

The NTMA has released its review of its 2009 activities. Link here.

In relation to the coming year, the report says that “The NTMA plans to raise up to €20 billion in the bond markets in 2010. This requirement is significantly less than in 2009 because of a smaller projected Exchequer deficit of €18.7 billion and a lower refinancing requirement of €1.2 billion.”

These figures do not include any allowance for any borrowing that may be triggered by bank recapitalisation requirements. That said, the National Pension Reserve Fund had a good year thanks to the rise in international stock markets and its value now stands at €22.3 billion. Excluding the €7 billion held in preference shares in AIB and BOI, this leaves €15 billion that could, potentially, be used to recapitalise the banks without borrowing.

43 replies on “NTMA Review of 2009”

Said before but saying again (given the thread): Ireland will be pretty much the only country in Europe issuing less in 2010 than they did in 2009. The lack of redemptions is obviously a slice of luck rather than planning, but its welcome nonetheless and will ease the pressure on the NTMA this year.

“Ireland will be pretty much the only country in Europe issuing less in 2010 than they did in 2009. ”
Thats of course if you close your eyes, wish very hard, and hope that nobody notices the 54b worth of nama-bonds that someone, somewhere, somehow, has to issue….

As the NTMA notes, the E35bn raised last year included over-funding of E5bn which is “available to finance the deficit in 2010″…though the agency still intends to raise the E20bn needed to fund the planned deficit (E18.7bn)+redemptions(E1.2bn)..

The “real” deficit in 2009 (excluding the €4 bn that evaporated in Anglo) was €20.6 bn. As Michael Crowley has noted the NTMA appears to be working on a 2010 projected deficit of €18.7 bn. Absent more money-shredding inputs to Anglo (can we be sure of this?), the NTMA will have the €5 bn carryover with the residual of €15 bn in the NPRF to finance a recap of €20 bn. Does it make sense to apply the NPRF in this manner? Will a €20 bn recap be enough?

@ Brian

theres something called NAMA thats going to issue 54bn in debt? No way. Thanks for the info. As such, will the government have difficulty issuing 74bn in actual debt? If only they could find some way to keep two thirds of this off-market and with a captive buyer for the next decade, because im fairly sure my initial post was about the fact that the Irish govt will be unique in issuing less to the general market in 2010 than in 2009…

You, me and the bond markets know this. But, we have had this discussion before.


you’re right. However, that said, i still get independent economic research comments which say “Ireland will be unique in Europe in that they are issuing less debt in 2010 than in 2009”. Seriously. Optics are important, and im fairly sure you know that too.

Brian L,

You could add some billions for bank recaps. Though the gov seems determined to inefficiently minimise this by overpaying for bad assets. NTMA dude sings from the hymns heet … http://www.independent.ie/business/irish/no-reason-to-change-30pc-discount-valuation-nama-2003986.html


There’s a good piece on alphaville, though I guess BarCap mightn’t be independent enough for your liking 😉 The first graphic doesn’t make AIB or BOI too pretty.

@ All

Basel Committee Proposes Strengthening Bank Capital and Liquidity Regulation


On December 17, 2009, the Basel Committee issued two consultative documents proposing reforms to bank capital and liquidity regulation, which are intended to address lessons learned from the financial crisis that began in 2007. [1] The document titled Strengthening the Resilience of the Banking Sector proposes fundamental, although in many respects anticipated, changes to bank capital requirements. The document titled International Framework for Liquidity Risk Measurement, Standards and Monitoring proposes specific liquidity tests that, although similar in many respects to tests historically applied by banks and regulators for management and supervisory purposes, going forward would be required by regulation.

This looks like a good summary – others here are more tuned than I will ever be on bank ratios ………… looks like some of us got some fast learning to do ………….

@Paul Hunt

The idea of using €15 billion from NPRF to re-capitalise banks leaves me speechless ……………. NTMA has a sound record ………..

@David O’Donnell,

Not my idea. For some time I’ve considered it as possibility that the Government might choose, but Karl raised it as a possibility in his kick-off post. It’s feed the zombies time.

No mention of short-term debt… shouldn’t it also be included in the GGD? There’s 70 bn USD in commercial paper programs, the HFA and the t-bill program… no idea how much is allowable limit and how much is currently issued.

How hard will it be to raise capital in bond markets in 2010? Harder than 2009?

Is Ireland’s 2009 borrowing requirement the appropriate benchmark for us to use to start uncorking the champagne?

To put AM’s graphic into context . For AIB to end 2011 with a core tier one ratio of just 5.8% would require some 9b extra capital, for BOI to end up at 6.6 would require 6.4b. Thats just keeping their nose barely above water. Lets say they need another 50% to be really comfortable.
So we are up to 15.4*1.5 = 23b. Thats a chunk of money boys and girls…


this is the full URL that I should have posted above – on Basel tier ratios 1 and 2 (for poor financial illiterates such as meself)


@Paul Hunt
Understood not your idea to ‘raid’ the NPRF …….. (p.s. how do we hide it?)

@Brian Lucey

Think they will settle at €15B or so ………[the 8 can wait to 2012……..] ……. still a massive ‘chunk of money’ ……….. this black hole gets deeper and deeper – not even sure Stephen Hawking could figure it out …………

Brian Lucey said today that we could nationalise our entire banking system for €7 Billion and then sell it off – keeping an SME bank – at our leisure. Instead we are borrowing FIFTY FOUR BILLION EURO and swopping it for the floodplains and ghost estates of Ireland for a massively overstated price. Officially the price is overstated by €4.7 Billion, in reality, as Morgan Kelly has proved, by much, much more (see my title). This must be stopped. Full nationalisation now. Don’t listen to the scaremongering NAMA shills. Full nationalisation now.

Doing anything else is a transfer of wealth from the public to bank shareholders and bondholders.

@E65 etc
“Brian Lucey said today that we could nationalise our entire banking system for €7 Billion and then sell it off – keeping an SME bank – at our leisure.”
no, he didnt. What he said was : 7b pref warrants gives us 25% , which would be bad value, we could buy the whole thing for less. We should consider cleaning the banks and either give to the bondies or selling. I said naught about an SME bank either.

@ also E65bn

“as Morgan Kelly has proved”

He can see into the future now? He proved nothing, he simply has an opinion he has expressed. There’s being flexible, there’s overreach, and then a long long long way past that there is you.

@Brian Lucey
You are correct. I withdraw that. I thought that €7 Billion sounded like a reasonable price for them, given this reminder by Greg of their price in Dec 2008:


“Here is the body of an email I sent to Pat Kenny one year ago to the day. He did air it and was shot down by the anti-nationalisation argument.

I cannot reproduce the accompanying table in WordPress but the market values were as follows.


Name / Shares In Issue / Price / Market Value

Anglo Irish Banks / 759,952,175 / 0.377 / 286,501,970
Allied Irish Bank / 880,661,066 / 1.980 / 1,743,708,911
Bank Of Ireland / 1,004,193,740 / 0.880 / 883,690,491
Irish Life & Permanent / 276,782,351 / 1.520 / 420,709,174

Total stock market value one year ago = €3,334,610,545


Brian Lenihan could buy the entire quoted Irish Banking System for €3.3Bn and still have €6.7 left over to fund credit for “real” business.

No dividend payments for five years.

Properly consolidate the sector (Swedish style).

And then sell the restructured entities at a later date (for 5? 6? 7? Billion)

Why bother with preference shares if you can own the whole lot?


So, in short the entire quoted banking system could have been taken over by the State for less than the “investment” in Anglo Irish Bank.

Every single shareholder could have received full market value (including Anglo).

Irish Life & Permanent would by now have been re-privatised at a gain of (what) €2bn?

Instead we have NAMA. We have already “invested” €11bn and not a shred of equity.

We will (under Fianna Fail and the Greens) “invest” another (what) €10bn?

That is €21bn of Citizen/Taxpayer money utterly squandered by Fianna Fail & the Greens.

Remember, we have already guaranteed the entire balance sheets of these institutions.

Why did we waste €11bn hard cash? Why another €10/€11/….€15Bn?…”

It would be another government triumph to give us only 25% of the shares for €7 Bn, given where they were before Lenihan started talking their share prices up, and his decision to officially overpay for their property loans by €4.3 Bn and in reality by much more.

I withdraw the comment about you advocating an Irish owned SME bank.
It is an option though.

@ BL
To put AM’s graphic into context . For AIB to end 2011 with a core tier one ratio of just 5.8% would require some 9b extra capital, for BOI to end up at 6.6 would require 6.4b. Thats just keeping their nose barely above water. Lets say they need another 50% to be really comfortable.
So we are up to 15.4*1.5 = 23b. Thats a chunk of money boys and girls…

Brian, could you walk me through the numbers please

Morgan Kelly is hated because he refuses to wear the kryptonite jersey.
He treats the runaway Irish property bubble like a runaway property bubble. He doesn’t treat is as a uniquely Irish phenomenon because runaway property bubbles are not a uniquely Irish phenomenon. In any case, the same sort of bubble happened with Irish farmland in the late seventies.

“A less futile exercise is to ask how much Nama would have cost at the end of similar credit-fuelled price bubbles. A decade after their peaks, Tokyo land prices had fallen by five-sixths, while Irish farmland, adjusted for inflation, had fallen by three-quarters. Had Brian Lenihan bought €77 billion of either, applying the proposed Nama discount of 30 per cent, he would have lost €35 billion-€40 billion on our behalf, or roughly €20,000 per taxpayer, and that is before adding interest.”


Ok you say, I concede Irish farm land but how is the bubble in Japan comparable to us? Surely their prices went really, really high. Well, off the top of my head I would point out that land in Tokyo is expensive and always will be. For years before their boom Tokyo has been a hugely densely populated megacity, in a country with a huge economy, in a really densely populated country (very mountainy). It was therefore hugely expensive BEFORE the Japanese credit bubble. Being already really expensive, the bubble would have driven prices really, really high.

Ireland is a prosperous (they’re working to reverse it) undensely populated
country. Dublin is the relatively small capital city. The natural price level in Ireland is going to be really, really low compared to Tokyo.
But both of them had massive bubbles. I believe that any time anyone plots long-term Irish house prices the results have been Morgan Kelly not Brian Lenihan. Remember too, prices will probably fall below their long-term trend before recovering – even without the inexplicably ginormous number of empty properties we have.

This prompts some questions:
1. How did we end up with so many empty properties – experts say between 160,000 and over 200,000? A developer friendly government (more accurately a government of developers) was in office. Is it too much of a stretch to say that the developers were told in the run up to the 2007 election by FF/Developers/Bankers (aka Developers/Developers/Developers) keep building, keep up construction employment, and a friendly government will stay in office.

When the great depression began Herbert Hoover did the following:
“In November 1929, he met with industrialists and union leaders and negotiated a deal whereby industry agreed not to reduce wages and labor unions agreed not to strike. This later led to Hoover signing into law the Davis-Bacon Act, which required local governments to pay union wages on public works projects and the Norris-LaGuardia Act, which prevented courts from issuing injunctions against union strikes. Keeping wages artificially high limited employment opportunities such that by the end of 1931, the unemployment rate was 16% and growing.[40]”

Did FF, to take a benign view, say, well a stop in construction employment suits no one, keep on building until we get a huge public works programme up and running to absorb all these builders and we’ll take care of the empties?
Then of course at the start of 2007 we had the credit crunch and a chain reaction that only Jeremiah academic economists predicted was unleashed. McCreevy bought a house in 2006 just before the peak. FF, looking at it benignly, thought that the peak of the credit bubble price level at the end of 2006 was the natural one, or else with a bit of rigging, could become it. That may be why it took them so long to recognise the truth. I fear that many still don’t.

2. Why did we build 21,000 properties last year and only sell 7,000? What’s the point of building them if there is a huge oversupply? You would only do it if some dumb patsy was guaranteed to buy them at the end of it.
Oh wait, that’s us.

3. The initial claim by developers was that the oversupply in Dublin was small and the bottom of the market near. Then it became the oversupply of houses in Dublin was small – the problem was apartments. Is this really tenable any longer? I believed it myself, but is Dublin any better? You can’t build a wall around Dublin and keep prices really high whille they are really low in Newbridge. If anything, prices may be disproportionately high in Dublin. Is Dublin to Ireland as Tokyo was to Japan? I hope not but the worse thing would be to try to rig this using green pretexts.

The house mountain:
4. Instead of knocking all these houses down, why not give a huge number, as many as possible, as holiday homes to people who have paid huge amounts of stamp duty directly, huge other taxes indirectly, and have therefore been disproportionately funding the country (full disclosure: I haven’t)? Houses in the midlands and further out won’t have a huge effect on the Dublin market. If they so wish, give them the proceeds of the sale instead. By doing this, some good could come from this debacle.

Also, designate scenic areas and move people en masse (well, as far as is practicable) into them. Foreign observers, such as Simon Jenkins, say our coast line has been ruined by development. Now we have lots of spare houses. We could give people a big, modern house not very far away.

I am sure there are many other possibilities. The Greens are probably in favour of the second but I would guess horrified by the first. On NAMA the decisions were taken before the debate. Now the GP are the only thing standing between FF and electoral incineration. FF may be happy to allow a small, dwindling party to entirely decide where and how the country live. But they shouldn’t be allowed to.

@ E65bn

to be honest i didnt bother reading in full your post, there’s only so many hours in the day and all that, but my point still holds: Morgan Kelly has “proven” nothing. History will ultimately be the judge of whether he is right or wrong, not me, and certainly not you. Any discussion beyond that point is essentially p1ssing up the same tree you generally rant on about, aka NAMA, and i’d be risking repetitive stress sydnrome if i got into another discussion of it with you. Is there any possibility you could leave the discussion on this page to the subject matter at hand, ie the NTMA and its review of 2009. Everybody else seems to be able to do this, so why on earth can’t you? There’s more than enough pages dedicated soley to NAMA for you to talk to yourself on…

@Brian Lucey
Briefer sounds more partisan. In brief:

1. Morgan Kelly’s genuine critics are deluded by a belief in the exceptional nature of the Irish property bubble. Ours is claimed to be uniquely Irish, beyome comparison to any other.

2. FF may have bought the 2007 election to a much greater degree than we have ever previously contemplated, and been fully aware of the house over supply long before it. It was supposed to segueway into the NDP. Then the credit crunch happened.

3. Why are we still adding to the house mountain?

4. Contrary to spin the Dublin property market may not be much better off in terms of oversupply. There is a possibility it is worse.

5. The government tried to predetermine the NAMA debate. The debate on what to do with the house mountain shouldn’t be. Ballymun was sincerely believed at the time to be the smart, green, sustainable solution.

@Brian Lucey
NAMA Board:
It seems that only 3 people on the NAMA board know about banking/property loan recovery and only one was nominated by the government. Is this a three member board? Is it a one member board?

“Another member is Michael Connolly, who is a former board member of Bank of Ireland and now sits on the Financial Services Ombudsman Council as well as advising ACC Bank, Anglo Irish Bank and Bank of Ireland. Mr Connolly left his job as head of business banking in Bank of Ireland nine years ago after the bank abolished its separate business centres to bring decisions back to branch managers.”

“The third accountant to join the board is Peter Stewart who was proposed by the Labour Party and is managing director of Dublin firm O’Donovan Stewart. Mr Stewart was hired by rogue solicitor Michael Lynn to draw up a list of the solicitor’s assets and liabilities when the Law Society launched a probe into his legal practice. He previously set up the economics and financial consultancy group Tansey Webster Stewart along with the late Paul Tansey, economics editor of the ‘Irish Times’, and business consultant Stuart Webster.”

“Limerick accountant Brian McEnery was proposed by Fine Gael. The insolvency expert is no stranger to public life and has previously served as a board member of semi-state bodies as well as president of the Association of Chartered Certified Accountants. Mr McEnery told the Irish Independent over the summer that no previous recession had produced such a huge overlap between personal insolvency and corporate insolvency.”

In fact, I am not sure about the banking/property loan management skills of the FG/Lab men.

Is this a one member board?



@Mark Dowling
The South East of England, the most prosperous part, does seem – from my detailed academic study (of the newspapers) – to be more prone to booms and busts. At least this was the case with the boom in the eighties. If Ireland had an artificial credit bubble and Dublin really boomed then it may really go bust. I know many people who bought in Dublin near the boom peak so I am not taking pleasure in it. It only occurred to me in fact because the NAMA lobby say the precise opposite.

If Dublin prices are really high, and the commuter belt really cheap, then people will drive. That means Dublin prices will fall until…
I wonder what was the percentage difference pre-boom. Then again, phenomena like Wexicans were unheard of then.
See (mean) definition one:

We’re living through an X-Files episode.

Corrigan’s statement that NAMA would get credit flowing was based on an old argument long disproved. He said it would flow because it would now be in the banks interests to lend. Not so.


Also on Corrigan’s interview:

In emphasising the need to avoid a firesale (which means no Irish property sales at all for 2 years) NAMA also confimed what Whelan said.
“Effectively, the developers have been told that they can start paying back the money in 2013.”
On the solemn statement that NAMA would examine business plans Whelan said:

“… in light of NAMA’s own business plan, it will be pretty hard for them to quibble with a developer who offers them a plan of “I’ll wait until 2013 and sure things will be grand then.”


Developers who work with NAMA (which will be all of them) will get 2 years. After that, when the reality of the property market is clear, and they have been cooperating for 2 years, my cynical belief is that we will be told…that we are where we are.
After a lot of complaining we might even get a NAMA inquiry.

As head of the NTMA Corrigan is responsible for NAMA and sits on the board. Like the chairman of NAMA and the chief executive he has no experience that I could find of collecting property loans.

The management team of an agency for property loan management
have no experience of property loan management.

Corrigan is also 64 and therefore like the chairman will face little consequence if it goes wrong.

To sum up:
A management team of (property loan) know nothings. A public that have been told repeatedly that the goal of the agency is loan recovery but the management team of the agency happily declare that they won’t be doing any of it for 2 years (no wonder, they have to learn). When people realise this the consequences for national solidarity will be…well, there won’t be any national solidarity.

It is actually getting to the stage where I would plead with the establishment to do a better job of pretending. If NAMA is going to impersonate a property loan manager then at least treat the public with some respect.

Please hire qualified actors – not civil servants who wouldn’t be cast in the local drama group.

I don’t believe the Anglo board is a corporate governance star either.
It’s a bank & property loan recovery agency. The Board is:

– Alan Dukes
– Ex Revenue Commissioner Frank Daly
– Donal O’Connor
– Some BOI guy


It looks like all the banking technical knowledge will be coming from the BOI guy. At least Seanie Fitzpatrick has had some punishment.
If this bank is going to have an extreme banking makeover – turning it from a property lender into a state owned SME – this is an odd sort of board to have.

We always seem to get pushed off-piste into the well-trodden NAMA slush. NAMA is a done deal deal. Yes, it’s very likely there’ll be tears before bed-time, but the whole package of problems has been kicked well into the long grass. This issue here is primarily about financing. The NTMA is planning to borrow €20 bn to cover the projected 2010 deficit that includes €6-7 bn as part of what’s left of the NDP. Huge uncertainty remains about the scale of recap/”investment” in the covered banks. Brian Lucey reckons €23 bn will be required just for BoI and AIB. Add in the others and who knows?

Perhaps the Government reckons it can get in and out quickly and the NTMA can provide the cover with T-bills, but it would make sense to work on the basis that the Government will hold an equity stake for quite a while. The UK Government seems to be reconciled to the fact that it will hold significant equity stakes in RBS and the Lloyds Group for a good while yet.

And even with a comprehensive recap there’s no guarantee that the covered banks’ balance sheets will stop contracting and that they stop leeching the real economy. In the meantime there is a heavy constraint on borrowing for productive investment (whose debt-service is tax-funded) and consumers will pay twice for any investment in the state sectors off the Government balance sheet. Firstly to finance a share of the investment up-front and then to pay for the full return on, and return of, this investment.

Extremely limited direct Government financing of investment, no bank financing of investment and consumers double-paying for a share of semi-state investment. Looks like a GUBU-squared decade coming up.

The Eamon Keane interview was much more informative. In response to a question about not taking paycuts he made some reference to top hatted public service employees, or was it pensions.
It’s a bit rich considering he could be on €1 million a year as his predecessor was.

“It is rumoured that Mr Somers earns anywhere between €200,000 and €1,000,000 a year”.


@ Paul hunt

I asked Mr Lucey to provide the numbers behind his 23billion forecast for the 2 banks. I am still waiting. Maybe I will have to get the KGB to hack into his PC.

Geeze, you asked less than 24h before you complained your still waiting. Newsflash – I dont spend my entire day and night hanging on the blog here. I have other things to do.
Look at the link AhuraMazda gave – there it shows that its as a % of existing market cap. So take the existing market cap and multiply by the percentages given. But all that is as shown in the linky….

@Brian L

thanks for that. I have asked the KGB to hold off on your PC for the moment. I will be back. However, I asked for your numbers not AM. I really do not understand where 23bn is coming form.

You have misinterpreted the table. It is from P.22 of Barcap’s “European Bank Too Big To Fail” from Jan 5 2010. What is intends to show is the required extra capital to raise Core Equity to 2 points over the 8% sector average (10%). At 5th June market caps, AIB needed c. 8bn to get CT1 to 10% not 5.6% as you state. BOI would need over 5billion to recap to 10% core T1.

Arguably 13billion would leave them fit for purpose, albeit de facto nationalised. Your 50% cushion to a 15% Core tier 1 (?) would leave us with the best capitalised banking system in the developed world

Thanks, if I have misread it. … I had read it as from where now to now+x. Still, at this stage as you say, its nationalisation by any other name

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