If I were in trouble with my mortgage, I’d be straight on the phone to my bank manager today to start negotiating. The banks know that NAMA dishes out heavy enough discounts - so if they can get away with short-sales within, say, 20% of the mortgaged amount before NAMA arrives to take the mortgage at 50-70% of face value, they might just go for it.
When AIB, BOI and IL&P are 100% nationalised, the Irish government will appoint a valuer, the valuer will decide if the equity shareholders are entitled to anything. They will most likely decide that they are entitled to nothing as their shareholding is worthless.
The NAMA structure doesn’t work anymore. Or a least the nama bonds at 6 month euribor to be used as repo collateral.
For example - tracker mortgages. Banks are getting about ecb+1%. It wouldn’t make sense to replace these with a write-off and replacement with something earning 6m euribor.
Though my warning light is flashing. If the gov is forced to shrink the bank balance sheets immediately, they may be told to remove the Irish sovereign from any of this risk. This may take the form of selling the mortgages to a non-irish investor/bank. At a guess, we’d be doing well to get 60c in the euro for trackers. This would force the irish banks to call on the contingent capital pretty quickly.
Question on the Tracker book : if my Tracker was indeed sold to a Foreign Bank, I assume the product itself remains intact? Ie :Im still paying Tracker rates? Is it possible they can break the contract?
So what’s do the terms and conditions on the tracker mortgages allow? If nationalized, can trackers be thrown away? Borrowing at 5%+ to loan at tracker rates is not viable so when does the straw land on the camel?
ON Tuesday there was a very strong (unfounded) rumour that sweep banking cirles in Cork at a branch level that AIB and possible Bof I would go into receivership/examinership. It caused a huge amount of unrest amongst the staff. Their is currently an IBOA meeting taking place in Cork it will be interesting to see what is said