NAMA Haircut,why can't we know ?

So it seems like BL has told all his FF buddies & even a few of those commie Greens what the discount NAMA is going to get is. So why won’t he let the rest of us in on the secret ?

We’re the poor bastards picking up the tab, don’t we get to know ?

I don’t like this, ‘it’ll be released in when the Bill is published Sept 16th’ crap. Ruairi Quinn specifically asked for BL to commit to a decent period of discussion in Committee before the bill went to the Dail, so that some mature consideration & contributions could be made, to what is undoubtedly the most important piece of legislation to go thru the Dail in the last 60+ years.

So once again, what’s the big fuggin secret ?

You have answered your own question…

This is by design and the current confusion was the intention of the government all along.

In the announcing statement for the Bill the Minister stated that

and we learn from a article in last weeks Indo…

Now this is very interesting because when drawing up a bill that is structured like the NAMA Bill a detailed valuation methodology for the various asset groups and the supporting equations would have been the starting point for the scenario building that obviously went into shaping the final results seen in the Draft Bill.

So the details of the valuation process are missing from the bill by design. To deliberately shorten the period available for informed debate between the placing of the bill and the final vote.

So far none of the critics of NAMA has been able to come up with any firm figures for how much NAMA will lose, or how much it will cost. The main reason is not due to lack of detailed information about what will be bought (which there is) but due to the fact that there is only the vaguest outline of the valuation process in the Bill.

Definitely a sign of a government that is only acting in the best interest of the country…

(quote)So the details of the valuation process are missing from the bill by design. To deliberately shorten the period available for informed debate between the placing of the bill and the final vote.(quote)

I think the reason is that the maximum that Nama can pay is an amount which guarantees not to wipe out the equity capital in any bank. So you need to look at the equity capital in each institution and that will put a ceiling on the amount Nama will pay.

From what I understand this is where the maximum 30 per cent haircut that Karl Whelan et all talk about comes from.

You cannot have a proper valuation exercise set out in advance when you will actually need to work backwards to ensure that you do not end up with bondholders being hit (should equity capital be wiped out) or indeed nationalisation.

Also does anyone know what is the maximum shareholding the Government or indeed any investor can hold without it triggering takeover procedures?

revo, I don’t know that this is the case. Mr. Lenihan has repeatedly said that he has no objections to the government being the majority shareholder.

I believe the takeover rules will be waived (legislated out), though I haven’t seen any legislation for it - I presume there will be a separate bill determining any equity recapitalisation.

So the Government, & all its flunkies are free to say that NAMA isn’t a bailout, & that everyone else is just making up figures. But at the same time they refuse to give the actual figures to the opposition so that they could actually work off a level playing surface.

Welcome to democracy in Ireland, small ‘d’, very fuckin small ‘d’.

Maybe it’s a pudding bowl and he refuses to come out of his room…

Yes this is true but I still think there are issues around this.

From what I understand there is a certain shareholding (wipeout of equity capital) that he cannot go over without it impacting on bond holders. The DoF does not care really about equity shareholders being wiped out it is only concerned about bondholders because it believes the stockbrokers who insist that international investors cannot tell the difference between bank and sovereign debt despite having opted for the higher risk/reward bonds in the first place.

Thus he is free to to be majority shareholder but not to nationalise. He is free to wipe out most but not all equity capital. Would this make sense?

That is what the UK government did.

Note that at current market cap, an 80% stake in AIB would cost 8 bn, a 90% stake 18 bn… that’s a lot of recapitalisation. If they need more than that, they are not worth saving!

What part of systematic didn’t you understand YM ?

Get with the program will ya ! Here, have some Coolaid.

(What do you mean they’re not singing systematic…)

(Psst fishfoodie, I’m shure shyshtemic is what you mean…).

It is 30% in Ireland I think but I think that automatic takeover thresholds can be waived in certain circumstances. The UK government has a 70% stake in RBS and 43% of Lloyds.

When NAMA was rolled out the minister stated that the 60 billion in NAMA bank asset bonds was separate from 20 billion plus of new government debt needed to recapitalise the banks.

NAMA just buries the worst of the toxic loans and advances and disposes of the embarrassments at Anglo. The extra money, the money needed to actually recapitalise the banks, is probably just to cover the huge increase in cross bank deposits in both Anglo and BOI in the two years before they collapsed.

I suspect the true value of these cross bank deposits was about as real as the value of most of the property that was used to secure advances at Anglo.

Yes, hence the line in the FAQ on NAMA (posted here viewtopic.php?f=50&t=24538):

Using a 5 to 10 year basis, it should be possible to beat those numbers into line.

Indeed it’s what the UK did and now they are in the money on their RBS stake. Amazing that in Ireland we’ve decided to come up with an unweidly excessively complicated solution when simple recapitalisation has worked everywhere else. Why exactly is this, I don’t follow the debate close enough to understand this.

And that is why the suspicion is that there is a bailout of borrowers hidden in NAMA.

Now, the situation of the Irish banks is worse. There is little doubt about that. The bubble was bigger, the bubble was more leveraged, the number of likely solvent existing borrowers is smaller, the developers/investors are private companies so are unable to recapitalise themselves (as, say, British Land has been able to).

But even so, it should be possible to recapitalise and liquidise. Therefore the suspicion is that there is an unwillingness to liquidise, that a zombie solution is preferable as it rocks fewer boats.