NAMA to Purchase Derivatives


NAMA are entering the derivatives business.

Like letting a five year old at the controls of a nuclear reactor. … /#comments


I rest my case.

Just because NAMA is going to spend 50 bn to buy 90 bn of loans, it doesn’t mean that 250 bn of toxic derivatives aren’t going to be transferred at zero notional cost to NAMA.

We are so utterly fucked by Angelo, it’s not true.




I know you`ve being saying this for months ym but I just thought it was a bad dream.

we are royally 8-


Where’s my post it note again.


This is scary.

Before we only speculated at a possible derivatives risk. Now, NAMA are specifically looking for someone with expertise in the area to manage whatever NAMA takes onto its books. What are the total value of derivatives that Irish banks have engaged in anyway? What if 1%, 2%, or even 10% of them sour?

At least with fields in Mullingar and shopping centres in Manchester, you have some tangible idea of where you are.


Quake in your boots lads… This is obviously what the whole shebang is all about, ECB are going to extend us the cash to keep the international elite capitalist class in the black at the expense of the Irish taxpayer.

The fix, is in. :nin


Okay, at a guess here’s a scenario:
AIB and BoI think interest rates are going to rise circa 2006/2007, so they look to get a load of interest rate swaps to protect themselves. To hedge these, they buy swaps in case rates go down. Angelo is selling swaps. Angelo buys a whole rake of them from the other two banks. Being canny and savvy, Angelo doesn’t hedge these, 'cos Angelo needs the money. Uh-oh, the crisis happens. Interest rates collapse. Angelo is now stuck with paying large sums of money to AIB and BoI. AIB and BoI have swaps of their own with other counterparties who need to be paid. Angelo is now systemic.

Is this credible?

Is Anglo now the Irish AIG, underwriting the other banks?


Not the big derivatives story. They had to put that in the bill. The Irish taxpayer already owns 220B of Anglo derivative (down from 250 billion six months before). This is how they shovel those Anglo contracts onto the NAMA balance sheet.

What is interesting is that only 20 b of the Anglo contracts are for hedging. The other 200B are for ‘trading’. If they could lose 700 million while trading 20B of fx derivatives just how much money could they have lost on 200B/230B of derivatives?.


Angelo have something in the region of 220 bn of a derivative book.

BoI and AIB have more, but on a larger asset base.

Only Angelo disclose that they trade in derivatives, they others say they hold them only for hedging purposes.


Well, let’s hope the other participating institutions aren’t hiding something else under the carpet then.


jmc, but how much are they going to accept from the other banks? Not buy, accept. How in the hell are they going to know if they will be profitable or hugely loss making?


Did you not read that bit, a nice shiny certificate from the service provider to NAMA assuring them that they have valued them on the basis of accepted market methodologies.


Get me some new underwear!


I have a duvet I need to hide under.

Call me when we hit the €1trillion.


Why dont we just let NAMA buy everything. Good, Bad , Ugly buy it all.

Then ask it to leave. :nin


My guess is that it is purely for the Anglo book. I just had a quick look at the AIB and BOI numbers. AIB has about the same numbers as Anglo, total. BOI about 40% more. What is interesting is the trading/hedging split. With BOI/AIB it is around 65/35. With Anglo it is 90/10.

So when compared with the ‘legitimate’ banks Anglo should only have had 50B in trading derivatives.

So where did that extra 150B (200b in Oct 2008) come from? And why the huge ramp up from 2006 to 2008?


I pointed this out back on Feb 20.



Hey Bungle, I think you’ll find that was in response to my pointing it out!
(Mind you, I only looked because you prompted me to!).

I still don’t understand (or don’t want to understand would be more like it at this stage) why Angelo’s reporting method for derivatives changed…


Ah Interest Rate Derivatives… the most complicated buggers to price amongst all the asset classes. The worry here is that the Irish banks have been sold things by the guys in London that they really have no idea about. I doubt AIB or BOI have a quant team able to find the correlation between parts of yield curve, Blacks swaption price etc. NAMA will have to pay some serious money if they want to make sure they get the right guys for trying to sort out the true value of these instruments and then offload them at the right pace. The fear is they hire a team of accountants who just use NPV or DCF analysis and then get absolutely ripped off in the market due to mispricings.


Fair enough. Your post was in turn a response to my original post pointing out the anomalies in anglos derivs book.


seems obvious now. of course they were cheating.