NAMA is supposed to take loans of €5m and over off the banks and give them easy money for it .
However there are 1000s of loans in the €3-5m range in the system .
Furthermore there are loans of €5m that are not currently classified as property loans.
I understand that one bank at least ( not one of the big 2 or Anglo) is ‘managing’ its book.
a) It is advancing dribbles of overdraft type financing and rolling over like a bitch to get the loan over €5m .
b) It is reclassifying business expansions ( read commercial property) loans to commercial and managing the paperwork trail to ensure ‘consistency’
**Lenihan has left us wide open to this because there are NO SANCTIONS in the NAMA bill against banks that manage their books to ensure that loans reach the NAMA threshold. **
80% of €5m is much better than 20% of €4.9m is it not ???
Let me put it another way, if Lenihan was told €90bn of loans qualified in the spring it is more liek €95bn right now and will hit €100bn by christmas at the interest rates being ‘agreed’
This is another NAMA wart. As I said to TUG the other night its a case of going all the way or not. No half arsed efforts but thats what they really love it s the legacy of fudge Bertie left behind. ALready you NAMA creating even more sub distortions it being the MAMA of all distoritons.
ACC is rapidly moving through the loan book, Rooskey Liquidation tomorrow if anyone fancies a slice of a ghost estate ??
Back to logistics now .
I mentioned elsewhere on the pin ( cannot find it) a block breakdown of the €90bn
My guesstimate is
The first €30bn of the loans are held by the 10 biggest operations , Quinlan Carroll McNamara etc
The second €30bn are of the loans held by the large mid tier operators who owe a crude average €250m , we have around 120 operations in this second tier between developers and private equity operations .
Logistically you can chase these guys if the legislation is strong enough …and it is not strong enough right now
They will tie you up a lot with lawyers and accountants though but strong legislation akin to money laundering legislation and which prevents solicitors and barristers and accountants from colluding in the obfuscation of assets will reduce the noise floor and help the signal to get through .
However the last €30bn is very diverse . I would assume the AVERAGE loan is €10m ( the floor is €5m) which means you have to chase 3000 separate operations for the money to get it all in .
It will require a considerable staff to chase these people and investigate and tag their assets and the houses they transferred to their daughters and wives etc etc .
**I estimate therefore that NAMA will require around 350 operational staff just to get a handle on all these developers and speculators and to track down their assets and guarantees and to exercise them on behalf of the taxpayer. **
On top of that they will require some good solicitors and accountants to catch all the hail mary passes being flung at them by the likes of Jimmy Clancy , and there is one of them in every parish in Ireland
Based on that alone and adding the finance bods in their treasuries capital markets and dealing desks I cannot see any way to run NAMA with fewer than 500 staff and that where the legislation is strong . If the legislation is a soggy piece of Fianna Fáil pisswater they will need 1000 staff .
Your breakdown makes perfect sense if all 90B of the bank assets were ‘real’. i.e proper legitimate businesses contracts. I’d be very surprised if more than 60B/70B of the bank assets are legitimate when all the foreign cross holdings have been unwound. And that is before the remaining ‘legitimate’ assets are properly revalued.
The one huge gaping whole in the Bill is that it claims precedence over large swathes of existing Irish corporate and contract law when acquiring and disposing of bank assets and underlying collateral and guarantees. In several parts it also seems to make such claims outside the normal jurisdiction of the state. Now as the large majority of Irish development deals involve foreign shell companies, and half the bank assets are forign deals to start with, I see this part of the bill as little more than wishful thinking.
Practically speaking, when it comes to the execution of these part of the Bill the only bank assets that will be successfully handed over are those which are really toxic. If there is any real worth to a particular bank asset the advantage is very much with the developer. Despite the wording of the Bill there is actually little real actual power to compel and enforce a complete acquisition without the complete cooperation of all involved parties. Definitely a scenario for gross overpayment on the bank assets.
The NAMA Bill is structured so that NAMA will have a minimal ‘supervisory’ staff in addition to the NTMA staff. There are several provisions in the Bill that indicate that the bank assets will be continued to be managed by the existing institutional owners after they have been acquired by NAMA. So the taxpayer hands over the cash after NAMA makes a ‘valuation’ and the assets continued to be managed by the banks stuff who currently do it. So pretty much business as usual.
NAMA will own these loans if/once it pays for them.
I take it that bank staff will be seconded to special ‘NAMA sections’ for working them out . It makes sense to me to do it that way but these staff will be NAMA staff even if a figleaf of outsourcing is applied .
Edit: Random speculation, but yes, very nice business if you can get it.
Leads me to another question actually. What are the moral implications of doing business with Nama. Lets say it gets passed. Would it be etical to deal with them knowing that its taxpayers money? ( Being Wasted)