NAMA is coming… will it save us?

NAMA is coming… will it save us?

NAMA is coming... will it save us?

Minister for Finance Brian Lenihan hopes to release the legislation bringing the National Asset Management Agency (NAMA) into play over the coming weeks.

Yesterday was the deadline for Irish banks to report back with a detailed breakdown of their property portfolios, giving NAMA its first chance to review loans across several banks. … This is probably the biggest decision to face Ireland since the creation of the state, and its effects could be felt for decades should we get it wrong.

However, there are two opposing views from the main parties in Ireland, Taoiseach Brian Cowen is insisting that the best advice has been sought on this topic:

“The proposal we have brought forward is on the basis of the best international advice, including the European Commission and the International Monetary Fund, and we are doing this in consultation with the European Central Bank”

And Enda Kenny’s (Fine Gael) preference would be to setup a “Good Bank” because NAMA will:

” transfer the responsibility for dealing with toxic loans from the banks who made them, and the investors who funded them, to the Irish taxpayer”

Property Feedback Friday is back and we are asking for your view on NAMA.

Have your say:

  • Should NAMA be giving money to developers to complete commercial projects?
  • Are you worried how NAMA will value the toxic loans?
  • Do you think NAMA is the right solution?
There are 36 comments for this article
  1. Brian at 1:03 pm

    Hannah,you are the only one that has told the way it is.The rest of them are all fireside economists who do not have a clue what they are talking about. NAMA is the only way forward and we want to get on with it.What done is done,We were all to greedy and now we are paying the price.

  2. Terry at 12:46 pm

    Why are we giving the banks €54 billion – we should pay current market value for the property loans and give the banks a loan of the money they will need to recapitalise – with terms and conditions attached – similar to those attached to loans which we must accept on taking out a loan from the bank.

  3. Libertyed at 10:24 am

    Wow, great comments here. Why has Lenihan not gone after the developers and banker’s who created this mess in the first place. These are criminals,who cause this fraud on the Irish tax payer. Any other government whould have put this shower into jail. But not lenihan, these developers and bankers are all buddies of this crony FF party. The people of Ireland need to send a clear message. If NAMA is be put into play, then this government is out and banned from ever…

    We need change in this country, and getting rid of the FF party, is the first step in the right direction. Nama is a protection for these criminals of bankers and developers. I wonder how many non recourse loans have been giving to the crony party of FF by these Bankers of AIG, BOI, & AIB…?

  4. Stephen at 3:14 pm

    Nama is just one more con job perpetrated on the people of this country
    by the current incompetent government. In 15 years they have destroyed and blatantly lied about the health system, the social welfare system( we are seen as the easiest touch in the EU for money for doing nothing)
    They have overpaid themselves to the point where they are some of the best paid politicians in the world, and robbed us blind with their expenses, some of them are not even interested in paying taxes. So just let me be clear about all the people who think Nama is the way foward, are you saying you believe any of the words that come out of these Gobsh*tes mouths. And we wonder who the fools are!!!!!!!!!!!!

  5. George Waddell at 12:13 pm

    My concerns about NAMA are as follows:

    1. Are there actually any better alternatives out there?
    2. FF’s banking and developer chums are getting all the short term benefits – will the country at large actually get any benefit in the short or long term?
    3. By clearing the banks toxic debt what is to stop them carrying out the same old practices that got us all into this mess?
    4. It looks like they are going to pay above the odds for these assets remember this is TOXIC debt i.e. the banks are saying they can’t recoupe the money on these things on the short term so why not pay below the market price (which is in free fall anyway) that way the banks are rid of the risk and the coutry may stand a chance of turning the situation around longer term.

  6. BrianODoherty at 3:40 pm

    The more NAMA pays for banks’ assets, the better !!

    –provided the banks somehow “guarantee” that the same price, or more, will eventually be realised by NAMA. (The State will levy them anyway)

    NAMA will not pay cash for the bank’s assets, just “bonds”…IOUs !…NAMA is a LOAN from the banks to the State, in reality…These bonds will be redeemed for cash , sometime in the future- depending on their “terms”….meantime, NAMA can sell them for cash and the State can use the dough to pay for ordinary government expenses–the welfare system, health, pensions, etc
    If there was no NAMA, the State would have to Borrow this extra dough–maybe 50 bn. or 90 billion – over a period of years, and it can’t…Or taxpayers would have to pay that much extra tax…and they can’t or won’t
    So, be grateful to NAMA folks…It’s just very unfair that it is presented as a gift from us to the banks’ shareholders, when, in fact, it is the oppsite. (This is argued on my website

  7. R Smith at 11:32 am

    The risks to the NAMA plan have been well-aired, yet the debate remains convoluted and is making no progress. It might be beneficial to outline a sensible nationalisation-based alternative.

    Firstly, instruct the banks to raise new private capital themselves. This gives investors a chance to replenish and retain control of the banks and makes NAMA redundant. If investors decline to participate, the government can fund the equity capital injection, but first it must announce the termination of NAMA. Bank share prices have increased dramatically, largely the result of investors’ expectation that the taxpayer will assume losses on development loans through NAMA. Bank share prices would probably collapse upon the announcement of the termination of NAMA. The government can then employ, say €20bn to acquire significant and inexpensive equity stakes in the banks, thus replenishing them so that they can lend profitably for the benefit of businesses and taxpayers alike. €20bn would more than double the current equity capital of our two largest banks. The taxpayer can dispose of its interest to international investors/other banks in the future. The outlay for the taxpayer here is €20bn, not circa €60bn as per NAMA. Also the taxpayer will enjoy the potential for significant upside if the industry recovers, unlike NAMA, which will not participate in the recovery of the banks it bails-out. I struggle to understand how NAMA is a superior proposal.

  8. Hannah Phelan. at 11:04 pm

    NAMA will permit the Gov. to provide the Banking system with Bonds in exchange for which the recipients will receive massive funding from the ECB at an interest rate of just 1.5 per cent!!! This will allow the banking system to become liquid and start to lend money to clients. The controversy regarding the price to be paid to the Banks for their very bad loans centres on the present or market price or the future market value.There is no market at present, except of the “fire sale” type and that would make it even harder to reclaim the future The market price is not necessarily the same as the market value, as Messrs. Kenny and Bruton suggest. The soft opttion of “nationalization” is the brain child of a collection of academic theoreticians, all of whom are ensconced in first class seats on the State gravy train and will continue to get their salaries, the highest in Europe, incidentally. Indeed , the academic in chief was revealed to have been not only a cheerleader for the boom in construction but also to have actually advised his private clients to purchase sub-prime mortgage “structured investment instruments”. (Source: Harry McGee’s inerview with the “wise after the event expert in finance” in the Irish Times last month.) Dr. FitzGerald and Alan Dukes are not FFers. However, they were both down that road before; in 1986 the Dail was recalled in emergency session to save AIB after the savaging in the London reinsurance market of AIB’s insurance company, Insurance Corporation of Ireland. The then Taoiseach and his Minister for Finance (Garret and Alan Dukes) know the chill wind of impending Bank failure and the imminent approach of the IMF.That is why they support NAMA; that is why they disagree with their friends and former Cabinet and party colleagues. I believe that NAMA will work; the so called Swedish model which is recommended by FG, Labour, SF, Joe Higgins et al was based on its app;ication to just two of the smaller Nordic banks, not the whole system.I do not in any way wish to justify the mess that was made of our economy by FF; however, I recall Enda and Pat Rabbitt at the time rounding on FF for not being more profligate in the many “give away” mistakes made all too often, in the not too distant past.

  9. F McCaffrey at 3:14 pm

    Please do try the this in the next few days at your local AIB or BOI

    You: I would like a loan please.

    Bank Manager: Certainly, how much would you like & what’s it for?

    You: Well I need about 24 times my net annual salary to buy a pile of properties that no one wants, for a price that someone might pay, in about 5 to 10 years.

    Bank Manager: Wow sounds risky, what sort of a profit do you expect to make?

    You: Well actually I am hoping to just break even.

    Bank Manager: Pardon?

    You: Oh and I need the loan interest free.

    Bank Manger: Interest free!

    You: Oh don’t worry, if I don’t break even the guys I am buying the property off will make up a percentage of the shortfall. So I don’t stand to lose that much.

    Bank Manager: Well thanks for coming in today and best of luck with your eh, little venture.

  10. Diarmuid at 2:25 pm

    If anyone believes that developers put up €30bn in hard cash as part of this “€120bn” loan book they are bigger fools than the government is taking them for.

  11. Peter O’Connor at 9:57 am

    We need a government of war at this point. A government of true national-unity. Get the best of all parties and get them to work together for the good of the country. Then is say 3years have a general election let the voters choose afresh.

  12. Rohan at 12:33 am

    Not good to any common man, NAMA is good proposal but IMF and EU must find ground reality, will this really help to common man or to dear Govt. friend?

  13. Richie at 5:44 pm

    would prefer all the government parties to work together on this than trying to win points at this stage, I think it is a done deal as far as the next time we all get to vote there will be a new government however wouldnt it be better to have a say about NAMA now and make sure everyone is on board !!!

  14. brian at 1:53 pm

    hi joan, I got the SBP today as well, I see the column your reading however there is a paragraph on Bauying the banks assets which examples the thinking behind what will be paid, the example here is of a development site purchased for €120, developer put in €30m of his money and got €90m off the bank NAMA will give the bank 60m…meaning the bank made a loss of 30m but the developer will still have to pay off the full 90m to NAMA. NAMA knows they must get at least 60m but anything more is a profit for the taxpayer. The more I am reading about this the more it makes sense.

  15. joan at 1:30 pm

    I am just after reading the Sunday Business Post today and it says that the valuer for NAMA has reviewed the property history of Ireland and believes that in 7 years property will go up 88% again…the example is as follows if a commercial development is worth €120m and is now worth 50% in value €60m, in 7 years he believes the property will be worth €112m…this is a total guess and he is betting with our money and our kids futures…nobody knows how long this recession will last, who knows we could still be in a recession in 7 years and the property would be worthless, personally I dont think that will happen and I do think we are at the bottom of the market but I would like to see some harsher valuations.

  16. Peter O’Connor at 12:23 pm

    It seems to me that instead of pouring money into NAMA the Gov. would be better spending the money to create NEW jobs – especially in the green sector. Building windmills, micro-hydro etc. I have a small stream I can step across and it’s about 20cm except in flood. I can raise 6kW/hour if I was allowed to build a small micro-hydro. that’s enough for 4 houses to run normally day and night. NO co2 and less fines from Europe because we (Ireland!!!) aren’t green enough. It’s a mad world. Huge houses/offices – what’s going to heat them when the oil goes??
    We should be greening the country – for ourselves AND for the tourists that come for a Green Ireland. I know what I’m talking about – we won the E.U. Green Flower Award in June. As a B&B we’re bucking the trend by appealing to the Greener tourists.It’s been our best summer in TEN years.

  17. Carmel at 3:35 pm

    Reply to Elcke…how do you expect NAMA to be able to sell half built developments…is it not better for the country as a whole to complete them and move on …rather than seeing lots of empty building sites for years…this will also generate some jobs for a lot of irish people who were employed by the construction industry and take them off social welfare.

  18. Jim at 3:24 pm

    I think the creation of a new nationalised GOOD bank is the way to go let all the other Banks sort themselves out, they privately owned and have been enjoying massive profits for years now, so for the next few years they should find it hard and change their practises and return to profitablity…Ireland should move on with a new clean bank which is answerable to the government and taxpayer.

  19. elcke van kleffens at 1:19 pm

    to give the developers money to realise the big projects will be the worst scenario the government can decide to, there is already a large over production in ireland in building, in private building as well in commercial. as many foreign companies leave ireland and less new companies establish in this state there will be a smaller demand for buildings for quiet a time. so no NAMA.
    NAMA is bad for the private tax payers and fine for the big banks, who can go in with their usual business (example the big investment banks in the us got 50billion loans some months ago and paid in the meantime 30 billion of bonusses!!!!! this NAMA will give ireland an enormous burden that will have effect for many years to come

  20. alan at 10:55 am

    Dave I think you are right I have a small company at the moment and I have had to let 2 of my staff go, I need a bigger overdraft to buy stock in so that I can fill orders, I think the TV and press and going so over the top it is unbeleiveable why cant we ever work together…that doesnt mean I like banks or the government it simply means I need want us all to survive this.

    I vote for NAMA and lisbon to save Ireland and if I am wrong at least I acted and didnt just sit there whining about everything

  21. alan at 10:49 am

    hey Peter even if we found the right solution right now the banks would still be on board because they cant make much money at the moment, without this being fixed they cant give money to you and I or companies….so just because the banks think this might fix the system doesnt really mean NAMA is wrong …. see what I am saying

  22. alan at 10:41 am

    I am for NAMA and will vote yes for Lisbon….but want this government out ASAP, I think people need to have a clear mind and not go againist things just because they are coming from Fianna Fail. We need to be part of Europe, we need to have NAMA to fix our financial system and we need a new government.

    Mr Cowan on the Late Late show last night was so bad, fair play to Ryan for asking the hard questions. I have no confidence he will save us, time to fly in obama !!!

  23. Peter O’Connor at 10:35 am

    NO ! It might take 10 or possibly 17 years to reach the level of growth we had and this time we’re not short of housing OR commercial units. It could be 20 years before any more are Really needed.
    If NAMA pays anything like market (present) they are wasting my and your money.
    I don’t see any bank objecting to NAMA => it’s wrong.

  24. alan at 10:32 am

    I have to say feel really sorry for the people working in both the motor and property industry, they have to stand by and watch their jobs and companies fail on a daily basis. I have a brother working for a big motor dealer on 28K plus commission and a sister working in an estate agents on 31K plus commission but lets face it there is not much commission this year. My brother was let go on wednesday and has moved back home and my sister has said she will be next unless Ireland starts moving again. How come the UK was able to revive the motor industry and how come this government is so slow to act.

    I personally back NAMA if it will start saving jobs for the normal irish person and start giving more credit to small businesses in trouble.

    I dont think NAMA is about saving developers or banks it is about saving you and me and our jobs. I hope things dont get as bad as it was in the 1980’s.

  25. Rob at 10:16 am

    Should NAMA be giving money to developers to complete commercial projects?
    Yes I think so, if we have development half finished then NAMA will get next to nothing for them it is much better to have a fully completed development where NAMA and the taxpayer have a chance of making some money.

    Are you worried how NAMA will value the toxic loans?
    I think this is the key element in the next few months and will either make or break this goverment, everyone in Ireland knows that the price should be 50% the market value, you dont need to be an expert to figure this out.

    Do you think NAMA is the right solution?
    I dont know…nobody knows…but I do think it is time for everyone to start working together for the good of our country and really it doesnt matter right now who is to blame…one thing is for sure if all parties and people dont get behind one solution then this is going to go on for a very long time.

    On a different note…
    I watched our leader on the Late Late show last night and really feel the man is simply way out of his depth and extremely bad at public speaking…however I really dont think Enda Kenny is much better…I think it is time for a change in leadership in both parties, if either wish to succeed.

    Great blog…really interesting comments…a proper insight into the property market…wouldnt it be great for someone in government to read this and really be in touch with the people of Ireland.

  26. at 12:54 am

    Everybody is an expert on economics and what property will be worth in the future etc etc Are the so called ‘experts’ advising us now on Nama the same people who didn’t see the problems coming, suddenly these economists are goin to figure out how to sort this mess out,don’t think so. Putting a floor under false property prices and ‘getting the show back on the road’ quote from our leader on the Late Late show is a bailout of Fianna Fails brothers in arms simple as! and a return of the same problems which led to this situation,we keep voting these guys in so I guess what else do we expect,a young well educated people us Irish does not mean were very clever.Celtic Tiger was built on credit and I suspect EU using the Irish Nation as guinea pigs for what happens to nations when an unlimited amount of credit is extended to poorer nations so as to know what policies sanctions to place on new states who join eg Poland etc so as the same mistakes are not made

  27. Brendan at 6:39 pm

    No. NAMA should not be giving money to developers to compelete commercial projects. If a developer has gone bust, NAMA should buy the assets at the best possible price for the taxpayer and hold it until an alternative commercial solution can be found to deal with it.

    Yes, one of the most worrying thing about is how it will value toxic loans. The board of NAMA will have to have the wisdom of Solomon and be as tough as nails to withstand the pressures it is going to come under. Fianna Fail does not have a good track record when it comes to appointing boards and holding them accountable for doing the ‘right thing’. Some would say that there are too many examples of Fianna Fail appointing boards and then leaning on them to do favours for their little pals. If NAMA is run that way, we’ll end up in an even bigger mess.

    No. I don’t think NAMA is the right solution for one reason only. I don’t trust these people to manage it properly. If I could believe that they would buy assets from the banks at fair value or even a little above fair value and manage them properly thereafter, then it might well work. In the hands of these people, it is likely to be another shambles.

  28. Ray at 4:43 pm

    What on earth makes you think the current bunch of incompetents know anything about economics either ? We’re in uncharted territory as a country and there is no one way out of the this FF_created mess that is right above all others suggestions, despite what Brian & Brian try telling us as they repeatedly try to convince us that NAMA is the panacea for all of our ills.

    They are trying to put an artifical floor under property prices in this country to save their main donor body from being wiped out – remember, if the developers get wiped out, then so does a large chunk of FF funding, not to mention that I’m sure a lot of developer and banking “associates” of the party know where the bodies are buried, figuratively speaking !

    FF will do absolutely anything (including lying through their teeth a la Frank Fahy on Newstalk yesterday) to give the impression that they are thinking of the country – the fact is, they are thinking of themselves first, and their party second. The nation and the population at large come a long way down their list of priorities esp. as they know the next election is lost.

    To hear Frank “Forty Gaffs” Fahey lecturing us about how NAMA is the answer, with his spectacular conflict of interest, would be laughable if it wasn’t so serious !

  29. Rob B at 4:16 pm

    Well said Mark, people are wasting their time bashing the prospect of NAMA being introduced. The focus must be to make sure that it works within a framework that benefits the irish taxpayer rather than the banks and or developers. The most important thing this economy needs is an functioning banking system, at the moment we do not have one. From small businesses to individual personal lending, no business is being conducted with the banks and the economy is stagnating. When NAMA roles out, if managed effectively, will allow banks to open their doors once again allowing the wheels of business to start turning again. THis is more important than saving the hides of a few developers.

  30. Bazzer at 3:37 pm

    so [quote]All of a sudden the whole country are experts in economics and the property market[/quote] eh??? Well as an ordinary Joe effectively prevented by market forces from trading up (to suit my families needs) for the last 5 years, even I could see the train wreck coming down the tracks 2 years ago when people were tripping over each other bidding in 20,000euro jumps on fairly ordinary family homes. The banks were happily fanning the flames of our economic meltdown. Giving them taxpayers money now does not imply they will lend it to struggling businesses to help the economy (leopards don’t change their spots and self preservation is their primary concern) and one fears the money will merely be used to shore up their own operations and balance sheets. If banks, builders and developers are very keen to implement NAMA should’nt one be at least suspicious? If you had a croc and found a sucker willing to offer you over the odds for it, wouldn’t you bite their hand off to clinch the deal? Wake up people and smell the smell… NAMA is a catastrophy waiting to happen.

  31. Mark Whelan at 2:44 pm

    My preference is that NAMA take full control of what happens to un-completed property developments (which is actually about 1/3 of the assets NAMA will buy)and as much as possbile remove the original developer from the equation. That way any future profits (we hope) from these projects will go to the State and taxpayers. Developers who viewed themselves as entrepreneurs and made huge profits in the past will now have to take the losses. Whoever is in government must let NAMA operate without interference and on a commerical basis.

    The second question refers to valuing toxic loans, remember toxic loans will constitute less than half of all loans purchased by NAMA. By using the long term ecomonic value model the price paid will be higher than if the loans were sold in a ‘firesale’scenario. Whatever NAMA pays for the loans is of no bearing to how developers will be treated, it is only relevant to the banks that sell the loans and the losses they record in their 2009 accounts. The lower the price paid, the bigger the loss incurred, the more government will have to invest in the banks for them to survive. Its a ‘zero sum game’in that regard so paying very low prices means you just have to put in more capital to offset the losses. What really matters is that the State gains from any future uplift in the share value of banks (taking an equity stake is the easiest way to do this not nationalisation) and the value of the bad loans (which means NAMA takes control of the property developments underlying the loans it has purchased) and that the developers are made repay in full the money they owe.

    The international world expects NAMA to happen, it is too late to stop this particular train, if NAMA is defeated the uncertainty this creates internationally will lead to a huge flight of investor money from the country and possible financial meltdown. Anti NAMA people need to move onto the real agenda which is to make sure NAMA is refined and improved to make it as effective as possible, and that includes putting those developers that own money in liquidation and taking their assets wherever they are held.

  32. tom at 2:17 pm

    Should NAMA be giving money to developers to complete commercial projects?
    yes if it makes economic sense to do so. if the comerical project will be sale-able when built, then they should be build and sold at a profit.
    Are you worried how NAMA will value the toxic loans?
    yes, but i think we need to wait and see what criteria is being to carry out this calculation.
    Do you think NAMA is the right solution?
    i think it’s the best of a bad lot. we shouldn’t be in this situation in the first place, but we are where we are.

  33. Norma Cairns at 2:15 pm

    No, Nama should not give money to developers to complete any projects.
    Yes, I am worried that toxic loans will be overvalued and I do not think it is the right solution if it’s basing values on future values – dealing in futures is one of the reasons we’re up the Swanny.

  34. Dave at 2:11 pm

    All of a sudden the whole country are experts in economics and the property market. We voted for politicians to do the job so stop whining and let them do it. It’s the media who are whipping up the storm about NAMA and most of them don’t have a clue. The public just want the Government to get us out of the mess we are in. MAMA is the only way they can do this so that the banks will start lending again.


  35. Joe at 2:06 pm

    No NAMA is not the correct way forward but its what we’re going to get. Fianna Fail are despaerate to bail out their developer friends and have a vested interest in keeping property prices artificially inflated regardless of the consequences for the taxpayer or society as a whole.

    The ‘toxic loans’ will be overvalued. Hopefully NAMA can and will be rolled back when this government is removed from office sooner rather than later I hope

  36. Daniel Duggan at 2:05 pm

    Nama is a con-job to protect those who for years have filled the Galway tent. It attempts to place a false floor under property prices and uses tax payer’s money to do so. Why do Irish people think high property prices are beneficial? This is the greatest brain-wash since the Catholic Church told us sex was bad!
    Irish property prices should reflect the quality of infrastructure and the population density, both of which are among the lowest in the western world. If you want to invest buy a pension which is fully tax and PRSI deductable, buy a house to live-in and buy it as cheaply as possible, just like a car or a trolley of shopping.

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