Undue diligence: €6 billion to go from NAMA to Anglo with no questions asked

He3

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Remember the promises about due diligence before spending our money bailing out bank investors? They are no longer 'operative' - NAMA is reportedly about to channel six billion euro to Anglo without performing any due diligence on the loan securities. This is public money that will presumably end up with Anglo's private creditors. David Clerkin has the story in the Business Post p3. The assurances that NAMA would ensure it gets value for money suddenly look even more threadbare.

NAMA is to give six thousand million euro to Anglo without any advance examination of the quality of the loan security. In the jargon, no due diligence before handing over the public's money. This at a time when part-funded voluntary groups like Community Development Partnerships up and down the country are being weighed down with demands from government departments and quangos looking for them to account for every penny they spend.

Panic move?

Link

Nama to issue €6 billion to Anglo in blind transfers


As I post this, I am listening to Anglo Chairman Alan Dukes divert a discussion on the bank crash on This Week to talk about the budget deficit....

Maybe someone in the studio will ask him why Anglo should get this six thousand million before due diligence. Due is there for a reason isn't it?
 
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He3

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Nobody intervened as Dukes pontificated about the budget deficit. Maybe the six billion was discussed before I tuned in to the show?

God be with the days when Albert Reynolds and the country at large knew the value of six billion euro.
 

neutral_lurker

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Thanks for your posts HE3 keep them coming.

What about the regulator cant this issue be raised with him
What about the opposition can noone request this info
Lack of regulation and independent assessment is what has got us here in the first place - same old, same old.
 

NAMAwinelake

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The suggestion that NAMA could value and carry out due diligence on €19bn of Anglo (especially Anglo) loans in the next 30 days is risible. The EU Decision on 26th February, 2010 sets out the approved process for acquiring loans and it includes "(48) .. Before the actual purchase of the loans by a NAMA group entity ...iv. Provision by the participating institution of a legal and tax due diligence report;
v. Determination of the current market valuation of all underlying property and
assets by external valuers appointed and paid by the participating institution but
with a duty of care to NAMA;"

NAMA cannot transfer €19bn of loans in the next 30 days unless the EC waives the requirements set out in its Decision and if it does, it will be breaking its own rules on State-aid. Something has to give.

http://ec.europa.eu/community_law/state_aids/comp-2009/n725-09.pdf
 

He3

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The suggestion that NAMA could value and carry out due diligence on €19bn of Anglo (especially Anglo) loans in the next 30 days is risible. The EU Decision on 26th February, 2010 sets out the approved process for acquiring loans and it includes "(48) .. Before the actual purchase of the loans by a NAMA group entity ...iv. Provision by the participating institution of a legal and tax due diligence report;
v. Determination of the current market valuation of all underlying property and
assets by external valuers appointed and paid by the participating institution but
with a duty of care to NAMA;"

NAMA cannot transfer €19bn of loans in the next 30 days unless the EC waives the requirements set out in its Decision and if it does, it will be breaking its own rules on State-aid. Something has to give.

http://ec.europa.eu/community_law/state_aids/comp-2009/n725-09.pdf
Yes, something has to give. At the moment all the 'giving' is by the public and when we drop the polite pretence, that is happening at the point of a gun. The posters who were calling for the builder in his truck at the LH gates to be shot show us that.
 

He3

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Thanks for your posts HE3 keep them coming.

What about the regulator cant this issue be raised with him
What about the opposition can noone request this info
Lack of regulation and independent assessment is what has got us here in the first place - same old, same old.
Don't thank me neutral_lurker thank the SBP and David Clerkin, part of the mainstream media that, with others, try hard to bring us this information.

As NamaWineLake says, this would appear to be in breach of the terms of EU Decision. Maybe someone can confirm for us that this means it would be unlawful.

Something - or someone - has got to give.
 

He3

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Quiet here isn't it?
 

DCon

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The suggestion that NAMA could value and carry out due diligence on €19bn of Anglo (especially Anglo) loans in the next 30 days is risible. The EU Decision on 26th February, 2010 sets out the approved process for acquiring loans and it includes "(48) .. Before the actual purchase of the loans by a NAMA group entity ...iv. Provision by the participating institution of a legal and tax due diligence report;
v. Determination of the current market valuation of all underlying property and
assets by external valuers appointed and paid by the participating institution but
with a duty of care to NAMA;"

NAMA cannot transfer €19bn of loans in the next 30 days unless the EC waives the requirements set out in its Decision and if it does, it will be breaking its own rules on State-aid. Something has to give.

http://ec.europa.eu/community_law/state_aids/comp-2009/n725-09.pdf

Lenihan climed that the EU had been advised of his new method.

I wonder if they are sick of his spoofing yet

In order to support the accelerated implementation of the plan for restructuring
Anglo into an Asset Recovery Bank and a Funding Bank, the Board have agreed
that Anglo’s remaining eligible bank assets will be transferred to NAMA by the end
of October and that bonds will issue to Anglo in return on the basis of NAMA’s
current estimate of their value. These loans will then be subject to due diligence
and valued by NAMA on a loan by loan basis. If any adjustment to their value is
necessary, it will be made subsequently. The EU has been advised of this revision
to the valuation process for the remaining Anglo loans and I will be making
Regulations to provide for it.
http://www.nama.ie/Publications/2010/MinistersStatementOnBanking30Sept2010.pdf
 

GDPR

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Remember the promises about due diligence before spending our money bailing out bank investors? They are no longer 'operative' - NAMA is reportedly about to channel six billion euro to Anglo without performing any due diligence on the loan securities. This is public money that will presumably end up with Anglo's private creditors. David Clerkin has the story in the Business Post p3. The assurances that NAMA would ensure it gets value for money suddenly look even more threadbare.

NAMA is to give six thousand million euro to Anglo without any advance examination of the quality of the loan security. In the jargon, no due diligence before handing over the public's money. This at a time when part-funded voluntary groups like Community Development Partnerships up and down the country are being weighed down with demands from government departments and quangos looking for them to account for every penny they spend.

Panic move?

Link later

As I post this, I am listening to Anglo Chairman Alan Dukes divert a discussion on the bank crash on This Week to talk about the budget deficit....

Maybe someone in the studio will ask him why Anglo should get this six thousand million before due diligence. Due is there for a reason isn't it?
Is there no box you can't think yourself into?
 

He3

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Blind transfers they call them

Link up now

Anglo Irish Bank will be paid more than €6 billion for the last set of loans it transfers to the National Asset Management Agency (Nama) before the agency has a chance to assess their true value.

The decision will allow Anglo to use newly-issued Nama bonds as collateral for fresh borrowing from the ECB, in an effort to ease its increasingly stretched liquidity position.

The agency will pay for the loans upfront, despite its previous insistence that due diligence be carried out on all loans before a transfer takes place.

Nama will seek to recoup the difference if its due diligence subsequently discovers that it has overpaid for some or all of the loans.
Nama to issue €6 billion to Anglo in blind transfers | The Post
 

He3

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So we are now pushing the losses of bondholders on to the NAMA.

I love the bit at the end, where it states that the NAMA will pursue any losses.

From who? Anglo is a non functioning Bank. It is a financial skip waiting to be dumped.

These bondholders must think all of their birthdays have come at once.
The nation has been sold into bondage. Perhaps sold is the wrong word, because that would imply some sort of bargain being struck. Given.
 

NAMAwinelake

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He3,

Having read the EU Decision from February 2010 in some detail it seems that there is some provision for estimated valuations on the borrowers outside the top 150. This provision didn't attract concern at the start of April 2010 because at that point we didn't know what rubbish NAMA was going to find. Now we do have an idea and we know it's getting worse with the smaller borrowers (EBS's haircut was 38% in T1 and 2 and is now estimated to be 60% for the last EBS tranche). So what the EU approved below should be withdrawn.


Regardless this is paragraph 56 of the EU Decision
"Whilst it is expected that all the properties securing the eligible bank assets will be
independently valued, given the high number of loans, the market valuation process will
be performed in two steps.

i. Firstly, each participating institution will provide NAMA with the required data
for the top 100 borrower relationship credit positions. NAMA will then
determine from these the top 150 borrower relationship credit positions by size
of exposure across all participating institutions. The underlying collaterals
relating to these top 15019 borrower relationship credit positions will form the
"core underlying assets", for which the valuers will provide Collateral CMVs.
The data then collected would form a statistical basis for determining the
Collateral CMVs of the remaining underlying assets (the “non-core underlying
assets”). The statistical basis would be applied to establish an initial Collateral
CMV of the non-core underlying assets, based on which an initial transfer price
will be determined;

ii. Secondly, the valuers will prepare valuation reports for the non-core underlying
assets over the next 12 months (i.e. post transfer of assets to NAMA in certain
circumstances) in order to determine a final Collateral CMV of the non-core
underlying assets. Any settlement amount (deriving from any difference
between the initial Collateral CMV and the final Collateral CMV of the noncore
underlying assets) will be clawed back by NAMA.”
 

He3

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Thanks Namawinelake. The Business Post article says that legislation needs to be changed:


The government has informed the European Commission of the change to Nama’s operation, but will need to bring in new legislative regulations to allow payments to be made to Anglo in advance of the formal valuation of the loans in question.
Any idea what exactly that refers to?
 

He3

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He3

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A link to whatever Regs Lenihan has to change to swing this would be much appreciated, as well as any comments he would have made at the time saying how we were being safeguarded blah blah.
 

Garza

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The nation has been sold into bondage. Perhaps sold is the wrong word, because that would imply some sort of bargain being struck. Given.
Ain't the first time, over 1000 years ago Dublin sold nearly half of the island's population into slavery.
 

He3

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Dáil debate on bank recapitalisation, in a response to Deputy Joan Burton

"The valuation procedure as between NAMA and Anglo Irish Bank carries no risk for the taxpayer whatsoever." – May 13 2009.

thanks to Rocky on alonso's thread for that gem from Guess Who?
 

He3

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Being discussed on VB now
 

NAMAwinelake

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Thanks Namawinelake. The Business Post article says that legislation needs to be changed:




Any idea what exactly that refers to?
He3, no I don't know exactly what change is required but the Tribune is just quoting from Minister's statement "The EU has been advised of this revision to the valuation process for the remaining Anglo loans and I will be making Regulations to provide for it."

The NAMA Act anticipates a process of undertaking valuations and due diligence prior to transfers and it doesn't provide for post-transfer balancing if the loans are transferred on an estimated basis (there is a provision for extra costs on the banks if new matters come to light which reduce valuations).

So even though the EU Decision allows for estimated valuations on some of the NAMA portfolio with a reckoning later on, this may need to be made explicit in legislation. I can't think of any other change.
 


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