NAMA - Davys Morning Comment

[hammer]

As the latest deadline for initial loan transfers to NAMA looms (end-March), an
article in the Irish Times on March 13th revisited the possibility that discounts on
the initial tranche of loans (circa €17bn representing the top ten developers) may
be above the average (originally estimated at 30%) for the entire portfolio.
Quoting 'an informed source', the article suggests that [COLOR="Red"]NAMA participants 'are
likely to be shocked at the size of the discount'.[/COLOR] In the case of Allied Irish Banks
(ALBK), we are modelling for a discount of 35% on the initial estimated portfolio
of €24bn (i.e. €8.4bn), although it looks like loans transferring may be less than
€23bn. In the case of Bank of Ireland (BKIR), our model assumes a discount of 27%
on the initial estimated portfolio of €16bn (i.e. €4.3bn), although Saturday's article
suggests that transfers may be as low as €12bn.

[DCon]

It's amazing that we need the EU to try and keep our government honest

[Cassandra Syndrome]

Apparently the are having to admit the level of complexity in the loans and how massive loans were given just on the strength of the word of a solicitor. Never would have imagined that..... *coughs* Lynn *coughs*

[Cassandra Syndrome]

And here is a link for it. I wonder why they were forced to admit this?....

Nama finds banks took solicitors? letters as security | The Post

[DCon]

And here is a link for it. I wonder why they were forced to admit this?....

Nama finds banks took solicitors? letters as security | The Post

Sounds great

A number of institutions, including Anglo Irish Bank and Irish Nationwide, have drafted in extra lawyers in an effort to resolve the problems over securities. In many cases, they are discovering that the institution only has a second, third or fourth call on an asset.

A number of banks have already threatened legal actions against the law firms which worked on the titles. A number of alleged negligence cases are expected to come before the courts in the coming weeks and months, as the Nama process unfolds, according to reliable sources.

[Cassandra Syndrome]

Sounds great

It does indeed! Its a bit like gang warfare. Let the Neo Feudalists kill each other!

[makingjam]

It all will be fine. The government have appointed Ernst and Young to oversee the loan transfers to NAMA so that there won't be any over-payment.

NAMA poised to give banks five days' notice on developer loans - Irish, Business - Independent.ie

Of course, the fact that they are the same company that previously missed all the mess at Anglo shouldn't worry us
Anglo Irish Bank says total level of loans to directors stands at ?179m - Where were the auditors Ernst & Young?
Or that the firm is in big trouble in the US at the moment after missing a few things in the Lehman books
Ernst and Young May Face Liability in Lehman Case - NYTimes.com

Nothing to see here, etc., etc.

[roc_]

Pure spin.

They're more likely to be shocked at the degree of debt forgiveness they managed to get away with than anything else.

[powderfinger]

Given some of the 'deals' that Davy's put together for their clients they would be well placed to advise on shock discounts.
David McWilliam's piece in yesterday's Business Post illustrates.
Sunday Business Post | Irish Business News

The geniuses at Davy Stockbrokers were taken by it at the height of the boom. They saw ‘‘potential uplift’’, as they might have said back then. So too did their private clients and the developer Joe O’Reilly - one of Anglo’s Golden Circle.

In fact, so taken were they that they paid €58 million for a huge site next to the cemetery. The site, Woodbrook, where the golf club used to be, lies beside the graveyard, just beyond the Protestant church.

In July 2006 this 51-acre site was bought for over €1 million euro per acre without full planning permission. According to a glowing article in the Sunday Times back then, the fully-developed site would be worth close to €1 billion when it was developed.

The Davy clients provided mezzanine finance similar to the Glass Bottle arrangement for Becbay at Ringsend complete with similar anticipated returns of 17% p.a.
And now they 'advise' expectation of 5c in the € to the Woodbrook punters.
The Nama sting in the tiger's tail is well noted by McWilliams.

However, for the average citizen - ordinary people like my father, who never got involved in all this carry-on - the sickening part of the Davy Stockbrokers publication last week was that we - not they - are going to pay for this greed, through Nama.

In a nauseating paragraph, Davy says in its report that ‘‘Nama is likely to be the only institution that will have the capacity to provide development finance to build out development projects and thereby provide some capacity for return’’.

There it is, in black and white. his toxic loan, which the promoters say now is worth 0.05 per cent of what it was originally, will be given to the taxpayer to fund. What sort of nonsense is this? This land should be sold now to whoever wants to buy it and the Davy private client T consortium, the loan and the developer should be allowed to suffer.

[FlyOver]

A number of institutions, including Anglo Irish Bank and Irish Nationwide, have drafted in extra lawyers in an effort to resolve the problems over securities. In many cases, they are discovering that the institution only has a second, third or fourth call on an asset.

A number of banks have already threatened legal actions against the law firms which worked on the titles. A number of alleged negligence cases are expected to come before the courts in the coming weeks and months, as the Nama process unfolds, according to reliable sources.

Haha, solicitors fighting solicitors. Now there is a recipe for gridlock if I ever saw one!!!

Oh, and as for the banks not being the first in line for call on assets, good luck if they will ever see a euro from the sales. Here in the states, second liens almost never see a dollar. After the sale, the fist lien is lucky to see 80% return let alone anything left over for the second lien.