Resolving potentially huge row over bank property loan valuations by NAMA

[patslatt]

Today's Independent predicts a huge row between the banks and NAMA over the banks' property loan valuations. See 'State facing battle royale' in deal over toxic loan valuations - Irish, Business - Independent.ie

Given the very limited liquidity and paucity of transactions in trading for property assets,prices can be volatile and mark to market valuations a moving target. One way to resolve differences of opinion on valuations would be to allow banks to retain a residual interest of say 25% in any profit on final disposition of the asset after its transfer to NAMA. In a tradeoff for this interest,NAMA would demand that the banks accept a lower initial price on the asset.

[wysiwyg]

Bring in Bo Lundgren, Swedens former Minister of Finance, who solved the same issue for the Swedes in the early 90's.

Tell him to build a team around him to do all the valuations. Tell him get whoever he likes, from anywhere in the world. Pay him 1 billion euro for doing it. Yes, I said one billion euro.

Don't let any, not one, Irish politician, banker, economist, down to the canteen lady in their offices, near the process...

It'll be money well spent.

[feargach]

prices can be volatile and mark to market valuations a moving target.

No.

Ever heard of Occam's razor? The banks loved mark to market when the boom was on. It's time for them to come to Daddy and take their beating.

[Furze]

I suggest this is a job for experts not political advisors; request the IMF and/or ECB for assistance in devising a benchmark/formula for this task as they may ulimately be required to bail us from this folly.

[Digout]

Bring in Bo Lundgren, Swedens former Minister of Finance, who solved the same issue for the Swedes in the early 90's.

Tell him to build a team around him to do all the valuations. Tell him get whoever he likes, from anywhere in the world. Pay him 1 billion euro for doing it. Yes, I said one billion euro.

Don't let any, not one, Irish politician, banker, economist, down to the canteen lady in their offices, near the process...

It'll be money well spent.

Do you really think FF will bring in an outsider? This is a job for a FF/builder crony.

[anewbeginning]

I suggest this is a job for experts not political advisors; request the IMF and/or ECB for assistance in devising a benchmark/formula for this task as they may ulimately be required to bail us from this folly.

Agreed.

The problem is we have the same people who created the mess, the 'advisors', politicians and bankers trying to solve the mess.

Does anyone trust this bunch to get it right?

[MsAnneThrope]

Don't let any, not one, Irish politician, banker, economist, down to the canteen lady in their offices, near the process...

I agree 100%. If ever this country needed outside, independent, honest, prudent and uninfluenced advice it is now. I consider this appointment to be one of the most crucial in the State's history and there is too much at risk, for us and future generations, to screw up this appointment.

Apart from the Swedish guy who did it in his own country (albeit with the advantage of devaluing the currency) who else would you consider as good, qualified candidates.? I must admit I'm at a bit of a loss as to who that could be and would they be interested in taking it on?

[cyberianpan]

The American solution[SIZE=1]*[/SIZE] is to let private players buy into the "distressed loans" fund ...maybe even just make up a few percent of the total

But the idea is that this is a method of getting open & honest pricing

cYp
[SIZE=1]* I haven't seen any more details on the US programme, despite looking for them[/SIZE]

[Easy Tiger]

The American solution[SIZE=1]*[/SIZE] is to let private players buy into the "distressed loans" fund ...maybe even just make up a few percent of the total

But the idea is that this is a method of getting open & honest pricing

cYp
[SIZE=1]* I haven't seen any more details on the US programme, despite looking for them[/SIZE]

Quite. But this is such a small market it would be quite cheap to buck.

Put the whole lot on the open market, now.

[patslatt]

The American solution[SIZE=1]*[/SIZE] is to let private players buy into the "distressed loans" fund ...maybe even just make up a few percent of the total

But the idea is that this is a method of getting open & honest pricing

cYp
[SIZE=1]* I haven't seen any more details on the US programme, despite looking for them[/SIZE]

If private investors were allowed to bid at auction for minority interests,the higher the minority interest taken up,the greater would be the confidence that the valuations were favourable to NAMA. This would have two major advantages:a reduction in the government's capital requirements and valuable advice from investors on management. Their participation could delay the closing of transactions by an extra couple of months to give them time for due diligence but that wouldn't matter much.