It's been a big morning for Irish politics and economics, hasn't it? A big morning for Irish life, in fact.
So big, you might have missed something important about NAMA.
It's operations are being fundamentally changed.
We all remember being solemnly told that NAMA would acquire property finance related loans with a nominal value in excess of €5m. Not any more. Now, in relation at least to AIB and Bank of Ireland, NAMA will only acquire such loans in excess of €20m.
This change will be the main driver in reducing the number of NAMA debtors from 1500 to 850.
“The Government has decided, having consulted with the NAMA Board and the European Commission, that where the total exposure of a debtor is below a €20 million threshold in AIB and Bank of Ireland, that debtor’s loans will not now be transferred to NAMA. The threshold had previously been set at €5 million. … I have been advised by NAMA that there are 650 debtors with property-related debts of between €5m and €20m in these two banks. They account for just €6.6bn of the aggregate €80bn volume of NAMA eligible loans.”
Surely NAMA must quickly publish a revised business plan. Everything changes with an announcement like this, from NAMA's funding needs to its forecast recovery rate, to staff numbers and outside advisors.
The excellent NAMAwinelake draws attention to the ever-decreasing amount scheduled for transfer from Bank of Ireland to NAMA. Is it a mechanism whereby the bank keeps better quality loans from transfer to NAMA? Is this to save the bank from recognising the full extent of its bad loans?
NAMA scope and operations significantly altered « NAMA Wine Lake
So much for NAMA cleaning up the balance sheets of the banks, bringing a measure of finality, and helping get credit moving.
Lenihan is making it up as he goes along.