McAleer an Rushe trash their British Land Site at 2-14 Baker Street flooding Bakers Mews with filthy water. mud and noise in the early hours. But…. who cares?

Related articles

• Dicing with Death – Update: McAleer and Rushe’s Health and Safety Record (2to14bakerstreet.wordpress.com)
• British Land Partner Resorts to Threats and Subterfuge on Baker Street (2to14bakerstreet.wordpress.com)
• Dicing with Death – 2-14 Baker Street British Land Development (2to14bakerstreet.wordpress.com)
• British Land Reports Profit of $1.36 billion (benzinga.com)
• Free Parking in Westminster : parking and congestion control exemption in Marylebone (2to14bakerstreet.wordpress.com)
• Brighton & Hove Council Legal Action against McAleer & Rushe (2to14bakerstreet.wordpress.com)

(MORE TO FOLLOW) Dow Jones Newswires

July 12, 2011 15:24 ET (19:24 GMT)

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“money is not my god”, “I’m not one of these developers looking for €200k salaries” but he welcomes NAMA’s profit-sharing initiatives.

Niall Mellon, the property developer behind Knockrabo Developments and the Niall J Mellon group was a guest on RTE Radio 1 yesterday on the Sunday edition of the Marian Finucane show. The show is available online here and Niall’s contribution kicks in at around 40 minutes and lasts just over 30 minutes. The interview gave an interesting counterpoint to the interview the previous day with the NAMA chairman, Frank Daly. Niall himself (pictured here in 2008) is reportedly one of the Top 20 developers in NAMA, and there has been no news about whether or not the44-year old developer has agreed a business plan with NAMA. In addition to property development, the soft-spoken developer is probably best-known for his housing charity work in South Africa. I came away from listening to the interview thinking Niall is either a modern day saint or one of the cutest hoors you might ever come across. Here are the interview highlights:

read full article at source here  http://wp.me/pNlCf-1yr

Comment:

This is not uncommon as most con artists have a variety of personalities “the likable rogue” has help C J Haughey get away with sheer robbery most of his political life .As for NAMA been part of the solution is just farcical and coming from Niall Mellon a developer in trouble what else can you expect .Saint or rogue ? I dont know, but Nama is part of the problem, Its become a  safe haven for the very people that cheered on the exploitation of home buyers .These very people are now sitting in plush offices that are now been paid for by the taxpayers of Ireland and developers have even the cheek to expect to get paid 200,000 Euros  by Nama  is simply outrageous .

I am glad to hear that Niall mellon isn’t  getting paid a salary from Nama but his services might be called upon to build homes for the soon to be evicted Irish home owners maybe  homes Niall built in the first place .

A lot of the other developers have their hands out and Nama is obliging, . What bulsh*** .I heard a saying on TV last night

Money talks and Bullsh** walks!

If only ,here in Ireland we are drowning in Bullsh**from our political
masters and our money is doing the walking out of the country!

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• Frank Daily Reveals some of NAMA’s secrets (thepressnet.com)
• NAMA chairman interview on RTE Radio – agreement on just one developer business plan “close to finality” (namawinelake.wordpress.com)
• http://www.examiner.ie/breakingnews/ireland/nama-appoints-receiver-to-mansfield-assets-502113.html (thepressnet.com)
• NAMA CEO provides update on agency’s progress (namawinelake.wordpress.com)
• Privacy law may delay Nama property sales (thepressnet.com)

Saturday, I had the time to listen The Marian Finucane talk showon RTE 1
Marian was talking to the NAMA chairman Frank Daily Listen here to show .What I
found most surprising was after nearly 15 months NAMA still has to approve one
business plan and even this one “was close to finality” This is surprising to
say the least Then we heard that NANA wrote to the Government last year about
Upward Only Rents and leases, to highlight the effects any change would have on
NAMA,(presumably negative). Anyway listen and learn here

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• http://www.examiner.ie/breakingnews/ireland/nama-appoints-receiver-to-mansfield-assets-502113.html (thepressnet.com)
• NAMA offering lucrative bribes to developers to secure co-operation (namawinelake.wordpress.com)
• Privacy law may delay Nama property sales (thepressnet.com)
• Who’s more greedy? (politics.ie)
• RTE “stars” face 30% cut (politics.ie)
• NAMA CEO provides update on agency’s progress (namawinelake.wordpress.com)
• ‘NAMA offering lucrative bribes to developers’ reports blogger Namawinelake (politics.ie)

Image via Wikipedia

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I see in the Irish Times today that the Central Bank‘s level of emergency liquidity provided to Irish banks last month, was €53.7 billion While the bank does not disclose the exact figure for the amount of emergency liquidity it provides, the vast bulk of the category of “other assets” refers to emergency liquidity funds. While at the same time the ECB is still supporting the Irish banks to the tune of €102.3 billion. So If the EU is slowly withdrawing its support for Irish banks and the Irish Central Banks is taking up the slack I have a question (1) Where did the Irish central bank get this €53.7 billion from? Have they discovered a hidden vault full of Euros somewhere in the Central bank vaults or are they printing this money. If they are doing so, it must be with the approval of the EU. With the national debt now standing at € 101,441,549,888 billion and we are expecting to have a budget defecate at the end of the year of 20,000,000,000 on top of that ,let’s just do a top up here €53.7 +€102.3 +€ 101.4 +€ 20.00 = €277,400,000,000:Billion Now let’s say that the banks will not need any more money and NAMA is not going to lose its shirt and we will somehow balance the budget next year (somehow through divine intervention) at the current market interest rates of 5.6% ,the interest alone will cost us 15,534,000,000,Billion a year. Now with an income of 35,000,000,000 billion in total revenues I would say “Houston we have a problem”! The current government are just not facing up to reality. Our current government expenditure is running at 54,000,000,000 and after paying the interest on existing loans we will have a budget defecate of approximately 38.5 billion. Now how is that not going to end up with us having to default???

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The National Asset Management Agency (NAMA), set up by the government 18 months ago to acquire risky assets, is trying to lure buyers back into one of the region’s worst-performing property markets.

NAMA may sell homes at a discount, providing the value of the property falls further in the years after the deal, said Ray Gordon, a spokesman for the agency.

‘The market needs a kick-start,’ said Tom Dunne, a lecturer at the School of Real Estate and Construction Economics at the Dublin Institute of Technology. ‘NAMA might be able to provide that.’

Ireland’s boom and bust, which led to an 85 billion euro (S$153 billion) international bailout last year, was driven by the real estate market. Property prices quadrupled in the 10 years through 2007.

Since then, home values have fallen 40 per cent, figures released on Tuesday showed. Mortgage lending has dropped about 95 per cent from the market’s peak.

The government, through NAMA, is on the hook for 31 billion euros of loans tied to the property market, equivalent to 20 per cent of the Irish economy and part of the more than 100 billion-euro cost for taxpayers to rescue Irish banks.

‘There is no lending going on,’ said Niall Gaffney, chief executive officer of IPUT, a real-estate fund and among the largest owners of offices and stores here. ‘The market is dead.’

The number of new mortgages granted in the first quarter declined 53 per cent to 3,259 from a year earlier, the Dublin- based Irish Banking Federation said on May 17.

Home prices fell one per cent in April, according to a report published on Tuesday by the country’s statistics office. Prices have fallen every month since December 2007.

Date: 09 June 2011 | For the full report, please visit http://www.businesstimes.com.sg

Arrant attitudes to health and safety at 2-14 Baker Street site on Baker's Mews

So, here we have it. British Land who, at a meeting with a neighbour of the site at 2-14 Baker Street (10 Portman Square) - who had been treatened by McAleer & Rushe thugs, on Tuesday 7th June, stated “We have a long successful track record of building of buildings. And part of that is understanding that [the] contractor might be the builder but we are responsible for it. So we have project managers, we have people who monitor their work. But also, we in turn are monitored by people at Health and Safety.”

And further clarified with the additional rider of “We have independent health and safety advisors to regulate the site. But in terms of any health and safety breaches, we take that very seriously. So we don’t just sit back and allow McAleer & Rushe to do as they will. We monitor that very very carefully.”

But the issues with the rear of the development site at 2-14 Baker Street (10 Portman Square) remain such that one must reasonably conclude that this is a case of ‘you can fool some of the people some of the time, but you can’t fool all of the people all of the time.’

Or maybe it’s the old ostrich story of having one’s head stuck in the sand or having you head stuck so far up somewhere else…. Whatever it is, something is seriously wrong at British Land’s 2-14 Baker Street (10 Portman Square) site.

Having raised and written about tangible, real and documented (including video and still image records) safety issues in Baker’s Mews, to the rear of the 2-14 Baker Street (10 Portman Square) development, the farce continues.

The words ‘arrant’ and ‘invective’ are polite description of conflict resolution at work in relation to this site.

To respond to site vehicles driving at pedestrians and on the pavement endangering life with barriers to prevent such errant behaviour would normally be commendable. A visual sign that the issue is being taken seriously.

But in this case one wonders whether the barriers are there to protect te errant drivers and not pedestrians. Or is all just for show? To put barriers and cones on the pavement in the manner depicted in the above image is to stick two fingers at health and safety. It is sticking two fingers at those passing through the Mews and, in particular, it is sticking two fingers at the local residents who have to deal with this ‘crap’ every day.

Is it acceptable that a pedestrian has to physically move cones and barriers just to walk down a pavement? Is it too much to expect safe and unimpeded pedestrian access AT ALL TIMES? Is it safe practice to place cones or any tripping danger in the way of pedestrians? Is it acceptable to block the way of wheelchairs and parents with buggies?

Of course, the site work and shareholder value must take precedence. That seems to be the rule of thumb with British Land and McAleer & Rushe.

The only reason the barriers and cones are as they are in the photo is because site traffic continues to mount the pavement and continues to be facilitated by McAleer and Rushe in mounting the pavement.

Maintaining risk to the young, to the old and infirm, to wheelchair-bound, to the blind and to any other users of the pavement appears to be acceptable and preferable to the inconvenience of safe practices.

After all, safety takes time. Time is money and that’s just what McAleer & Rushe don’t seem to have.

Who in their right mind would award such a build and development contract to an effectively bankrupt company who ride roughshod over public safetly – and in a manner that is so blatant? Can this company really be so arrogant that it believes itself above the law and/or that it is not accountable for its actions?

And as to British Land – where is the evidence of “….in terms of any health and safety breaches, we take that very seriously. So we don’t just sit back and allow McAleer and Rushe to do as they will. We monitor that very very carefully.”?

If only Boris Johnston did some cycling around this part of London… we migh see more action than from Westminster City Council who clearly should not allow this site to operate.

Related articles

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• British Land Partner Resorts to Threats and Subterfuge on Baker Street (2to14bakerstreet.wordpress.com)
• English Heritage deals blow to £340m UBS office (guardian.co.uk)
• A return to the mystery on Baker Street as Northern Irish property company confirms loans have transferred to NAMA (namawinelake.wordpress.com)
• British Land net profit slips; upbeat on outlook (marketwatch.com)
• Property is not out of the woods yet (telegraph.co.uk)
• Free Parking in Westminster : parking and congestion control exemption in Marylebone (2to14bakerstreet.wordpress.com)
• Dicing with Death – Update: McAleer and Rushe’s Health and Safety Record (2to14bakerstreet.wordpress.com)
• Brighton & Hove Council Legal Action against McAleer & Rushe (2to14bakerstreet.wordpress.com)
• Q&A: 2-14 Baker Street, British Land and McAleer & Rushe (2to14bakerstreet.wordpress.com)
• British Land sees slowdown in property values growth (telegraph.co.uk)

Heavy vehicular traffic in and out of the British Land 2-14 Baker Street (10 Portman Square) site, means the roadway access for residents of Bakers Mews and those passing through is very frequently blocked. But it is not just road access that’s affected. Heavy duty site vehicles treat the pavement as a road extension irrespective of the danger thus posed to pedestrians. With regular pedestrian traffic through the street, both by residents and the general public, it seems reasonable that such passageway remains safe and unimpeded by British Land or McAleer and Rushe who are developing the site.

This video shows a typical experience of someone walking through Bakers Mews – or at least trying to. Too often even pedestrian passageway is not possible. The video shows a pedestrian walking into Baker’s Mews from Fitzhardinge Street keeping to the pavement. A site truck sits in Mews on the roadway. As the  pedestrian approaches the truck it starts moving (reversing). It is almost as though the driver is waiting for someome to come along and then deliberatey putting the pedestrian at risk - not unlike certain video games where points are accrued by knocking down pedestrians.

As pedestrian comes closer the truck mounts the pavement and the front of the vehicle swings in towards the wall closing the gap and creating substantial and real hazard for the pedestrian.

Had the pedestrian continued walking at this stage he would have been crushed between truck and wall. A site worker from the British Land and McAleer and Rushe development walks to the front of the truck and obstructs pedestrian without any acknowledgement, and stands in front of the small gap between wall and truck. Instead of ensuring passageway for pedestrian, the gap between the truck and wall is closed up. The pedestrian is left standing with access blocked - which is a regular occurance.

Children frequently use this stretch of pavement. Had a child run down the pavement at the time of this incident, or had run from the residential area of the Mews, the result would have been certain severe injury or death.

Indeed, it is noteable that the pavement surface is also becoming unsafe. Paving stones are smashed and churned. Access covers to telecoms facilities are damaged and the pavement surface is fast becoming a hazard for pedestrians.

Would this 2-14 Baker Street site be better run and better managed if it was now a NAMA (Irish National Asset Management Agency) asset as it rightfully should be?

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• 10 Portman Square | W1: Can a Name Change Clean up a Dirty Image? (10portmansquare.wordpress.com)
• Plundering Ireland? – Disposing NAMA Assets at 50%+ Below Value – McAleer & Rushe, British Land, Bank of Ireland and NAMA (2to14bakerstreet.wordpress.com)
• British Land Partner Resorts to Threats and Subterfuge on Baker Street (2to14bakerstreet.wordpress.com)
• Dangerous by Design 2011 (akhealthpolicy.org)
• A return to the mystery on Baker Street as Northern Irish property company confirms loans have transferred to NAMA (namawinelake.wordpress.com)
• Private Sanitation Truck Kills Pedestrian in Brooklyn (streetsblog.org)
• Councils To Tackle Pavement Parking (confused.com)
• Call to lower pedestrian death rate (autonetinsurance.co.uk)
• Dicing with Death – 2-14 Baker Street British Land Development (2to14bakerstreet.wordpress.com)
• Parking on a pavement? Watch out for new laws (confused.com)
• British Land sees slowdown in property values growth (telegraph.co.uk)
• Q&A: 2-14 Baker Street, British Land and McAleer & Rushe (2to14bakerstreet.wordpress.com)

Image by Szili via Flickr

Just down the road from the home of Sherlock Holmes, the creation of a Scottish born Irishman, another (Northern) Irish creation presents a case worthy of the attentions of the aforementioned Holmes.

Worthy of scrutiny, it involves magic (how do you pull money out of an empty hat?), ‘reverse economics’ (how do you buy something and sell it for half the price and still make a profit?), and intrigue. It also lends itself to the types of practices one might associate with certain ‘organisations’ (don’t mention the word ‘Family’) common of 1920’s New York City or Chicago.

2-14 Baker Street (10 Portman Square), Central London. The once glorious 1950’s building is no more. Pulled down. Demolished. Ashes to ashes and all that. The former home of BDO Stoy Hayward and the infamous, and oft fondly remembered, Irish managed restaurant, ‘School Dinners’. A restaurant perhaps better named  ‘Sinners Paradise’!

But the intrigue starts in 2005 when British Land sold the building to McAleer and Rushe for £57.2m. McAleer and Rushe were overstretching themselves on the deal but ingratiated themselves with a friendly manager from Bank of Ireland. It was Bank of Ireland who performed the magic – money from nothing. Deal done. But not ‘happily ever after’. At least not for Bank of Ireland and not for the Irish State.

Trumpets boomed, the peacock strutted and the London construction-related media exhibited excitement. McAleer and Rushe were on the lips, in the headlines and full steam ahead. But not all was as it seemed. Public image is one thing, but the bottom line is money. And McAleer and Rushe simply did not have that. Not even nearly enough. Eventually the cards started to fall. With the loan heading towards NAMA, speed became the essence. A race.

The finishing line witnessed the ‘reverse economics’. McAleer and Rushe sped towards the line in 2010 to a waiting British Land standing with £29m. McAleer and Rushe won the race and their prize was a forfeit of nearly £30m. 2-14 Baker Street (10 Portman Square) going back to the 2005 seller for half the price – and despite Central London’s commercial property market largely remaining unaffected by valuation woes elsewhere.

And then the intrigue. The Bank of Ireland loan goes to NAMA becoming an Irish State asset. McAleer and Rushe did more than forfeit the £30m. There was a second prize – but one that took McAleer and Rushe outside the NAMA debt. In a move that many a poker player might admire, McAleer and Rushe were now a ‘partner’ of British Land and would share the profits of the development of 2-14 Baker Street (10 Portman Square). But it did not stop there. There was a third prize. With declared net assets of just £5m, losses of £11m and borrowings of £70m in 2010, McAleer and Rushe were also awarded the contract to develop the site. By all accounts a firm who were technically bankrupt were handed the cream on the cake as well as a large slice of the cake.

Might there be even a fourth or a fifth prize? How many rabbits can be pulled from a single hat? Yes, there was, in fact, a fourth prize. This one went to the directors of McAleer and Rushe. Money. Lots of it, in fact – with one director gaining over £100,000 in his take home package. Despite their winnings and the fact that the 2-14 Baker Street (10 Portman Square) race represents the single best deal in McAleer and Rushe’s history – the company’s annual report, filed in March 2011, fails to acknowledge the ‘race’ and accompanying benefits among their ‘Principal Activities’.

Demonstrating yet more magic, intrigue and ‘reverse economics’, despite declaring losses of over £11m, turnover down 45% over the previous year, £51m of term loans and £10m of overdrafts repayable on demand, the directors lay claim to all being rosy in the garden with the statement “.…the construction activities continue profitably”. Not surprisingly, the directors go on to declare that analysis of key performance indicators are not necessary! Not surprisingly too is that KPMG, the auditors assert “significant doubt on the ability of the group to continue as a going concern.”

And all of this is likely to be relevant to recent events at 2-14 Baker Street (10 Portman Square). Demolition started in January 2011. Despite Westminster’s widely acclaimed ‘Westminster Considerate Builders Scheme’ the demolition of the original building appears to have been done without proper compliance to both the relevant standards and to regulatory requirements including Health and Safety. It is noteworthy that in the annual accounts filed by McAleer and Rushe in March 2011 the directors set out their obligations on Health and Safety as pertaining only to their staff and not the Public.

The 2-14 Baker Street (10 Portman Square) site, during the major part of the demolition, has not been cordoned off or secured. The site has been freely accessible to members of the public including young children. Despite the substantial size of the site, and multiple demolition equipment in use – dust and particulate control has been one man with a garden hose – “because if the site becomes soggy or inundated with water it will become muddy”, according to one person working on the site.

Neighbours have been complaining since work began of excessive noise, dust and vibrations. Concerns on asbestos have not been responded to. Residents have regularly been prevented access to their homes – or have been unable to exit from them. Children living in the vicinity of the site have been put at risk. The excavated site has been unguarded and there is a noticeable lack of staff on site. Local residents have not been included in planning around the works, assurances on undertakings have not been kept to, and the impact on quality of life and ‘quiet enjoyment’ remains substantial for those affected.

Worryingly, McAleer and Rushe appear to believe that their actions should be by their determination only – with scant regard for official bodies and no regard for members of the public.

‘Promises are made to be broken’ seems to be the order of the day. Written and verbal assurances to local residents about things as basic as unimpeded and safe access to homes, site security and dangerous practices have not materialised in practice.

On the 26^th of May one resident of Baker’s Mews was prevented access to his home in his car by a substantial sized trailered truck to the front and then additionally blocked by other heavy duty trucks belonging to the site from behind. Unable to move forward to access his home and unable, for a time, to reverse out of the street he was subject to threats and intimidation by the site staff including direct employees of McAleer and Rushe. This included threats against property and threats of Police action. And this to someone being physically prevented from accessing his home. McAleer and Rushe were solely the ones at fault. See video.

The tenant is now considering legal action against both McAleer and Rushe and against British Land as the site owner. The threats and the nature of the incident on the 26^th May were such that the family of the resident were not comfortable in attempting to gain access to their home that day – and instead had to spend several hours at a nearby hotel until such time as the site staff including the McAleer and Rushe employees were off site for the day.

Westminster’s assessment of the incident was starkly on the side of the resident and states that it “ultimately agrees” with the resident “that he should be able to access his property via the available public highway in Baker’s Mews at all times.” The Westminster City Council Officer goes on to demand that McAleer and Rushe “ensure that the City Council does not have to take further action to ensure free access to the public highway in Baker’s Mews is maintained.”

Despite this, British Land prefer to side with McAleer and Rushe rather than deal with the seriousness of the incident. In a thumbs up for thuggery and threats, British Land says in an email of Friday 27^th May to the affected resident, “we are unable to establish definitively fault on the part of the contractor”. The inference seems to be that British Land prefer to protect an effectively bankrupt company cutting corners at public risk than to act reasonably towards the interests of those affected daily by the site at 2-14 Baker Street (10 Portman Square).

And so the saga continues. Perhaps the optimal solution and best for the safety for the public and residents adjacent to the site will be that the banks call in the loans and McAleer and Rushe be replaced by a party that complies with the law in every respect, the requirements of the Prevention of Harassment Act and with the obligations of Westminster’s Considerate Builders Scheme. Maybe with the ‘right’ partner British Land might start behaving as a responsible company again.

Given that there is, in fact, no real Sherlock Holmes, perhaps British Land might like to appoint their own ‘Holmes’ or even a ‘Watson’ to resolve this in a proper and fitting manner.

For imagery related to this press release please visit:

www.youtube.com/user/W1Resident  

Legal Statement Regarding This Article

This article makes no assertion of illegal behaviour or wrongdoing by British Land or McAleer and Rushe in respect to the sale of 2-14 Baker Street in 2005 and in 2010. The information relied upon in this statement is available in the public domain including articles in the British media, online blogs, the respective websites of British Land and McAleer and Rushe as well as the financial information and remarks contained in the McAleer and Rushe annual report published in March 2011. Information relating to the actions and activities of McAleer and Rushe in respect to the site at 2-14 Baker Street are supported by video and photographic records and recordings and reflect the experience of people and persons directly affected by the actions of that company, its agents and employees.

Related articles

• British Land Partner Resorts to Threats and Subterfuge on Baker Street (2to14bakerstreet.wordpress.com)
• A return to the mystery on Baker Street as Northern Irish property company confirms loans have transferred to NAMA (namawinelake.wordpress.com)
• School Dinners on Baker Street  (Ottawa Citizen, June 26, 1985)
• British Land Reports Profit of $1.36 billion (benzinga.com)
• Dicing with Death – 2-14 Baker Street British Land Development (2to14bakerstreet.wordpress.com)
• English Heritage deals blow to £340m UBS office (guardian.co.uk)
• Brighton & Hove Council Legal Action against McAleer & Rushe (2to14bakerstreet.wordpress.com)
• British Land sees slowdown in property values growth (telegraph.co.uk)

source: http://wp.me/pNlCf-1sq

comment:

Since retailers are paying 50% less in costs when are the prices coming down in the shops?

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JACK FAGAN Irish Times 25^th. May 2011

A RECENT ADMISSION by the chairman and chief executive of Nama that they are precluded from giving information, to interested parties, on assets acquired could seriously delay the sale of distressed property loans, say senior property industry figures.

The disclosure is likely to come as a surprise to some Government ministers who are anxious to see Nama speed up its disposal programme. To date the State asset management company has spent €30.5 billion on buying loans from participating banks with a nominal value of €73.4 billion. Under current legislation, the National Asset Management Agency can only release details of property loans it has bought if the borrower gives consent to it or where a receiver has been appointed.

Both the chairman and chief executive of the Nama, Frank Daly and Brendan McDonagh, told a meeting in Cork last week that under Sections 99 and 202 of the Nama Act, as well as the Data Protection Acts, they could not provide prospective buyers with information about the underlying property assets in any particular property portfolio.

The admission was greeted with surprise and dismay by property managers who question how anyone can purchase a loan book or a bundle of properties without knowing what exactly they are buying. A leading property manager said it was like trying to sell your house and not being able to tell prospective buyers what the address was, how many bedrooms it had or what price was expected.

“No one will buy a pig in a poke. This is legislative madness which needs to be changed,” he said.

The unusual restriction will clearly put Nama at a significant disadvantage to non-Nama banks which can offer loan books and property assets for sale on the open market.

Mr Daly and Mr McDonagh told the Cork meeting that given hardly a week goes by without some comment or other being made about the alleged secretiveness of Nama they thought “it may be appropriate to talk briefly about the whole area of openness and transparency as it relates to Nama and to set out the current legal constraints under which we operate”.

In their address, they said members of the Nama board and Nama officers were prohibited under Section 202 of the act from disclosing confidential information.

Confidential information was specifically defined to include information relating to debtors. Furthermore, Section 99 of the act provided that, on acquisition of a loan, Nama took over the obligations of the participating institution under the loan, one of which was the contractual duty of confidentiality which the debtor enjoyed while still a customer of the participating institution.

For these reasons they considered they could not disclose details about debtors because to do so would leave them open to litigation. Information about individual debtors or guarantors was protected against disclosure by the Data Protection Acts which Nama must comply with as a data controller.

The Nama executives said a change in the law would be required to enable Nama to disclose information about a debtor. “However, even if the law were to be changed, there is still no certainty that the amended legislation would survive constitutional challenge if a debtor initiated proceedings to protect what he would perceive to be his right to confidentiality and to privacy.”

The two executives said they were not in a position to have discussions with potential investors, or others, about assets which were under the control of debtors who were meeting their repayment obligations or who were still negotiating with Nama on their business plans.

This was no different from the reasonable expectation that any of us might have that our bank would not enter into negotiations with a third party about the sale of our property unless we were in serious default. “That is not to say that we cannot facilitate buyers and debtors who share a common commercial objective. I should add that many of the disclosure constraints that apply to property assets under the control of debtors do not apply to property assets that are controlled by receivers engaged directly or indirectly by Nama.”

Property managers will be sceptical about the danger of introducing a minor amendment to the law that would enable Nama to provide full information on distressed property assets for sale. One property manager said it was “laughable” that a Government threatening to outlaw existing legal agreements on upwards-only rent reviews would hesitate about making a simple change in the Nama law to allow it to recover billions of badly needed euro spent on distressed property assets.

Comment:

Something stinks and this has all the hallmarks of deals been done for the benefit of the insiders and the golden circle .The government should immediately put in motion a regime that will ensure total transparency of the process of disposing of these properties. NAMA must provide full information on distressed property assets for sale. The notion that they could hide behind Sections 99 and 202 of the Nama Act, as well as the Data Protection Acts, prohibiting them to provide prospective buyers with information about the underlying property assets in any particular property portfolio is preposterous.

I suspect that the choice pieces are been creamed off to the benefit of possible the very same developers that are now in trouble. It is not acceptable that we the taxpayers should now allow this kind of blatant attempt to fleece us once again .

Related articles

• So you’re concerned that a property in NAMA is becoming a hazard…. (thepressnet.com)
• NAMA makes curious decision to redeem its bonds; the best return the agency can get for its spare cash is 1.7% (namawinelake.wordpress.com)
• NAMA to introduce new mortgage product which will safeguard against future property declines (namawinelake.wordpress.com)
• Who are the five developers currently in NAMA’s cross-hairs? (thepressnet.com)
• The financial institutions are having a Laugh! (thepressnet.com)

News that Declan Taite of FGS was appointed as receiver by ACC Bank on 17th May, 2011 to Mick Wallace’s M & J Wallace Limited, the building firm founded in 1970 and which has been responsible for numerous developments in and around Dublin. The colourful plain-speaking builder and developer topped the polls in the Wexford constituency in the February general election.
His financial woes have been known for some time. In March 2011, the Sunday Business Post reported that he owed €40m to the banks including ACC Bank. He said he didn’t expect to go to NAMA because his loans from AIB were below €20m and the incoming government wanted to keep those smaller loans in the banks themselves. Mick’s tale seems all too familiar, with his property assets dropping 75% from €80m in the boom to €20m today.
There is no suggestion from today’s news that Mick Wallace’s personal solvency is at issue at present, though it is a feature of our commercial lending practices that personal guarantees are frequently sought and given. Bankruptcy disqualifies a person from membership of the Dail, but there are around 10 bankruptcy cases a year here, so even if there are personal guarantees, an arrangement might be made with creditors.

source:URL: http://wp.me/pNlCf-1qQ

 I couldn’t let this pass without putting it in full here (emphasis mine):
JUDGMENT of Mr. Justice Kelly delivered on the 10th day of May, 2011
Introduction
The collapse of Anglo Irish Bank Corporation Limited (Anglo) has had profound and serious consequences for the economic wellbeing of this State and its’ citizens. It has caused much hardship to many small shareholders who invested in it in good faith. It played no small part in seriously damaging Ireland’s business reputation throughout the world.
In such circumstances, one could reasonably expect that the relevant authorities in the State would carry out a comprehensive investigation so as to ascertain whether any breach or breaches of the criminal law might have occurred in respect of the activities of Anglo and those who were responsible for it.
The applicant (the Director) has indeed been carrying out an investigation together with the Garda Bureau of Fraud Investigation and it is that investigation which gives rise to the current application.
The application concerns the treatment of material which was obtained on foot of warrants granted by the District Court to the Director in February, March and September 2009. This involved the use of what is statutorily described as an “extended power of seizure”.
In this application, the Director seeks orders pursuant to s. 20(2G)(a) of the Companies Act 1990 as inserted by s. 5 of the Companies (Amendment) Act 2009 to extend the period specified under s. 20(2I)(a)(i) to deal with such material for a further period of six months from the date specified in a similar order which I made on 9th November, 2010. A second order is sought in the same terms in respect of potentially legally privileged material.
This is the sixth time on which the Director has applied for orders of this type. The first occasion was in October 2009.
The Application
The statutory provision relied upon by the Director provides that an application may be made to the court by the Director or any person affected by the exercise of an extended power of seizure. An extended power of seizure was exercised in the present case and that is not in contest. In such circumstances, the Act provides that the court “may, if it thinks fit and having had regard, in particular, to any submissions made on behalf of the Director with regard to the progress of any investigation being carried on by the Director for the purpose of which the powers under this section had been exercised, give one or more” directions (my emphasis). The direction which is sought here is a further extension for a period of six months within which to deal with the material which has been the subject of the extended power of seizure.
At earlier hearings, I directed that if further extensions of time were to be sought, the court would have to be apprised of the progress being made in the various investigations which are being carried on.
The Investigation
Five issues have been identified which are the subject of investigation by the Director and the Garda Bureau of Fraud Investigation.
They concern:-
(i) the provision of financial assistance by Anglo to a number of persons in 2008 to enable the purchase of Anglo’s shares in circumstances which may have contravened s. 60 of the Companies Act 1963;
(ii) the provision of loans by Anglo to its former directors and the regular “warehousing” in Irish Nationwide Building Society of certain loans made available by Anglo to some former directors at the end of Anglo’s financial year thereby misleading the auditors in circumstances which may be contrary to provisions of the Companies Acts 1963 – 1990;
(iii) a “back-to-back” deposit arrangement undertaken with Irish Life and Permanent Group for the benefit of Anglo at the end of Anglo’s financial year in September 2008;
(iv) the provision of a loan to a director of Anglo in circumstances which may be contrary to common law and s. 297 of the Companies Act 1963; and
(v) the communication of possible false or misleading information in certain Anglo public statements in 2008 which may constitute breaches of the Transparency (Directive 2004/109/EC) Regulations 2007 and the European Communities (Admission to Listing and Miscellaneous Provisions) Regulations 2007.
I will consider each of these issues in turn.
Issue (i)
In sworn testimony which was put before me in November 2010, I was informed that insofar as this issue was concerned “substantial progress has been made, and the Director expects that the investigation of this item will be substantially completed at the end of the year”. That was the Directors own time estimate and not one in any way imposed by the court.
In an affidavit dated 19th April, 2011, in support of this application, I was told that a report relating to certain aspects of this issue was forwarded to the D.P.P. on 24th December, 2010 and that a file was sent to the same officer on 14th March, 2011, following what was described as “the substantial completion of this investigation”. The file was seventeen volumes in size and consisted of some eight thousand pages.
I am informed that the investigation file with the D.P.P. is about 90% complete. Despite the “substantial completion” of the investigation, there are a number of important interviews which have yet to be concluded and some other unspecified work which remains outstanding. Only when this is done will the Director be submitting this additional evidence to the D.P.P.
In December 2010, the Garda Bureau of Fraud Investigation furnished an investigation file in respect of market abuse matters in relation to this issue to the D.P.P. It is under consideration by that officer. I am not given any information as to what has happened to this since December 2010.
However, I am informed that further documentation is required to complete this investigation and this involves documents in respect of which the provisions of the Bankers’ Books Evidence Acts will have to called in aid. In addition, the investigation continues to involve the use of mutual assistance procedures in the United Kingdom in order to obtain evidence and statements from a number of persons.
I confess that when the affidavit evidence of last November was put before me and I was told that this investigation would be “substantially completed” by the end of 2010, I took that to mean that papers in final form would be placed before the Director of Public Prosecutions for his decisions at that juncture. That clearly is not the case.
Issue (ii)
In November 2010, I was told under oath concerning this issue that “substantial progress has been made and the Director envisages that the investigation of this item will be substantially completed by the end of March 2011”.
In an affidavit dated 19th April, 2011, I am told that the position concerning this issue is that:-
“Further analysis of documents will be required and a significant number of witnesses (approximately fifty) remain to be interviewed. The ODCE investigation is progressing well and every effort is being made for its completion by the end of 2011”.
This is remarkably different to what I was told last November. Instead of the investigation being “substantially completed by the end of March 2011” there is now no more than an assertion that every effort will be made for its completion by the end of 2011.
I am at a loss to know how the original time estimate could have been given, as even now, in May 2011, fifty witnesses have yet to be interviewed.
Issue (iii)
In November of last year, I was told that it was anticipated that this investigation would be substantially completed at the end of that year. A file was indeed furnished to the D.P.P. on this topic in December 2010. However, I have been given no information as to what has occurred since then. I do not know whether the D.P.P. is still considering the matter, whether he has issued directions or has made any decision at all on the topic.
Issue (iv)
In this case a file was also sent to the D.P.P. at Christmas 2010. No further information has been furnished as to what has been happening since then.
Issue (v)
I am told that a report was furnished to the D.P.P. on this matter in December 2010. However, as the investigation is largely interconnected with the events which are the subject of the issues at (i) – (iv) above, this investigation apparently cannot be completed until those investigations are at an end.
Discussion
I accept, as I have done before, that the task of conducting these investigations is a difficult one. It involves consideration of large numbers of documents both in hardcopy and electronic form. The electronic documentation has to be processed and that is complicated and time consuming. Some people have been uncooperative in making statements. Others have made commitments to give statements but have not yet done so. Other individuals have simply refused to cooperate at all. I also accept matters may arise during an investigation which put time estimates out of kilter.
Very considerable resources have been made available with a view to making progress on these inquiries.
Notwithstanding all of this, however, it has to be borne in mind that the genesis for this application was the execution of search warrants issued by the District Court as far back as 23rd February, 2009.
Now, more than two years after that event, the investigation is still continuing and I have been unable to obtain anything like a firm estimate as to when it is going to be brought to an end.
The self-selected estimates of time which were the subject of the testimony given to me in November of last year have proven to be inaccurate to a substantial degree. For example, I simply do not understand how in relation to Issue (ii), I was told that the investigation would be substantially completed by the end of March 2011 when now in May 2011, fifty witnesses remain to be interviewed. The best that I can be told by way of estimate is that every effort is being made for the completion of the investigation of this issue by the end of 2011.
This case may be unique as to its complexity and the volume of material that has to be assimilated but it is certainly not unique in its speed, or rather lack of it. Over the last few years, I have sent papers for consideration by the relevant investigation and prosecution authorities in a number of Commercial Court cases where judgments for many millions and indeed tens of millions of euros were given against individuals where there was prima facie evidence of criminal wrongdoing on their part. In some such cases admissions of wrongdoing were made. Despite the fact that years have passed since the papers were referred to the authorities, no prosecutions have ensued and little appears to have been done. I am not alone in my sense of disquiet in this regard. In his judgment of 13th April, 2011, in Kelly v. Byrne, Clarke J. said in respect of the defendant in that case:-
“It is of some relevance to note that Mr. Byrne made full and frank admissions in the witness box as to the practices in which he was engaged and his acceptance that those practices were unlawful under many headings. I do have to comment that, in the light of those admissions, it is very surprising indeed that no further action against Mr. Byrne seems, as yet, to have been taken.”
This is not a desirable state of affairs. An apparent failure to investigate thoroughly yet efficiently and expeditiously possible criminal wrongdoing in the commercial/ corporate sector does nothing to instil confidence in the criminal justice system as applicable to that sector.
Conclusion
I acknowledge again the huge volume of material that has to be considered in the present case and I do not underestimate the complexities involved. Despite that, in excess of two years investigation without any appreciable result is not at all satisfactory.
I am prepared to exercise the discretion which is vested in me under the statutory provisions in favour of the Director on this occasion. I am not, however, prepared to grant an extension of six further months as sought. I will grant an extension until Thursday, 28th July, 2011. On that occasion, I expect much progress to have been achieved. If a further extension is to be sought, I expect to be furnished with much more detailed information as to the progress of the investigation of these various issues. In particular, I will require to know what progress has been made in respect of the material sent to the D.P.P. in December 2010. I will also expect more accurate estimates of time as to the completion of these investigations than have been furnished to date.

source:http://thestory.ie/

Comment:

Almost 3 years have passed and we still haven’t even begun criminal proceedings against the Directors of Anglo, All of the Culprits that were conspiring to defraud their own shareholders by their fraudulent support of the Anglo Irish Bank Stock. Insider trading that resulted is wholesale fraud and the collapse of the confidence and good name of Irish Life and permanent whose Directors were responsible in the dubious attempts to support Anglo Irish Banks stock.  All of the Directors of the Various Banks have questions to answer s but as this is Ireland none of them will ever see the inside of a court room except if they bring a libel case brought against me because of this comment .This state of affairs clearly shows that the well connected in this Ba-NAMA- Republic are been protected from prosecution and the means is to slowly drag out this process for as long as possible and eventually have all investigations dropped! Why? Because the rot goes all the way to the top

Brian Lenihan , Brian Clown and Berti Ahern are ultimately responsible for this disaster and they should all be in Jail !

This morning the Irish Banking Federation (IBF), which represents more than 95% of mortgage lending in the State, released mortgage lending date for quarter one of 2011 – the data is here and the press release is here. The figures paint a picture of a property market that is seizing up. Superlatives come in abundance : €577m was advanced during the quarter which is 96.91% down from the peak in Q3, 2006; the average investment mortgage is now €144,000 which is 56% down from peak and indeed 24% down from the previous quarter which is indicative of fire sales or tightening in lending criteria; just 15 mortgages a day were advanced to First Time Buyers (FTBs) during the quarter. The numbers are pretty bad. Of course the stress test and bank restructuring announcements were made at the end of March 2011 so any positive effects of these announcements will not be captured in the figures released today.
As for the outlook, there is a commitment by the incoming government to ensure there is €10bn of new lending per annum in the economy over the next three years and NAMA has flown a kite that it may part-fund purchases of property from its portfolio. The economy remains decidedly weak though the ESRI broke ranks last week and suggested GDP might grow by 2% in 2011. The Allsop/Space auction on 15th April, 2011 laid bare the extent of the decline in Irish property prices with achieved results suggesting we were (unscientifically) 60% off peak actual prices. Generally falling wages, stagnant population due to emigration and the market-distorting effects of NAMA, restraint on repossessions and bank foreclosure sales are all making for a dysfunctional market at present and it is hard to see any significant recovery in lending figures in quarter two.
The IBF numbers are significant though in their implication on the rental market. If potential buyers are sitting on their funds or are unable to get loans, then renting is really the only alternative which might strengthen demand and stabilise prices. Recent data from DAFT.ie and the CSO suggests that rent levels are stabilising.
And here are the numbers. First up, loan volumes (that is, number of new mortgages advanced) – RIL means Residential Investment Loan.

Next up, the value of new lending

And lastly the average of each loan advanced. You CAN’T equate this with average house price because we don’t know the proportion of the purchase price accounted for by the mortgage (was 100% and more during the peak, is typically 70-92% now).

Commenting on the data this morning, IBF Chief Executive, Pat Farrell, stated: “The economic situation remains challenging and prudence remains the order of the day.  For customers that means manageable borrowing and for financial institutions it means prudent lending.”

Source:http://wp.me/pNlCf-1pz

Comment:

There is no reason for anybody to take out loans and commit themselves to years of misery especially when we don’t know what new taxes the government are going to invent .baring in mind we expect to have a new property tax and new water charges imposed on all of the hapless homeowners in the country .Perhaps they will introduce a new window tax and what about a shower tax ,maybe even a new tea tax !

 May 3, 2011 at 11:49 am 

Laura Noonan in today’s Irish Independent reports that of the 30 top NAMA developers, 18 have signed “or are close to signing” a memorandum of understanding with the agency and these 18 are seen as being “relatively safe” (presumably that’s a direct quote from NAMA). Of course the reported phraseology might mean that all 18 of the developers have yet to sign, and “close to” is a very imprecise term. In addition to the signatures of the developers, the memoranda of understanding will need be signed by NAMA, which might require the agreement of the NAMA board, and potentially the spouse of the developer. And after the memorandum of understanding comes the Heads of Terms and finally a full agreement, and these two subsequent documents will also need to be signed by the developer, NAMA and potentially the developer’s wife. Next Tuesday will be the 10th of May, 2011 and the first anniversary of the completion of the transfer of the first Tranche of loans to NAMA. Now the first 30 developers have an average loan exposure of €900m and the business plans will not be straight-forward to say the least. That said, it is difficult to conclude anything other than NAMA is well behind schedule in its agreements with developers.
As for the remaining 12 developers in the Top 30, apparently five are facing foreclosure action by NAMA because the memoranda of understanding have not been agreed. The other seven are presumably already subject to foreclosure action.
And here’s where it starts to become very messy. NAMA does not generally disclose the identity of its developers – the agency stubbornly stuck to its guns last November 2010 at the Oireachtas Committee of Public Accounts hearing where Deputy Roisin Shortall in particular pressed NAMA for names of the Top 10 but the agency did not yield and asserted that such information was confidential. So we don’t definitively know the identity of the Top 10 or the Top 30. That said, Ireland being Ireland, we have had what seemed like well-informed reporting which speculated about the Top 30 and it is that reporting (particularly this and this article) which forms the basis of the table above. A further complication is that the Top 30 developers have extensive portfolios of property that might be split across many companies and some of those companies are subject to receivership and some aren’t.  For example, the only company with which David Courtney an Jerry O’Reilly have been associated which is subject to a NAMA receivership is Radora Developments which was responsible for the Elm Park development.
NAMA has foreclosed on quite a number of developers not on the above list. Jim Mansfield is not there, for example; reporting suggests that his debt to NAMA is “tens of millions of euro” which might mean he was too small for the Top 30. Jim however owes loans to other banks and Bank ofScotland(Ireland) foreclosed on the Citywest hotel complex last year. The implication from Laura’s reporting is that NAMA has foreclosed on seven of the Top 30 and that being the case, I would say those seven refer to Liam Carroll, Bernard McNamara, Derek Quinlan, Paddy Shovlin, Paddy Kelly, David Courtney/Jerry O’Reilly (Radora) and Ray Grehan (where the receiver has been “stood down”, temporarily perhaps). In addition, McInerney is in examinership and its appeal against the withdrawal of that examinership is scheduled to be heard at the Supreme Court this week. There was a report about receivership in respect of Sean Dunne in the Irish Sunday Times (not available online) but that seems to have been denied by Sean’s spokesman and nothing has come up in the Iris Oifigiuil.
So we don’t know the identity of the Top 30, we probably just about know the receiverships affecting the Top 30 and we certainly don’t know the identity of the 18 that NAMA claim have signed, or are close to signing, agreements. We most certainly don’t know the identity of the five that may be facing imminent foreclosure.
As always with these pieces, I get concerned that the media can get used by NAMA to wave its stick at recalcitrant developers – since NAMA doesn’t disclose confidential information and not all developers are networked with their competitors sufficiently to know the status of the negotiations with NAMA, there is a concern that developers will read articles like those in today’s Independent and conclude they are risk. Which they might be. Though they might also conclude that NAMA’s apparent failure to sign the three documents that comprise an agreement with a single developer, one year after absorbing the first tranche, might mean there are more general difficulties at the agency.

source URL: http://wp.me/pNlCf-1lR

Comment:

I would question the expertise of the NAMA staff, I would also question the recruitment methods and the safeguards that are or are not in place that would stop the poacher from becoming game keeper so to speak? Who is safeguarding the taxpayer’s interest in this new lottery carrousel for the chosen few ?  

Related Articles

• http://www.examiner.ie/breakingnews/ireland/nama-appoints-receiver-to-mansfield-assets-502113.html (thepressnet.com)
• NAMA appoints receiver to another Top 20 developer bringing its tally to seven (namawinelake.wordpress.com)
• NAMA provides progress update and claims PTSB/ESRI index is not realistic (thepressnet.com)
• Avalanche of receiverships as NAMA enters its enforcement phase (thepressnet.com)
• NAMA gives us a new collocation – “standing down a receiver” (namawinelake.wordpress.com)

THE NATIONAL Asset Management Agency (Nama) has ruled out a further increase in the fees paid to the five participating institutions for administering €72.3 billion in loans for the agency, despite lobbying by the banks for an increase.

Nama has acquired the property loans of about 850 borrowers from the five lenders and the largest 175 debtors, accounting for about €61 billion of the debt, are managed directly by the agency.

The financial institutions are paid a fee of up to 0.1 per cent of the face value of the loans to cover the cost of administering the loans, depending on the ability of the institution to recover the loan.

This amounts to €72.3 million in fees based on the nominal value of the loans within Nama.

The fee was originally set at 0.06 per cent of the value of the loans but the European Commission recently approved the payments to be increased up to 0.1 per cent. The increase in the fee is at Nama’s discretion and where warranted to recover costs, according to a spokesman for the agency.

The spokesman ruled out any additional increases. “There are no discussions,” he said.

The administration fees paid to institutions vary depending on the work they are required to do for Nama but that the fees would not be higher than 0.1 per cent.

A number of the financial institutions have criticised the size of the fee, saying that it does not cover the cost of servicing the loans day-to-day for Nama.

Bankers have pointed out that other State-run asset management agencies pay higher administration fees to the banks for servicing the loans and that Nama’s arrangements do not incentivise the banks to manage the loans effectively.

David Hodgkinson, the executive chairman of AIB, told the Department of Finance in a letter last January that the servicing fees under Nama were “insufficient to meet the costs related to servicing those relationships”.

He wrote to the department’s secretary general Kevin Cardiff to object to plans to transfer smaller land, development and related loans under €20 million under the so-called Nama 2 process.

He warned that the problem of insufficient fees would be compounded under the Nama 2 transfers, which at the time were proceeding under the terms of the €85 billion EU-IMF bailout.

“Ultimately, the costs have to be met and the bank will likely require an increase in servicing fees, which in turn will impact the profitability of Nama,” he said.

The IMF, the European Commission and the European Central Bank agreed earlier this month that the Irish banks would not have to transfer the €12 billion batch of small loans to Nama.

The agency has yet to publish its quarterly results for the final three months of 2010, which are awaiting sign-off by Minister for Finance Michael Noonan

source:http://www.irishtimes.com/newspaper/finance/2011/0425/1224295410252.html

Comment:

What we have here is an attempt to milk NAMA and the Taxpayers of this country for Fees for a disaster the Banks caused themselves .The Finance minister should tell them all where to go in no uncertain terms .In fact the Minister should investigate the Salaries and perks of all NAMA staff and no bonus or other perks should be paid. No banker should be paid as far as I am concerned as NAMA is supposed to be doing this work in the first place

 ( I say 47%see below comment)

ANALYSIS: Price to income ratios suggest there is a way to go yet before property prices stabilise

WHEN BUBBLES burst it takes time for society to recover its financial nerve. Before this can start, there must be some degree of certainty that all losses have been accounted for.

There are persuasive arguments for believing that this point has not yet been reached in Ireland. A key priority for the State must be to get house prices back in line with their long-term value, and consequently with incomes, and keep them there in order to underpin competitiveness.

There are other issues to be dealt with such as the parallels in the commercial and retail property sectors.

As last week’s report by Finnish banker Peter Nyberg showed, Ireland got carried away with the availability of easy money. The result was we blew much of the gains made earlier in the Celtic Tiger period. Irish house prices increased between 1996 to 2007 by around 330 per cent – a bubble extreme in scale and duration but a classic nonetheless, matching the criteria in the extensive literature on bubbles.

Yet we continue to hear cries of: “nobody saw it coming”. Plenty of people saw it coming – it was obvious to those who took the trouble to read what was being written here and abroad about house prices. There were reports and comments from international observers including the European Central Bank (ECB), Organisation for Economic Co-operation and Development (OECD), the Financial Times and the Economist, and in particular, the International Monetary Fund (IMF)

The third Bacon report in June 2000, when discussing changes in the model used for indentifying drivers of house prices, noted: “. . . the very dramatic change in the effect that the previous period’s price is having on the current period price level”. This is the essence of a bubble – a cycle of buying driven by expectations of further price increases unrelated to any increase in fundamental value.

The fear of a property crash permeated the Bacon reports and the limited policy recommendations emerging from the reports reflected this. In any event, the actions taken as a result of the three Bacon reports were reversed under concerted pressure from vested interests. In retrospect, how lucky we would have been if we had experienced a property crash in 1998, when the first Bacon report was issued, rather than 10 years later.

The reality is that most did not want to recognise the bubble – as implied by Nyberg. These ranged from those who were wilfully blind to regulators who saw it and were constrained from acting decisively for reasons that ranged from perceptions of the limited scope of their authority, political pressure and organisational culture.

They also included conflicted media that benefited from spending on advertising and citizens who felt they were wealthier because the price of their home had increased. The price had increased but the intrinsic value remained the same – it was still the same house no matter how you measured the price.

Many fallacious arguments were put forward during the boom to justify high house prices such as suggestions that increased demographic demand underpinned prices. This did not make any sense. Look at the slums of major Third-World cities where real demographic demand is of an order unimaginable here. There are no bubbles.

On the other hand some countries and cities, with political restrictions on development, maintain high prices whereas others, such as Hong Kong and Singapore with a small land area, manage to house large populations. Similar illogicality was behind most of the thinking and talking.

Global low interest rates and access to large quantities of easy money were the proximate cause of the bubble here and of the global financial crisis. The tsunami of cheap and easy money hit Ireland just as the tiger economy was moving into high gear. We were preparing to adopt the euro and with it access to a large pool of low-cost European finance, while at the same time new funding techniques such as securitisation provided the technical means to access these funds.

Together these developments removed the funding constraints that a small peripheral currency had previously imposed. In addition, a short-term laissez faire, caveat emptor, philosophy took over the sale of financial products and services. If the bank boards and regulators did not know or understand what was happening, what was the non-expert expected to do?

Cheap and easy money would not have been enough on its own to facilitate the inflation of the bubble. For example, neither Germany nor Canada suffered from bubbles. In Ireland, despite many timely and well-founded warnings, an array of defects in our beliefs and governance left us vulnerable.

In the end the inevitable happened and the bubble burst. Essentially our domestic financial institutions are wiped out and European institutions and the IMF direct our financial affairs.

But this is not the end of the affair. We have arrived here slowly, bit by bit, as the extent of the losses has become clearer. The question remains have we reached the end? The recent stress tests have helped but, hard as it might be to accept further bad news, it is better to get it all out in the open now.

We need functioning lenders that are properly capitalised and in a position to lend to businesses and individuals. If, after recapitalisation, there remains doubt about any unrecognised losses, banks will be constrained from lending due to lack of resources. In addition, we await the revised memorandum of understanding following the recent EU-IMF examination of the Government’s adherence to last autumn’s bailout deal.

Aside from the need to get the bad news out and sort out the banks, it seems that there is a real dilemma at the heart of national policy. Do we prioritise competitiveness by bringing house prices back into line with incomes or keep them inflated in the hope of reducing further losses to the banks and Nama (National Asset Management Agency), as well as containing the extent of negative equity?

While higher incomes are a driver of house prices, prices themselves are a driver of demand for higher incomes. If house prices remain high relative to incomes this limits our ability to regain lost competitiveness. This pressure is not going to decrease as the vast populations of China, India and other large emerging countries play an increasing role in the global economy.

In addition, well-managed economies such as Germany have, over the last two decades, brought down their unit labour costs, and compete with us in selling on global markets. This implies that average house prices must return to levels that are in line with long-term ratios to incomes, and possibly even lower as costs realign to meet increased competition.

As is shown in the incomes, construction costs and house prices chart, despite the bubble in house prices, construction costs did not increase any faster than incomes over the last 30 years. This implies that all the overvaluation has been in site prices, as well as builders’ profits in the case of new houses.

It also implies that there is a greater speculative element in site prices and unfinished estates. When house prices fall back to their true value, there may be a higher proportional reduction in the value of some of the collateral supporting loans held by Nama and the banks.

This possibility may not, as yet, be fully reflected in considerations of the level of new capital required by the banks or the likely final recoveries that will be achieved by Nama.

Hopefully the recently completed stress tests and increased capital adequacy requirements will adequately deal with a realignment of both residential and development property values. In fact it seems the State may be hoping for some stabilisation of prices at close to current levels, and that time will take care of the problem.

A significant factor behind the Irish bubble was the implicit belief that low short-term interest rates would continue indefinitely. This belief influenced buyers’ understanding of affordability and value and was one of the fallacious arguments used as a selling point for houses and mortgages.

Despite the fact that we in Ireland (as in the UK) have a tradition of variable rate mortgages, it is long-term interest rates that matter over time for determining the true value of assets. While market traders in stocks and bonds in liquid markets can react to short-term rate movements, home buyers and banks that provided long-term mortgages cannot do so.

From 1953 to 1996, (ie before the bubble), the average ratio of the price of new houses in Dublin to average industrial earnings was 5.3. That is also where it was in 1996. In 2006, it reached 13.7 and by 2010 it had fallen back to 7.4.

Based on a return to the pre-bubble level of the ratio, average house prices in 2010 should have been approximately €180,000 instead of approximately €250,000. Here we are talking about average house prices and average incomes. Of course there are exceptional houses and special buyers but for the country and economy overall it is the averages that matter.

Why does the price to income ratio revert to a stable average in all economies over long periods and roughly what value might we expect the ratio to have?

Excluding capital gains or losses, the economic value of a property is the capitalised value of the rent, less expenses (day to day and repairs and renewals), that could be earned if the property were let. This is the same as saying the rent must at least recover the cost of interest paid. The economic value is: value = net rent ÷ real interest rate.

If expenses are 10 per cent of the annual rent and the real interest rate is 5 per cent, then the value is 18 times the rent. If rents are limited to a proportion of average incomes, say one-third, the value would be about six times the average income. If interest rates are 6 per cent the ratio would be 5. For simplicity, excluding expenses: value = income ÷ 3 ÷ real interest rate.

Over long periods, long-term real (inflation adjusted) interest rates are quite stable. Although interest rates fluctuate and have been low in recent years, real rates revert to a narrow range.

UK long-term real risk-free real interest rates, (ie the rate adjusted for inflation with the State as borrower), have averaged about 3 per cent over the last three centuries and the same applies in other major economies. If we add 2 per cent for wholesale and retail banking margins, we arrive at a real cost of funds of 5 per cent. Incidentally this is the minimum rate permitted under German mortgage bond law for the valuation of properties.

It is instructive to see what the value of an average Irish house would be if the German capitalisation of net income method is used. Taking the property website Daft’s 2010 average monthly rent of €830, less expenses of 10 per cent (voids, running costs and repairs), and a rate of 5 per cent, this would also give an average value of about €180,000.

Though the statistical methods take some account of changing conditions and mix of property types etc, these are approximations based on averages and are not precise measurements.

However they show a consistent pattern and point to a persisting overvaluation of houses of the order of 25 per cent to 30 per cent.

source: http://www.irishtimes.com/newspaper/opinion/2011/0425/1224295408815.html?via=mr

Comment:

So if I am to get this right 5.3 times average wage is the approximate price for the average home?

Well the average industrial wage is falling .Even if we say that the average industrial wage is no 25,000:00 euro times 5.5 would bring the average house price to Euro 132,500:00.According to the latest daft.ie report average 3 bed homes in Dublin would be approximately 250,000:00 Euro. So even by these numbers we have a long way to drop yet ,another 47% to be exact .Message loud and clear if you are buying now the real price you should be paying is 47% below the asking price of today

Jim Mansfield

Nama appoints receiver to Mansfield assets

Wednesday, April 20, 2011 – 05:28 PM
NAMA has this evening appointed a receiver to assets owned by developer Jim Mansfield.

Kieran Wallace of KPMG will assume control of the assets including Weston Aerodrome in Dublin, Palmerstown House golf club in Kildare, and a number of apartment blocks attached to the Citywest Golf club in Dublin.

71-year-old Mansfield had failed to agree a suitable business plan with NAMA to pay-down his debts.

Last year, Bank of Scotland Ireland appointed a receiver to Mansfield’s City West Hotel.

Read more: http://www.examiner.ie/breakingnews/ireland/nama-appoints-receiver-to-mansfield-assets-502113.html#ixzz1KBCeXzDe

Related Articles

• Reports of NAMA appointing receivers to Jim Mansfield properties (namawinelake.wordpress.com)
• Avalanche of receiverships as NAMA enters its enforcement phase (thepressnet.com)

There was something surreal about lawyers in the High Court last October, 2010 acting for Paddy McKillen, casually referring to the €45m loan provided by Anglo to the developer as a participant in what has become known as the “Anglo Golden Circle” or “Anglo Maple 10” transaction whereby a group, reported to have been 10 of Anglo’s customers, were advanced some €450m in allegedly non-recourse loans to purchase shares being disposed of by tycoon, Sean Quinn. The reference to the loan in open court last October, 2010 had nothing to do with the probity/legality of the transaction, the purpose was to examine if the loans were performing or not in the context of NAMA’s rights to acquire the loans. At the time, it seemed decidedly surreal.
Surreal, because there have been several investigations into the so-called “Anglo Golden Circle” transaction over the past 28 months. Two of the investigations have been by the Gardai (Irish police service) and the Office of the Director of Corporate Enforcement. Just before Christmas 2010, there was an indication that files were being sent to the Director of Public Prosecutions, but four months later, there doesn’t appear to be any progress.
Of interest therefore is that a judge in Northern Irelandhas referred to the scheme in a judgment (not yet available online seemingly) reported yesterday by the BBC. The case inBelfast involves a company controlled by prominent Northern Irish developer, Peter Curistan on one side and Anglo Irish Bank on the other. There is a contention that another Northern Irish property company, PBN Property (now in NAMA incidentally) was favoured in a transaction involving Anglo and Peter Curistan. PBN Property is partly controlled by Paddy Kearney who is alleged to be one of the “Anglo Golden Circle”. The judge is reported to have called theGolden Circle transaction “a prima facie improper and unlawful proceeding”. One wonders what the process is inNorthern Ireland whereby a judge’s assessment of something as unlawful leads to a police inquiry. And on this side of the border, we continue to wonder when or even if, we will ever get legal clarity on what seems to have been a share support scheme.

source: URL: http://wp.me/pNlCf-1iP

comment:

Insider trading is the trading of a corporation‘s stock or other securities (e.g. bonds or stock options) by individuals with potential access to non-public information about the company. In most countries, trading by corporate insiders such as officers, key employees, directors, and large shareholders may be legal, if this trading is done in a way that does not take advantage of non-public information. However, the term is frequently used to refer to a practice in which an insider or a related party trades based on material non-public information obtained during the performance of the insider’s duties at the corporation, or otherwise in breach of a fiduciary or other relationship of trust and confidence or where the non-public information was misappropriated from the company

Irish Law on Insider trading :Insider%20Trading%20Law%20in%20Ireland

 The Golden Circle: There are a few different branches in the republic ,some in the financial sector and some are within the political elite of the country. Then there are the rest in prominent positions around the state guanos and the State media, illegal insider trading was carried out by one branch of the golden circle In the case of Anglo Irish Bank but we must also not forget that Irish Life and Permanent senior directors and other bank officials from the Department of Finance and the then financial regulator. None of the Golden circle has been brought before the courts for this specific crime why???  Now that we have a new Government what is taking them so long to bring these crooks to justice ?

Related Articles

link:  http://thepressnet.com/2011/04/03/the-mystery-of-the-e7bn-deposit-into-irish-banks-by-minister-lenihan-on-the-eve-of-the-general-election/

• What now for the Sean Quinn property empire? (thepressnet.com)
• What legal constraints will be found to keep the same old codgers’ in place? (thepressnet.com)

Feeding the vultures?

Reading the Irish Examiner this morning I am struck and really upset by what I am seeing ..

On the cover is a picture of the large queues at the NAMA property auction in Dublin this week – while I am sure there are some genuine people in that queue looking for a break by getting a property they can afford and get their lives moving I am more than sure that their are plenty of “vultures” swooping to pick some meat off the dead carcases of our property collapse.

Consider the steps that lead us to this point:

Step 1 – Property owner (formerly known as bank customer) can’t afford mortgage: bank turfs the loans to NAMA at a huge discount and write off the balance (request money from government to cover the loss – p.s. we have to pay for this). End of problem for Mr Bank.

Step 2 – NAMA take on advisor’s, solicitors, experts of all sorts and deal with the “property owners” at huge cost (the problem is just in another box and we pay the fees). A good friend of mine, a solicitor tells me they all know the biggest game in town is getting a gig with NAMA!

Step 3 – NAMA creatively look for solutions to sort out the property market? Nah – lets just do a fire sale and get rid of the properties for half nothing. What brains came up with that solution?

Step 4 – Chase the original property owner for the deficit (at this stage it is probably much bigger than it ever needed to be in the first place), which they will never, ever be able to clear.

Step 5 – NAMA realise that it has a bigger hole than it thought in the first place – look for money from Government as they have a shortfall (that’s us folks!)

Step 6 – Vultures queue up, avoid buying any property until they come up for sale again in another bargain basement sale. Further devaluation of property prices as a result – yep you get a bigger hole with even more people in trouble..

I know there was a huge reaction this week to talk of Debt Forgiveness (why should we pick up the tab for other people’s carelessness? is the general attitude) but if you look at the scenario above, which we have all witnessed – the original property owner could have made a sensible arrangement with the bank, managed through the current economic climate and ultimately recovered more money than what was ever possible in an auction fire sale.

Possible Result – The deficit would have been a lot less, huge savings would have been made on unnecessary professional fees and the property market would not be further compromised.

Just a month ago a pub quite close to us was closed by the bank – the “owners” could not manage the level of debt as they bought too high. Now the pub is being touted around by the bank  at prices a fraction of what the original debt was – they will never recover the deficit from the original owners and we will end up picking up the tab for the “unnecessary deficit”.

Will the new operators do a better job that the original owners? And what about all the suppliers who get burnt in the shut down scenario?

Debt forgiveness is emotive and really difficult to manage (fire sale is too easy, less messy, inhumane and lousy for the economy = our country) but it must be better than pure stupidity, which we will all end up paying for. It’s time to work hard at brave, practical solutions that have the best interest of the county at heart..

….and besides, why do we need to feed the Vultures?

Greg Canty is a partner of Fuzion

The following is prepared on a continuing operations basis unless otherwise stated.

Profitability

Total AIB Group – loss for the period € 10.2 billion

Continuing operations loss after taxation € 10.4 billion

NAMA transfer related losses of € 7.0 billion

Credit provision charge of € 6.0 billion (Non NAMA € 4.5 billion; NAMA € 1.5 billion)

Operating profit(1) € 963 million

AIB Bank ROI loss of € 10.8 billion; operating profit(1) € 189 million

Capital Markets profit of € 71 million; operating profit(1) € 577 million

AIB Bank UK loss of £ 1.2 billion; operating profit(1) £ 141 million

Asset quality(2)

Criticised loans at 30.2% of total loans

Impaired loans at 13.4% of total loans

Provisions for impairment of loans and receivables of € 6.0 billion or 5.25% of average

customer loans

Earnings per share

Total AIB Group – loss per share EUR (564.0c)

Statement of financial position/funding

Total assets decreased from € 174 billion at 31 December 2009 to € 145 billion at

31 December 2010

€ 18 billion of gross loans transferred to NAMA during 2010; € 2 billion remaining to be

transferred

Gross loans (excluding NAMA loans) decreased by € 3 billion (€ 7 billion excluding

NAMA reclassifications) in 2010 to € 94 billion

Total gross loans (including NAMA loans) decreased by € 24 billion in 2010

Customer deposits decreased by € 22 billion in 2010 to € 52 billion

Total AIB Group customer accounts 45% of funding requirement at 31 December 2010

Loan to deposit ratio of 165% compared to 123% at 31 December 2009

Capital ratios 31/12/2010

Core tier 1 ratio 4.0%

Tier 1 ratio 4.3%

Total capital ratio 9.2%(3)

(1)Operating profit before provisions and losses on transfer of loans to NAMA.

(2)Includes loans held for sale to NAMA.

(3)At 31 December 2010, the Group benefited from derogations from certain regulatory capital requirements granted on a temporary

basis by the Central Bank. These derogations remained in place until the completion of the liability management exercise on 24

full PDF  here :http://www.rns-pdf.londonstockexchange.com/rns/7174E_-2011-4-11.pdf

comment:

This is an absolute joke not one cent more should be put into this toxic toilet .The Directors should all be sacked and criminal charge for fraud should be brought against the previous directors responsible since 2007.

How can the new finance minster even contemplate putting taxpayer’s money into this criminal enterprise? This is just as bad as Anglo Irish Bank. When are we going to get these crooks before a judge?

Link: http://www.billtormey.ie/2010/05/31/kiberd-agrees-with-kelly-on-debt/

Damien Kiberd is a sound commentator in my view. His article supports my abhorrence of the NAMA project from the outset. Brian Lenihan Jnr has not been a good Minister for Finance depite the rumours to the contrary. He could be worse in the usual Fianna Fail manner but he has been enveloped by the establishment from the beginning. Kiberd in essence details the evidence that forces him to conclude that Professor Morgan Kelly of UCD is correct in his recent apocalyptic pronouncements in the Irish Times article when he concluded we are bankrupt – only a question of time.

By Cormac Murphy

Thursday March 31 2011