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Most of the general public in Ireland probably think that NAMA is fully owned by the Irish Government .  (Probably – most of the general public in Ireland don’t really care.)
If the bad debts turn out to be OK – then NAMA could make a profit – so that could be good for the taxpayer?

But – there is a small catch – PRIVATE INVESTORS  actually own 51% of  Nama’s (National Asset Management Agency) property loans.
17% is owned by Irish Life which is part of Permanent TSB
17% is owned by New Ireland – which is part of the Bank of Ireland Group
17% is owned by “major pension and institutional clients”  of AIB Investment Managers
They paid €51 Million for a 51% share in NAMA.

The government has set up an SPV  – special purpose vehicle  – to buy and manage the debts. This is a way of keeping the NAMA debts off the Irish State’s balance books -  and off the national debt. This was  done to get around   EU rules about state borrowing limits

The “SPV”  is  a separate entity to Nama and will have its own board, although this will include representatives of the asset management agency. Nama will supposedly have a veto over all of the SPV board’s decisions.

If the property loans can be managed profitably, then Nama and the private backers will be paid a yearly dividend, tied to returns from Irish Government bonds. Once the entire operation is finished, the SPV will be wound up. The Government says that the investors, that is Nama and the private backers, will only be repaid their €100 million if the resources are there.

If the loans are ultimately profitable, they will be repaid their capital plus 10 per cent – (€1.7  million for each private investor)  – once the SPV is wound up.
This means that the private backers will be repaid their €51 million, plus €5.1 million, plus any dividends they will have received along the way. Any further profits over and above these amounts will be returned to the exchequer.

However, if the property loans are not profitable, Nama and the private investors will lose their €100 million.
(In the scheme of things – the €49 million NAMA investment is a small drop in the ocean of the NAMA €80 Billion debts)

So it appears that the Irish taxpayers will have paid around €80 billion to buy overpriced property and bail out the banks. But -  51% of the debt is sold back to some of those banks – for just €51 Million !!
It’s a crazy world ….. run by bankers it seems.

In amongst all the news about NAMA and bad banks – we have a bit of slightly better financial news. Yesterday the Dept of Finance announced that Credit Unions will be allowed to have a bigger percentage of their loans lasting five years or more. Under current rules  -  a maximum of 20% of a credit union’s loan portfolio may be outstanding for periods in excess of five years, and only 10% of the loan portfolio may be outstanding for periods exceeding 10 years.
The  amendment to Section 35 of the Credit Union Act 1997 will extend the lending limit for loans over five years from 20% to 30% for all credit unions.
This should make more money available to Credit Union customers in Ireland – and hopefully at interest rates that are lower than bank loan rates.

Brian Lenihan – Finance Minister  spoke today about funding shortfalls in the Irish Banks . He said AIB would need to raise €7.4bn by the end of the year to meet targets. It plans to start selling off assets in Poland, the US and Britain to help raise this, but the State will have to take a stake in the bank.

Bank of Ireland will require €2.7bn in new capital, but it is hoping to meet much if this from private sources.

Irish Nationwide will require €2.6bn of new funds from the Government, most of which will be payable over 10 to 15 years.
EBS will need €875m. The State will provide €100m by taking new shares in the society, which will give the Government full control.

Minister for Finance Brian Lenihan said the State would be providing €8.3 billion to Anglo Irish Bank this week alone, and that the bank may need a further €10 billion to cover its losses from bad property loans.

The State already owns Anglo Irish; it has an indirect stake of 25 per cent in AIB and a stake of 34 per cent in Bank of Ireland.
The investments in AIB and BoI will be in addition to €7bn that was provided in 2009. Anglo Irish recieved €4bn in 2009.

Today – after a few months of waiting and wondering – the minister for Finance announced details of the first wave of  bad debts to be transfered from the Irish banks to NAMA (National Asset Management Agency)

Just over 1,200 individual loans are involved with a  total  “book” or nominal value of €16 billion. They are being  purchased for  €8.5 billion, an average discount of 47 per cent.

It transferred the  initial loans from Irish Nationwide Building Society and EBS Building Society yesterday and the first batch of loans from Bank of Ireland will be transferred on  Friday, April 2nd.  The first set  of loans from AIB and Anglo Irish Bank are expected to be completed in early April.

Nama will pay AIB €1.88 billion for loans worth €3.29 billion, a discount of 43 per cent. It will pay €5 billion for €10 billion of Anglo Irish loans and  Bank of Ireland will get €1.26 billion for loans worth €1.93 billion.

The transfer of the remaining “bad” loans from all five institutions is expected to be completed by the end of 2010 – and no later than end February 2011, a deadline set by the European Commission. The total value of loans that  Nama expects to  purchase is  €81 billion.

The Irish High Court has appointed two provisional administrators to Quinn Insurance after an application by the Irish Financial Regulator.

The appointments were made after the  High Court heard the regulator had “very serious” concerns about the company’s ability to meet its liabilities.

At the hearing  Mr Justice John Cooke said he was satisfied to appoint Paul McCann and Michael McAteer of Dublin accountancy firm Grant Thornton as joint provisional administrators to Quinn Insurance following an ex parte application, meaning that only the regulator was represented. Quinn Insurance operate as Quinn Direct and Quinn Healthcare. (They took over the BUPA operation in Ireland)

The news may prompt customers of Quinn Healthcare to switch to either VHI or Aviva.

Switching health insurance provider is free and can be done at any time without any extra waiting period – as long as you have no gap in cover or the gap is less than 13 weeks, and there is no upgrade of cover and you have served all your waiting period with your old insurer.

At the hearing it was heard that  in recent months the company had “significantly breached” its solvency ratios and that  the regulator was further concerned when it was discovered that subsidiaries of Quinn Insurance had made guarantees in relation to the group’s assets which reduced the amount of cover for policyholders’ liabilities at the company. It was also said that Quinn Insurance had gone from a position of having assets over liabilities of some €200 million to now having an excess of liabilities of more than €200 million, counsel said.

It appears that these guarantees had been in place since 2005 but were only coming to light now. A number of Quinn Insurance’s directors were not aware of the guarantees made by the subsidiaries, the court was told.

The provisional administrators will run the company as a going concern and conduct business with a view to putting it on a sound commercial footing.

Only the non-life parts of the Quinn Insurance, including the motor, home, intermediary and public liability insurance businesses, will now be run by the administrators.
Quinn Life  business is not affected by today’s court ruling.

The regulator said in a statement it had taken this action in the interest of the firm’s policyholders. “Irish policyholders of Quinn Insurance Limited can continue to renew policies, carry out new business and make claims in the normal way.“
“The appointment of joint provisional administrators will better protect policyholders. It will allow the firm to remain open for business, to continue to be run as a going concern under different management and to put the business on a sound commercial and financial footing.”

It’s understood the subsidiaries of Quinn Insurance gave guarantees to the value of €448 million in favour of bondholders of the Quinn Group who have provided large sums of money to the wider Quinn Group business. This in turn reduced the insurance company’s solvency cushion.

The matter only came to light when the issue was raised by a third party acting on behalf of a creditor of the group which was reviewing its exposure to the wider Quinn business. The company then notified the regulator of the matter last week.

The Quinn group  owes more than €2.5 billion to State-owned Anglo Irish Bank.

The regulator has also directed Quinn Insurance to cease taking on new business in the UK to prevent the company “suffering further financial losses from its currently unprofitable UK business”.

WIth the recent AIB and PTSB mortgage rate rises causing the usual  media uproar – it is worth looking at  UK  mortgage rates to see how they compare to those available in Ireland.
With the UK base rate at just 0.5% and the ECB rate at 1% – you might expect lower interest rates in the UK - but that is not the case.

The lowest variable rate we could find for a UK first time buyer (according to MoneySupermarket.com)  was  4.29% – but this is restricted to joint applications by graduates.  Here in Ireland as at 30th March 2010 – FTBs can still apply for variable rates from 2.6% to 2.99% on LTV of 85%.  That is a 1.6% difference.

There are still tracker mortgages available in the UK – but the best rate we could see for an FTB was base rate plus 3.29% (3.79%). This is still 50% higher than the lowest variable rate available in Ireland – and it comes with a £495 fee and a deposit of 15% is needed.
See  Best Variable Rates in Ireland

The lowest 2 year fixed rate in the UK was from Britannia with a rate of 4.49%  for an 85% loan to value. There is an application  fee of  £999. (Application fees for mortgages are unheard of here in Ireland). Here in Ireland the lowest 2 year fixed rate is just 2.65% (no fee) – see Best 2 Year Fixed Rates in Ireland

In July 2008 the lowest mortgage rates available in Ireland were around 5.5% – so all Irish  borrowers will have seen their monthly repayments tumble in the past 18 months  – especially those wise/lucky  enough to get a good tracker rate.
Rates are now rising again – and hopefully borrowers put aside some or all of the reductions in mortgage repayments – which they can now use to cover the rate rises.

It is easy to see why people are angry with the rate rises when the see the massive profits Irish banks made in recent years.

With the announcement that AIB are increasing mortgage rates tomorrow – we have updated all the following best buy pages to take account of the revised AIB rates.

Lowest Variable Rates
Lowest 1 Year Fixed Rates
Lowest 2 Year Fixed Rates
Lowest 3 Year Fixed Rates
Lowest 5 Year Fixed Rates