Dermot Desmond Against NAMA

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canicemcavoy

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Interesting intervention by the Kaiser here, I presume his late timing is deliberate and related to the reopening Dail today.

What do the more financially astute here think of this suggestion:

Based on the widely rumoured figures, Ireland Inc intends to provide circa €60 billion of bonds to the banks as part of the Nama exercise. The Government could achieve exactly the same impact by guaranteeing €60 billion of bonds issued by the banks themselves. The Government can then charge a completely transparent fee for the use of this guarantee. This leaves all the risk of the existing loans with the existing capital providers and could be implemented in the morning without new quangos, complicated legislation, or additional risk. It should be noted that Ireland Inc is already showing significant profit on its preference share investment in the two main banks.
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?
 
Like all financial magnates, his first loyalty is to protecting and nurturing his portfolio of companies and property. That is why all his musings should be taken cum granis unless they are given deep scrutiny. At this stage of the game, any stories planted have very little sway. Similiar to Aesop's Noah, crying wolf has a sell by date.
 
He repeatedly says that "the problem is liquidity".

That is not the only problem. Solvency is a big problem as well.

He doesn't seem to understand that the banks must be made solvent. That the uncertainty over the value of their loans must be removed.

His solution would not work because the banks could not lend any money if their capital ratios were not restored. I am surprised that his deputy Michael Walshe allowed him to publish this.

Brendan
 
Brendan said:
He repeatedly says that "the problem is liquidity".

That is not the only problem. Solvency is a big problem as well.

He doesn't seem to understand that the banks must be made solvent. That the uncertainty over the value of their loans must be removed.

His solution would not work because the banks could not lend any money if their capital ratios were not restored. I am surprised that his deputy Michael Walshe allowed him to publish this.

Brendan
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Maybe he feels the liquidity and solvency issues need to be addressed explicitly.

NAMA will probably kill two birds with the one stone i.e. by paying say €55bn for assets worth say €30bn it is first recapitalising to the tune of €25bn (a gift from the taxpayer) thus restoring solvency to insolvent banks and secondly providing excess cash (similar to a deposit) to encourage new lending

In practical terms the banks are probably illiquid and insolvent, NAMA is seen as a way of solving both.

Remember, Dermot Desmond has offloaded his bank shares so wouldn't like to see the banks gain from NAMA at the expense of the taxpayer (that said, don't know how much exposure he has to Irish taxation either!).
 
Remember, Dermot Desmond has offloaded his bank shares so wouldn't like to see the banks gain from NAMA at the expense of the taxpayer (that said, don't know how much exposure he has to Irish taxation either!).
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I doubt if he would be promoting his own agenda. He would be interested in seeing the country making the right decision.

Having said that, I think his company owns or invests heavily in a fund which buys distressed debt from banks.

Brendan
 
On the one hand, he's saying that we shouldn't be attempting to value the loan books, and on the other he says we should throw out a few bonds worth €60bn for recapitalisation.

That's pretty the same thing as arriving at a €60bn valuation of the loan books.
 
Not really.

I share his concern at the huge valuation exercize which will cost a fortune and really result in a misleading figure anyway.

Brendan
 
Brendan said:
Not really.

I share his concern at the huge valuation exercize which will cost a fortune and really result in a misleading figure anyway.

Brendan
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It is, because the banks will have to work the existing loans to pay back the bonds, and it we guarantee the bonds, and they can't sweat them enough, we get the bill.

Its basically NAMA without public sector involvement.
 
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