Ireland’s National Loan Recovery Agency aka NAMA
It would be pleasant and cosy but innocent to accept that all the cash flow loans will be recovered 100%….. If that was the case it would now be easy for the Banks to arrange a re-financing of those loans with other foreign Banks e.g. (HSBC that doesn’t have a capital problem) or to sell the entire cash-flow loan book and that would immediately solve 40% of the Irish banks €77bn bad loans problem. So, it is correct to infer that these cash flow loans too are really poor and highly exposed (i.e. hyper bubble loans). Also remember the true case example of the 3 year old Dublin Retail Shopping Centre [€3.2m Annual Rent Roll €52m 20 year loan (no problems yet!)] valued 3 years ago at just under 5% yield – to give a valuation of €72m; professionally re-valued in last number of weeks applying a more correct yield of 7.5% to the annual cash rent roll of €3.2m (in absence of bubble 7.5% yield should have always applied for this class of property investment), to give a current valuation of €43m – Bank now concerned that Loan/ Value ratio has disimproved from intial L/V (52/72 = 72%) – a perfectly acceptable L/V for the Bank at the time of disbursement for the Bank eager to “throw” a 20 year term loan at this “flagship” rent rolling property investment let to undoubted retail tenants, B&Q etc etc. and to an experienced, undoubted property investment client [who knows, without having to be told that the correct value of this investment is at most €40m!]
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