NI business circles the wagons over Nama

Amid fears that NI securities could be discounted in loan transfers to Nama, an advisory committee will be set up in two weeks to represent NI business interests in the matter, says local Institute of Directors chair Joanne Stuart. Bro McFerran President of the NI Chamber of Commerce warns:

There was an assumption previously in Northern Ireland that a business with property loans would be insulated from Nama because it was UK-based, even if that loan was with an Irish bank,” he said. “The Business Alliance in Northern Ireland has been getting the message out that local businesses cannot afford to ignore Nama, because it could very well be coming to you even if you have a performing loan – and that in itself is one of the big issues.
“The level of discount that could be applied by Nama to securities based in Northern Ireland in the months ahead is a major concern here.”

A major sign of NI’s exposure is Allied Irish’s efforts to sell First Trust, as reported in the Bel Tel. Economist John Simpson supports a sale to Dankse Bank, the owners of Northern Bank. AIB need to raise 7.4 billion euros for its balance sheet by the end of the year. Last month, Brian assured Sammy that there would not be a firesale of NI assets.

  • aquifer

    “because it could very well be coming to you even if you have a performing loan”

    Are NAMA going to be checking how real the security is for these loans? If so we could see an interesting paper chase through cross-holdings and development shell companies, ending with no cash and few assets.

    All those little white lies on the loan application forms adding up to a big black hole.

    Could be a few nice cars coming up for sale though.

  • Drumlins Rock

    Even if we are in difficult times I dont think the loss of one our “big 4” high street banks would be good for competition long term, espicially one of the ones who can print their own money!

  • Davros

    I’m sure the interests of NIs property developers will be taken on board by our politicians.

  • Nama = Ponzi Central

  • Mack

    NAMA will be looking to make a profit where possible. Performing loans being in NAMA aren’t a problem, the danger arises where you have non-perfoming loans in an external state. One of the goals of the current arrangements was to prevent a firesale of assets in the south (where the banking solvency and NAMA’s success depends on it’s prevention) – despite Brian Lenihan’s reassurances – I imagine that if it makes financial sense to cut losses and sell off collateral on non-performing loans outside of the state – then that’s what they’ll do.

    Although they’d have absolutely no interest in a northern firesale if they are heavily exposed to the north – and it’s quite possible with AIB & BofI being among the big players up there and 6% of NAMA loans being northern they could well be.

    On balance, I’d guess you are ok – but that’s probably dictated by financial realities rather than political niceties.

  • Mack

    By the way – to provide a little clarity.

    When Northern Politicians ask Southern Politicains to prevent a firesale of northern assets – if this goes against the best financial interests of NAMA & the banks they are in effect asking southern tax payers to subsidise the northern property market.

    Not something I’d be happy with & what would be the quid pro quo?

  • LabourNIman

    Drumlins Rock – the choke hold the big four have had on NI consumers will finally be broken.

    NI has plenty of banks, and a far better choice of products than they offer. Hopefully this will open the eyes of many people and move to a bank that will fight for their custom.

  • Cynic2

    We don’t need to worry. NI has already led the way. Our First Minister has bought land for just a £5!

  • Belfast Gonzo

    Here’s a question. Would you take out a mortgage with First Trust right now?

  • Coll Ciotach

    What would happen if the South stopped propping up the economy here via NAMA?

    Are we looking at a massive drop in value of property? Would this be an advantage or disadvantage to the Republic?

  • Alias

    Coll, it all depends on whether there is a surplus or a shortage of property in NI. In Ireland the supply far outstrips the demand, with a stock of 340,000 vacant units that is increasing as immigrants depart the rented sector and properties are repossessed or handed back to the lender. In the UK, on the other hand, the longer term demand will outstrip the supply so that will lead to a quicker recovery of values and some stability in the construction sector. If you have the same market dynamics as the rest of UK then you should be able to absorb any offloads by NAMA up there. The bigger downside is likely to be that billions in outstanding loans will no longer be tax deductible since NAMA is not a UK bank. I don’t think that the Irish state should involve itself in protecting assets in a foreign state when this cost is borne by that state and not by the foreign state. We will get not one word of thanks for any generosity we show but plenty of bitching and demands for more handouts…

  • LabourNIman

    Belfast Gonzo – yes, the terms for the mortgage will not change when it is bought from FT. But that said the mortgage deals are crap anyway

  • Mack

    Mortgages won’t be sold to Nama. Only development loans with a value of over €5 million.

    First Trust, if it remains part of AIB group will almost certainly raise variable mortgage rates as far as the market will allow it to. In the south many mortgage vendors are no longer taking switchers – with the intent of making existing mortgage holders sitting ducks.

    As long as competition remains there’ll be some limit to upwards pressure on rates..

  • Coll Ciotach

    Alias

    The “UK” as you call it is not the same as Ireland. On both sides of the border we have seen unparalleled property development. As you cannot export the houses in Ireland to the island of Britain the argument that the “UK” demand will outstrip supply does not hold locally as you have alluded to.

    Locally if NAMA dumps property north of the border, and the Republic refuses to maintain the excesses of the market here, what are the economic consequences?

    I believe that property prices will drop through the floor, (ahem), due to it still being overpriced in comparison to wages and costs of building, which will have negative impact on the economy, will Britain pay for the resulting mess?