Economics 04/08/2009: NAMA & Liam Carroll – the saga continues

Oh, you have to love the drama and tension surrounding NAMA.

The latest thing to hit the rumour mill as we expect this afternoon our Suprem Court’s rulling on Liam Carroll’s appeal of the High Court decision to deny his companies examinership protection is that, allegedly, BofI and AIB are considering a buy-out of ACC Bank. Now, this is a rumor at this moment in time, and I have to stress this once again – it is a rumor – but given that:

  • ACC can be, probably had for ca Euro130-140mln;
  • ACC’s books are so toxic (30% plus impairement across the property portfolio, 39% impairment across commercial property alone that its parent Rabo Bank would simply love to get rid of it for any sort of money;
  • ACC’s removal from the challenge to Liam Carroll and other developers would allow the big 3 of Ireland to continue on their chosen paths to the taxpayer-financed feeding trough of NAMA;
  • ACC’s buyout wouyld please the masters in the Government; and
  • NAMA would more than compensate the buyer for the extra cost (say ACC is bought at a 50% discount to the book, then NAMA buys roughly 75% of former ACC ‘assets’ at 30% discount, implying a nifty return of Euro 5 per original expenditure of Euro 100, and you get to keep 25% of the ex-ACC assets too…

It would be no brainer for the AIB or BofI to load up on more toxic stuff to swap it for taxpayers cash.

From our, taxpayers’ perspective, this is equivalent to throwing children off the sleigh in hope of holding back the wolves. The only hope we have at this stage is that a swift turning down of Carroll’s appeal by the Supreme Court throws these schemes wide open.