While Irish taxpayers will understandably be galled at the thought of paying for non performing property loans; I don’t really see what difference it makes whether the loans based on the purchase of Irish or foreign land. The purpose of the National Asset Management Agency or the “bad bank” as it’s more commonly known, is to provide certainly about Irish banks balance sheets by removing assets whose value is worrying investors.

This should give investors a measure of confidence, as the government is effectively forcing the banks to write down the value of the loans before taking them over. However, they’ll be concerned about the (vague) levy that could be charged back to the banks (and hence their investors) if the Irish government makes a loss on these assets down the line.

I actually think the worst performing loans are going to be those given to purchase scandalously overvalued Irish land (a prime example being the Jurys Ballsbridge site in D4). I don’t see why they wouldn’t be able to recoup a decent percentage of loans given to purchase in places like Florida and Birmingham (given time), although I’d imagine most of the Eastern European loans (a very small percentage of the total) will simply be written off.

Kind Regards

Colin Murphy
Director
Torcana Ltd

Tags: Budget 2009, Irish government, National Asset Management Agency, Overvalued Irish land, Torcana
Posted in General Opinion |