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Come and Get Your Bailouts!
Read more about: NAMA 
NAMA is law since yesterday when our President upheld the national interest and signed off on bailing out banks. What is that I hear? Protests that it is not a bailout? Well have a look at this:
Royal Bank of Scotland is poised to spark a diplomatic row with Ireland by attempting to dump £7 billion of toxic loans into the Irish “bad bank”.
Stephen Hester, the RBS chief executive, is expected to lodge an application to join Ireland’s National Asset Management Agency (Nama) within the next few weeks through its Ulster Bank subsidiary.Irish officials are said to be furious about the plan, however. The Treasury had previously reached a “gentleman’s agreement” with its Dublin counterpart over their bailout plans.
The Treasury had agreed that no British banks would apply to use the Nama as long as no Irish banks tried to join the parallel UK programme, the Government Asset Protection Scheme (Gaps).
This was agreed to make it easier for taxpayers in both countries to stomach the deal. Under EU rules, Ireland is legally obliged to consider RBS’s application to join the scheme.
The Irish officials had no idea RBS was considering using the Nama scheme until Hester alluded to the possibility in a conference call with analysts two weeks ago. His comments came after the bank confirmed plans to place £282 billion of assets into Gaps — some £40 billion less than originally planned.
Hester told analysts that part of the reason the figure had come down was that RBS might use similar schemes in other countries — specifically Nama. Over the summer, Ulster Bank identified £15 billion of bad loans, mostly linked to property deals, in its £54 billion loan book. Although some of those loans are believed to be covered by Gaps, the bank has identified £7 billion of loans it could place in the Irish scheme.
A final decision has yet to be taken on whether to proceed, although it is understood that the documentation has already been drafted.
That looks like some pretty tasty jurisdiction shopping to park your assets, get your bailout and haul ass out of penury and into profit.
Appalling. RBS really take the biscuit. What happened to honour amongst thieves?!
Cian,
Bit of kite-flying going on here in the ST, and with RBS too. I’d wait to see what comes out in the wash before suggesting it may amount to anything other than hot air. Anyway, under the legislation, the banking insitutions have to agree to join the NAMA plan and in return for NAMA taking over their toxic loans at a price it will decide, then agree to a whole lot of terms and conditions being imposed on their operations. Not quite as simple as the RBS chief might like to think or seek to portray through favoured news outlets, is it?
Here’s the quote –
Wolfgang Rothmaier: Good morning. Three questions from my side; first, you might have been becoming aware of the Moody’s ratings release on Ulster Bank where information is given that Ulster Bank, contrary to former guidance by the Group, would not be participating in the Asset Protection Scheme. I have not seen this information anywhere else and would like to get some guidance on that one. Second question would be what rate of Core Tier 1 ratio would you regard going forward in the mid-term as being a well-capitalised ratio for the Group? Third question; with the initial APS you were giving guidance on the contingent B-shares facility. What kind of new Government economic interest would be connected if the facility would be exercised? There’s a new facility of 8 billion now and I would be interested to know what the economic interest of the Government would be should this ever be exercised. Thank you.
Stephen Hester: Ulster Bank: let me be very clear, there are substantial assets of Ulster Bank in the APS. There is a small element that had been removed because it is otherwise eligible for NAMA, the Irish Bank scheme. We haven’t decided whether to put it in there or not, but it is only a small element of Ulster Bank that changed and we remain committed to the support of Ulster Bank as we have always been and as we are of all are subsidiaries. Our core Tier 1 targets were published in August for our strategic plan and we have no reason to change them. I’ve never calculated the Government share for the contingent because I don’t expect it to happen. If it did, you should be thrilled at someone subscribing at 50p a share in a disaster scenario, but I don’t expect that to be pertaining.
Irish taxpayers, this is the barrel. If you would be so kind as to drop your undergarments and bend over it we can get on with introducing you to the broom handle.
We have always been a generous country. Our state generousity in recent times has known no national boundaries. Why should we not be generous to poor foreign institutions.
Maybe that is why we are now up to our neck in debt. But when did a drunk stop buying drink for his “friends”.