Thursday, September 30th, 2010

Brian Lenihan’s full statement on banking released this morning also has a section on NAMA.  Interestingly it states:

The Government has decided, having consulted with the NAMA Board and the European Commission, that where the total exposure of a debtor is below a €20 million threshold in AIB and Bank of Ireland, that debtor’s loans will not now be transferred to NAMA. The threshold had previously been set at €5 million. … I have been advised by NAMA that there are 650 debtors with property-related debts of between €5m and €20m in these two banks. They account for just €6.6bn of the aggregate €80bn volume of NAMA eligible loans.”

So, €6.6bn worth of smaller loans will not be transferred to NAMA after all, as “Loans of this size can be efficiently managed by the banks themselves through their network of local representation and relationships.”   Which makes one wonder why they needed to be transferred in the first place?

It would be interesting to know the geography of these €5-20m properties.  One assumes that there is a lot of housing and land outside of the principal cities which have just exited the potential NAMA portfolio.  What will be left is the more viable, larger developments in more prime locations (along with the more marginal stuff transferred from Anglo, Irish Nationwide and EBS).  One assumes this means that a large chunk of the marginal sites and the owners who have less experience and weaker or no business plan have fallen out of NAMA’s remit.  This will certainly make the life of NAMA easier, and make it more likely to succeed, with the banks themselves left to work out what to do with the properties.  Presumably they will either try to make them going concerns or off-load them at a loss.  It will be interesting to see how such offloading might affect the work of NAMA given that these impaired assets will no longer be coordinated by a single entity.

Rob Kitchin


Joan Burton, quoted in the Guardian, describes this morning’s announcement about the latest bank bailout costs as ‘Ireland’s Black Thursday.’  Patrick Honohan announced this morning that the final bill for bailing out Anglo Irish Bank, all being well, will be €29.3bn, another €3bn is to be pumped into AIB (making the State the majority shareholder) and another €2.7bn into Irish Nationwide.  The figure for Anglo could rise to €34.3bn if the haircut being applied to the remaining loans being transferred into NAMA exceed 67%.  The State is now the majority shareholder in four banks (AIB, Anglo, Irish Nationwide, EBS).

Quoted in the Irish Times, ‘Mr Lenihan said today’s final figures for repairing Ireland’s banking system would provide reassurance to investors:  “The overall level of State support to our banking system remains manageable and can be accommodated in the Government’s fiscal plans in the coming years.”‘

Manageable?  Well, hopefully, but at what cost?  A year’s tax receipts at present is €33bn.  The €29.3bn that’s gone into Anglo has disappeared into a black hole never to be seen again.   Another €15.4bn has been pumped into the other banks (Bank of Ireland, AIB, Irish Nationwide, EBS), which hopefully will be recovered over the long term.  The €40bn or so going into NAMA may or may not pay back depending on the nature of the assets transferred in and whether the Irish property market recovers sufficiently over the next 10-15 years.   The government are presently borrowing €20bn per annum to bridge the gap between tax receipts and the cost of running the country.  Since the bank guarantee two years ago, the Irish state has borrowed a fantastic amount of money, so much so that the Guardian reports that government debt now exceeds GDP, with the deficit 32% of GDP (easily the highest in Europe).  If there is a reason that overseas investors are nervous, this is it.  Our economy has shrunk markedly, our unemployment and welfare bill grown significantly, our austerity measures do not seem to have worked, the banks have been financial blackholes, and we owe a fortune. Yet we are committed to reducing the deficit to 3% of GDP by 2014, committed to the bank guarantee, and to paying back our debts in full.  Hardly reassuring.

The government are trying to draw a line under the bank bailout.  Lenihan, again quoted in the Guardian, ‘insisted that these were the final figures, adding “this bring the crisis to a closure”. “We’re quite satisfied that the balance sheets of the banks have been cleaned up and restored and the banks are ready and fit to go back into business”.’  That said, the government has insisted that the bank bailout would only cost so much before, and the banks were sound, and everytime it has been woefully wrong and had to announce another round of expensive bailouts.

It is not unsurprising then that citizens and international investors are wondering whether this really is the last time; whether this is the last black day in a string of such days.  For all our sake’s let’s hope it is, because it’s going to take a generation or more for the Irish taxpayer to pay back the debts of bailing out the banks.  And paying it back is not going to be easy unless there is a radical transformation in the present state of the Irish economy and it will involve quite a bit of pain (get ready for the tightening of belts come budget day).

Rob Kitchin

Recently, an increased amount of attention has been given to the role of architecture and design at both a national and the local level. This has been highlighted by the introduction of a Government policy on architecture, and the establishment of the Architecture Foundation, whose role is to promote the importance of architecture and urban design in society. The annual Openhouse Dublin and now Openhouse Galway illustrate how such bodies can play a role at the more localised level. Such strategies are furthered by the introduction in recent years of a ‘Public Choice’ award by the Royal Institute of Architects in Ireland (RIAI), and indeed, the opening of darcspace, a gallery orientated towards the built environment.

To a large extent, widening the debate about architecture and design in Ireland is timely. Given the poor quality of many of the developments of the last two decades, it is now possible to rethink the relationship between planning, development, architecture, urban design and the social spaces which they help to create. There are a number of ways of looking at these areas. The approach taken is of crucial importance. Take the aim of the Architecture Foundation for example: “the IAF is all about promoting a better built environment for everyone’s benefit. We strive for an Ireland in which the importance of architecture is widely acknowledged, and in which people are able to relate to and influence the built world around them, and where high standards of architectural design are appreciated by all.” A key question is therefore related to what better architecture is? Can it be a democratic process, or is it inherently given to the few who are trained in the area of design?

From a normative perspective, perhaps it is time to cast open questions about the role of architecture and query what makes better places for people to live in, and indeed how our ways of life should influence future design and planning practice. This is not just a matter of the admiration of the latest award winning projects, or architecture as art, but instead placing the focus on how we can create a more democratic and inclusive built environment. In this regard the launch of Dublin’s bid to become the Design Capital in 2014 might act as a point of departure. Although not exclusively aimed at the built environment, It offers an opportunity for individuals to submit ideas with the aim of winning the design capital status. The debate about how the spaces of NAMA can be integrated into such a bid is surely crucial to its potential success. As well as allowing for reflection on how an over-inflated property market has negatively impacted upon our cities, suburbs and towns, it might also help to widen debates about the role of architecture as just one element of the built environment. The future of the country is reliant on the process of planning, designing and building becoming a public good for the benefit of society as opposed to the unpredictable outcome of extreme forms of speculation.

Philip Lawton

N.B: As part of Openhouse Dublin, a debate entitled ‘Does Size Matter’ will take place in the new Lansdowne Road stadium on the 7th of October at 7pm