Cantillon

Inside the world of business

Troika pessimistic but untroubled by Nama debt

A MIXED bag best described the verdict passed by the troika on Nama in their most recent report.

They were complimentary about the agency’s efforts to maximise the value of its portfolio, noting it was “possible” that the agency could improve its ratio of performing to non-performing loans in the coming months “as agreements on revised business plans are reached with a growing number of borrowers, restoring their capacity to meet debt obligations”.

They also noted the various schemes being explored to boost the disposal of Irish assets, such as deferred payment and vendor finance.

On the downside they honed in on the recent Comptroller and Auditor General report which identified considerable challenges to Nama’s ability to meet its debt redemption targets going forward, owing to deteriorated market conditions for property assets (making future disposals more difficult), risks to rental income collection and further deterioration in property prices affecting collateral values.

In the end, the troika struck a pessimistic tone, noting that whilst Nama’s debt repayment target of €7.5 billion by 2013 was maintained, “subsequent targets could be revised down reflecting these challenges”.

That said, the troika seemed relatively untroubled by this prognosis. This presumably reflected the fact that because the Government owns the banks that are owed money by Nama (with the exception of Bank of Ireland), it is not going to be under any great pressure to repay its debts on time.

What's up with WPP shareholders?

He’s one of the most powerful ad men in the world, but Sir Martin Sorrell can now count himself the latest target of the so-called shareholder spring.

Yesterday’s investor rebellion at WPP, where almost 60 per cent of shareholders voted against a remuneration report, is one of the biggest since 90 per cent of Royal Bank of Scotland Group shareholders rejected Fred Goodwin’s pension plan.

At £11.6 million (€14.3 million), Sorrell’s total remuneration, including long-term incentives, last year made him the second- highest-paid chief executive in the FTSE 100 index (behind Barclays’ Bob Diamond), where the median compensation is £3.2 million.

Even excluding the long-term incentives, his pay in 2011 came to £6.8 million.

Taking reporters’ questions after the company’s annual general meeting in Dublin, Sorrell did not seem especially humbled or embarrassed by the rejection of his pay package. “What do you think?” he asked a reporter from the Daily Telegraph, who asked whether he remained committed to the group.

And while much of the lengthy agm was devoted to highlighting WPP’s performance in the fast-growing Bric (Brazil, Russia, India and China) markets, company chairman Philip Lader denied that this amounted to defensiveness on the part of the company.

Louise Rouse, a representative of Fair Pensions, a charitable organisation that campaigns for major institutional shareholders to hold companies to account, suggested afterwards that “the tone that was created was one of arrogance”.

Rouse, who was the only shareholder or proxy to ask a question at the meeting, said it was “astonishing” that Sorrell and Lader had not explicitly acknowledged the expected pay revolt in their presentations in the way that directors of Aviva and Barclays had addressed their respective rebellions.