Cantillon

Inside the world of business
 

Irish Life makes well-timed sale of stake in Nama owner

IRISH LIFE’s sale of a 17 per cent stake in the special-purpose vehicle that owns the National Asset Management Agency is well-timed. You will recall the rinky-dink performed by the authorities to set up the ownership of the country’s “bad bank” through a company 51 per cent owned by private-sector interests.

It was structured this way to keep the €74 billion of face-value loans at Nama off the State’s balance sheet and the EU’s statistics office, Eurostat, happy.

But the State’s takeover of Irish Life, as part of the bailout of Permanent TSB, brought the 17 per cent stake on to the State’s books.

Nama yesterday announced the sale of the stake to Walbrook Capital, a London firm set up last year by Michael Keeley, Geoff Broomhead and Simon Haworth, former executives in the structured credit division of UK bank Barclays.

The sale coincides with Eurostat’s publication of EU state deficits and its decision to withdraw a reservation about the “statistical classification” of the Nama special purpose vehicle . Eurostat said on the basis of documents from the Central Statistics Office the vehicle is majority privately-owned following this sale. So in one fell swoop Nama remains out of State hands and the EU statisticians are happy again.

But what of this Walbrook crowd? It’s thought they didn’t pay more than the €17 million Irish Life invested.

Keeley, an Australian lawyer, featured in a controversial deal that surfaced last year involving the transfer of $12 billion of toxic credit assets off the balance sheet of Barclays to a Cayman Islands firm, Protium, in 2009.

Keeley and 45 other structured credit executives were to manage the run-down of the assets through a New York company called C12 Capital Management but this did not proceed and Walbrook has no further ties with C12. One source was keen to stress that the Protium arrangement was driven by Barclays, and not Keeley or his team. At least now he is involved in an off-balance sheet entity, this time sitting away from the Irish State.

Well at least we’re clear now about where Ireland stands in relation to our “promised” bailout, aren’t we?

Hardly. And what’s probably most surprising is that, as a state and a government, we are surprised. If you go back over the pronouncements made at various points following the June summit and since, it is hard to identify where the Government sourced its conviction that we had “won” our argument for a “deal” on the bank bailout.

The actual wording from the summit – largely concerned with addressing the shorter-term problems of Spain and Italy – stated, in part: “The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme . . .”

Fine as far as it goes but certainly not something that could be interpreted as a hard commitment for a particular policy choice. And, more significantly, regardless of the general view in Dublin that a deal would be done by the end of this month, there is nothing in that statement to tie Germany, or other members states, to a specific timeline.

In the interim, there has been plenty of comment from Germany and elsewhere among those states likely to be footing the bill for any bailout. Little of it has been comforting. Then chancellor Merkel dropped a bombshell when, in relation to a question on Spanish bank recapitalisation, she said: “There will be no retroactive direct recapitalisation, either.”