Cantillon

Inside the world of business


 

Nama and IBRC have a lot in common. Shoud they merge?

While defending itself against accusations of leaks and not doing enough to prevent leaks of information, the National Asset Management Agency complained yesterday about how it’s far more transparent than other entities.

Nama chief executive Brendan McDonagh appended a one-page table to his presentation to the Oireachtas finance committee, showing that it disclosed more than other commercial State agencies and the guaranteed banks.

They did not have to publish quarterly or preview reports for the following year, and they were not statutorily obliged to appear before the Public Accounts Committee or subjected to a review by the Comptroller Auditor and General, while Nama had to do all that.

“For some reason, however, there seems to be a view that Nama should be subject to a commercially disadvantageous regime of disclosure which does not apply to other commercial State agencies or publicly owned banks,” said McDonagh. Nama’s legislation means that it has to operate the same confidentiality that banks apply, he said.

Even if it didn’t, disclosing information on debtors and their property where Nama is competing with banks heavily deleveraging their property loan books would make the taxpayer “the only certain loser”, he said.

Fianna Fáil TD Seán Fleming later suggested that given that Irish Bank Resolution Corporation, the former Anglo Irish Bank, and Nama carry out similar work and were both State-owned, did it not make sense to merge the two?

There wasn’t much of a response to the idea but it makes sense on a cost basis and, on the transparency side, it would at least make the former Anglo a little more accountable on deals it does.

Fleming also asked whether IBRC and Nama had competing interests at times, citing the sale of loans on the Maybourne hotels in London as an example. McDonagh said that he didn’t believe so. But without full transparency around the deal to sell the loans and the effect on the position of State-owned IBRC, which is owed tens of millions by one of the hotels’ shareholders, it’s hard to know if the taxpayer is losing out.

Pensions are expensive but it is still difficult for the ordinary consumer to ascertain how expensive. That was the fundamental finding of the 290-page report from the Department of Social Protection on the issue of pension charges.

The scale of the problem facing individual pension scheme members was illustrated pointedly in the reported difficulty of two-thirds of pension scheme trustees in sourcing the necessary figures for the report. Trustees are the people legally charged with representing the interests of scheme members; if they cannot get a steer on charges, there’s little chance of anyone else doing so.

For all that, this is a worthwhile report. For the first time, we have proper data rather than anecdote to bolster the argument that we pay too high a price for our pensions, especially given the notoriously poor performance of the sector over the past decade.

We also have evidence that there is a very broad range in the level of charges being applied to very similar pension products. The reduction in yield because of charges imposed on group occupational schemes was anywhere from 0.25 per cent to 1.71 per cent. With the department noting that every quarter percentage point increase in this measure resulting in a 4 per cent hit on the final pension fund, the impact on scheme members was a reduction of from 4 per cent to almost 28 per cent in the value of their fund.