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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.

Fogginess of Ireland’s ‘special case’ was there even after June summit

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.”

The subsequent peace offering in a hurried joint communique between Enda Kenny and Dr Merkel – acknowledging Ireland as a “special case” – fundamentally takes us no further forward. Increasingly, it appears that the Taoiseach and his Ministers have over-promised and will under-deliver .

Fatuous statements, such as Mr Kenny’s “I’m a hard grafter and, as some of them found out, they shouldn’t tangle with me too often” at the time of the June summit, do nothing to strike the necessary balance between the need for support and the ability to deliver on commitments that this Government needs to cultivate.

It remains far from clear how much support we will ultimately receive in mitigating the cost of the bailout. Flaunting a sense of entitlement as we spend the troika’s money hardly helps.

Focusing on trade links with Africa

YESTERDAY REPRESENTATIVES from more than 120 companies joined academics and politicians from African countries and Ireland at the UCD Michael Smurfit Graduate Business School for the second annual Africa-Ireland Economic Forum.

Many Irish companies now have active commercial interests in the African continent. Glanbia has a joint venture with PZ Cussons in Nigeria, Irish milk powder now gets shipped into Northern Africa each year, and Algeria is the second-biggest purchaser of Irish cheese after the UK.

Exploration companies like John Teeling’s Botswana Diamonds and Tullow Oil are active in the oil and mining industry, while ESB International is delivering a major infrastructural project in Tanzania. The Irish construction and engineering sector is particularly active in Africa.

The question of how inward investment will benefit Africa is key, with the continent still facing massive challenges in terms of corruption, political instability and economic inequality, despite the rise in gross domestic product.

As the forum highlighted, with wide disparities in wealth and income in Africa, a one-size-fits-all approach to trade is restrictive. The complex world of trade and market access is also a barrier.

As Minister of State at the Department of Foreign Affairs and Trade Joe Costello said, talks on free-trade agreements between Europe and most of sub-Saharan Africa should be completed by 2014, and are likely to feature during Ireland’s presidency of the EU in the first half of next year.

There is also a need to encourage more intra-Africa trade. As Tánaiste Eamon Gilmore pointed out, just 10 per cent of African trade is with other African nations, compared to the EU, where over two-thirds of trade is with fellow EU member states.

Quote of the Day

There had already been a recapitalisation of banks . . . which worsened Ireland’s debt

– François Hollande outlines Ireland’s “special case”

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