Archive for February, 2015

SMEs to have access to state-backed loans if their lender leaves Irish market

The Government’s credit guarantee scheme is being extended to cover businesses whose lenders, like Danske Bank, are leaving Ireland.

Small and medium enterprises (SMEs) will now have access to state-guaranteed refinancing loans if their lender is leaving the Irish market.

Up until now the Credit Guarantee Scheme was only available for new loans, not refinancings.

The maximum length of loans made under the scheme is also being extended, from three to seven years.

“Thousands of people in the SME community have been affected by the exit of some foreign banks from the business credit market here,” said Minister for Business Ged Nash.

“The problem arises when these SMEs seek refinancing loans, often with relatively short timeframes, and are not able to meet the minimum stake requirements of the remaining banks.”

The credit guarantee scheme was designed for businesses refused loans by banks. To bridge this hurdle it provides a 75pc guarantee to the lenders against any potential losses on the loans. Bank of Ireland, AIB and Ulster Bank participate.

The borrower pays a 2pc annual premium. 156 businesses have availed of the scheme since its launch in 2012.

Irish Independent

NAMA appoints Cushman & Wakefield to sell mega €8.4bn Project Arrow NPL

NAMA has appointed Cushman & Wakefield Corporate Finance team to sell the giant €8.4bn Project Arrow non-performing loan (NPL) portfolio, as the Irish bad bank accelerates its remaining wind-down.

Project Arrow will be the largest loan portfolio sale in NAMA’s history and takes the aggregate nominal value of the current pipeline of loan portfolio sales by the Irish bad bank to €12.9bn across six separate loan disposal processes.

NAMA’s notable pick-up in planned loan portfolio sales this year – which already reflects a 66% increase on 2014’s €7.8bn – is influenced by a number of aligning economic and political factors.

These include: the success of last year’s €21.7bn IBRC loan book sell-off; the weight of capital chasing Irish real estate, in part due to the relative value of the asset class compared to equities and bonds; and Ireland’s impending General Election next Spring.

C&W’s Corporate Finance team will now undertake a review of the giant loan pool, the underlying collateral and seek to determine the present real estate value within Project Arrow. The process is expected to lead to the formation of sub-pools, which would then be potentially sold separately.

Project Arrow is secured by approximately 90% Irish real estate and 10% UK real estate, and is virtually all non-performing. By sector, Project Arrow is approximately 50% Irish residential, while the remaining half is comprised of a mix of offices, retail, mixed-use, hotels and land – including UK assets.

The Irish Times reported yesterday that the mega NPL was comprised of 500 NAMA borrowers and that the loans, which all have a face value of €75m and below, are currently managed by Allied Irish Bank and Capita Asset Services, on behalf of NAMA. Furthermore, the newspaper reported that Lisney would assist Cushman as selling agent for the giant loan portfolio.

Given the anticipated demand for NAMA loans, Project Arrow – and the five additional separate loan portfolio sales – an end of year closure of all deals is highly probable. The five additional NAMA loan portfolio sales are:

the c.€1.5bn Project Tolka, secured by the loans of developers Paddy Kelly, John Flynn and Alanis, a property investment company controlled by the McCormack family;
the c.€1bn Project Jewel, secured by the Chartered Land’s Dundrum Town Centre, as well as two smaller shopping malls – for the full story, please click here;
the €778m Project Milner, secured by Gerry Barrett’s 10-strong property portfolio comprised of 10 assets including the G Hotel in Galway and the D Hotel in Drogheda. Cushman is selling the loan portfolio;
the c.€700-750m Project Abbey, the loan book of Pat Doherty’s Harcourt Developments. KPMG is selling the loan portfolio; and
the c.€440m (c.£325m) Project Albion, a UK commercial property loan portfolio comprised of a mix of borrower groups. Cushman is selling the loan portfolio.
NAMA completed €7.8bn in loan sales last year – 66% lower than the current visible trajectory for 2015. Last year’s loan portfolio sales comprised:

the €5.4bn Project Eagle which sold to Cerberus Capital Management;
the €1.8bn Project Tower which traded to Blackstone;
the €427m Project Spring which traded to Deutsche Bank;
the €225m Project Drive which sold to Patron Capital;
the €373m Project Holly which sold to Lone Star; and
the €250m Project Club which traded to CarVal Investors.
In its review of 2014 published on 2 January, NAMA wrote that “improved conditions in the Irish commercial market and an upsurge in investor interest in multi-asset property portfolios and in loan portfolios enabled NAMA to increase substantially the scale of disposal activity in 2014”.

NAMA is expected to downsize its headcount this year by around 80 staff to 270 by the end of this year and down to around 125 by the end of next year.

NAMA and Cushman & Wakefield could not be reached for comment.

SOURCE: [email protected]

Call for banks to offer more help for those facing negative equity

Northern Ireland suffered a huge housing bubble in the 2000s followed by a crash in 2008 that saw prices fall by almost 50%
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Banks could do more to help mortgage customers who are in negative equity or facing repossession, a Stormont-backed taskforce has recommended.

The taskforce has been examining the high levels of negative equity and repossessions in Northern Ireland.

It does not recommend debt forgiveness but says banks could do more to prevent repossessions.

It also says mortgage advice services should receive more funding and be better targeted.

Northern Ireland suffered a huge housing bubble in the 2000s followed by a crash in 2008 that saw prices fall by almost 50%.

As a consequence, rates of negative equity are much worse than elsewhere in the UK and repossessions have also increased.

The taskforce has warned that the number of people falling behind on their mortgage payments could increase when interest rates eventually begin to rise.

It assesses that the number of very high risk borrowers could more than double from 15,000 in 2014 to 32,000 in 2018.

The main advice body, the Mortgage Debt Advice Service, currently deals with around 1,600 cases a year, but under the proposals its workload would at least double.

The service’s budget is rising from £225,000 to £340,000 next year but under the taskforce’s plan it should rise again.

Many of the new cases would be dealt with an earlier stage and would therefore involve less complex issues.

The taskforce recommends that establishment of a mortgage option hub which would refocus the current range of advice services, which it says can be confusing.

Recommendations for the banks include greater use of Assisted Voluntary Sales (AVS) rather than repossessions.

In an AVS, the owner effectively sells the house on the bank’s behalf and the bank keeps the sale proceeds.

The report also raises concerns about banks selling repossessed houses at auctions.

Prices achieved at auctions are generally lower than a standard sale which leaves with the borrower with a bigger residual debt.

The taskforce estimates that repossessed properties sold between 2008 and 2013 only achieved 42% of the “true market value”.

However, it does not make any recommendations about auctions.

Source: BBC News