Context needed in Project Eagle sale discussion

“Those Northerners eh? You just couldn’t be up to them” — that seems to be, at least part of, the rationale presented as to why Nama decided to dispose of its Northern Ireland loan book when it did.

‘Project Eagle’ has swung full circle now, and the Government’s decision to finally investigate the sale ensures the story will be with us for some time to come.

The Comptroller and Auditor General’s report has also drawn increased attention to current Nama auctions.

The idea that the situation in Belfast in 2014 somehow necessitated a swift exit strategy does not entirely stand up to scrutiny.

Putting to one side the hoary old cliches that appeal to latent prejudice about northern lawlessness and chicanery, the idea that Nama was somehow bounced into action because it could no longer put up with the pleadings and representations of political and vested interests is hard to believe.

This is the same Nama, headed-up by experienced and astute public servants, which has spent the past six years laying down the law to property developers.

The same organisation that has unwound a massive property portfolio fraught with political and social sensitivities.

It has stood accused of all manner of things in its time, not least, the assertion that it is to blame for the housing crisis. Yet it has gone about its work with a remarkable hard-headedness.

What we are being asked to believe is that it didn’t like the smell of the place — and when the first opportunity arose to clear-off out of the North — that’s what it did. If true, that would be a damning indictment.

The other argument presented in the wake of the C&AG’s report was that the State agency had done everybody a favour ahead of the Brexit vote. Nama can say that had it waited then the return on the Northern book would have been considerably less.

But who was talking about Brexit in late 2013 when PIMCO, the vast US investment firm, first approached Nama with a proposal to buy its Northern loans en-masse? The answer is nobody.

It was barely a twinkle in David Cameron’s eye at that stage. And up until June 23 2016, it was something most people in Dublin didn’t think would ever occur. So the idea that Nama deployed some magnificent political foresight and did us all a favour doesn’t really cut ice.

What actually happened seems fairly clear. Nama is on-the-record as saying it wanted to be out of all foreign currency and foreign property risk by 2016. Not only this, but its entire timeline of disposals had been shortened early on in the Government’s term in office.

Brendan McDonagh, Nama’s chief executive will tell you that Nama’s primary concern over recent years has been to remove the ‘contingent liability’ hanging over the country.

Nama was to move quickly and had political backing to do so. The political impetus was understandable.

The Irish commercial property market had turned upwards quickly. Having just been through the worst crash on record, the temptation must have been to take advantage of a buoyant market before it again all turned to dust.

One of the main criticisms of Nama must be that it under-estimated the level of bounce back. While it was disposing of property, other investors were snapping up Irish real estate with their eyes on double-digit returns.

Nama, had it been left well alone, might have held out for longer and benefitted from the better than anticipated increase in Irish property values.

Project Eagle needs to be viewed in this context. The idea that Nama was willing to forego potentially hundreds of millions of taxpayers’ euro simply because the North was too troublesome and messy is too shocking to contemplate.

Paul Colgan is Economics Editor with Ireland Live News on UTV Ireland.

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