A FORMER Barclays banker who is among the new shareholders in the National Asset Management Agency’s ownership company was involved in a scheme to remove toxic assets from Barclay’s books that a top UK regulator described as “pushing the envelope too far”.
Nama yesterday said Irish Life had sold its 17 per cent stake in the special purpose vehicle that owns the loans agency to London company Walbrook Capital. One of the firms’s three founders is Australian lawyer Michael Keeley, who worked for the structured credit division of UK bank Barclays.
Mr Keeley, as a member of a 45-strong structured credit team at Barclays, was involved in a scheme designed by the bank to move $12.3 billion (€9.4 billion) of toxic credit market assets off the balance sheet of the bank in 2009.
The executives were asked to manage the run-down of the assets through a New York hedge fund called C12 Capital Management in a scheme the bank called Protium.
The scheme was later reversed by Barclays after UK regulators raised concerns with the bank.
Andrew Bailey, the highest-ranking UK bank supervisor, attended a board meeting of Barclays in February and queried the buccaneering culture at the bank.
The Protium scheme was described by the regulator as “pushing the envelope too far”. Details of the intervention emerged in the controversy over Barclays’ role in the rate-rigging Libor scandal which led to the departure of chief executive Bob Diamond.
A spokesman for Walbrook and Mr Keeley declined to comment on Protium, while a Nama spokesman also had no comment.
A source close to Walbrook said Mr Keeley was part of the Barclays team asked to manage the Protium assets but this was led by the bank rather than the team itself.
Walbrook was set up in 2011 by Geoff Broomhead and Simon Haworth who worked with Mr Keeley at Barclays Capital. They left Barclays in 2009 to manage Protium but ties with C12 and Walbrook have since been severed.
The sale of Irish Life’s 17 per cent stake in National Asset Management Agency Investment Limited keeps loans of €74 billion at the country’s “bad bank” off the balance sheet of the Government.
The vehicle was structured to give private investors a 51 per cent stake in Nama’s ownership to satisfy EU accounting rules that the agency’s liabilities were sitting off the State’s books.
Irish Life was an original 17 per cent shareholder in the Nama vehicle with the fund management units of Bank of Ireland and AIB.
The Government’s takeover of Irish Life as part of the bailout of Permanent TSB threatened to bring ownership of Nama’s SPV into majority State control given that the Government had 49 per cent of the Nama vehicle.
Walbrook’s acquisition of the stake for an undisclosed sum, understood to be less than the €17 million Irish Life originally paid, puts Nama’s SPV back into majority private hands.
Mr Keeley, a senior partner in Walbrook, said the decision to invest in Nama “followed a careful assessment of the outlook for the Irish economy and in particular its property sector, which we believe is now close to stabilisation.”
Walbrook said that it invests in long-term credit, property and renewable energy assets.
BANKS had been given a life-saving blood transfusion by taxpayers but returned the favour by charging customers more, the financial regulator has said.
The country’s top regulator, Matthew Elderfield, also accused the banks of not properly contributing to society.
His comments came on the day it emerged that Bank of Ireland is to push up the interest on credit cards by as much as 4 percentage points, in a move that will hit thousands of householders. Many struggling consumers are so short of cash they are using credit cards to juggle their finances.
The new rates, which will be between 0.7pc and 4pc higher, take effect from December 18 next. They apply to purchases on cards. The bank, which got €4.7bn from the taxpayer, said it had not raised rates since August 2011.
Mr Elderfield, who is also the deputy governor of the Central Bank, said banks faced the uncomfortable task of “telling the neighbours who donated blood to them that they need to charge them more as customers”.
Mr Elderfield said returning to profitability was one of the key challenges the banks faced.
“Progress on profitability will only be possible in the interim due to gradual repricing of assets to reflect the cost of funds,” he said.
That implied further interest rate hikes, he said.
AIB has announced two hikes in its variable rates in quick succession. Bank of Ireland has hiked its variable rate by 0.5pc, while Permanent TSB has signalled a rise in fixed rates.
Speaking at an event in UCC, Mr Elderfield said the banks were out of the “critical ward following radical surgery and an extensive transfusion of blood from the Irish taxpayer”.
But, he said, they were still not contributing properly to society as they should and remained weak.
However, the central bank deputy governor confirmed that Ireland may be close to removing the banking guarantee that makes the State responsible for deposits kept in the bailed-out banks, confirming earlier reports in the Irish Independent.
“My view, we are getting close to the position where the changing circumstances arising from successful implementation of the IMF/EU programme and the introduction of the banking union should permit the full removal of the government guarantee,” he said.
In a clear reference to speeches earlier this week calling on the banks to face up to their mortgage problems, Mr Elderfield said the banks should be able to cope with losses even if they fully faced up to the problem.
Lenders had set aside “prudent provisions” for bad loans and retained a “healthy buffer” of additional capital, he said.
Banks wouldn’t know whether they had enough capital to withstand ”extreme loss developments” until they worked out what they could recover or needed to restructure among troubled loans, he said.
Lenders may be encouraged to hoard reserves and restrict lending until a “case-by-case re-underwriting” of soured loans was complete, he said.
Irish Life posts €96m in first half profits, ‘wrong’ time to sell company – Irish, Business – Independent.ie
RISH Life Assurance, the state-owned life assurer, said it is the wrong time to sell the company.
The company annouced today that pre-tax profits increased six-fold to €96m last year under International Financial Reporting Standards. The group’s embedded value, an estimate of a life assurer’s worth based on future profits of existing policyholders, was €1.8bn at the end of June.
Kevin Murphy, Irish Life chief executive officer, said the assurer is “very conscious” of its taxpayer support “and we are determined to ensure that this can be repaid fully as soon as practicable,” he said. He added that the Irish life and pensions market is likely to remain tough for a number of years.
Top management in both AIB and Bank of Ireland are reading the Old Testament to get them out of the current economic crisis.
Apparently, they have heard it’s where prophets are to be found
If you are looking for a loan please do not walk into the bank with a copy of the New Testament as it is viewed with suspicion