slim nymph and wicked free

Nobody wants the bank shareholders votes?

I haven’t heard one word of sympathy for bank shareholders (AIB and BOI) during the election campaign, in spite of the injustice done, and still being done, to them. And in spite of their very large numbers. There must be even more votes to be collected from bank bashers and general begrudgers.

As we have pointed out before, the majority of both the main banks was owned by c. 150,000 Irish resident individual “retail” small investors. That’s about 3000 per constituency and on top of that add spouses and family…making a total of perhaps 500,000 votes from bank shareholder families right across the nation. They are not normally wealthy people, but rather typical, but older, middle class…retired public officials, middle managers, retired professionals, farmers, small businessmen…the backbone of our economy and society. Some of them have been severely distressed by the loss of their savings , inability to keep up VHI payments and prospects of  low quality care in later life in public care homes.

What “injustice” you might ask? Well consider: The original NAMA deal  offered their banks liquidity in exchange for long term illiquid assets, at an expected discount of c. 30%. After the deal was done–i.e. banks had made their agreement with NAMA- that state institution lowered the buying price by c. 100%..i.e. paid half the expected price.  This had the effect of devaluing the shares in the banks by so much that, in effect, almost all equity in the banks was passed over to the State.  (So, a decision by officials concerning the possible future value of private property results in the propery being handed over to the officials… in  modern Ireland !) (In the case of AIB, NAMA upped the ante last September, after the AIB directors had all but  completed, successfully, the plan to recapitalise the bank that had been agreed with NAMA…Why has NAMA not been asked to properly explain its sudden change of mind and devaluation of AIB’s assets ? This happened at a time  when the renowned investment bank, Goldman Sachs was preparing its own report on Irish bank asset values, which estimated that NAMA’s valuations were “unrealistically pessimistic”, a report never discussed in the Irish media)

So, shareholders were done, wrecked and wiped out by mysterious decisions made, in their own interest, by officials. Not only that, but NAMA never paid  for the property anyway. Instead, the mechanism by which the banks were to be enabled to borrow liquidity, i.e. the government guarantee for tradable NAMA bonds, never worked out..In reality, the officials so mis-managed the bank support programme in Ireland that the credibility of both the banks and the sovereign Irish nation was  destroyed, to the point where no investor will lend money to the nation, on  any state guarantee, and a 100 bn. of deposits ran out of the banks.

Further, even if the original NAMA bargain was delivered by NAMA, it was immoral, because it clearly put the downside risk- of the target sales price for bank assets not being achieved- onto the shareholders of the banks, but kept all the upside potential gain for the State itself. Should we allow that in modern Ireland? And now that NAMA has in effect reduced the target price to c. half the envisaged level, shouldn’t the shareholders be given a break and a promise that they will be paid any extra profit that NAMA will make on their property, considering that they’ve already had to take such an enormous loss on it?

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Video: About NAMA(2009)