Sometimes the diffusion of figures required to explain what is going on with NAMA, the bank bailout and the economic crisis, produce nothing more than a thick cloud of confusion. For most readers, even for those who are not normally numerically illiterate, they seem to fall about incomprehensibly as we read any of the many articles spewed out by the Great Financial Crisis Machine. There are times, however, when one number can stand out, helping to make sense of all the rest.
In this case, keep the number 63 fixed in your mind.
The amount paid by NAMA for the loans in 2009 when first established (excluding the amount paid by ‘private investors’ and interest charged on the bonds raised when the loans were taken over) is €30.2bn, says this article by Tom Lyons in the Irish Times today.
In the article NAMA’s Chief executive Brendan McDonagh said that “Nama’s clients now number 700, of which 500 were relatively small with total combined borrowings of €2.5 billion.” The original number of borrowers transferred in 2009 was 800.
Based on this, it suggests that in 2009 300 people were responsible for the vast majority of the €74bn of loans taken from the banks. While we have to wait until later in the year to get a proper figure, it’s reported that €22bn of the original €30.2bn loan book remains.
The article now informs us that just 200 people originated the remaining combined borrowings of €19.5bn.
However, if we look at the figures for 2009 when NAMA was set up we can see that now only did the vast majority of the stock of the loans emanate from a very small number of people and its actually far less than 200 people.
In 2009 just 63 people were associated with €45.47bn of the €74bn of loans transferred from the banks, while 709 people were associated with the remaining €28.54bn.
Given that McDonagh has said that 500 people are now associated with total combined borrowings of just €2.5 billion, it’s worth looking at the bottom 500 debtor connections on NAMA’s books in 2009. These bottom 500 held a nominal debt of between €49m and less than €20m with combined total borrowings of €9bn. This means that 300 borrowers were associated with €65bn (€9bn less €74bn).
If 63 people were associated with €45.47bn it follows that 237 people were associated with €19.53bn (45.47 plus 19.53 equals 65).
Now NAMA has 100 fewer borrowers on its books. How many of the 63 largest borrowers in 2009 are responsible for the remaining €19.5bn on NAMAs books (€22bn remaining on NAMA books in 2014 less €2.5bn of the 500 smaller borrowers)? I don’t know exactly, but the point remains, the vast bulk of NAMA loans were taken out by a very small number of people.