Four Courts, Dublin

The High Court today approved the appointment of a provisional liquidator to two companies owned by the embattled developer, Liam Carroll following Tuesday's Supreme Court decision to refuse court protection for his his companies. Meanwhile, the investment management industry body said today that "bad bank" NAMA should resist paying a big discount/"haircut" on the estimated €90 billion of mainly toxic property loans, which it will acquire from the banks.

Today's High court application was made by Dutch-owned ACCBank, which is owed €136 million.

This follows last night's dismissal by the Supreme Court of an appeal by six of Mr Carroll's companies for the protection of the court.

ACC also issued a petition for both companies, Vantive Holdings and Morston Investments, to be wound up. That hearing will take place on September 9th.

Mr Justice Iarfhlaith O'Neill in the High Court granted the appointment of a provisional liquidator, who will also also have the power to secure assets held by subsidiary companies controlled by Mr Carroll. Mr Carroll's property group was not represented in court.

Minister for Finance Brian Lenihan said at the end of last month that on September 16th, information on the determination of "long term economic value" of the properties underlying the loans, will be published.

Ireland should resist political pressure to underpay for the €90 billion of property loans it’s seeking to purge from banks, according to the head of the country’s fund management industry group.
Minister for Finance Brian Lenihan will on September 16th signal how much the National Asset Management Agency (Nama) will pay when it buys the loans at a discount from lenders such as Bank of Ireland and AIB.

“I strongly believe that the Department of Finance and agency understand that while they have to be fair to the taxpayer, the key audience is international financial markets,” said Frank O’Dwyer, who heads the Irish Association of Investment Managers in Dublin.

“An excessive haircut, with any taint of political motivation, any sense of ‘let’s stick it to these guys,’ would erode confidence,” he said according to Bloomberg News.

This is a weak argument as the State has to carry the risk in either option but the option chosen can impact the future risk.

Research shows that where there a severe property correction in a market, it can take 15 or more years to recover.

The agency’s task is to find a “zone of rightness” for the discount, O’Dwyer, whose members manage about €300 billion, said on August 10th.

Overpaying for the loans could mean a future “loss levy” for the banks, while underpaying could leave them starved of capital, O’Dwyer said, forcing the Government to pump in more cash and increase its shareholdings.

Ireland has already nationalized Anglo Irish and injected €7 billion into Bank of Ireland and AIB.

"The only certain game in town in relation to capital is the State," said O’Dwyer.

However, what needs to be addressed the State's future potential from large bank stake sales, compared with a "bad bank" which may not make a profit in two decades.