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Management of Nama

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The Board of Nama has been announced but I'm uneasy about its breadth of expertise and experience for several reasons.

Firstly, too many locals (8 out of 9) are members and too many of these previously worked for the establishment (4 out of 8) raising the possibiliy of "board capture". Presumably, they were selected because they "understand" the Irish business culture and political agenda, as well as for their undoubted experience and expertise. I would like to have seen the board include "real outsiders" with direct experience of very large-scale asset management, well-known views on protecting taxpayers and track records of aggressively pursuing large-scale, delinquent loans. These would include some really tough, nasty lawyer-types who cut their teeth on Wall Street and would be more than a match for any of the "locals". Of course, appointments of this type could put the "cat amongst the pigeons" and this isn't what the Minister for Finance is seeking at board level given his role in shaping and running Nama.

Secondly, bearing in mind that Nama will be one of the largest property companies in the world, I would have thought that its board and management should also be world-class. Anything less is equivalent to sending a boy on a man's errant. Bear mind that the three most important factors determining the success of a venture are management, management and management. The equivalents for property are location, location and location - these factors were often ignored during the boom and contributed to the crisis which Nama seeks to address.

Thirdly, the proposed staffing of Nama is only a fraction of that used by the Swedish "bad" bank operation which dealt exclusively with nationalised banks (this may still happen in Ireland) and had a loan portfolio far smaller than Nama's. It appears that Nama's in-house staff of about 100 people will be managing a highly fragmented, complex portfolio worth €77 billion covering 20,000 loans linked to almost 2,000 developers' business plans. As a consequence, Nama will be over dependant on expensive external advisers and will be obliged to over-delegate back to the covered institutions. Such an approach is penny wise and pounds foolish and a clear recipe for cock ups.

Overall, I'd have liked to have seen more people with substantial, relevant, international experience at board level and clearer indications that the management team will be appropriate to the task. Bear in mind that Nama exists because of massive managerial failures at government, regulation, administration, banking and developer levels. We don't want Nama to repeat these errors due to insufficient experience or expertise.

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This page contains a single entry by Brian published on December 23, 2009 6:37 PM.

Budget 2010 was the previous entry in this blog.

Ministerial Pay is the next entry in this blog.

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