Davos the Dragonslayer

What will Iron Bank do if NW doesn't pay debts?

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ADWD Jon IX

Tycho Nestoris had left behind a copy of their agreement. Jon read it over thrice. That was simple, he reflected. Simpler than I dared hope. Simpler than it should have been.

 

There's something weird with that loan. We're never told who the loan was made out to: the NW or to Jon personally. If it was made out to Jon personally, it may actually be Jon who can claim the money and is responsible for it, not the NW.

As KitN, Lord of Winterfell or whatever, the loan and the responsibility for it may go to him depending on the wording.

Maybe relevant, but Marsh knows about the valuables collected from the wildlings, but if I recall correctly, Jon didn't tell Marsh about the loan before he was attacked.

Lending money to the NW was nice, but given the NW's poverty and a bad winter coming, it was a bad decision financially for the Iron Bank. So what did they gain?

Edited by Lollygag

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2 hours ago, Lollygag said:

So what did they gain?

It makes one wonder if they know something we don't...

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4 hours ago, Davos the Dragonslayer said:

What will Iron Bank do if NW doesn't pay debts? 

they will add it to the debts of the seven kingdoms, or whatever kingdom the watch ends up being in if it survives 

3 hours ago, Lollygag said:

So what did they gain?

Interest upon repayment under the assumption that after all the wars are over and westeros is united under a single ruler the the loans will be consolidated? 

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Think of that loan as part of a package deal with the one they advanced to Stannis Baratheon.  The IB expect Stan to support the NW if he should ever win the throne.  Could be in the form of higher taxes levied on the small folk all across the country.  

That loan really never made much sense because Stannis was a long shot.  But this is a fictional story.  

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27 minutes ago, Widowmaker 811 said:

Think of that loan as part of a package deal with the one they advanced to Stannis Baratheon.  The IB expect Stan to support the NW if he should ever win the throne.  Could be in the form of higher taxes levied on the small folk all across the country.  

That loan really never made much sense because Stannis was a long shot.  But this is a fictional story.  

 

Wasn't the reason they reached out to Stannis in the first place is that Cersei is withholding payment?

Ironbank will get it's due. If a prince decides they'll not pay that loan, he is simply replaced with another who will be more than happy to pay.

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Iron bank would make sure their man is Lord commander and they would pay them back.

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2 minutes ago, Corvo the Crow said:

 

Wasn't the reason they reached out to Stannis in the first place is that Cersei is withholding payment?

Ironbank will get it's due. If a prince decides they'll not pay that loan, he is simply replaced with another who will be more than happy to pay.

This is true.  It is expensive to change kings.  It's like a U.S. presidential election.  It costs to win the throne.  I can only assume the loan they gave to Stannis is a very small fraction of what the kingdom actually owes by comparison.

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8 hours ago, Davos the Dragonslayer said:

What will Iron Bank do if NW doesn't pay debts? 

The Night's Watch has minimal cash, and little prospect of obtaining large quantities in the future.  Most likely, payment will be in kind; goods and services, if you will. Jon's assistance in contacting Stannis was probably part of it,, although likely not art of the actual agreement.  

Access to natural resources is likely part of the agreement.  We have seen, for example, that wood is very valuable in Braavos, and there is likely quite a lot of timber available in the Gift and the area north of the Wall.  Harvesting this would likely require NW permission (the Gift) or assistance (Far North), and concessions to do so could be quite valuable.  Other resources, such as mineral wealth, could also be available.

8 hours ago, Lollygag said:

There's something weird with that loan. We're never told who the loan was made out to: the NW or to Jon personally. If it was made out to Jon personally, it may actually be Jon who can claim the money and is responsible for it, not the NW.

As KitN, Lord of Winterfell or whatever, the loan and the responsibility for it may go to him depending on the wording.

I doubt that Jon is personally responsible for the loan.  Institutions are less likely to die or disappear than people are, and Jon personally likely has even less access to financial resources than the NW would.

8 hours ago, Lollygag said:

Maybe relevant, but Marsh knows about the valuables collected from the wildlings, but if I recall correctly, Jon didn't tell Marsh about the loan before he was attacked.

Given that Jon held a long meeting with Nestoris, which I think everyone at Castle Black knew about, I would expect he had to tell his captains something.  So it is likely Marsh has some idea of what is going on.  The conditions of the loan could potentially have played a part in his coup attempt, if he was sufficiently bothered by them.

4 hours ago, Dorian Martell's son said:

they will add it to the debts of the seven kingdoms, or whatever kingdom the watch ends up being in if it survives 

Interest upon repayment under the assumption that after all the wars are over and westeros is united under a single ruler the the loans will be consolidated? 

While the Crown (or whoever is in charge up north) could potentially assume the loan, the NW is officially an independent institution, so I doubt that the Crown could be held responsible if it didn't want to be.  Jon can only bind the NW, not anybody else.  

It is quite possible that political considerations will come into play.  It is also quite possible that the loan to stannis could potentially include provisions for repayment of the NW loan.  Whatever is going on, I wold love to see what is in that agreement.

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6 hours ago, Dorian Martell's son said:

Interest upon repayment under the assumption that after all the wars are over and westeros is united under a single ruler the the loans will be consolidated? 

The WOIAF states that the North bears most of the responsibility for the NW. Below, Jon thinks that the NW is fully and solely responsible for the loan. If Stannis co-signed officially or not, Jon wasn't told. Jon also seriously questions their ability to repay.

TWOIAF

Only the fact that the Northmen themselves greatly honor the Watch has kept it functioning, and a great part of the food that keeps the black brothers of Castle Black, the Shadow Tower, and Eastwatch-by-the-Sea from starving comes not from the Gift but from the yearly gifts these Northern lords deliver to the Wall in token of their support.

ADWD Jon IX

It gave him an uneasy feeling. Braavosi coin would allow the Night's Watch to buy food from the south when their own stores ran short, food enough to see them through the winter, however long it might prove to be. A long hard winter will leave the Watch so deep in debt that we will never climb out, Jon reminded himself, but when the choice is debt or death, best borrow.

He did not have to like it, though. And come spring, when the time came to repay all that gold, he would like it even less. Tycho Nestoris had impressed him as cultured and courteous, but the Iron Bank of Braavos had a fearsome reputation when collecting debts. Each of the Nine Free Cities had its bank, and some had more than one, fighting over every coin like dogs over a bone, but the Iron Bank was richer and more powerful than all the rest combined. When princes defaulted on their debts to lesser banks, ruined bankers sold their wives and children into slavery and opened their own veins. When princes failed to repay the Iron Bank, new princes sprang up from nowhere and took their thrones.

1 hour ago, Nevets said:

I doubt that Jon is personally responsible for the loan.  Institutions are less likely to die or disappear than people are, and Jon personally likely has even less access to financial resources than the NW would.

Jon as Lord or King is much more likely to repay than the NW and Jon becoming Lord benefits Stannis. The IB calls in the loan early and Jon is strong-armed into accepting Stannis' offer to pay it back. It's one option I consider given that Jon himself calls out the loan as suspect and it makes no sense from the IB's perspective given the poor odds the NW will be able to repay in any capacity. It's a guessing game given we don't know the terms, but there's definitely something going on.

1 hour ago, Nevets said:

Given that Jon held a long meeting with Nestoris, which I think everyone at Castle Black knew about, I would expect he had to tell his captains something.  So it is likely Marsh has some idea of what is going on.  The conditions of the loan could potentially have played a part in his coup attempt, if he was sufficiently bothered by them.

Technically Jon doesn't need to tell them anything and as for who knows what, I don't know. Maybe. As a reader I'd feel blind-sided by the loan impacting Marsh's decision as the reader doesn't know the terms and we didn't see Marsh being told or see any conflict over it.

 

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4 hours ago, Nevets said:

While the Crown (or whoever is in charge up north) could potentially assume the loan, the NW is officially an independent institution, so I doubt that the Crown could be held responsible if it didn't want to be.  Jon can only bind the NW, not anybody else.  

It is quite possible that political considerations will come into play.  It is also quite possible that the loan to stannis could potentially include provisions for repayment of the NW loan.  Whatever is going on, I wold love to see what is in that agreement.

as there is currently a war for control of the continent, with several claimants asking the bank for money, this move to loan money to the watch is inherently political. 

2 hours ago, Lollygag said:

The WOIAF states that the North bears most of the responsibility for the NW. Below, Jon thinks that the NW is fully and solely responsible for the loan. If Stannis co-signed officially or not, Jon wasn't told. Jon also seriously questions their ability to repay.

 the key word is most, and the Bravosi bankers do not seem to have the same care for region specific lines like a westerosi would. And the watch should be able to repay the bank. They have vast reserves of timber. There are metals and game to be had. The problem is that the watch lacks bodies for the labor required to harness said resources. And none of that matters because the long night is approaching and things like gold will mean nothing once the wall falls and the white walkers move south 

 

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Seems pretty clear that if Jon doesn't repay, then the Iron Bank will replace him with a Lord Commander that is more amenable.  And if the Watch in general is unable to pay, then they'll have resources forfeited.

Some of this is obviously because the author wants it this way, but Tycho Nestoris is an intelligent and able banker; he wouldn't be lending to the Watch if he didn't see some collateral or means of repayment there.

The Bank is only backing Stannis to make a statement, not necessarily because it's a good loan.  Whether or not Stannis wins the Iron Throne, Cersei and future monarchs will know that rival claimants will spring up if they don't honor their obligations.  If Stannis wins, so much the better.  That isn't the case with the Watch, which is easily the oldest institution in the world by quite a long way.  They wouldn't be lending to the NW if there wasn't something in the Gift/New Gift worth having if they default.

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18 hours ago, Dorian Martell's son said:

as there is currently a war for control of the continent, with several claimants asking the bank for money, this move to loan money to the watch is inherently political. 

 the key word is most, and the Bravosi bankers do not seem to have the same care for region specific lines like a westerosi would. And the watch should be able to repay the bank. They have vast reserves of timber. There are metals and game to be had. The problem is that the watch lacks bodies for the labor required to harness said resources. And none of that matters because the long night is approaching and things like gold will mean nothing once the wall falls and the white walkers move south 

 

The Iron Bank cares very much over whether they'll get paid and they didn't overlook the Watch's situation in making their decision. That's bad business. You don't rise as high as the IB by being careless. As I quoted above, Jon notes that the Iron Bank is larger than the other Free Cities' banks combined.

As for ability to pay back the loan, I'm going with what Jon said and the fact that they couldn't raise themselves out of their dire position. Add to that the wildling situation, the Others, and a long bad winter. The NW was nearly a dead thing as of the beginning of AGOT. If you disagree about their ability to repay the loan, you're disagreeing with Jon.

A long hard winter will leave the Watch so deep in debt that we will never climb out, Jon reminded himself, but when the choice is debt or death, best borrow.

Again, there's something fishy about that loan as Jon himself states.

The Long Night has nothing to do with terms of the loan and Jon is thinking that they'll never climb out of debt, so it's not Jon's mind either regarding his thoughts on accepting or repaying the loan.

Edited by Lollygag

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17 hours ago, cpg2016 said:

Some of this is obviously because the author wants it this way, but Tycho Nestoris is an intelligent and able banker; he wouldn't be lending to the Watch if he didn't see some collateral or means of repayment there.

Speculation here mostly, but concurrent to the whole Iron Bank thing, Jon demonstrated Arya's value to him with the fArya plot. Not sure how much the IB knew of the Winterfell plot or if it impacted their decision or not.

I'm not sure how much, but the FM and the Iron Bank are affiliated to some degree. And the FM have real Arya. I'm inclined to think that if real Arya decided to leave the FM, they might have a problem with that.

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For the Watch Iron Bank! The next Lord Commander might be smarter.

Or they could petition the Iron Throne.

Edited by hiemal

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5 hours ago, Lollygag said:

The Iron Bank cares very much over whether they'll get paid and they didn't overlook the Watch's situation in making their decision. That's bad business. You don't rise as high as the IB by being careless. As I quoted above, Jon notes that the Iron Bank is larger than the other Free Cities' banks combined.

you don't become the largest lending institution in the world by making bad business decisions. the watch has plenty of resources at its disposal but it lacks the men to exploit it. Remember the quote from the old bear about how the trees used to be kept away from the wall, but now they grow right up to it 

5 hours ago, Lollygag said:

As for ability to pay back the loan, I'm going with what Jon said and the fact that they couldn't raise themselves out of their dire position. Add to that the wildling situation, the Others, and a long bad winter. The NW was nearly a dead thing as of the beginning of AGOT. If you disagree about their ability to repay the loan, you're disagreeing with Jon.

A long hard winter will leave the Watch so deep in debt that we will never climb out, Jon reminded himself, but when the choice is debt or death, best borrow.

Yes, I am disagreeing with the unreliable narrator  the last hearth has plenty of trees, and white harbor has a shipbuilding industry,  but it took dinner at winterfell to let the Umbers and the Manderlys come together to in an agreement that would be mutually beneficial to both of them. The watch has trees, farmland, south of the wall and Trees and mineral wealth north of the wall. The Iron bank would see this. 

5 hours ago, Lollygag said:

Again, there's something fishy about that loan as Jon himself states.

Of course, the largest lending organization in the world would have its own motives in lending people money. 

5 hours ago, Lollygag said:

The Long Night has nothing to do with terms of the loan and Jon is thinking that they'll never climb out of debt, so it's not Jon's mind either regarding his thoughts on accepting or repaying the loan.

The long night has everything to do with what will happen as to the repayment of the loan in the story. but only the readers know this. 

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1 hour ago, Dorian Martell's son said:

you don't become the largest lending institution in the world by making bad business decisions. the watch has plenty of resources at its disposal but it lacks the men to exploit it. Remember the quote from the old bear about how the trees used to be kept away from the wall, but now they grow right up to it 

Yes, I am disagreeing with the unreliable narrator  the last hearth has plenty of trees, and white harbor has a shipbuilding industry,  but it took dinner at winterfell to let the Umbers and the Manderlys come together to in an agreement that would be mutually beneficial to both of them. The watch has trees, farmland, south of the wall and Trees and mineral wealth north of the wall. The Iron bank would see this. 

Of course, the largest lending organization in the world would have its own motives in lending people money. 

The long night has everything to do with what will happen as to the repayment of the loan in the story. but only the readers know this. 

Stupid forum ate my post and I'm not rewriting it all. Short version.

Potential =/= Actualization. The NW are dying, even by Westerosi standards their quality of life is lousy. Even to save the kingdom, they've not had the wherewithal to actually use any resources. The Lannisters and the IT also have resources, yet they aren't paying either. Westeros has stagnated for thousands of years because of this type of lack of initiative. And the lack of men both in the Watch and the North is a BIG.THING. and has been since the beginning of the series. Will be even worse after the winter, Others, etc. Think Jon is seeing it exactly right.

You say they have their own motives for lending the money beyond profit but argue that the loan is in itself completely logical?

I'm not discussing what only the readers know, just what Tycho wrote, what he intended, and what Jon knows and what he may not know. Character motivation has nothing to do with what only readers know. Not sure why you replied this to me.

Edited by Lollygag

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25 minutes ago, Lollygag said:

Potential =/= Actualization. The NW are dying, even by Westerosi standards their quality of life is lousy. Even to save the kingdom, they've not had the wherewithal to actually use any resources. The Lannisters and the IT also have resources, yet they aren't paying either. Westeros has stagnated for thousands of years because of this type of lack of initiative. And the lack of men both in the Watch and the North is a BIG.THING. and has been since the beginning of the series. Will be even worse after the winter, Others, etc. Think Jon is seeing it exactly right.

This is why the loan will not get repaid 

26 minutes ago, Lollygag said:

You say they have their own motives for lending the money beyond profit but argue that the loan is in itself completely logical?

Yes, it is called diversifying an investment portfolio. The crown owes the IB money. The watch does, and Stannis will soon as well. They are hedging a bet that someone will repay a loan at some point. 

27 minutes ago, Lollygag said:

I'm not discussing what only the readers know, just what Tycho wrote, what he intended, and what Jon knows and what he may not know. Character motivation has nothing to do with what only readers know. Not sure why you replied this to me.

The readers are able to see things that a character in a POV cannot. That is the whole point of a story like this. Of course it will be discussed. 

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This is not a post with authoritative banking information, but more along the lines of some general knowledge.

Banks and other high finance institutions (not to mention bookies) try to "hedge" their positionsbets by laying off risk where they can. They are willing to waste some money on losing causes since they look at every angle of the risks they face with their loans. Hedge is analogous with insurance. They are paying out money just in case something bad happens one way, so that they, at least, get something back another way.

I can imagine IB investing in Stannis, hedging that if the Lannisters default, Stannis might come through with some income for them - not necessarily what they are owed by the Lannisters, but, more than their investment in Stannis, and more than the Lannisters would seem likely to pay (at the moment zero). If the Lannisters pay up in the end run, then they lost a bit on their hedge.

The loan to the NW is a bit shadier - only because we don't get details. It's easy to imagine that the IB Factor is given details by Jon about the existential risk that exists in Westeros. Which, of course, is preposterous on its face, but a minor investment to hedge against it is not a big deal. I'm guessing that the monies loaned to NW are trivial from IB standards.

What if NW default? The IB is, meanwhile looking for other hedges. The Martels? The Iron Born? The White Walkers... Or even Dany. There is no mention of finances in regards to Dany's needs for fleets, troops, etc. Odd...

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3 hours ago, Dorian Martell's son said:

This is why the loan will not get repaid 

Yes, it is called diversifying an investment portfolio. The crown owes the IB money. The watch does, and Stannis will soon as well. They are hedging a bet that someone will repay a loan at some point. 

The readers are able to see things that a character in a POV cannot. That is the whole point of a story like this. Of course it will be discussed. 

 

:bang:I don't know why you're even replying to me. I only care about character motivation in regards to the agreement just made. If you want to discuss the ACTUAL repayment of the loan at some point in the future, bring it up with someone else. I don't see a point in discussing ACTUAL repayment because everything will go to **** as you've said and we weren't told the terms of the agreement and Jon called it fishy.

Jon did not call the loan fishy because he doesn't understand hedge funds and investment portfolios. Economics aren't GRRM's strong suit, for which I'm grateful as that would be quite dull. And I still maintain that hedging a bet that the NW will repay a loan is nonsensical unless there's something else going on that GRRM is actually likely to bring up in the series (not investment portfolios or hedge funds).

@Wild Bill

It doesn't sound like the IB are doing hedge funds or investment portfolios. They find some way to get their money. RL banks use hedge funds and investment portfolios because they can't recoup their investment by selling the defaulter and their family into slavery or threaten/murder/extort them. And hopefully ethics play into that decision too, but with some of them, I wonder.

"The Braavosi have a saying too." Pycelle's jeweled chain clinked softly. "The Iron Bank will have its due, they say."

Tycho Nestoris had impressed him as cultured and courteous, but the Iron Bank of Braavos had a fearsome reputation when collecting debts. Each of the Nine Free Cities had its bank, and some had more than one, fighting over every coin like dogs over a bone, but the Iron Bank was richer and more powerful than all the rest combined. When princes defaulted on their debts to lesser banks, ruined bankers sold their wives and children into slavery and opened their own veins. When princes failed to repay the Iron Bank, new princes sprang up from nowhere and took their thrones.

They support the replacement prince who will honor the former's debts.

Also, the Iron Bank isn't a purely financial institution. Its motives have to be balanced by its history as being originated by slaves who were at odds with Valyria. Whole lot of mystery there...

They're probably quite conflicted about Dany. She adamantly hates slavers, but the Braavosi hate dragons. Perhaps this part of the discussion is a hint as to what the IB are thinking?

The narrow sea is perilous this time of year, and of late there have been troubling reports of strange ships seen amongst the Stepstones."

"Salladhor Saan?"

"The Lysene pirate? Some say he has returned to his old haunts, this is so. And Lord Redwyne's war fleet creeps through the Broken Arm as well. On its way home, no doubt. But these men and their ships are well-known to us. No, these other sails … from farther east, perhaps … one hears queer talk of dragons."

 "Would that we had one here. A dragon might warm things up a bit."

"My lord jests. You will forgive me if I do not laugh. We Braavosi are descended from those who fled Valyria and the wroth of its dragonlords. We do not jape of dragons."

 

Edited by Lollygag

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