FIVE OF the financial institutions guaranteed by the Government have been asked by officials working on the State’s “bad bank” plan to list the names of their top 100 developer customers and the size of their loans by Monday.
The information will advance plans by the the National Asset Management Agency (Nama) to acquire the loans of the top 25 borrowers whose assets will be handled first by the State agency.
The loans of the lower tiers of developers are expected to be transferred in tranches of 25 customers until the top 100 developer borrowers within the guaranteed lender are moved across to Nama.
The top 50 borrowers are expected to account for loans of €40 billion to €50 billion of the expected €80 billion total that will be transferred to the loan agency.
It has emerged that the top developer customer owes close to €2 billion, though his loans may exceed this figure when borrowings from foreign banks falling outside the guarantee are included.
Fewer than 10 developers each owe more than €1 billion.
Questionnaires were submitted on Monday to Bank of Ireland, Allied Irish Banks, Anglo Irish Bank, Irish Nationwide Building Society and EBS building society seeking further details on their top 100 borrowers in the development sector by next week, according to senior banking sector sources.
Irish Life & Permanent has no development loans, though it has provided loans to developers for commercial investment properties which may also be transferred to Nama as they were provided as collateral for development loans.
Officials working on the Nama plan received a detailed breakdown of the number of top developers last month and the amounts they owe. The latest request for names will lead to a demand for detailed files on the first development loans to be bought by Nama.
Nama officials are expected to ask the Government to limit the purchase of toxic assets from the banks to loans exceeding €5 million, as this will significantly reduce the number of borrowers falling under the “bad bank” plan.
By limiting asset purchases to individual loans exceeding €5 million, Nama will reduce the number of customers falling under its control from 14,000 to about 1,500, easing the administrative headache facing the State-run body.
This will mean that the total development loans being handled by the agency will fall from €55 billion to €47 billion – most of the difference are loans held at Bank of Ireland and Allied Irish Banks.
While some €8 billion in loans may not be transferred, Nama’s purchase of the large development loans will also force write-downs by the banks on the smaller loans.
Nama is expected to buy €33 billion in loans on assets such as investment properties provided as collateral for development loans.
Anglo Irish Bank chairman Donal O’Connor told an Oireachtas committee yesterday that the bank would transfer €17 billion in development loans to Nama.
It’s understood the bank will also transfer some €10 billion in associated loans. Advisers to Nama will be appointed shortly.
