An amendment to the legislation covering the National Asset Management Agency (Nama) published today will allow for the transfer of up to 20,000 additional small loans from Bank of Ireland and AIB to the agency.

The National Asset Management Agency (Amendment) Bill 2011 published by the Government provides a legislative framework for the transfer to Nama of land and development loans previously excluded on the basis that they were valued below a threshold of €20 million.

The removal of this threshold was agreed with the EU and IMF in November as part of the bail-out package. Originally Nama was to acquire all land and development loans valued above €16 million from Bank of Ireland and AIB, but this was increased in September to €20 million.

It was estimated at the time of EU/IMF agreement that the additional loans to be transferred to Nama would amount to about €16 billion. However a spokesman for the Department of Finance said today the total is now expected to be lower than this as “associated loans” will not be transferred. “The actual value will only be known when the banks assess their loan book,” he said.

“The loans will be valued and acquired by Nama in pools of particular loan categories rather than individually,” he added.

The discounts to be applied to these loans will be based on Nama’s experience to date in relation to the location of the land on which the loan has been secured, and the extent to which the development on that land has been completed. Therefore different levels of discounts may apply, depending on whether the land is located in the Republic, Northern Ireland or the UK, the Department spokesman said.

The management of these loans is to be outsourced to the two banks, under performance agreements.

The Bill also increases the level of burden sharing by the banks in respect of these news loans.

A spokesman for Nama said that the removal of the €20 million valuation threshold will affect anyone with land and development loans with AIB or Bank of Ireland, “right down to the local professionals and syndicates who might have got together to develop apartments”.

Meanwhile Fianna Fáil senator Mark Daly claimed today in the Seanad that there were “numerous anecdotes” of individuals who are “illegally putting bids in on their own debt through third parties and offshore companies” and buying back their debt from Nama at hugely reduced rates.

Responding to this, Nama said it has addressed this issue extensively at the Public Accounts Committee.

“We would ask any other person to advise us of incidents where they think this may be happening,” a spokesman for the agency said.

“For our part, Nama is determined to avoid such developments in so far as it can within the law as passed by the Oireachtas.”