Nama deal would pay €25m to banks, says McInerney

BANKS OWED over €110 million by house builder McInerney would be unlikely to get much more than €25 million if the National Asset Management Agency (Nama) were to take over their loans, the group’s lawyers told the High Court yesterday.

McInerney wants the court to approve a rescue plan for the business that will see US investor pay €25 million to the three banks – Anglo Irish, Bank of Ireland and Belgian-owned KBC – in final settlement of the debt, but the banks argue this would be unfairly prejudicial to their interests.

McInerney’s legal team told Mr Justice Frank Clarke that Nama has been paying market value for property loans given by the five Irish banks participating in the scheme.

On the basis of figures provided to the court in the autumn, this would mean that the banks would ultimately wind up with a figure not far removed from Oaktree’s €25 million offer.

However, the banks are likely to produce evidence today showing Nama has been buying loans from the participating banks at their November 2009 value.

This would be higher than the market value, as prices continued to fall through 2010.

Early last month, Justice Clarke ruled the rescue plan and €25 million offer would be unfairly prejudicial to the banks, who proposed an 11-year wind-down managed by a receiver.

However, he has decided to revisit this ruling because it has since emerged that Nama intends taking over the debts due to Anglo and Bank of Ireland, which rules out the possibility of an 11-year receivership.

Before the ruling was finalised, the banks wrote to McInerney indicating the loans were about to be transferred to Nama.

The letters prompted the group to ask Justice Clarke to review his judgement. He has since begun hearing evidence on how Nama’s intervention would affect the banks’ interests.

In an affidavit, Bank of Ireland group legal services solicitor, Patricia McSparran, says she was wrong when she e-mailed McInerney staff in November to say that the group’s loans would transfer to Nama “in the next few days”.

Ms McSparran says she used this phrase “as a stratagem in order to elicit a speedy response” to a number of queries she made and that she actually had no information as to whether the group’s loans would transfer to Nama.

She also acknowledged that when she mailed the company the day after the ruling in the banks’ favour in January, stating the loans were due to transfer to Nama “very shortly”, she had no grounds for saying this.

Ms McSparran said she only knew that Nama would decide on the McInerney loans at some point, and she wanted to have a due diligence report completed before then. “Nobody told ... me the transfer ... was likely to take place shortly,” she says.