CONCERNS THAT property valuers and auctioneers could be exposed to future claims for incorrect valuations is a contributing factor to heavier writedowns being assigned to the value of loans moving to the National Asset Management Agency (Nama).
Estate agents and valuers working for the financial institutions have been placing more conservative values on assets – in particular undeveloped land banks – backing loans to be transferred to Nama, according to sources with knowledge of the process.
The five financial institutions expected to participate in Nama have been working with their own property valuers ahead of the scheduled start of the loan transfers at the end of January.
Nama will appoint its own legal advisers and valuation teams to provide independent valuations on the €77 billion in loans moving to the new State agency.
Asked about the pressure on valuations, a spokesman for the Department of Finance said the banks were having to provide realistic assessments of the values of loans transferring to Nama.
A source close to one of the institutions that plans to participate in Nama said property valuers were concerned about their professional indemnity insurance when assessing property values and felt they had “a duty of care” to Nama as they would to a client given that the State agency will be the ultimate owner of the loans.
One source with knowledge of the banks’ valuation process said that estate agents were finding it difficult to provide accurate valuations as there was little or no activity in the property market.
Minister for Finance Brian Lenihan told the Dáil on Thursday that the July deadline for the transfer of loans to Nama would not be “significantly” extended after “minor delays”.
Mr Lenihan said in September that the Government planned to pay €54 billion for the €77 billion loans to be acquired by Nama, representing an average industry discount of 30 per cent on the loans.
However, the Minister stressed that this was an estimate and that each loan being acquired would be valued by the middle of next year.
Bank of Ireland said last Monday that it believed the discount to be applied on €16 billion of loans it expected to move to Nama “should not be greater than the average discount”.
The bank originally said in September the discount to be applied to its loans could be “significantly” less than the average 30 per cent.
Following the bank’s statement on Monday, analyst Eamonn Hughes at AIB-owned Goodbody Stockbrokers increased his estimate for the discount to be applied to Bank of Ireland’s Nama loans from 18 per cent to 26.5 per cent.
He also revised upwards his estimate for the discount to be applied to loans of €24.2 billion to be transferred from AIB to Nama from 28 per cent to 33 per cent.
