Nama gave notice of plan to repay €2bn

THE NATIONAL Asset Management Agency gave the Minister for Finance three months’ notice in April that it planned to repay €2 billion of bonds to the banks, saying this was conditional on cash being available following the short-term transaction with the former Anglo Irish Bank.

Brendan McDonagh, chief executive of Nama, wrote to the Minister on April 5th saying the board of the agency met on March 28th and approved the repayment of €2 billion of senior bonds issued to buy loans from the banks before the end of July 2012.

The letter was sent just a week after Nama was instructed by the Minister to lend €3.06 billion to Irish Bank Resolution Corporation (IBRC), the former Anglo Irish Bank, with IBRC providing 13-year Government bonds in return as collateral.

Nama took part in the transaction pending Bank of Ireland shareholder approval as the Government sought to use long-term borrowings instead of cash to cover the annual instalment to IBRC on the promissory notes created by the State to cover Anglo’s €31 billion bailout costs.

The €3.06 billion facility was borrowed from Nama by IBRC on April 3rd with a maximum maturity of 90 days under the direction order issued by the Minister under the legislation setting up Nama.

Mr McDonagh told the Minister in his letter of April 5th that the €2 billion repurchase of the Nama senior bonds “will be conditional on Nama having adequate cash balances available at the date of repurchase, taking account of the recent IBRC-Nama transaction”.

He said the agency proposed advising the banks of the repurchase of the bonds “no later than 6th July 2012” with the intention of repurchasing the bonds by the end of July 2012.

The Minister did not reply to Nama’s letter until June 20th – two days after Bank of Ireland shareholders approved its involvement in the transaction – when he agreed with its plan to repay the €2 billion of senior debt.

The letters were released by the Department of Finance to The Irish Times under a Freedom of Information Act request.

Nama subsequently redeemed the €2 billion in bonds earlier than it said it had expected to in the April letter.

The agency, set up to purge the banks of their most toxic loans, repaid the bonds last month, bringing to €3.25 billion the total repayments on senior bonds.

The bonds were repaid after the Nama transaction with IBRC was unwound following Bank of Ireland shareholder approval.

Mr McDonagh told an Oireachtas committee earlier this month Nama was “well on the way” to meeting its target of repaying €7.5 billion of its debts by the end of next year.

Nama borrowed €32 billion to purchase loans with a face value of €74 billion from five Irish lenders and has a targeted schedule of repayments over its lifespan.