Nama reveals €1.1bn loss for last year in annual report

The National Asset Management Agency (Nama) set aside almost €1.5 billion last year to cover further write-downs on €71 billion of loans it had acquired from five banks, according to its annual report published today.

The agency made an operating profit of €305 million for the year, but impairment losses were €1.485 billion for the 12-month period.

In the first quarter of 2011, Nama made an operating profit of €91 million.

"We've made enormous progress on a wide range of fronts over the past 15 months, and we're ahead of schedule in respect of many areas," said the agency's chief executive Brendan McDonagh.

"Our expectation now is that the pace of activity will step up again in the months ahead as we move through the implementation phase of our work."

Last year, Nama acquired 11,500 loans of 850 debtors from the five participating institutions. It paid €30.2 billion for nominal loan balances of €71.2 billion, a 58 per cent discount.

It acquired further loans with a face value of €1.1 billion for a purchase price of €300 million from AIB in February, bringing the loan portfolio to €72.3 billion and the total paid for the loans to €30.5 billion.

Mr McDonagh said that the agency still believed that it would make a €1 billion profit by the end of its 10-year lifespan.

The agency has reviewed the business plans of 91 of the top 180 borrowers that it will manage directly and that these borrowers accounted for 77 per cent or €55 billion of the face-value loans on its books, said Mr McDonagh. Enforcement action has been taken against 27 borrowers.

Chairman Frank Daly said the agency would review the business plans of the remaining 89 borrowers by the end of the year.

The majority of the property assets relating to these loans are in the State, while 32 per cent are in the United Kingdom.

The agency is also overseeing the sale of helicopter and seized jewellery belonging to debtors, as it chases loan repayments.

Nama has published a list on its website of hundreds of properties it controls in the Republic, Northern Ireland and Britain.

Mr McDonagh said that of the €3.9 billion of sales agreed Nama had sold properties in the UK at prices above what it had paid for the loans but that some assets in Ireland were sold for below their purchase price, which was "reflective of the market".

Nama has loans on 143 hotels, of which 83 are in Ireland. The agency has loans linked to eight five-star hotels, 33 four-star, 32 three-star and one two-star hotel, for which "all offers will be considered", he said.

"We don't want to be in the hotel business. We want to get out of that business as quickly as possible," said Mr McDonagh.

Of the 83 Irish hotels, five have been closed, while just over 30 are being run by owners who borrowed the original loans on the properties.

Mr Daly said that there were 900 hotels in Ireland and the perception that the agency was running the hotel industry in Ireland – "and maybe ruining it as well", as some have suggested – was not correct.

"We are not in the business of supporting any hotel that is not commercial viable," said Mr Daly.

Mr McDonagh said that the agency was pursuing developers for the return of unencumbered assets and any assets transferred to third parties to ensure their debts were repaid.

The agency had just secured €200,000 worth of jewellery a borrower had bought for his partner and that this would be sold, he said.

"We are working very hard to get as much money back but we are not being any way insidious about it; we are being business-like and tough but fair," he said.

Mr McDonagh said that Nama was not allowing developers to be paid the salaries they received when their loans were in the banks.

He referred to one "gallant proposal" from a developer who said that he should be earning €1.5 million a year. "He is nowhere in that kind of stratosphere now," he said.

Developers have also had to change their lifestyles to ensure Nama was repaid. "The planes are gone, the helicopters are grounded and are being sold," he said.

A "handful" of developers had not fully disclosed all the assets they owned on statements of affairs, showing their net wealth that they submitted to the agency, he said.