Ex-Barclays director to head up Nationwide dealings with Nama

IRISH NATIONWIDE has appointed Valerie Mulhall, a former director at Barclays Bank Ireland, as the executive responsible for liaising with Nama on the purchase of the building society’s soured development loans.

The building society plans to bolster its management team further by hiring a senior executive with expertise on the London property market to review its UK loan book.

Irish Nationwide’s UK loans are mostly concentrated on commercial property investment and residential development in London and the southeast of England.

A spokesman for the building society said Irish Nationwide would also “shortly” appoint a head of commercial lending for Ireland and the UK. It is expected to be an external appointment.

The building society is known to have a large number of profit-share agreements on UK property development ventures where it has taken an interest in any potential upside on the project.

The profit shares could pose difficulties for Nama when it comes to valuing the loans in advance of their transfer from the lender.

Some €4.4 billion in loans, or 42 per cent of Irish Nationwide’s €10.5 billion loan book, are in the UK. The building society has development loans totalling €4 billion.

Bloxham Stockbrokers estimated that Irish Nationwide would transfer €7 billion, or two-thirds of its loan book, to Nama, and that the Government would pay €5 billion for the loans, representing a discount or “haircut” of 29 per cent on the face value of the assets.

Irish Nationwide made a pre-tax loss of €280 million in 2008 after writing off €464 million on bad loans, an increase from €49 million the previous year. A quarter of the bad loan provision last year related to commercial loans in the UK.

The building society said the provisions against UK loans amounted to 3.6 per cent of the British loan book.

The building society is expected to set aside more provisions to cover rising loan losses this year as 80 per cent of Irish Nationwide’s loan book relates to property investment and development.

The spokesman said the repayment of a €1 million bonus by Irish Nationwide’s former chief executive Michael Fingleton had “no contractual basis”, and was a matter to be resolved between the Government and Mr Fingleton.

The Minister for Finance Brian Lenihan last week said he cannot force Mr Fingleton to return the bonus, which the former building society chief executive agreed to repay last March.