FIVE OF the guaranteed financial institutions have submitted the names of their top 100 developer borrowers and the size of their loans to officials setting up the State’s “bad bank”, Nama, by a deadline set for yesterday evening.
The information will be used to determine the first borrowers to be processed by Nama (National Asset Management Agency) once the legislation establishing the agency is passed later this year.
Teams within Bank of Ireland, AIB, the nationalised Anglo Irish Bank, Irish Nationwide Building Society and EBS building society have been collecting information on their largest development loans during the past week to meet the deadline for further information.
Brendan McDonagh, the interim managing director of Nama, and his team within the National Treasury Management Agency (NTMA), under whose aegis the new agency is being set up, are expected to process the top 25 borrowers first and then subsequent customers in tranches of 25.
The top 50 developers across the guaranteed lenders are estimated to account for between €40 billion and €50 billion of the €80 billion to €90 billion in development and associated loans which will be sold to Nama by the banks at an as-yet-undisclosed discount.
Irish Life Permanent has no development loans and was not asked to submit information. However, the group has loans to developers on commercial investment properties which may be sold to Nama if they were provided as collateral for development loans.
Bank of Ireland has divided staff into teams to manage the legal and accounting issues arising from the transfer of the loans.
A steering group of 12 senior executives within AIB has been overseeing a team of 200 staff working on preparation work for Nama.
The two main banks and EBS building society are expected to be the first institutions to sell their development loan books to the agency.
The top 100 borrowers in Bank of Ireland are estimated to account for about half the bank’s development loans, although some of the other institutions are thought to have larger individual exposures to their biggest developer clients.
Anglo has a higher concentration of large borrowers so the bank’s 100 biggest clients would account for a larger percentage of its overall development loan book.
Nama is being created to buy soured property loans from the financial institutions with the aim of cleansing their balance sheets in an effort to kick-start new lending.
London-based HSBC was appointed last week to provide banking advice, while PricewaterhouseCoopers are acting as tax advisers. Legal advisers are due to be appointed by tomorrow.
The drafting of the legislation setting up Nama is at an advanced stage.
