BANKS WILL begin transferring loans to the National Asset Management Agency (Nama) next month, with development loans valued at €19 billion to be transferred in the first tranche, the agency said yesterday.
Around half of the approximately €80 billion in loans to be acquired by Nama will be transferred by the end of April at the latest, according to Nama chief executive Brendan McDonagh.
Speaking at the annual business review of the National Treasury Management Agency (NTMA) – which will have responsibility for Nama – Mr McDonagh said Nama was on track to begin the process of loan transfers and was awaiting approval from the European Commission.
Mr McDonagh said the initial valuations showed that the average discount on loans transferred to Nama would be about 30 per cent, the discount originally mooted by the Government.
The loans of the top 10 borrowers, with a nominal value of €19 billion, will be transferred in early February, subject to approval. A second transfer will take place in early March, while Nama intends that a third transfer will take place by the end of March – or “by the end of April at the latest”.
At this point, about half of the loans earmarked for the agency, representing the debts of the 100 largest borrowers, will have been transferred to the State under Nama.
The process is expected to be completed by the end of the third quarter of 2010. The plan to cleanse the Irish financial system of its bad debts was to begin in December, but was delayed.
The original size of the loans to be transferred was late last year estimated at €77 billion, for which the State will pay €54 billion.
The NTMA’s new chief executive John Corrigan said he was confident the European Commission would approve the Nama scheme. “While we have no reason to doubt that we will get that approval, the timing is a moveable feast,” Mr Corrigan said.
The commission has asked the Financial Regulator to oversee the process and the regulator has in turn outsourced the task to a “major international firm”, Mr McDonagh said.
Shareholders at AIB voted on December 23rd to participate in Nama, while Bank of Ireland is to vote next Tuesday at University College Dublin, it said yesterday.
The State has already pumped €11 billion of capital into the banking sector, which collapsed in the wake of the Irish property bubble and the fallout from the global financial crisis. Mr McDonagh said he had received all of the necessary information on the top 10 borrowers from the five Nama lenders – AIB, Bank of Ireland, Anglo Irish Bank, EBS and Irish Nationwide.
The Nama chief executive added that a recent recovery in UK and other overseas property prices was good news for Irish taxpayers, as more than a quarter of the Nama loans relate to overseas assets.
