EBS told to expect discounts of 60%

NAMA TRANSFER:THE EBS was told yesterday that it should expect higher discount levels of up to 60 per cent in the transfer of loans to Nama, but the Minister for Finance Brian Lenihan said that the 75-year-old institution would need no further State money.

So far the Government has injected €350 million into the EBS, and has pledged a further €440 million to allow the building society to fulfil its capital requirement.

This requirement was set out by the Financial Regulator.

Mr Lenihan said yesterday that although the institution may need more funds, this is expected to come from the new buyer.

The EBS is currently undergoing a sales process which has led to four interested parties submitting offers for the institution.

They comprise three private equity-led consortiums, and Irish Life and Permanent.

The haircut of 60 per cent on Nama-bound loans from the EBS is higher than the discount that was applied in the previous transfers of loans from the EBS to Nama.

EBS transferred loans with a nominal value of €35.9 million in return for €19.3 million in Nama securities in the second tranche of loans, a 46.4 per cent discount.

In the first tranche of loans transferred to Nama which saw the EBS transferring €140 million in loans to Nama, the discount was 37 per cent.

In total the EBS is transferring approximately €1 billion in loans to Nama.

Last week the building society published interim results which showed that impairment provision charges amounted to €223.5 million in the six-month period, with €105 million of that relating to loans being transferred to Nama.