THE HAIRCUTS:THE NATIONAL Asset Management Agency (Nama) is set to apply a significantly higher discount when it purchases the remaining €46.2 billion in loans out of a total of €73.4 billion from the State's troubled banks before the end of the year.
Nama will pay an estimated €30.5 billion for the total loans of €73.4 billion, down from the previous estimate of about €40 billion on a total of €81 billion in loans.
The overall loans to be acquired has fallen by €6.6 billion as the Government has increased the cap on development loans to remain behind at AIB and Bank of Ireland, in order to speed up the transfer process.
Nama will now not acquire individual loans of less than €20 million from the banks, up from €5 million previously.
This will remove about 650 borrowers – mostly small-scale developers who received loans for speculative projects primarily in rural areas – from the transfer process.
The vast bulk of the €6.6 billion in loans – about €4.5 billion – are at AIB, with the remainder, some €2.1 billion, at Bank of Ireland.
According to market sources, the move is aimed at reducing the administrative headache of managing so many small loans.
The 650 borrowers whose loans will remain behind at the banks account for thousands of documents that would have faced intensive processing by Nama.
Minister for Finance Brian Lenihan said that loans of such a size can be “efficiently managed by the banks themselves through their network of local representation and relationships”.
To date, some € 27 billion in loans have been transferred to Nama in two tranches.
However, to provide more certainty and to end the speculation on discounts, Mr Lenihan said yesterday the remaining Nama transfers will be completed in a single tranche for each institution.
Nama plans to acquire the remaining loans by the end of the year or the early part of next year.
Anglo is set to transfer its remaining € 19 billion of eligible assets to Nama by the end of October.
The remaining loans will be transferred at an expected discount of 67 per cent, up from 58 per cent for the first two tranches, which means the bank will require an extra €6.4 billion in capital and possibly €11.4 billion more in a worst-case scenario.
