State loans agency pledged €850m in cash as collateral with NTMA

Wed, Oct 24, 2012, 01:00

NAMA:State loans agency, the National Asset Management Agency, had to pledge €850 million in cash as collateral with its parent agency, the National Treasury Management Agency, to cover billions of euro in hedging positions taken on loans.

The arrangement with the NTMA appeared for the first time in Nama’s accounts for the second quarter of the year published last week.

No collateral had been provided by Nama to the NTMA at the end of the previous quarter.

Nama had €8.6 billion of foreign currency derivatives at the end of last year to hedge exchange-rate risks on foreign currency loans, mostly in sterling. This compared with €10.3 billion worth of currency derivatives at the end of 2010.

A spokesman for Nama said the collateral was required by NTMA as a result of Ireland’s credit rating and that the NTMA required the collateral to support hedging positions undertaken for Nama and it deposited the collateral with the NTMA.

Nama made a net gain of €93 million on derivatives in 2011, up from €23 million the previous year.

It said most of the €14 billion in interest-rate derivatives that it acquired with the loans from the banks were non-performing. Some €2.5 billion were performing.