Nama 'confident' over bank loans

Wed, Mar 14, 2012, 00:00

The chairman of the National Asset Management Agency (Nama) has said that he is still "confident" that it will recover the €32 billion that it paid financial institutions for property loans and the cost of carrying them but that it would be a "huge challenge".

Speaking to the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, Frank Daly said that Nama aimed to recover as much as possible but the prospects of recouping the €74 billion face value of the loans "certainly are not great" and are in fact "pretty weak".

Nama chief executive Brendan McDonagh said that a further €4 billion in asset sales would have to be approved this year and next, bringing total approved sales to €9 billion, if the agency is to repay the troika's target of €7.5 billion - a quarter of its debts - by the end of 2013.

Asked if they were picking "low-hanging fruit" by selling assets in the UK, Mr McDonagh said that Nama had to sell assets "where there is the greatest liquidity."

Mr Daly told Fine Gael TD Liam Twomey that Nama was identifying potential properties that could be suitable as alternative sites for the proposed national children's hospital.

Mr McDonagh told the committee that the agency had received 150 applications from debtors or directly from their tenants seeking rent reductions, and that Nama had agreed reductions in 120 cases and was still assessing the remaining 30 applications.

Nama was being realistic about the "what is happening out in the market", he said.

Responding to criticisms that the agency was "slow or lumbering", Mr McDonagh gave a detailed account of the agency's activities to date. The average time taken on decisions was six days, he said.

Nama has agreed business plans with 530 debtors, taken enforcement action against more than 180 debtors more and has yet to assess the business plans for another 60 debtors, he said.

Two-thirds of the 790 debtors in Nama were working "constructively" with the agency, he said.

Mr Daly said that Nama had decided not to bring 600 smaller debtors into the agency under its direct management from the banks as recommended by former HSBC chief executive Michael Geoghegan in his review of Nama last year.

Instead, Nama plans to install five staff on rotation in each of the three banks from which it has acquired loans - Irish Bank Resolution Corporation (formerly Anglo Irish Bank), Allied Irish Banks and Bank of Ireland - said Mr Daly.

Mr Geoghegan had argued that failing to bring the 600 debtors into Nama within six months might increase the risk of the agency failing to meet its debt repayment schedule. Mr Daly said that Nama's alternative arrangement would be kept under review.

Mr Daly responded to claims that Nama had frustrated job creation, pointing out one example where 230 jobs were created in south Dublin through an investment facilitated by the State loans agency.

The Nama chairman questioned whether the criticisms arose as a result of negotiations over properties in question being done in public.

"I am sometimes surprised at the readiness of a small number of commentators to accept often deliberating misleading stories about Nama without showing the scepticism that might be due given the obvious interests of many of those promoting these stories," he said.

The committee was told that about 9,500 people are employed in Ireland by Nama debtor companies and that €506 million in working and development capital loans has been provided to debtors in this country and €1.1 billion in total.

Sinn Féin TD Pearse Doherty told the committee hearing that he had introduced legislation to bring Nama under the Freedom of Information Act to improve the transparency at the agency.