Lenihan to reveal level of extra bank capital next week

MINISTER for Finance Brian Lenihan is expected to reveal the extent of the additional capital requirements for Irish-owned banks on March 30th.

It is understood that the Minister will also give an up to date picture of the discounts that the banks will take on transferring their property loans to the National Asset Management Agency (Nama).

Sources indicated yesterday that the first loans could be transferred to Nama as soon as Friday this week. These will relate to the top 10 borrowers and involve about 1,000 loans with a combined value of €17 billion.

Bank of Ireland, EBS and Irish Nationwide received their draft acquisition schedules from Nama late last week and have been given until tomorrow to dispute any details in the documentation.

This deadline for disputes was originally to have been 28 days, but has been shortened significantly by Nama as it seeks to get the loans transfer process moving.

Reports at the weekend suggested that average discounts of up to 40 per cent could be applied to the first tranche of loans.

The draft documentation forms the basis of the banks' agreements with Nama, and deals with the security behind loans and the payment of Government bonds to the institutions following the transfer.

It is understood that final acquisition schedules will be issued to the three institutions this week, with the loan transfers beginning very quickly after that takes place.

The transfer of loans to Nama is expected to have begun by the time the Minister makes his speech on the recapitalisation of the Irish banks.

It is understood that Anglo Irish Bank and AIB have yet to receive their draft acquisition schedules.

Sources indicated that AIB, which is expected to transfer €23 billion in loans to Nama, would receive its draft acquisition schedule in the coming days.

It is not clear when Anglo will be issued with its draft documentation. Anglo is expected to transfer €36 billion worth of loans to Nama, making it by far the biggest single client of the agency.

A spokesman for the Department of Finance said the timeline for the Minister's announcement would be finalised this week and confirmed it would take place before the end of March. The Minister will seek to have his plan signed off by the Cabinet before he makes his speech.

The State has already pumped €11 billion into the Irish banks. Analysts estimate that AIB requires up to €4.4 billion in additional funds and Bank of Ireland up to €2.8 billion to bolster their capital ratios.

Significant cash injections will also be required for Anglo, EBS and Irish Nationwide.

In relation to Bank of Ireland, EBS and Irish Nationwide, it is understood that two of the institutions have sought to clarify the securities held over certain loans since receiving their documentation from Nama.

The State agency is thought to have applied a bigger discount to loans where there is a security issue relating to assets being transferred.

Bank of Ireland and Irish Nationwide are believed to be the two institutions that sought clarification from Nama.

Bank of Ireland is expected to transfer about €12 billion in loans to Nama with Irish Nationwide moving €8.5 billion to the agency.

EBS is transferring €800 million to Nama. The building society has said it will need up to €400 million to replenish its capital base after incurring losses on the sale of €800 million in loans to Nama.