FEES AND EXPENSES:THE DRAFT business plan published yesterday allows for fees and expenses of €2.64 billion over the 10-year life of Nama. Most of the fees will relate to the process whereby the banks' loans will be transferred to Nama, details of which were also outlined.
In the first instance the banks will have to draw up a list of eligible loans – although they will be able to flag loans they think should not be transferred. The Minister for Finance will decide if they are eligible after taking advice from an “expert reviewer”.
The banks will also have to provide a valuation which will be audited and reviewed by a “panel of valuers” appointed by Nama. The legal documentation related to the loan will also be reviewed by legal advisers and if the legal title and other documents are defective and cannot be rectified, Nama can refuse to accept the loan or charge a bigger discount.
“Loan valuation firms” working for Nama will then value the loan taking into account the associated collateral and also the value of interest rate hedges and other derivatives associated with the loan. The work of the valuers will be audited by an “Audit Co-ordinator” who will also prepare a schedule under which the loans will be acquired.