No incentive to repay Nama debts, says Grehan

DEVELOPER RAY Grehan, whose property interests have been put into receivership by the National Asset Management Agency, has said there is no incentive for him to stay in Ireland and repay his debts to the State loans agency.

Mr Grehan said Nama would continue to pursue him for the full €650 million in property loans he owes even though the agency has removed his ability to repay his debts. "There is no future in today's market in Ireland but there may be a future in 10 years' time," he told The Irish Times.

“But if you listen to Frank Daly [Nama chairman], it is not an option. He says that your debt will always be owed to the State.”

Mr Grehan was one of a number of contributors to Nama-land, a programme about the workings of the State agency broadcast by RTÉ's Prime Timelast night.

The developer said he was looking at his options but that there was no opportunity left for him in Ireland after Nama appointed receivers to his property assets in Ireland and the UK.

“They have taken the opportunity away from me to repay my borrowings. Therefore if I come back in five or six years’ time and I create a business in the UK or elsewhere in the world and I create wealth again, they can come after that as well,” said Mr Grehan.

“This is not an opportunity to start again – this is an opportunity to knock our lights out,” he said.

Speaking to Prime Time, economist Peter Bacon, the architect of Nama, said the agency was not an asset or property management company as he had envisaged it but a debt collection agency. “It is difficult to know why it is being implemented in this way... One possible reason is that you would not find the expertise to run that kind of operation within Ireland.”

The aim of Nama was to repair the balance sheets of the banks, not to make a profit, he said, and that Nama underpaid the banks for €72 billion in loans it acquired.

It made no difference whether Nama made a profit or not as the agency and the State’s bank bailouts were “two sides of the one coin”, he said. “If Nama believes that generating a profit makes it look good and feel good, well and good. In terms of the taxpayer, it has no effect,” said Mr Bacon.

His initial proposal for Nama involved the removal of €156 billion of land, development and property investment loans from the banks, he said. The decision to remove €72 billion meant that there were loans remaining but that the EU-IMF bailout was supporting the removal of these loans.

It would have been better to repair the banks “in one fell swoop” but this wasn’t possible.

The chief executive of Nama, Brendan McDonagh, told Prime Time it still had to carry out due diligence on €17 billion of loans acquired from the banks.

Nama fast-tracked the acquisition of the loans last year, applying an average discount before examining them loan-by-loan to remove uncertainty around the banks.

Mr McDonagh said there was incomplete loan documentation as in some cases the banks used the same solicitors as the borrowers in transactions and the banks were trying to get this documentation.