Nama expects profits of €1bn after this year

THE NATIONAL Asset Management Agency expects to make profits of €1 billion a year from 2012 – after allowing for bad debts – and to see a sharp reduction in loan impairments, the chief executive of the agency, Brendan McDonagh, said.

Mr McDonagh said in an interview with The Irish Times that the loans agency will have to take only “incremental” impairments on specific loans after writing down the value of its loans by €2.75 billion since Nama was set up in 2009.

He ruled out any requirement for State support, saying there was €1.5 billion of subordinated debt issued to the banks that it did not have to repay if it was unable to recover what it paid for the loans.

“We are probably going to be producing pre-impairment profits of well over €1 billion a year, so we would believe at this stage – with a cumulative impairment taken of €2.75 billion, absent anything that has taken place in the market – we are probably reasonably provided for at this stage,” Mr McDonagh said.

Nama, which was set up to purge the banks of their most toxic assets, acquired property loans with a face value of €74 billion from five lenders for €32 billion raised from State-backed bonds.

The agency has been contacted by the Spanish authorities for advice, said Mr McDonagh, as Madrid plans to resolve toxic loans in the country’s banking system.

Nama may put a further 250 residential properties up for sale in September under the deferred mortgage payment initiative aimed at encouraging sales by protecting buyers from negative equity following the pilot scheme.

Mr McDonagh defended Nama’s approval of €15.5 million in annual pay to 160 developers, or an average of €97,000 each, saying that receivers and property managers would cost much more.

Nama earned €6 million on the short-term cash-for-bond swap with Irish Bank Resolution Corporation to cover this year’s €3.06 billion bill on the Anglo Irish Bank promissory notes, he said.

Mr McDonagh had no comment on Nama’s decision to appeal to the High Court the ruling of the Commissioner for Environmental Information that it should fall under the Freedom of Information Act.

The Government plans to introduce legislation to extend the Act to the State loans agency.