Unfinished business: Nama to leave some unsolved cases behind

Agency due to wind down by 2021, but State will be left with ‘residual loan portfolio’

Nama  was established in  2009 to take toxic property loans off the balance sheets of domestic banks. Photograph: Cyril Byrne

Nama was established in 2009 to take toxic property loans off the balance sheets of domestic banks. Photograph: Cyril Byrne

 

A number of legal cases and a small residual portfolio of property loans are likely to remain unresolved when State agency Nama winds down its operation in 2020 or 2021.

In a written answer to questions from Sinn Féin’s finance spokesman Pearse Doherty, the Minister for Finance, Paschal Donohoe, said the Government was giving “active consideration” to how these issues would be dealt with post Nama’s wind-down.

Mr Donohoe said Nama will have “substantially” completed its work by 2020/21, by which time it will have repaid all its subordinated debt and reimbursed its private shareholders.

“There is a possibility that a small number of loans may not be resolved by 2021 due to ongoing litigation that is largely outside Nama’s control,” he said. “In addition, there is a possibility that Nama may also be left with a small residual loan portfolio where best value for the State may not be achieved through sale or disposal before the end of 2021.

“Such assets are currently expected to represent less than 1 per cent of Nama’s original portfolio.” (Nama paid €32 billion to purchase €74 billion in par value loans). “Active consideration is under way regarding Nama’s end-of-life strategy and the maximisation of the return of any surplus to the State in respect of these remaining assets.”

Section 227 review

Mr Donohoe said this would form part of its Section 227 review of Nama, which is required every five years under the legislation governing the agency, which was set up in 2009 to take toxic property loans off the balance sheets of domestic banks.

He said the review would be published later this year, after which he would decide on the wind-down timetable. Nama is expected to achieve a surplus of €3.5 billion for the exchequer by the time its operation ends.

Mr Donohoe also told Mr Doherty that Nama had funded the delivery of 9,669 homes by its debtors and receivers between January 2014 and December 2018.

He said Nama had delivered 2,481 social housing units directly through approved housing bodies, local authorities and a special purpose vehicle.

Nama was “working to maximise the amount of debt that can be recovered for taxpayers”

Mr Donohoe said some 223 debtors remained under Nama’s management by the end of November. Of these, 139 were in “support or forbearance strategies” while 84 were subject to enforcement proceedings. The debtors had a combined par debt balance of €23.9 billion, although he he not specify what sum Nama had paid to the lenders to purchase the loans.

Value of assets

The Minister said the value of the assets securing this debt was “very low” and Nama was “working to maximise the amount of debt that can be recovered for taxpayers”.

“Such work includes negotiating effective workout strategies with debtors and receivers and providing funding for investment in assets where it will enhance value,” he said.

Nama’s portfolio had an estimated carrying value of €2.3 billion at the end of 2018.

Nama had 238 staff at the end of 2018 with more voluntary redundancies expected this year as the agency moves towards wind-down. Nama has spent €8.3 million on redundancy payments since 2015, and €2 million on retention payments, which are made to certain staff dependent on Nama “achieving its targets and on satisfactory individual performance ratings”.