Some McKillen loans excluded from second Anglo Nama transfer

 

THE SECOND tranche of assets purchased by the National Asset Management Agency (Nama) from Anglo Irish Bank does not include some of the bank’s loans to developer Paddy McKillen who is challenging the agency in the courts.

Mr McKillen has loans totalling €800 million with Anglo, which were earmarked for transfer in the second tranche. It’s understood that the transfer of most of his loans to Nama are on hold, pending the outcome of his judicial review against their sale.

The case is due to be heard by the Commercial Court in October.

Nama had originally planned to purchase loans with a face value of €8 billion from Anglo in the second tranche, but the agency yesterday said that it had purchased loans with a face value of €6.75 billion from Anglo, paying €2.57 billion or a discount of 61.9 per cent.

Anglo’s loan transfers completed the second tranche, bringing to €27.2 billion the total loans bought from five institutions – Anglo, AIB, Bank of Ireland, Irish Nationwide Building Society and the Educational Building Society. Nama has paid €14.2 billion for 3,518 loans, representing an average discount of 52.3 per cent across the first two tranches.

The agency plans to purchase loans totalling €81 billion, leaving a further €53.7 billion to be purchased before next February.

Due diligence and the valuation of the third tranche of €12 billion in loans is under way and should be completed by the end of next month, Nama said in a statement.

The higher discount applied to Anglo’s second tranche has led to concerns that the discount on later transfers may be higher again, raising fears that the State-owned bank’s capital needs could rise above the €24.3 billion approved by the European Commission.

Anglo has so far received €14.3 billion from the State – €10.3 billion by way of promissory notes and €4 billion in cash.

The bank is finalising its half-year results to the end of June and the next capital injection required to cover the spiralling loan losses.

The figures, which are due to be published next Tuesday, will take account of both losses on the Nama loans and further impairments on Anglo’s non-Nama loans.

Nama paid €130 million less than the current market value of property backing the loans and some €660 million less than the long-term economic value. The price paid was reduced to account for poor documentation and security, and to cover enforcement costs of recovering loans.

Only EBS was paid in excess of both the current market value and the long-term economic value of property securing its loans.

Loans in Northern Ireland were transferred to Nama for the first time in the second tranche. Some 50 per cent of the €11.93 billion in loans in the tranche were in the Republic of Ireland, 44 per cent were in Britain and the Channel Islands, 3 per cent were in Northern Ireland, 2 per cent were in the US and Canada, and 1 per cent in the rest of the world.

Some 23 per cent of loans were on hotels, compared with 4 per cent in the first tranche. Of some 31 loans secured on hotels, 22 are in Ireland, compared with 17 in the first tranche, including 13 here.