BACKGROUND:THE GOVERNMENT spent much of the last week working out what implications the Nama discount of 30 per cent on some €77 billion of loans would have on the five financial institutions which would come under its remit, writes
HARRY McGEEPolitical Staff
According to sources centrally involved in the process, the National Treasury Management Agency (NTMA) was responsible for “number- crunching” and that the roundabout figures for the assets, as well as the discount, were generally known for some time. “A lot of the work in the last few days was estimating what the implications were for the banks in terms of capital. All of that had to be worked out.”
The sources, who spoke on the condition of anonymity, said many meetings were held over the weekend. Officials from the following agencies were involved: the Department of Finance; the NTMA; Nama; the Financial Regulator; the Central Bank; the Attorney General’s office; banking advisers Rothschild, and legal advisers Arthur Cox.
Minister for Finance Brian Lenihan was at many of the meetings.
There were some minor variations on figures, with figures on the loan book being worked on until the final minute. The officials said the NTMA and Nama were still working very late in the day on putting together an estimate as to how the property market would perform in the future.
All of the five institutions, including AIB and Bank of Ireland, were contacted on the eve of the Bill on Tuesday. Top executives from the two big banks visited the Department of Finance headquarters for meetings with Mr Lenihan, while officials from his department spoke to representatives of the other three institutions, Anglo Irish Bank, Irish Nationwide and the EBS.
“None of the banks were given a specific number about the overall book value or the discount,” said the source. “They were given a range and asked, under that scenario, what would you do? We wanted to make sure that they were putting together their contingency plans.”
Some degree of surprise was expressed yesterday at the very high book value of Anglo Irish Bank’s loans, which at €28 billion was the highest of the five. However, the fact that it was now 100 per cent owned by the State would reduce the risk of overpayment, officials said.