Government expects Nama profit of €4.8 billion by 2020

 

The Government's National Asset Management Agency (Nama) passed its first parliamentary stage tonight as it emerged the State expects the agency to make a profit of €4.8 billion by 2020.

A draft business plan published by the Department of Finance tonight, states Nama will emerge with net cash of €5.5 billion or a 'net present value' of €4.8 billion after ten years.

The plan assumes the €54 billion debt will fall by €6.5 billion per year from 2013 onwards, until 2020 when the then outstanding debt of €8.5 billion, including the €2.7 billion held back from the banks under the plan, is redeemed.

Assuming no major adjustments in the average margins over the main Euribor rate the Government expects the loans to generate €12 billion over the lifetime of the agency.

According to the draft plan, the projections assume that of the €77 billion nominal value of loans acquired, €62 billion will be repaid by borrowers and that load defaults or restructuring of loans will occur on 20 per cent of loans (€15 billion).

Nama passed its first legislative hurdle tonight and work on valuing risky commercial property loans to be taken from banks is set to begin as early as next month.

The Government last year issued a guarantee for bank liabilities worth some €400 billion, then injected €11 billion of capital into its top lenders. It now wants Nama to complete the task of cleaning up the sector.

Nama's business plan assumes the relevant legislation will be enacted in early November, with valuation focusing on the 25 largest borrowers set to start in November or December.

The Government is prepared to provide more capital to banks should they need it but it wants to avoid further full nationalisations if possible, Finance Minister Brian Lenihan told the Dáil.

"All that said, the government is not in principle opposed to nationalisation where it is the best solution," Mr Lenihan said before deputies voted 77-71 in favour of the draft law.

The aim is to transfer by the end of the year the largest 10 to 15 borrower exposures from banks including Allied Irish Banks, Bank of Ireland and nationalised Anglo Irish Bank.

Nama will pay €54 billion - in government bonds that can be cashed with the European Central Bank - for risky commercial property loans with a book value of €77 billion.

Officials are also in talks with British authorities about Nama's impact on Irish units of UK banks and on the UK property market, the business plan said, adding that it remained unclear if any foreign-owned institutions would want to participate in Nama itself.

Earlier today, Labour called for a moratorium to be placed on the repossession of homes by banks before the final enactment of the National Asset Management Agency (Nama) legislation.

Speaking during Leaders' Questions in the Dáil this morning, Labour leader Eamon Gilmore said that by the end of next year there would be 35,000 households who would not be in a position to pay their mortgages.

"It is well known that the banks are just waiting for the Nama legislation to go through before they open up in a very serious way to seek repossessions of homes from people who are in serious trouble."

Mr Gilmore told the Taoiseach that Labour finance spokeswoman Joan Burton would be putting forward an amendment to the Nama legislation calling for a moratorium on home repossessions "for a period of time," a move he said was "perfectly reasonable".