NAMA pays 120 developers €70,000-€100,000 a year
Published 27/10/2011 | 05:00
Up to 120 NAMA developers are being allowed draw down salaries of between €70,000 and €100,000 a year, the agency has revealed.
The State's so-called bad bank said paying such salaries was better value than paying more expensive receivers to manage distressed assets.
The agency's chief executive, Brendan McDonagh, came under fire from an Oireachtas committee for allowing two unnamed developers to draw down annual salaries of €200,000 a year.
Members of the Public Accounts Committee also strongly attacked an incentive plan NAMA operates, where developers are allowed a share in any upside if they manage to exceed the repayment schedule set for them by NAMA.
If a developer manages to generate a higher return than even NAMA has set them, Mr McDonagh explained, they could qualify for 10pc of the excess amount.
Several members of the committee said this was galling for the public to hear, but NAMA chairman Frank Daly strongly defended the incentive payments and the salaries paid.
"I absolutely understand the sensitivity of this. It's not an easy decision and we don't take it lightly. We'd love for them to do it for nothing,'' said Mr Daly.
Mr McDonagh and Mr Daly said developers had become "asset managers'' under the supervision of NAMA and, despite the sensitivity of paying developers annual salaries, it remained cheaper than working through a professional asset management firm, which charged about 2pc of the value of an asset. Receivers, meanwhile, charge about €180 an hour, Mr Daly said.
Developers in many cases were simply receiving 0.25pc of the asset value, Mr McDonagh insisted. Mr Daly said the incentive arrangements would only kick in years from now and he did not expect any big "pay days'' for developers.
Fianna Fail TD Sean Fleming said it was not right that even developers who would never repay all the money they originally borrowed would be paid in this way. He said the committee would have to look closer at the whole issue of incentivising developers.
The agency itself is paying salaries of €20m a year, with the average wage coming to about €100,000, said Mr McDonagh.
Mr Daly added that NAMA had to attract skilled professionals -- quantity surveyors, accountants and solicitors -- from the private sector, and they had to be paid market rates.
The agency, meanwhile, revealed it would make an operating profit of "at least'' €600m this year, but a large impairment charge will impact on the after-tax number. Mr McDonagh declined to comment on suggestions an impairment charge of €1bn was likely.
He said the agency checked the value of its assets at year end and it was a complex process.
It was also revealed a recent review of NAMA by ex-HSBC banker Michael Geoghegan did not result in a formal written report. Instead, Mr Geoghegan gave the board of NAMA a verbal presentation on his work.