NAMA to take over further €4bn loans despite Coalition's pledge
Fine Gael and Labour's Programme for Government ruled out more transfers
Published 29/03/2011 | 05:00
THE Department of Finance has told Nama to press ahead with taking over some €4bn of loans whose future was thrown into doubt by the change in government.
The move comes a fortnight after the Fine Gael/Labour administration published a Programme for Government that appeared to rule out all further transfers to Nama.
In a letter recently sent to Nama, the Department of Finance has clarified that Nama should continue to acquire assets covered by the "existing statutory regime".
This means that Nama can proceed with taking over about €4bn of loans where the transfer was delayed because borrowers and banks disputed the loans' eligibility.
The €4bn includes the €2.1bn of loans owed by Jervis Centre investor Paddy McKillen, who is vigorously opposing the transfer of his loans to Nama.
After a lengthy legal challenge by Mr McKillen, the courts recently ruled that Nama would have to begin a new process if it wanted to take over the loans. So far no such process has begun.
Nama has been given no power to take over about €16bn of loans from developers owing less than €20m, since a new law needs to be passed for those transfers to take place.
The smaller loans were brought into the Nama fold as part of Ireland's EU/IMF bailout deal, but it is thought that the new Government will try to avoid the transfers.
In the Programme for Government, the administration vowed to "end further asset transfers to Nama, which are unlikely to improve market confidence in either the banks or the State".
By the end of 2010, Nama had taken over loans with a book value of €71.2bn. Another €1.1bn of AIB loans have since been transferred across to the loans agency, bringing the grand total to €72.3bn.