Tuesday 17 October 2017

Nama writes off €1.5bn owed by 80 of its debtors

Minister for Finance Michael Noonan
Minister for Finance Michael Noonan

Gordon Deegan

The National Asset Management Agency has written off debts totalling €1.5bn owed by 80 debtors to the agency.

That is according to the Minister for Finance Michael Noonan, who said that the €1.5bn write-off "equates to 2pc of the original par debt acquired by Nama from the participating institutions".

In a written Dail response to Michael McGrath TD, Minister Noonan stated that "debt is only written off where all of the underlying assets have been realised, there are no further assets to be realised nor any additional recourse available to Nama to recover borrowings from the debtor."

Mr Noonan said: "Nama enters into such arrangements with debtors where it is expected that the exit arrangement will maximise the return to the State. I am advised that this may include debt compromise or settlement arrangements for a fixed number of years post-exit."

The Minister also stated that, "in certain cases, where the debtor has met certain stringent or 'stretch' targets set by Nama, an arrangement may be entered into with that debtor to release them from their personal exposure, where there is no further prospect of recovery of borrowings from that debtor." 

He pointed out that "such arrangements have no impact on the return to Nama in cases where no value can be recovered through the personal guarantees".  

Mr Noonan added that "Nama has leveraged personal guarantees to obtain more than €900m in additional security for its loans, primarily by obtaining charges over previously unencumbered assets and through the reversal of prior asset transfers".

Details relating to the €1.5bn write-off are to be part of the Nama 2015 annual report that is due to be published later this month.

To date, more than half of Nama's debtors with debts of €18.5bn have exited the agency.

Nama initially paid €31.8bn to acquire a €74bn loan book, comprising of 779 debtor connections. 

At March 31 this year, 442 debtors with a par debt of €18.5bn had exited Nama. 

Some 44 debtor connections have repaid their par debt in full, while the 442 debtor connections have repaid €9.6bn to the agency.

According to Mr Noonan: "Nama is on track to recover all of the €31.8bn it paid to the banks, including the €5.6bn in State aid and the €4.5bn of further value declines to the end of 2013.  

"In addition, Nama expects - based on current projections - to generate a surplus of up to €2bn by the time it completes its work after all its financial obligations have been repaid."

Separate figures show that over 70pc of the 96 Nama debtors who declared themselves bankrupt have been discharged from their bankruptcy.

The 96 debtors had aggregate debts of €8.4bn and 69 of those 96 bankrupts - or 72pc - have been discharged from their bankruptcy, with 58 doing so in the UK, 10 in Ireland and one in the US.

Some of those developers to exit bankruptcy in the UK include developers Bernard McNamara, Paddy Shovlin and John Fleming.

Some 12 debtors were discharged from bankruptcy last year, eight in the UK and four in Ireland.

Sunday Indo Business

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