Flow of credit to be affected by Nama delay DANIEL McCONNELL
Published 24/01/2010 | 05:00
THE National Asset Management Agency (Nama) is now two and a half months behind schedule amid tense negotiations over valuations with the banks, the Sunday Independent can reveal.
The delays will have a knock-on effect on the flow of credit from the banks and are a massive blow to small and medium-sized businesses already starved of credit.
The first transfer of assets, with a book value of €19bn, was due to begin back in December. This will now not happen until the middle of February at the earliest, according to senior government sources.
The first transfer will involve the 10 biggest borrowings whose actual value is now somewhere between €10bn to €11bn but the process has been mired by intense disagreements over the level of valuations. Sources close to the process have said that proposed valuations on some of the initial group of properties are far lower than the original markdown of 30 per cent.
This could have immense implications for taxpayers because it would leave the banks with gaping holes in their balance sheets and unable to extend credit to the market. This, in turn, could require a further €12bn in government injections into the main banks.
The Sunday Independent has confirmed that despite the delays over valuations, the taxpayer is to capitalise the main banks by April, using funds from the National Pension Reserve Fund.
The Department of Finance said that it is not unduly concerned about the delay saying much of the heavy work with regard to Nama has already taken place, and now it is a matter of it being rolled out. "While the first transfer was due in December, the valuation process has taken longer than expected. But we see the first transfer happening now in mid-February with the capitalisation happening shortly afterwards, possibly by April," a department spokesman said.
Labour's finance spokeswoman Joan Burton said: "If indeed the valuations are below the original markdown of 30 per cent, the implications for the taxpayer are severe."
It has also emerged that Nama, under the direction of chairman Frank Daly and chief executive Brendan McDonagh, has engaged a UK- based company to "assist it in determining requirements for borrower business plans".
According to documents seen by the Sunday Independent, the purpose of the business plans will be to "ascertain the factual position for each borrower. This will inform Nama as to how it can facilitate the borrower with working capital requirements in the short term."
Nama have also retained UK specialist teams to assess the business plans while staff at the State's bad bank will assess the ability of borrowers to meet their loans on an ongoing basis.
Elsewhere, the department is close to announcing the experts it will appoint to begin the groundwork on the banking inquiry. It had been mooted that the announcement could have been made today but it is now likely this week.