NAMA receives €600m of loans for free
Published 01/09/2010 | 05:00
ANGLO Irish Bank wrote down €600m worth of loans to zero when it moved them over to NAMA earlier this year, the nationalised bank has revealed.
The bank, led until December 2008 by David Drumm and Sean FitzPatrick, moved over €10.1bn of loans into NAMA during the first half of the year.
Most were severely discounted but still had some value. However, an analysis by the bank shows that €600m worth of loans were given no value at all and were effectively transferred to NAMA for free.
In fact more than €2.5bn of loans were discounted by 80pc or more, such was their poor condition.
The loans that moved to NAMA for free were secured by nothing more than personal guarantees from customers, it has emerged.
This means there were no other assets behind the loan, but the personal wealth of the borrowers.
Many of these borrowers have gone " belly up", explained chief executive Mike Aynsley, and simply no longer had the wealth the bank could call in. It is understood the number of borrowers involved in the €600m loans is relatively small.
The bank also warned yesterday that if Anglo is ordered to close over a drawn-out period, borrowers are less likely to repay their loans. "If you are in a wind-down, that gets known in the market. A borrower then sees us coming. He is going to negotiate,'' said Maarten van Eden, the bank's chief financial officer.
In fact the bank is still providing loans to developers, chiefly to finish off projects in the property arena, with €1.1bn advanced during the period. Much of the lending was previously committed to by the bank.