NAMA will cover its costs, says agency chief
THE head of the State's borrowing agency has insisted the National Asset Management Agency (NAMA) will make enough money to cover its costs.
The agency is expected to give government bonds worth €47bn to banks for their toxic property loans. It will also have to pay interest on the cost of borrowing this money from the European Central Bank over the next seven to 10 years.
But National Treasury Management Agency (NTMA) chief executive John Corrigan yesterday said he believed NAMA would not require taxpayers' funds to pay for this.
"The expectation is NAMA will be self-sufficient in relation to the servicing of those loans," he said.
NAMA is predicting the interest bill it will have to pay to the European Central Bank for borrowing €49bn will be covered by the interest payments it receives from the developers who have taken out the toxic property loans.
It is also depending on the value of its toxic property assets such as half-completed estates and development land increasing by 10pc over the next seven to 10 years.
Labour TD Roisin Shorthall asked Mr Corrigan if he believed the agency would be self-financing.
"I have no reason to believe that it will not be self-financing," he said.
The Dail's Public Accounts committee heard yesterday that NAMA currently has just 21 staff -- although it is expected to have its full complement of 80 by the end of the year.
Mr Corrigan, who is a board member of NAMA, said there was a process in place to ensure that staff hired from banks or property companies did not have conflict of interest.
"NAMA staff have to make a formal declaration and I see all those declarations," he said.
The committee also heard former NTMA chief executive Michael Somers had privately expressed concern several years ago that bank lending was outstripping economic growth.
"Maybe the text books need to be rewritten or else we have some sort of a problem here," he said. Mr Corrigan, who recalled the comment yesterday, said that although his agency had some degree of concern about the situation, the responsibility for regulating the banks was on the Financial Regulator and the Central Bank which had "hundreds of people" to perform this role.
The NTMA chief said that when his agency did a due diligence exercise on AIB and Bank of Ireland last year it had come across a "sense of disorder".
But he said when NAMA did a loan-by-loan evaluation of their books, the evidence was "really damning".