independent

Friday 18 April 2014

Only one in five loans with NAMA being repaid

FEWER than one in five loans transferred to the National Asset Management Agency (NAMA) were being repaid at the end of last year.

The latest quarterly accounts for the toxic loans agency show €16.5bn worth of loans – or 82pc – were in trouble.

And 74pc of the non-performing debt was four months in arrears.

But the State's bad bank generated €4.5bn in cash during the year, including almost €1.4bn in rent.

The agency is collecting more than €100m a month in rent from properties secured through receivership and debtors owning property.

The accounts also show that the bad bank recorded an after-tax and debt writedown profit of €230m.

In a cover letter with the accounts, chairman Frank Daly and chief executive Brendan McDonagh said NAMA remains profitable, with administrative expenses "low" at €119m.

"This is of the order of 3pc of cash collected during 2012 which compares highly favourably to what is typically averaged by similar international institutions," the letter said. The value of the non-performing loans was listed in the accounts as being originally worth €58.4bn by banks before they were transferred to NAMA.

However, the agency now values them at €16.5bn.

Receivers or liquidators were appointed in 223 cases amid unpaid loans worth €867m.

NAMA will only break even when the debt to the banks has been repaid, ideally over the 10-year life of the agency.

Any cash left after that would mean a "profit" to the State, though only if losses in the wider banking sector are not taken into account.

But the State's public spending watchdog, the Comptroller and Auditor General (C&AG), last year warned that it faces "considerable challenges" making back the €32bn it spent buying toxic property loans from banks. The C&AG acts as NAMA's auditor.

The C&AG says it believed NAMA paid significantly more for loans it acquired from six Irish banks than the assets are worth. The report also raised significant questions about NAMA's ability to "pursue developers to the ends of the earth".

According to the C&AG, a NAMA pilot scheme to trawl for hidden assets may not be worth the costs involved.

In 2011 NAMA put together a panel of private detectives and asset recovery specialists. The intention was to carry out detailed searches into the wealth of every NAMA borrower, starting with an initial sample of nine developers.

Irish Independent

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