Chairman rejects Wallace claims on value of assets and 'fixers'
Nama chairman Frank Daly took issue with allegations made in the Dáil last week by Independent TD Mick Wallace about the Project Eagle deal.
In the course of yesterday's meeting with the Public Accounts Committee, he went through each of the allegations and offered answers to questions posed by Mr Wallace.
- Mr Wallace's allegation: Cerberus or some "fixers" went to major Northern Ireland debtors prior to the sale of the portfolio and offered to sell them back their loans for 50 pence in the pound. Having bought the loans from Nama for 27 pence in the pound, Cerberus was able to sell the loans at twice what they paid for them.
Mr Daly's response: This is a serious misrepresentation of the facts… It is utterly disingenuous to suggest that the whole portfolio could have been sold for 50pc of par value. Some loans were worth 50 pence in the pound - and some were worth far less; perhaps as little as 5p in the pound.
- Mr Wallace's question: Why did Nama not negotiate with debtors to secure 50pc of the loans' par value as allegedly achieved by Cerberus?
Mr Daly's response: The Nama Act prohibits the agency from selling back assets to debtors who defaulted on their loans in the first place.
- Mr Wallace's allegation: The price paid by Cerberus was 27pc of par value, leaving taxpayers to cover the shortfall relative to par.
Mr Daly's response: Mr Wallace's implication is that, if Nama were to retain this portfolio for long enough, it would eventually recover par value This is a totally unrealistic view of what is achievable within any reasonable timespan.
- Mr Wallace's allegation: Stg£45m has been paid by developers in "fixers" fees.
Mr Daly's response: It is difficult to comment in any detail on this point as details were not provided as to what the fees represent.
I am aware, however, that it is normal practice for debtors to pay fees to new lenders when refinancing or buying back their loans. This is possibly what he had in mind. I understand that these fees - commonly referred to as arrangements fees - are typically charged at about 1pc of buyout value and this is normal banking practice.
Even if 1pc fees were paid on the whole portfolio, the total fee payment would amount to Stg£13m, not the Stg£45m claimed.
I can state categorically that these supposed "fixers" fees do not in any way relate to Nama.