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Anglo to transfer first €10bn of loans to bad bank

Anglo Irish Bank is expected to start transferring the first €10bn tranche of property loans to NAMA from this weekend.

It is expected that the haircut applying to the loans will be as high as 55pc, compared to 50pc estimated by Finance Minister Brian Lenihan at the end of March.

As a result, the average haircut applying to the first batch of loans from the five participants in NAMA will end up around 50pc, against the most recent estimate of 47pc.

The minister originally estimated last September that the industry would end up stomaching a 30pc haircut on their NAMA-bound loans.

Anglo is set to transfer €35.6bn of risky property loans to NAMA over the course of this year, making it by far the biggest participant.

Allied Irish Banks will be the second, with about €23bn of its assets moving across to the state-run 'bad bank'.

Meanwhile, the head of financial regulation, Matthew Elderfield, has demanded that banks use the initial haircuts right across their NAMA-bound portfolios, for the purposes of calculating how much capital they must raise by the end of the year to meet regulatory targets.

He is insisting the banks and building societies raise enough money to leave their equity capital ratios, a key measure of their financial stability, at 7pc as the economy bottoms out at the end of 2010.

NAMA is expected to start taking over the second tranche of loans from the banks within the next two months.

It expects to complete the transfers of all loans from the five institutions by the end of this year.

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The European Commission has given the toxic loans agency a final deadline of the end of next February to take control of all €81bn of loans.

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