DURKAN Group, the hugely successful UK-focussed construction group founded by Bill Durkan, has slammed Nama after "unsatisfactory" dealings with the €80bn state bad bank.
In an unprecedented move, Durkan decided to pay off €43m in Nama bank loans rather than continue to deal with the lumbering state agency.
Durkan hammered Nama as being unreasonable and leaving the successful construction company in "an invidious and unfortunate position". The process of dealing with the state agency was lambasted as "cumbersome, costly and time-consuming".
Durkan Group, which was founded by Bill Durkan in 1963, has become one of the largest builders of affordable housing in the south-east of England, as well as developing a major contracting business serving the education and healthcare sector. Its Durkan Estates wing is involved in residential developments.
The company had "good loans" or performing loans with Anglo Irish Bank and Bank of Ireland, which were transferred to Nama in December 2010. However, failure to agree a refinancing deal with Nama after an arduous process left Durkan unable to work with the National Asset Management Agency and it was forced to move its business elsewhere.
"On December 23, 2010, Nama advised that it had acquired the Durkan Group loans (all good loans). The group was left in the invidious and unfortunate predicament of having to engage in a cumbersome, costly and time-consuming exercise with an agency whose ultimate aim is the realisation of loans on behalf of the Irish Government," according to Durkan Group documents obtained by the Sunday Independent.
"Negotiations with Nama over facilities and the repayment of the loans proved to be unsatisfactory and would have been most uneconomic if accepted.
"By July 2011, it had become abundantly clear to the group that Nama was not in a position to facilitate the reasonable requirements as set out in our comprehensive business plan submitted to Nama on March 31, 2010. On August 2, the group repaid its entire indebtedness to Nama."
The move by Durkan Group to escape the dead hand of Nama is another blow for the secretive state agency, which has been accused of paralysing the property sector through its failure to kickstart the market by selling assets and greenlighting schemes.
Nama, which was set up in 2009 by the late Brian Lenihan, was established with the aim of restoring liquidity to the banks by helping to decontaminate their toxic balance sheets. It has failed dismally in that regard with mortgage lending last year down a staggering 95 per cent from peak levels.
Last December, a report by former HSBC banker Michael Geogheghan into Nama warned that a failure by the agency to evolve into a more entrepreneurial and confident business was likely to cost the State billions of euro.
Mr Geogheghan warned that Nama had to evolve from its start-up phase into "the pro-active, externally focused, entrepreneurial, confident business it needs to be". His report added that the Nama board was dominated by directors "with control rather than entrepreneurial backgrounds".
Nama must pay off €7.5bn of its €30bn of debt raised to buy over €74bn of loans from the banks by the end of next year. A failure to sell off assets to meet this looming bill "should possibly lead to the assets of Nama being given to one or more third parties to manage", Mr Geogheghan suggested.
Sunday Indo Business