Wednesday 13 December 2017

Low fees blamed as NAMA contracts declined

Finance Minister Brian Lenihan. Photo: Bloomberg News
Finance Minister Brian Lenihan. Photo: Bloomberg News

Emmet Oliver Deputy Business Editor

Several domestic and international accountancy practices and consultants have turned down work with NAMA, claiming the fees on offer are too low.

While the National Asset Management Agency plans to spend €215m this year on fees, several large firms have turned down assignments with the agency, particularly for work reviewing business plans of developers.

In a parliamentary reply, Finance Minister Brian Lenihan said: "I understand that a small number of firms have done so and have indicated to NAMA their dissatisfaction with the proposed fee arrangements.''

NAMA is reviewing business plans submitted by developers in Tranches 1 and 2 and so far has passed only a handful. Several of the plans were described as too optimistic, with others blocked because they did not follow a specific template designed by NAMA.

Mr Lenihan said: "The task of the NAMA board is to assess, for each debtor, the ultimate viability of that debtor given the scale of his debts and the quality of the assets securing them.

"It is reasonable to point out that a review of debtors, some of whom have aggregate debts running into billions, is not an exercise that can be carried out quickly given the scale and complexity involved,'' he added.

Delays

"To the extent that there have been delays in the process, it has been caused by the initial failure of some debtors to submit plans in line with the detailed template provided by NAMA.

"Some debtors were also asked to revise their original assumptions and projections so as to bring them into line with a realistic outlook for supply and demand for the various asset classes and geographical regions in which they operate,'' said the minister in a reply to a question tabled by Fine Gael TD Alan Shatter.

NAMA is expecting to pay out €1.6bn in fees during its lifetime, with the annual amount of fees shrinking as its portfolio gets smaller. The agency has been conducting due diligence on thousands of loans over the last few months.

The agency will pay out about €40bn for the loans it is taking over by issuing Irish government-backed NAMA bonds. If NAMA is in danger of not making a profit, it will hold back on 5pc of the consideration in the form of subordinated bonds.

The face value of the loans transferring to NAMA is €81bn. These are described as eligible assets and cover development land, investment property and so-called associated loans.

Irish Independent

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