Wednesday 22 November 2017

NAMA banks foreclose on €6bn loans to small players

Agency to take large bad debt charge in 2011 accounts

Brendan McDonagh, chief executive of NAMA. Photo: Frank McGrath
Brendan McDonagh, chief executive of NAMA. Photo: Frank McGrath

Emmet Oliver, Deputy Business Editor

The scale of action by banks against property syndicate members and smaller property players has been revealed with €6bn worth of loans foreclosed on in the last year.

It comes as NAMA finalises the value of its portfolio for 2011, with an impairment charge of up to €1bn possible.

Last year NAMA wrote down the value of its assets by €1.4bn, but it will not be as large this year.

Banks working under the supervision of NAMA have foreclosed on a total of 1,043 loans taken out by investors and landlords.

The loans are nominally worth €6bn, but NAMA values them at €1.6bn. NAMA itself has taken action against bigger developers, involving 196 loans.

A quarterly report by NAMA shows that among its portfolio only 23pc of loans are performing -- that is paying their interest. The vast majority of the loans are either 120 days in arrears or have been foreclosed on -- which usually means the companies behind them have been put into receivership.

While NAMA tends to take action against larger developers, AIB, Bank of Ireland and IBRC work under the supervision of the agency and take action either through the courts or via a voluntary insolvency process.

NAMA is now going through the business plans of its borrowers and many non-performing loans will be changed -- including lower interest and longer repayment terms -- turning them into performing loans. Also revealed in the report was:

- NAMA is now working with less borrowers, but with more loans after additional loans held by some developers were disclosed.

- The group of private investors who operate the NAMA structure on behalf of the State were paid €5m in fees during the quarter ended June 30, 2011.

- Up to the end of June, NAMA had generated €828m net cash from its operating activities, primarily due to cash from borrowers.

- Profit during the second quarter was €118m. Cumulative profit for the first six months of 2011 was €209m.

Since October, NAMA has completed the acquisition of the last remaining loans.

Loans worth €74.2bn have been acquired since the first tranche of loan transfers in March 2010. NAMA paid €31.7bn for the loans.

NAMA has reviewed 170 business plans of the 188 debtors whose loans are directly managed by it.

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