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NAMA-bound developers' loans get 'valuation'

The country's lenders are working hard this weekend finalising valuations on loans relating to the top 10 developers bound for the National Asset Management Agency (NAMA).

It was originally envisaged that initial valuations would be provided to officials at the agency by yesterday, but it is now understood the banks and building societies have until the middle of next week -- before the Christmas break.

Loans relating to the biggest developers are expected to be transferred within the first six weeks of next year.

The banks must submit figures, based on strict valuation methodologies provided by NAMA, and based on the market value of eligible assets. NAMA legislation allows the agency to then attach a maximum premium of 20pc on overall land portfolios being taken over -- though some will not be valued above the going rate.

However, this so-called 'long-term economic value' premium will not apply to property that is not land.

The valuations will then be assessed by a valuer panel across each of the country's provinces. The five top commercial estate agents, DTZ Sherry FitzGerald, CB Richard Ellis, Lisneys, Savills and Jones Lang LaSalle have each won lucrative valuation work with NAMA, alongside a number of regional players.

Shares in Irish banks have come under sustained pressure since Finance Minister Brian Lenihan announced in mid-September that the sector faces an average 30pc discount on loans heading to NAMA.

Allied Irish Banks and Bank of Ireland have each lost two-thirds of their value since then, as analysts continued to increase their forecasts for the size of 'haircuts' each must take on their NAMA portfolios. Top analysts currently see BoI taking a 26pc-28pc hit and AIB a 33pc-35pc discount.

AIB lost 7.1pc yesterday to €1.08, while BoI tumbled 3.8pc to €1.17, as investors globally continued to pile out of banking stocks after the Basel Committee of banking supervisors unveiled stricter-than-expected proposals demanding lenders hold more capital.

The influential committee's emphasis on retained earnings and equity as core capital "has obvious implications for the use of preference shares in bank capital, as with AIB and BoI", said analysts at Bloxham.

The State's €3.5bn investment in each is by way of preference shares.

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