THE National Asset Management Agency (NAMA) postponed doling out billions in cash to the banks in March so the money could be used for an obtuse scheme to avoid making a €3.1bn payment to the former Anglo Irish Bank, it emerged last night.
Details of the "intended" Nama payments were revealed to the Dail by Finance Minister Michael Noonan, who also hinted that the toxic loans agency would make the multi-billion payment to the banks in May.
Nama issued more than €30bn worth of 'Nama bonds' to banks when it bought their bad loans over 2010 and 2011. The agency has discretion on when it redeems the bonds, or buys them back from the banks.
Mr Noonan yesterday revealed that Nama had been on the verge of a bumper repayment "last month", when the agency had more than €4bn of cash on its balance sheet. The money was instead tied up in an elaborate operation to avoid paying cash to the former Anglo.
If Nama had handed over the money to the banks, it would have ultimately gone to the European Central Bank (ECB), since the banks are using the Nama bonds as collateral to draw down cash from Frankfurt.
Now, the ECB must wait for its money for several more months.
The ECB's enforced wait for its cash sheds further light on why Frankfurt was so unhappy with the Government's decision to issue Irish Bank Resolution Corporation (IBRC), formerly Anglo, with a €3.1bn bond instead of hard cash on March 31.
Bank of Ireland will ultimately turn the €3.1bn bond into cash for IBRC, but that can't happen until the arrangement is agreed by shareholders at a meeting that's expected to be held in May. Until then, Nama is lending IBRC the €3.1bn in cash.
"The money through Nama ... was due to be repaid to the ECB, so again it's ECB money that's providing the bridging," Mr Noonan said yesterday.
He also confirmed that BoI was brought into the deal because the ECB "expressed a clear preference" that a bank "that was not in majority state ownership" be involved.
His explicit remarks on the ECB's exposure to the deal and their involvement in framing it is likely to create further tensions with Frankfurt, which is already very wary about being seen to have made special allowances for Ireland.
A spokesman for the ECB last night declined to comment.
A spokesman for Nama said the agency had demonstrated its "ability and willingness to redeem the bonds as we generate cash".
It is understood that between €1.5bn and €2bn is now likely to be paid out to the banks in May.