Tuesday 19 November 2019

Nama has its say on mortgage arrears

NAMA chief executive Brendan McDonagh with chairman Frank Daly
NAMA chief executive Brendan McDonagh with chairman Frank Daly

Gretchen Friemann

Nama's chairman, Frank Daly, and its chief executive, Brendan McDonagh, have waded into the debate about how to tackle Ireland's high level of mortgage arrears, arguing that a "focused" not-for-profit agency would better manage the problem than either the banks or the so-called vulture funds.

The comments, made at a hearing before the Finance Select Committee, mark the first time that Nama's top brass has publicly aired an opinion on the issue.

Mr McDonagh questioned the ability of the banks to tackle the residual non-performing loans. He said: "A huge amount of energy is being devoted to a problem that is generally not getting much better and is probably getting worse."

The Nama bosses also cast doubt on whether the banks would have grappled with the €74bn racked up in toxic loans to developers.

Mr Daly, who has chaired Nama since its formation in 2009, claimed that "one of the beauties of Nama" was its "focus", since the agency had none of the same commercial considerations as the banks, such as customer relations.

Non-performing loans total €27.85bn across the three main Irish banks, accounting for roughly 16.5pc of the combined loan books.

While the committee's chair, John McGuinness, referred to the NPL figure as €16.5bn, his questions to the Nama bosses revealed how the debt funds, that have snapped up billions of euro worth of loan portfolios, calculate a purchase price.

According to Mr Daly and Mr McDonagh, the funds assume a value of the underlying asset and then deduct a further 10pc or so.

At the hearing the Nama bosses defended the agency against accusations of exacerbating the housing crisis by selling large swathes of property loans to vulture funds.

Mr McDonagh pointed out that of 50,000 sites, close to 20,000 passed into the hands of the vulture funds, while 30,000 wound up with developers and private investors.

Under questioning from Paul Murphy, Mr McDonagh said vulture funds are short-term holders of the land and blamed the hoarding on a lack of incentives for landowners to sell in the face of rising house prices.

As Nama prepares to wind down the organisation by 2020, Mr Daly stressed that the pressures of holding on to staff are becoming more acute, with executives offered steep pay rises in the private sector.

He reiterated that Nama is on course to return a €3bn surplus to the taxpayer but predicted that it may need to remain on a skeleton staff for many years, due to around 100 outstanding legal cases in which the agency remains embroiled.

Irish Independent

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