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NAMA looking at loss of less than €800m due to deeper loan cuts

THE National Assets Management Agency's summer predictions of an €800m 'worst case' loss are likely to be pared back, the Irish Independent has learned.

The news comes a week after the Financial Regulator announced the agency was extracting far deeper than expected discounts from the banks it is buying loans from.

The National Assets Management Agency (NAMA) has also decided to exclude 650 smaller developers from its remit, effectively absolving the agency of €6.6bn of the country's most troubled debt.

"The impact of the changes announced last week is likely to be positive in terms of NAMA's long-term financial performance," a spokesman for the agency confirmed.

He declined to be drawn on how much NAMA's summer predictions of a best case €3.9bn profit and a worst case €800m loss could be improved by the changes, saying it "wouldn't' be appropriate to be speculating".

"The NAMA board does not propose to review its business plan until all transfers have been completed and their valuations have been assigned to acquired loans," he added.

While the €6.6bn in loans that are being excluded represent a relatively small percentage of NAMA's original €80bn portfolio, smaller development loans are likely to be the most adversely affected by default.

Industry sources point out that while there will always be some residual value in trophy assets and properties in quality areas, the smaller loans of less than €20m are likely to be for development land in rural areas.

"A lot of that would be practically worthless now," said one source.

The Irish Independent has also learned that NAMA advanced more than €40m in working capital and other loans to developers in the second quarter of the year.

The €40m compares with the €27.2bn in loans that has been transferred over to the agency.

NAMA has always said that it would only advance fresh loans when the money was needed to enhance the value of projects already in train, and therefore enhance the chance of the core borrowings being repaid.

A spokesman for the agency declined to comment on the amount of loans issued, saying the figures would be published by the Finance Minister "in due course".

NAMA's new plan also sees the agency directly oversee the accounts of 150 borrowers who owe more than €50m, against initial plans to directly manage 100 borrowers who owed more than €100m.

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The extra 50 borrowers coming into its direct portfolio have cumulative borrowings of €4bn, the spokesman said, implying an average debt of €80m.

The spokesman also confirmed that NAMA would publish "brief statements" to confirm when individual institutions' borrowings had been transferred, against a previous policy of providing detailed data on each batch of transfers.

"Obviously the agency will also publish quarterly reports, annual statements and so on," he added.

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