Monday 20 November 2017

NAMA must invest more time and money in developing assets

PROPERTY

Emmet Oliver Deputy Business Editor

NAMA has been told to become more "entrepreneurial" by investing more time and extra funds in the €30bn of property assets it controls.

A report on the agency by ex-HSBC banker Michael Geoghegan suggested the agency take extra steps now to make sure its assets were more valuable in the long term. The agency was told to get its own chief financial officer (CFO), no longer depending on the NTMA for this role.

Mr Geoghegan said NAMA needed to move from the "control" it exerted over assets in its first phase of its operations to a new "entrepreneurial" phase.

Mr Geoghegan also floated the idea that the agency could be disposed of in time, but this would only happen after two-thirds of its assets were already sold off and once it had built up a sufficient skills base.

The way the agency dealt with borrowers should also be looked at afresh, with units within NAMA working more closely together, said the report by Mr Geoghegan, which will be released today or tomorrow at the latest.

Mr Geoghegan, a former chief executive of HSBC, also wants the board of NAMA to change, with more people on it from different business sectors.

A suggestion that NAMA take back control of more than €10bn of loans from the local Irish banks is included in the report, but is not expected to be acted on in the short term, if at all.

NAMA currently manages 180 debtors directly, and this group has loans worth nominally €62bn. The next 670 debtors, with loans worth €10bn, are managed by the local banks, under the supervision of NAMA.

To take these smaller loans and borrowers back into NAMA would be labour intensive, involving NAMA recruiting 200 extra staff. These staff could come from existing banks, but it is not clear whether they would have to apply for jobs with NAMA or simply transfer to the agency.

An advisory panel looking at NAMA's long-term strategy is also being put together, although no appointments are likely to be made until the new year.

The chief executive of NAMA, Brendan McDonagh, yesterday said the agency was very happy with changes made in the Budget. Mr McDonagh welcomed the greater certainty about dealing with upward-only rent reviews, which are being retained for legacy contracts.

He also welcomed the reduction in stamp duty on commercial property from 6pc to 2pc.

Meanwhile, Standard & Poor's yesterday put NAMA on a negative watch, which means the agency could be downgraded. The warning follows a similar note about Ireland generally.

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