Business Irish

Tuesday 23 January 2018

NAMA poised to give banks five days' notice on developer loans

Borrowings of ten largest builders to be transferred by end of the month

Joe Brennan

NAMA is to give the banks five days' notice next Tuesday on its schedule to take over loans relating to the country's top five developers, the Irish Independent has learnt.

It is expected that the borrowings of virtually all the 10 largest builders will have been transferred by the end of this month. But it is believed the handover of some loans relating to Liam Carroll may spill over into next month, as Allied Irish Banks tidies up security relating to €500m-plus of loans out to the developer.

The bank appointed a receiver in late January over a large portfolio of properties owned by Mr Carroll. So-called acquisition schedules will be served on the banks early next week on the first tranche of loans -- specifying the amount of loans NAMA will be taking over and the discount that will apply.

The Government will announce later this month an overall haircut on the first batch of loans.

This is expected to prompt the two publicly-quoted banks to inform the stock market of what discount was applied to their initial NAMA-bound loans.

The Government was originally slapping the banks with an additional 2.75pc charge, to cover NAMA's legal and liquidation costs as it moves in on insolvent borrowers. However, it was told by Brussels to increase this to 5pc, as it gave the entire 'bad bank' project the green light. The European Commission will audit the valuations through an investment bank -- to make sure its valuation guidelines are being stuck to and that there is no anti-competitive practice. Ireland's financial watchdog has hired consultants Ernst & Young to independently verify valuations.

Brussels' over-riding interest in maintaining tight control of the process reflects a belief that the NAMA project may be a template for other European countries with distressed banking systems.

The EU would be keen not to set an unhelpful precedent in Ireland in the event that any other jurisdictions come to set up a structure similar to NAMA.

The top 100 or so borrowers -- who owe the banks a combined €40bn and will see their loans transfer in three tranches -- will end up dealing directly with NAMA officials.

The administration of smaller loans out to the remaining 1,400 will be outsourced to the original banks and building societies, which have set up specific NAMA units.

NAMA intends to send key officials into each of the lenders to oversee the running of these divisions. The agency will set strict guidelines on how the viability of the smaller borrowers will be assessed.

Irish Independent

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