Sunday 25 February 2018

NAMA to reveal number of its loans in arrears

Brendan McDonagh, chief executive of NAMA. Photo: Frank McGrath
Brendan McDonagh, chief executive of NAMA. Photo: Frank McGrath

Emmet Oliver Deputy Business Editor

Further financial pressure may be piled on the Government this week with the National Asset Management Agency (NAMA) expected to reveal how many of the thousands of loans it purchased are in arrears or "non-performing".

The agency is expected to release its second quarterly report showing the number of performing and non-performing loans in its portfolio.

A rise in the number of non-performing loans is likely to go down badly with the markets, which have concerns over whether NAMA can break even on its plan to spend about €40bn buying distressed loans.


A non-performing loan is one that is 90 days or more in arrears, either on principal or interest.

The chief executive of NAMA, Brendan McDonagh, shocked politicians in April when he told them only 33pc of NAMA loans to date were paying back their interest.

Also due to be released is a report on NAMA by the Comptroller and Auditor General (C&AG), who has completed his work on the agency's costs, controls and expenditures.

His report also looks at the structure of NAMA, which is based on a special purpose vehicle that allows the state to ringfence NAMA debts from the national debt.

The quarterly report covers the period to the end of June 30 and will show whether NAMA is making a profit to date, its staffing resources and the level of working capital given to developers.

One company, Real Estate Opportunities (REO), has already received working capital to finish off some of its projects and at least three other firms have also received funds from NAMA.

The first quarterly report, which only covered the early activities of NAMA, showed the agency was holding just €156m of performing loans and €658m of non-performing loans.

These figures are based on the book value or nominal value of the loans. NAMA ultimately deeply discounts the loans when it purchases them.

NAMA will last for at least 10 years, so any final judgment on its financial cost is difficult to estimate at this stage.

However, ratings agencies such as Standard & Poor's (S&P) believe it will recover just €16bn of the €40bn it will spend.

This contrasts sharply with NAMA's estimates that in a "central scenario'' it can make a profit of €1bn and even in a worst case scenario will only lose €800m.

NAMA's business plan expects an average discount or "haircut'' on all the loans it is buying of 50pc.

The chief problem NAMA will face, claims S&P, is that it will only be able to sell assets very slowly and gradually as many of them are not liquid enough to be sold rapidly.

The agency claims this means generating income in the first few years will be difficult.

Irish Independent

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