Monday 27 January 2020

NAMA transfers of AIB and BoI to come in well below estimates

Joe Brennan

The country's top two banks' National Asset Management Agency (NAMA) transfers are set to come in billions of euro below original estimates -- although Anglo Irish Bank's NAMA-bound loans are expected to come to about €33bn, according to sources.

It also emerged yesterday that the European Commission is poised to deliver its verdict on the NAMA project by the end of this week.

Sources told the Irish Independent last night the EU Directorate General for Competition, newly headed by Joaquin Almunia, circulated a recommendation with other arms of the commission last week.

It came after Finance Minister Brian Lenihan conceded the first loans may not be transferred until late March, as NAMA trawled through valuations and continued to wait for approval from Brussels.

It is understood Allied Irish Banks (AIB), which was originally expected to transfer €24.1bn of loans to NAMA, will end up moving a maximum of €23bn across -- though the final figure could be lower.

Similarly, the Irish Independent has learnt Bank of Ireland's (BoI's) NAMA-bound loans should come in below €14bn -- well under the original €16bn estimate.

Sources suggested both would end up transferring fewer associated loans than expected as more property investment loans to individuals with little or no development exposure were exempt.

The minister said last September Anglo would move €28.4bn of risky property loans to the 'bad bank', comprising €16.3bn of land and development loans and €12.1bn of associated loans, such as investment property loans.

Informed sources said the nationalised bank was expected to send €30bn-€35bn of loans to NAMA, with the most likely figure coming to €33bn. The bulk of the increase related to the agency capturing more associated loans with regards to the country's top developers.

While observers believe the transfer of more Anglo performing loans should ultimately benefit the 'bad bank', it removes income streams from the bank as it struggles to contain spiralling losses as impairment charges mount.

Overall, NAMA is still expected to take over up to €80bn of loans -- at a 30pc discount to their original value.

NAMA may end up taking over the portfolios of the 10 developers -- understood to include big names such as Liam Carroll and Bernard McNamara -- in two batches next month, according to some sources.

The new governor of the Central Bank, Patrick Honohan, said yesterday he was "convinced" the EU would approve the project.


"The transfer is happening at fair and honest valuations. There is no deviation from that. The result is that banks will be showing losses that haven't yet been brought to their accounts," he said.

He reiterated that the banks would need to be recapitalised as they stomached discounts on the NAMA loans, and that the Government would be providing at least part of the necessary capital.

Mr Lenihan stuck to the line that he would inject more cash into the banks if needed, but that he would prefer for the lenders to raise the money themselves.

He effectively holds a 34pc stake in BoI, after taking €250m worth of shares in lieu of a cash dividend payment due at the weekend on the State's €3.5bn investment in the bank last year.

Analysts estimate that BoI needs to raise at least €2.5bn and AIB about €4bn to end up with equity capital ratios of at least 6pc at the low-point of the economic cycle.

Irish Independent

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