Tuesday 20 February 2018

NAMA 'would be €20bn in red if we'd listened to bank data'

McDonagh stands over comments on lenders giving 'incorrect' data to bail-out agency

Laura Noonan

THE National Assets Management Agency (NAMA) would have begun life €20bn in the red if it had accepted initial data submitted by the banks, agency boss Brendan McDonagh said yesterday.

The comments came at a lengthy Public Accounts Committee meeting where Mr McDonagh insisted he "unequivocally" stood over comments about "incorrect" data provided by the banks.

The Nama boss also published new data giving fresh insight into the pictures individual banks painted of their loan books in the summer of 2009, pictures which are now coming under fierce scrutiny.

The data shows collapsed Anglo Irish Bank claimed to have one of the most disciplined approaches to lending of the five banks participating in Nama.

The initial data supplied by Anglo implied developers spending €100m on land were only being given loans of €66m to €69m, since the bank's loan to value (LTV) ratio at origination was 66pc to 69pc.

The LTV for development was 65pc to 75pc, while the LTV for investment was 75pc to 80pc, Anglo told Nama.

Mr McDonagh said Nama now believes banks "across the board" had LTVs "closer to 100pc", implying that they were giving developers the commercial equivalent of 100pc mortgages.

This dramatic difference between the LTVs initially described and those eventually discovered meant the banks' loan books were in far worse shape than Nama originally expected.

"NAMA would have been, from day one, €20bn under water had we paid banks the money [based on the initial LTVs submitted]," Mr McDonagh said.

"That would have protected shareholders and bondholders -- the person carrying the can would have been the taxpayer."

Healthiest

AIB initially told Nama its average LTV was 70pc, making it one of the healthiest banks at that point. Since then, AIB's discounts on its Nama portfolio have shot up from an expected 30pc to an actual 54pc.

The only banks that initially admitted high LTVs were Irish Nationwide and EBS. Collapsed Irish Nationwide said it was lending 98pc for development projects, 94pc for land and 89pc for "associated" loans.

On-the-market EBS said it was lending 100pc for development, 69pc for land banks and 68pc for "associated" loans.

Bank of Ireland, which NAMA said was "closest" in its initial data, claimed its loan to value ranged from 66pc to 70pc across the book. Bank of Ireland's discount rate came in at 42pc, the lowest of any Nama bank.

The banks have vigorously rejected suggestions that they deliberately misled NAMA, and NAMA chairman Frank Daly admitted "inadequate systems" in the banks could have been responsible for any errors.

"In the absence of someone enquiring into it, I can't be definitive," he added.

Financial Regulator Matthew Elderfield has asked NAMA to provide it with any documentation a it has relating to anomalies in data provided by the banks.

Irish Independent

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