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Developers got a further €2.3bn before Nama offload

IRELAND'S broken banks gave the developers on their books €2.382bn on top of the €74bn they had already loaned them in the final six months before they offloaded the lot to Nama.

More incredibly, the banks then sought to recover the entire amount from the State's so-called 'bad bank', very nearly landing the taxpayer with a bill for a further €2.382bn on top of the billions already committed in recapitalisation costs.

The attempt by the banks to recoup their money came with the full authority of the Central Bank.

Under the terms of a letter it sent on April 7, 2009, the Central Bank informed the Bank of Ireland, AIB, Anglo Irish Bank, Irish Nationwide and the EBS that any funding issued by them to their developer clients after that date could be recovered without discount from Nama if they could prove the decision to advance the money was commercially justified.

In the event, Nama examined the funding given by the banks to the developers whose loans it acquired between April and November 2009, and decided to repay €971m to them, or €1.411bn less than they had been seeking.

Finance Minister Michael Noonan disclosed the startling figures in a response last Tuesday to a parliamentary question from Sinn Fein TD Pearse Doherty.

Asked by Mr Doherty what steps Nama had taken to ensure that the money it had advanced to developers between April and November 2009 represented value for money for the taxpayer, Mr Noonan said the agency had put in place what he described as "a very thorough process", which he believed was "designed with sufficient rigour to ensure that any approved expenditure would represent value for money for the taxpayer".

Commenting on what had transpired in the period between April and November 2009, the Finance Minister said: "I am advised by Nama that, arising from that review, approval was granted for €971m of expenditure, which is 41 per cent of the amounts for which the institutions made application.

"I understand that applications amounting to €1,411m made by the participating institutions to Nama were rejected as not being commercially justifiable, including applications for development projects for which there was no proven demand, and applications for overhead payments to debtors, which Nama considered to be excessive."

Sunday Independent