Nama faces losses of up to €8bn on 'junk' land
Growing pressure on 'bad bank' to open up its books to TDs' scrutiny
PETER Bacon, the creator of Nama, has said it is facing into multi-billion losses as a result of the continued fall in property prices. One government TD estimated the likely hole to be €8bn.
Mr Bacon's comments come in the wake of the Comptroller and Auditor General's report on Thursday into Nama, which said the agency had overpaid for the loans it acquired from five Irish banks.
The C&AG said that, as a result, Nama would struggle to recover the €32bn it paid to the lenders and its costs.
Speaking yesterday to the Sunday Independent, Mr Bacon said he was reluctant to put a figure on the size of the likely loss, saying: "You could use any assumption you like and come up with a figure."
However, he admitted that he had concerns over the agency's direction in attempting to ensure a proper return for the taxpayer.
Mr Bacon said: "Nama paid more than the current market value and said it was taking a long-term valuation. If you are trying to sell that asset within seven years, then it is not long-term and major losses are likely."
This weekend, Fine Gael TD Peter Mathews said that the C&AG's report showed that "all is not well with Nama". He said Nama was facing a hole in its balance sheet of up to €8bn and that he was deeply concerned.
"Nama cannot hide behind the screen of secrecy and privacy and there may be a temptation for it to use the armour-plated legislation it enjoys to insulate itself," he said.
Chairman of the Oireachtas Finance Committee Alex White said there was a lot of concern in political circles over Nama's accountability and transparency.
"There needs to be a greater willingness on Nama's behalf to explain its policy when the State and taxpayer are on the line for so much money."
Mr White confirmed that it is the intention of the committee to bring Nama before it in July to explain itself.
Finance Committee member Liam Twomey of Fine Gael said Nama enjoyed "incredible powers" and that given that the greatest concern is over its Irish lands, Nama could be sitting on €18bn worth of 'junk' land.
"The fallout of Nama not working is too enormous to fathom," he commented. "The Irish assets are grossly depressed and this poses great doubts over the figures presented by Nama."
Nama has insisted that it is acting to the maximum levels of openness allowed under its governing legislation.
In its response to the C&AG report, Nama said the report concluded that based on its audit and on specialist advice commissioned by it, the C&AG was satisfied that he had received a reasonable degree of assurance that Nama's valuation processes were robust.
Nama chairman, Frank Daly, said: "Overall, I am satisfied, based on the conclusions drawn in this independent and thorough report, that the approach we adopted was largely right, notwithstanding the very difficult circumstances which prevailed during Nama's establishment phase and the absence of precedents to guide us.
"The Comptroller's report also highlights the challenges associated with managing the acquired loan portfolio so as to generate the cash flows that will enable Nama to meet its debt repayment targets.
"These challenges are well known to us but we remain very much on course to fulfil the primary commercial objective that has been set for us by the legislature."