THE State's bad bank, Nama, has become "neurotically paralysed" and could lose the taxpayer up to €6.7bn, as a result of a catastrophic drop in property prices, the Sunday Independent can reveal.
There is now "grave concern" within the highest levels of Government that Nama is a "looming crisis", with speculation growing this weekend that the Coalition is considering "swingeing changes" at the top levels of the agency.
Prominent Government TD Peter Mathews yesterday accused Nama of becoming "neurotically paralysed", and demanded that it begin engaging in transactions and dramatically improve its transparency.
An extensive investigation of Nama's portfolio showed that as a result of a 30 per cent average drop in property values since November 2009, the taxpayer is now facing significant losses.
According to a number of independent indices, over that period Irish residential property prices have slumped by 27 per cent, while Irish commercial property prices have fallen by 22 per cent.
However, development land prices across Ireland have fallen further, with estimates of the collapse ranging between 30 and 40 per cent.
As a result, based on current values, examining the geographical and asset type, Nama will incur a loss of €5.1bn on its remaining portfolio, estimated to be worth €24.81bn.
Further losses of €1.3bn are also factored into the total loss figure as a result of the poor quality of assets still to be sold, mainly in Ireland; an incapacity of the Irish market to consume the sheer volume of the remaining assets; and the unavailability of credit to fund real-estate purchases from Nama.
In total, Nama, in even a non-worst case scenario, will have losses of €6.3bn, but this is not the full story from the taxpayers' point of view.
According to the agency's previous statements, any loss is to be borne by the participating banks, which are now owned primarily by the Irish taxpayer.
Therefore it is taxpayers who will pay the deficit, out of bank ownership reserves. Based on today's values, taxpayers' exposure to Nama will be €6.7bn.
Criticisms of Nama's chief executive Brendan McDonagh have also emerged over the refusal of the agency to engage in "reality" when it comes to its own valuations.
Despite being asked for responses to a number of specific questions, Nama failed to answer or counter a single point.
It accused the Sunday Independent of an "appalling lack of understanding" about the work of Nama, and of engaging in a "baseless" campaign against it and a number of its key staff.
"I won't make any comment on the questions which you raise about individuals in the agency, save to say that the agency and its staff reserve their right to take whatever action is deemed necessary to protect its and their good names," a spokesman said.
During a recent appearance of Mr McDonagh and Nama chairman Frank Daly at an Oireachtas committee meeting, Mr Mathews estimated that Nama is set to lose as much as €10bn.
Communications Minister Pat Rabbitte has heaped further pressure on Nama, saying in an interview in the Sunday Independent that it has become a "feeding trough" for lawyers, accountants and other professionals.
He said: "The creation of Nama has certainly been a feeding trough for professionals on a scale we've never experienced before.
"The frenetic atmosphere in the House when that legislation was going through in the wake of the bank crash probably explains the extraordinary lengths that the late minister, Brian Lenihan, went to in terms of setting up safeguards and ring-fencing Nama from political or other intervention. But in the process he set up €2.5bn for the reward of professionals who would work on the work-out of the banks' indebtedness. It certainly has been very hard to justify."