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So it was a builders' bailout after all

They and the banks have ruined the country -- but now a coterie of the most heavily indebted Nama developers stands to make millions of euro in "incentivised" earnings from the State's bad bank, the Sunday Independent can reveal.

Despite the greed and reckless lending, which caused the 2008 crash, many of the biggest developers or "debtors" are being paid salaries of more than €200,000 a year, having agreed business plans with the State bad bank for the workout of their loans.

However, it has now emerged that developers who "fully engage and cooperate" with Nama, who realise a profit not on the total value of the original loan but on what Nama paid for the loan, will share in that gain, despite the huge burden placed on the taxpayer to date.

As part of "Incentivisation Mechanisms", profits made above that will be shared out between the National Asset Management Agency and the developer, despite the incredible losses borne by the taxpayer to date.

For example, in a case where Nama took control of loans worth €1bn, it would have paid €540m for those loans. If €20m is given to the developer to finish a property, all the developer needs to pay back is €560m. Any gain on that will be split 90:10 between Nama and the developer.

It has been confirmed that, of the top 12 developers, who between them have debts of €23bn, all are currently working with Nama, apart from the developers it has moved against.

So far, Nama has appointed receivers to Sean Dunne, Liam Carroll, Bernard McNamara and Ray and Danny Grehan.

"Nama has appointed receivers to enforce against a number of the top 12 debtors, while it has agreed business plans with the others," Nama said.

The Sunday Independent sought further clarification from Nama about the plan, but it was unwilling to provide further information.

It has also been speculated that Nama could need a further injection of taxpayers' money of up to €1bn after it posted losses of €1.1bn for 2010.

Nama's projections are based on property valuations from November 2009 and, given the considerable slump in prices since, it is feared that its potential losses could be in excess of €2bn by the end of this year.

It has also emerged that €27m will this year be paid to Johnny Ronan and Richard Barrett's Treasury Holdings for the rent and upkeep of the National Convention Centre.

See Full Story, Page 23

Sunday Independent