NAMA chief: Nobody is too big to fail

THE chairman of NAMA issued a stark warning to developers yesterday, saying nobody is too big to fail.

He also criticised the reckless lending by banks during the boom, saying questions must be asked about the way banks were run.

NAMA chairman Frank Daly also echoed the views of the agency’s chief executive, saying NAMA will demolish properties if necessary.

Mr Daly said there were a large number of borrowers who owed between €5 million and €420m, who were not professional property developers.

“It is very difficult to understand how borrowers on relatively modest incomes could have been advanced large sums of money to invest in undeveloped sites in unpromising locations,” he said.

He added that it is inevitable that the outcome of the NAMA process cannot be positive for all borrowers and the result will be foreclosure.

“The onus will be on borrowers to demonstrate their viability, not on NAMA to make a leap of faith based on borrowers’ reputation or record,” he said.

NAMA began taking over €81 billion worth of loans from banks in March. It applied a discount of 51% on the first block of loans and it aims to complete the transfer of all loans by the end of the year.

Mr Daly, who was speaking to the Chartered Accountants Leinster Society yesterday, said the €5bn fund NAMA has to help real-estate borrowers complete unfinished developments is a limited resource which NAMA must utilise prudently.

“There is no question of throwing good money after bad,” he said.

“NAMA will take whatever actions it considers necessary to protect taxpayers’ interests, including the appointment of statutory receivers or the use of vesting orders or other enforcement mechanisms,” he said.

Last month NAMA chief executive Brendan McDonagh said that the agency may demolish vacant homes built during the boom.

“We know, even at this early stage, that it does not make commercial sense to complete many unfinished developments. They should never have been started in the first place,” Mr Daly said.

NAMA has already held meetings with the top ten developers or their representatives and these are being asked to submit detailed business plans to the agency.

Mr Daly said NAMA would approach these plans with a realism regarding property over-supply, prices and the prospective demand for developments.