NAMA to spend €37bn on bad loans

THE total amount that NAMA will spend on tainted bank loans will amount to around €37 billion, it was confirmed yesterday.

To date, NAMA has spent just over €30bn on loans from the five relevant institutions and yesterday’s revised figure takes into consideration an extra €12bn worth of additional loans that will be taken from AIB and Bank of Ireland.

The agency also said that comments from Anglo Irish Bank chairman Alan Dukes — suggesting that €75bn would be needed to fund the current NAMA operation and that a secondary body would be needed to absorb further bad bank loans — are “not correct”.

Meanwhile, the country’s two main banks — Bank of Ireland and AIB — have been linked with possible bids for the outstanding deposits of Anglo Irish Bank and the Irish Nationwide Building Society (INBS), which were put up for auction earlier this week.

Following an application from Finance Minister Brian Lenihan the High Court ordered — on Tuesday — that the non-NAMA related deposits and assets of both institutions should be auctioned immediately.

While both Bank of Ireland and AIB declined to comment yesterday, Emer Lang of Davy Stockbrokers said the deposits — estimated to be worth a combined €15bn — could prove attractive to both banks.

“The deposit base is likely to prove attractive to AIB and Bank of Ireland, which revealed low-double-digit billions of outflows in their respective November interim management statements. It would also go a long way to restoring the loan-to-deposit ratio at Permanent TSB to a more appropriate level. Little is known about the maturity profile or average cost of the deposits, factors that will influence the price, but typically deposit bases sell for a low-single-digit percentage premium,” Ms Lang said in a research note on the Anglo decision.

Elsewhere, banking trade union the IBOA yesterday expressed “serious concern” over the authorisation of an auction of INBS’s deposits — saying the society’s staff were being used as “collateral damage”.

“It appears now that the minister values short-term expediency more than the long-term stability of the financial services sector in Ireland,” IBOA general secretary Larry Broderick said.

“Instead of using these deposits strategically to buttress the balance sheets of one or more of the Irish institutions covered by the State guarantee, the minister is offering them for sale to the highest bidder, regardless of the consequences to our domestic banks,” he said.