NAMA’s €1 billion write-down may increase

NAMA made a loss of €714 million in 2010 after taking a €1 billion impairment charge to cover potential losses on loans it acquired at a 58% discount from Irish banks.

Yesterday, NAMA released excerpts from its fourth quarter 2010 report and unaudited accounts which showed just 23% of the €71bn in loans it acquired are “performing”.

More than three-quarters of NAMA’s non-performing loans are at least 120 days in arrears.

A spokesman said that when the audited accounts become available in June the €1bn write-down may be higher that in the unaudited accounts.

NAMA expects performing loans to rise to 25% once it acquires residual loans with a nominal value of €3.5bn.

To date, the agency has approved the sell-off of €3bn in assets held by NAMA borrowers in order to pay down debts either to the agency itself or to non-NAMA banks where they had co-lent on developments.

In its short statement, NAMA said that under IFRS accounting standards, it is required to include an impairment charge on loans and receivables in its audited 2010 accounts.

“As a result and at this time NAMA, in its unaudited accounts, has included an estimated impairment provision of €1bn in the Q4 Section 55 Accounts resulting in an overall accounting loss for the year of €714m,” the report stated.

To the end of March 2011, NAMA had paid out €30.5bn to acquire loans with an original value of €72.3bn covering assets ranging from London skyscrapers to farm land.

The discounts forced on Irish banks triggered large holes in their balance sheets, which the Government has helped fill, effectively nationalising them.

In 2010, NAMA focused on its top 30 debtors who owed €27bn. Agreements in the form of memorandums of understanding have been completed with 16 debtors, and are close to completion with a further two.

NAMA said it has commenced enforcement procedures against seven of the top 30 debtors, and is continuing negotiations with the remaining five.

NAMA chairman Frank Daly said 2011 have been exceptionally busy so far, as the agency focused on identifying developers it believes it can work with, while moving others into the enforcement process.

He said: “It should be stressed again that the only motive behind decisions taken on enforcement is to maximise the return to the taxpayer and where all other viable options have been exhausted.

“I would also emphasise that a majority of the debtors are working co-operatively and in a business-like way with NAMA — again to the advantage of the taxpayer.”

NAMA said it generated €740m from its operating activities, mainly through borrowers’ receipts which totalled 1.014bn and derivative inflows of €47m.

NAMA said: “There was a significant cash outflow of €240m to borrowers to allow them to complete projects and to fund working capital.

“NAMA had total cash balances of €837m at end-December 2010, an increase of €213m from end September 2010.”


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