Agency warns it could face losses of €800m on toxic loans

THE National Asset Management Agency warned last night that the taxpayer could face a loss of €800m on the €80bn worth of bad and doubtful loans transferring from Irish banks.

The news emerged yesterday as the agency published its revised Interim Business plan, published last October. NAMA disclosed that only 25% of the €16bn that has transferred to the agency is producing income.

That is significantly less than the 40% level indicated by the participating banks, including AIB, Anglo and Bank of Ireland.

NAMA chairman Frank Daly rejected a suggestion the banks “misled” the agency when they submitted the initial assessment of the state of the bad and non- performing loan on their books. When they submitted their plans in September 2009, the banks were “fighting for their lives”, he said.

At the time they expected the discounts on their loans would be less than 30% when the average discount being applied is 50%, he said.

“To say the least we are extremely disappointed and disturbed to find that, only months after being led to believe that 40% of loans were income-producing, the real figure is actually 25%,” Mr Daly said.

NAMA has presented a number of scenarios based on various outcomes over its projected 10-year life. It could either make a profit of €3.9bn or a loss of €800m, based on a 10% gain or loss on the long-term economic value of the loans. The €3.9bn figure is significantly less than the initial best case profit scenario of €4.8bn.

The bank’s basic position is however that the agency will “return a profit of €1bn to the taxpayer provided the long-term economic value of the assets is realised”.

Finance Minister Brian Lenihan said last night the Government would recover any loss made by NAMA through a surcharge on the banks.

NAMA said last night it would spend about €1.6bn on services over the lifetime of its operations, a figure €1bn less than previously projected by the bank.

It said it would pay fees of around €215m in 2011.


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