‘Small’ band of developers owe €1 billion each

A SMALL number of developers have property loans in excess of €1 billion each to which the taxpayer will be exposed as they are passed from the banks to the National Assets Management Agency (NAMA), an Oireachtas Finance Committee has heard.

A further 10 developers have loans of more than €500 million while at least 1,000 owe sums greater than €10m to the banks, which will pass “toxic assets” on to the state.

Finance Minister Brian Lenihan admitted it could be up to 15 years before the state knows the full cost of the plan that, the committee heard, may not break even when the Government eventually realises the value of the assets.

Mr Lenihan told the committee it would not be possible to include laws compelling banks to pay a levy to the state for taking over the bad loans as part of the NAMA legislation to be brought before the Dáil in July.

Instead, when the scheme had completed its work in 10 to 15 years, laws could be introduced allowing the state to recoup any losses to the taxpayer from taking over the loan portfolios.

Committee member Sean Barrett (Fine Gael) told the minister that introducing a levy at a later stage may not be legally possible.

Mr Lenihan said the Government would be guided by the Attorney General on the matter.

Following questioning from Labour’s spokeswoman on finance, Joan Burton, on possible conflicts of interest, the Government’s special adviser on NAMA, Dr Peter Bacon, admitted he undertook consultancy work for five developers and stood on the board of one firm up until September 2007.

He said the advice he had given had “not been tainted” by this and “any relationship I had with developers has been professional”.