NAMA transfers €2bn problem loans from BoI

THE National Asset Management Agency (NAMA) has begun another major bank bailout, clearing Bank of Ireland of almost €2 billion in problem loans held by developers.

NAMA has now initiated three major loan takeovers, having already transferred €140 million in loans over from EBS and €670m from Irish Nationwide Building Society last week.

The biggest takeovers have yet to take place. Loans valued at €10bn from Anglo Irish Bank and loans totalling €3.29bn from Allied Irish Banks are to be transferred to NAMA in the next fortnight.

Yesterday’s transfer from Bank of Ireland was completed at a valuation of €1.26bn for the loans — €670m or 35% less than they were worth when first issued by the bank.

The discount reflects the estimated fall in value of the development land and properties underpinning the loans since the property crash. The loans from EBS and Irish Nationwide had to be discounted by 37% and 58% respectively.

The completed transfers and the two planned for the coming weeks represent more than 1,200 of the biggest individual loans held by developers with a total original value of €16bn, now estimated to be worth about half that figure.

A further €65bn in smaller loans remain to be transferred after that.

NAMA said yesterday: “The agency expects to complete the transfer of the remaining loans from all five institutions by the end of the year and no later than end February 2011, the deadline set by the EU Commission.”

The International Monetary Fund (IMF), meanwhile gave its approval to the NAMA process and the Government’s decision to recapitalise the banks with direct injections of funds.

IMF deputy director of external relations, Gerry Rice, recognised that public assistance to the banks was “substantial” but said the Government had moved in the right direction.

“The Irish Government’s extensive and ongoing support we feel has been vital to maintaining financial stability,” he said.

“The establishment of the National Asset Management Agency, and this week the transfer of the first tranche of eligible assets from the designated financial institutions to the NAMA, represent important steps.”