Banks could have cost taxpayer extra €20bn with misleading loan figures

BANKS could have cost taxpayers an extra €20 billion because of the misleading figures they gave to NAMA about the value of their property loans, the agency’s chief executive has confirmed.

Brendan McDonagh said he will pass on details to the Financial Regulator outlining how banks gave figures of their loan to value ratios which were later found to be significantly different when NAMA carried out its own due diligence.

But he believes the financial institutions did not break any laws because their figures were provided in July 2009 — three months before the Dáil passed laws governing NAMA and its operations.

Mr McDonagh told the Dáil’s Public Accounts Committee (PAC) yesterday that if the agency had taken the banks’ word on the size of loans it “would be €20bn under water” and “the person that would have carried the can would have been the taxpayer”.

Mr McDonagh was criticised by committee chairman Bernard Allen (Fine Gael) for failing to alert authorities earlier when it appeared that banks had provided false information.

“Surely you should have been pro-active in taking action against those who were giving inaccurate information,” Mr Allen said.

But Mr McDonagh responded: “In my view, I can find no evidence there was a breach of the NAMA Act.”

He could not say whether there was “deliberate concealment” by the banks or if the wrong figures were down to a “lack of information or bad systems”.

The issue was first raised by Cork South Central TD, Michael McGrath (Fianna Fáil) who told a committee meeting in November there was a “clear pattern of false and misleading information” from the banks. At that meeting, Mr McDonagh said he could not disagree with these allegations.

The Financial Regulator, Matthew Elderfield, later called on NAMA to provide information substantiating this claim, but so far this had not been forthcoming.

The Finance Minister, Brian Lenihan, subsequently told the Irish Examiner it was a matter for NAMA to decide whether or not they made an official complaint to the authorities.

Yesterday Deputy McGrath said the Financial Regulator would be called before the committee.

“If it is not in contravention of the NAMA legislation, we have to hear from the regulator if it’s acceptable to behave in the way banks behaved,” he said.

“If there was false information fed into NAMA designed to achieve the maximum possible price for the loans, then we can’t let that go,” he added.