47% 'haircut' on first batch of loans transferred to NAMA

The National Asset Management Agency (NAMA) will acquire over 1,200 individual loans with a nominal value of €16bn for a consideration of €8.5bn, it was announced this afternoon

The average 'haircut' - the discount applied by NAMA when buying loans from the banks- on the loans to be transferred is 47%.

NAMA said in a statement that it had completed the transfer of the initial tranche of loans from Irish Nationwide Building Society and EBS Building Society yesterday.

The agency said it will transfer the first batch of loans from Bank of Ireland on Friday April 2 and expects to complete the acquisition of the first tranche of loans from the two remaining participating

institutions - Allied Irish Banks Plc and Anglo Irish Bank – by early April.

"NAMA 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 agency's statement said.

"In total, the Agency anticipates that it will purchase €81bn of loans."

“Our sole focus at NAMA is to bring proper and disciplined management to these loans and borrowers with the aim of achieving the best possible return and to protect the interests of the taxpayer," said NAMA Chief Executive Brendan McDonagh.

Borrowers will have to submit a detailed three-year business plan to NAMA within 30 days of their loans being acquired.

NAMA will then determine whether these plans are viable and will either approve them, reject them or refer them back to the respective borrowers for amendment.

"We will assess each borrower’s viability rigorously over the coming months as part of the business plan review process which will be a new start for all the parties involved," Mr McDonagh said.