The National Asset Management Agency (Nama) has focused most attention on the heavy losses incurred by the five participating banks through the knock-down price paid for the loans but little on the quality of the loans left behind.
Allied Irish Banks (AIB) said at its annual results this week that after the transfer of €23 billion in loans to Nama, it would have a loan book of €107 billion against which it had set aside about €3 billion for bad debts, or 2.8 per cent of the post-Nama loan book.
Some €58 billion of the remaining €107 billion left behind will be in the Republic of Ireland division and €48 billion overseas.
About €27 billion of the remaining loan book is Irish residential mortgages against which AIB had taken a charge of €91 million to cover losses during 2009. AIB managing director Colm Doherty pointed out that the bank’s mortgage arrears were below the industry average.
Among the loans left behind at AIB following the Nama transfers will be €12.8 billion worth of property and construction loans in the Republic of Ireland division.
The bank has set aside €800 million to cover losses on these loans after marking down €2.2 billion as impaired and a further €3.2 billion “on watch” or vulnerable. Some €3.5 billion of the €12.8 billion relates to land and development loans, mostly loans below €5 million which are not transferring to Nama, while €8.7 billion is secured on investment properties.
Mr Doherty said that €600 million of this book was originally due to transfer to Nama but has been retained at the bank as the loans were provided to the Nama-bound borrowers for purposes other than land and development lending.
A further €700 million of the €3.5 billion relates to overdrafts to borrowers moving into Nama and was secured on collateral to be held by the State agency. Mr Doherty said that the risk-sharing between Nama and the bank on these loans had not been agreed.
SIMON CARSWELL
