Banks to get €28bn from Nama

AIB and Bank of Ireland may get up to €28 billion in return for bad loans transferred to the National Asset Management Agency (Nama).

In statements issued this morning, AIB and Bank of Ireland said they would get €17 billion and €11.2 billion respectively if a 30 per cent discount was applied as expected to the loans.

AIB said Nama had not yet identified which of its loans it intends to acquire, but the bank was estimating it would take on land and development loans with a value of about €24.2 billion, before taking €2.3 billion of loan loss provisions into account.

"The Minister for Finance has provided guidance that an average industry discount of 30 per cent to the gross value of the Nama assets has been estimated, although there can be no assurance that this will be the case," the bank said in a statement tot he stock exchange this morning.

"In the board's view, there is no reason to believe that the average discount applicable to AIB's Nama Assets will fall significantly outside of this guidance."

Bank of Ireland, meanwhile, said it may transfer up to €16 billion in toxic debt to Nama. It said the discount applied to the loans was not expected to be above 30 per cent. The bank had previously speculated that its discount would be significantly below that figure.

The loss on disposal of the bank assets will be tax deductible, the bank said.

"Once the eligible bank assets are transferred to Nama, the bank will no longer receive income from these assets," Bank of Ireland said in a statement.

"The bank expects this loss of income would be partially offset by the interest income the bank would receive from the securities issued as consideration by Nama or the Minister for Finance on transfer of eligible bank assets."

The transfer of assets is due to begin in January, with the deal completed by July 2010.

Both banks urged shareholders to approve the Nama plan, warning failure to do so could put the institutions at risk full or part nationalisation.

Shares in AIB were down 5.5 per cent to €1.55 at close of the Irish market , while Bank of Ireland slipped 5.29 per cent to €1.61.