THE SIX domestic banks and building societies guaranteed by the State have been given until Monday to provide a breakdown of their development loan books, showing the top borrowers, as part of the preparations leading to the creation of the Nama (National Asset Management Agency) “bad bank”.
The National Treasury Management Agency (NTMA) asked the institutions this week to provide a detailed breakdown of the €60 billion in development loans and associated loans of €20-€30 billion across the banking system.
The NTMA, under whose auspices Nama is being created, intends to collate the most up-to-date information on the toxic loans to determine the debts of the top 50-75 borrowers. The most heavily indebted developers account for a large proportion of the loans moving to Nama.
A steering committee comprising the NTMA, the Department of Finance and the Attorney General is planning how Nama will be set up and run. The agency will focus on the loans of the largest borrowers at the outset. The committee is likely to attempt to push for the legislation establishing Nama to be published before the summer break at the end of July, and to have the Oireachtas recalled in early September to debate and pass the legislation.
Nama is planning to deal initially with the problem loans at Bank of Ireland, Allied Irish Banks and EBS building society, according to sources familiar with the committee’s workings. Meetings are being held between the NTMA and the banks this week on how the loans will be acquired.
The agency is expected to deal with Irish Nationwide Building Society and Irish Life Permanent (ILP) at a later date. While ILP has no development loans, Nama will assess whether it has any loans to developers on their investment properties.
The Government has yet to decide whether the nationalised Anglo Irish Bank will be included in Nama. Under the “bad bank” plan, the institutions will create new companies to administer the loans for Nama, though the agency will manage the day-to-day decisions on the loans. This will maintain up to 5,000 jobs within the lenders.
Nama may also offer the institutions an incentive fee amounting to 10 per cent of the loans recovered to encourage them to recoup the money from the property developers on behalf of the State.
