Written answers

Thursday, 29 April 2010

Department of Finance

National Asset Management Agency

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 111: To ask the Minister for Finance the full extent of debt so far acquired under the National Asset Management Agency; the current, expected or realisable values of the property; the degree to which expected State liability has altered since the passage of NAMA legislation; and if he will make a statement on the matter. [17557/10]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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The first tranche of loans has now been transferred to NAMA from all but one of the participating institutions. I am informed by NAMA that they intend to transfer the first tranche of Anglo loans over the next two weeks- commencing this coming weekend.

The nominal value of loans already transferred from four institutions in tranche 1 is €6 billion; the total consideration paid for these loans by NAMA is €3,538 million of which €3,361 million (95%) is Government guaranteed bonds and €177 million is subordinated bonds. The nominal value of loans to be transferred in Tranche 1 from Anglo is of the order of €10 billion. NAMA stated on 30th March 2010 that the average discount on these loans has been estimated at approximately 50%. Early indications suggest that this discount may be somewhat higher however; NAMA will not have the final average discount on these Anglo tranche 1 loans until the transfer is complete. The higher the discount on loans, the less NAMA will pay to acquire the loans.

Section 55 provides that NAMA will submit quarterly reports to me and these will provide detailed information on the loans including, amongst other details, the number of loans outstanding, the number of loans foreclosed, sums recovered from property sales in the relevant quarter and an abridged balance sheet of the assets and liabilities of NAMA and each NAMA group entity. The first quarterly report shall be submitted to me on or before 30 June 2010 and I will arrange for copies of these reports to be laid before each House of the Oireachtas.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 112: To ask the Minister for Finance the original anticipated or expected discount in respect of the relevant properties as expressed during the passage of the National Asset Management Agency legislation; the eventual discount in respect of such properties subsequently; the likely impact of the increased discount; and if he will make a statement on the matter. [17558/10]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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The estimated aggregate discount of 30% that I announced last September is a top-down aggregate estimate of the potential discount that the institutions will face. I always made it clear that the actual valuation would be determined on a loan by loan basis. Only after a significant number of loan-by-loan valuations have been carried out will it be possible to get a full sense of the overall discount.

The fact that the discount on the first tranche of NAMA loans is expected to be 47% as opposed to the initial estimate of 30% is proof of the robustness of the overall process. The increased discount will mean that the loans will be transferred to NAMA at a lower cost to the taxpayer than originally expected. Higher discounts also have implications for the capital needs of the banks as recently announced by the Financial Regulator.

The calculation of the discounts followed detailed loan by loan assessments which included legal due diligence, a detailed valuation process, and internal and external checking processes, including external audit. In my Dáil speech on banking on the 30th March I explained the impact of the NAMA process and the cost of recapitalising the participating institutions and that this restructuring and recapitalisation was critical to ensure that the banks can supply the credit necessary to underpin our economic recovery.

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