NAMA Banks Take Legal Action On €6B Loans

Approximately €6 billion worth of loans were foreclosed on due to the action banks took against smaller property players and property syndicate members.

The information comes as NAMA finalizes its 2011 portfolio value, with a potential loss charge of nearly €1Billion.

NAMA, last year, had an asset value of €1.4B but this year won’t be near as large.

Banks working under NAMA supervision had foreclosed on 1,043 loans that landlords and investors took out and were unable to pay on.

The loans are supposedly worth €6B; however, NAMA said the values are actually €1.6B. NAMA has also taken action against bigger developers that involve almost 200 loans.

According to a quarterly report, NAMA shows just 23 percent of the loans are paying the interest.

A significant amount of loans have either been foreclosed on or are behind in payments by 120 days. This typically means companies behind the loans are put into bankruptcy.

NAMA will take action against the bigger developers like AIB. However, IBRC and Bank of Ireland will work with the agency, taking action two ways: through the court system or a voluntary insolvency process.

NAMA is thoroughly looking through its borrowers’ business plans and changes to many non-performing loans will occur including longer repayment terms and reduction in interest. This will change them into performing loans.

The report also showed the following:

  • NAMA is currently working with fewer borrowers. However, it was disclosed that some developers had more loans after their additional loans.
  • Private investors operate the structure of NAMA on behalf the state and were paid €5 million in fees in the quarter that ended on Jun. 30, 2011.
  • NAMA, at the end of June, had made €828 million in net cash from the agency’s operating activities; mainly from borrowers’ cash.
  • Second quarter profit was €118M; Total profit for first six months of the 2011 year was €209M.
  • NAMA has finished its attainment of the last few outstanding loans.

Loans totaling €74.2 billion have been attained since the start of the loan transfers in March 2010. NAMA has paid €31.7 billion for all loans.

NAMA has looked over 170 business plans of roughly 190 debtors whose loans are managed directly by NAMA.