A FAILURE by the National Asset Management Agency (Nama) to evolve into a more entrepreneurial and confident business is likely to cost the State billions of euro, a former senior banker has warned in a report for the State agency.
Former HSBC chief executive Mike Geoghegan said Nama had to evolve from its start-up phase into “the proactive, externally focused, entrepreneurial, confident business it needs to be”.
In his report, published yesterday, two months after he completed his review, Mr Geoghegan said the Nama board was dominated by directors “with control rather than entrepreneurial backgrounds”. The “very active” board consumed “a very significant” amount of the executive team’s resources and focus, he said.
“This is manifested in the large number of internal meetings, long agendas and substantial numbers of attendees,” he said.
Mr Geoghegan advised Nama to increase the number of executives on its board from one – the chief executive Brendan McDonagh – to three. Other executives should not attend board meetings unless they are making presentations.
Mr McDonagh manages “an extraordinary level of administration” and is “not liberated” to focus on more strategic and entrepreneurial aspects of his role.
He advised Nama to recruit a chief financial officer to sit on the board, deputise for Mr McMcDonagh and reduce his workload.
Nama was advised to appoint a head of strategic planning and audit and to restructure its portfolio management, credit and risk, lending and legal departments.
Mr Geoghegan said the 600 smaller borrowers managed by the banks should instead be managed by Nama. This would require 200 more staff, a doubling of its workforce, at a cost of €25 million.
Failing to bring the 600 debtors into Nama in the next six months might increase the risk of Nama failing to meet its bond repayment schedule, he said.
Nama must pay off €7.5 billion of its €30 billion of debt raised to buy €74.2 billion of loans from the banks by the end of 2013. Failing to meet this “should possibly lead to the assets of Nama being given to one or more third parties to manage”, said Mr Geoghegan.
The Department of Finance confirmed that Mr Geoghegan would chair the group to advise the Minister on Nama’s future strategy.
