The Government should consider selling the National Asset Management Agency, one of the world's biggest property groups, once it has made significant progress in disposing of its loans, according to a report by the former head of HSBC bank.

The report, commissioned by Nama, which was created to purge Irish banks of nearly €75 billion of risky land and development loans, also said the agency should consider taking loans currently managed on its behalf by local banks under direct control, a source familiar with the report revealed today.

Nama lost €1.18 billion euros last year as property prices continue to drop following a bubble that was dramatically punctured by the global financial crisis. Nama had already demanded the banks cut the value of their loans by around 57 per cent before it bought them.

In his Budget speech yesterday, Minister for Finance Michael Noonan said the review by former HSBC chief executive Michael Geoghegan was generally positive but he would create a group to advise on its future strategy following Geogheghan's recommendations.

The report is to be published later this week or next week, the Department of Finance said.

The source said the report raised the possibility that the government could sell the agency once it has completed substantial work and built up a valuable skills base.

It does not recommend a sale in the "forseeable future", said the source, who spoke on condition of anonymity.

Land and development loans with individual exposures of under 20 million euros that were acquired by Nama are currently managed on its behalf by the banks that took the loans, including Bank of Ireland and Allied Irish Banks.

The report says Nama should consider taking the loans, which the government in May said had a total nominal value of €12 billion, under direct control as the banks may not have as much incentive to maximise profit.

"The report says if banks don't manage the loans effectively, it is possible they could bring them back into Nama," the source said.

Reuters