THE DEPARTMENT of Finance met Irish Nationwide and EBS yesterday to plan a timetable over the next four to eight weeks for the publication of their 2009 annual results, capital injections of up to €2.4 billion from the Government and progressing their merger.
The discussions signal an intensification of the Government’s efforts to reform the two smallest domestic financial institutions.
The two building societies are set to report their 2009 results and transfer the first loans into the National Asset Management Agency (Nama) over the coming weeks, leading to a capital shortfall and triggering a requirement for a Government cash injection.
Department officials are understood to have discussed the timing of events that will ultimately lead to the State taking special investment shares in the two societies.
A spokesman for the department had no comment.
The societies are planning to hold annual meetings within days of each other to secure members’ approval for their 2009 reports.
EBS and Irish Nationwide have been more focused in recent weeks on the Nama transfers and preparing their end-of-year accounts than on merger talks.
Irish Nationwide will transfer just short of €1 billion in loans linked to the top 10 borrowers whose assets are being taken over first by Nama, while EBS will transfer €150 million initially.
A new deadline of Friday, March 5th, has been set for the start of the loan transfers to Nama.
The write-downs on Irish Nationwide’s loans are particularly severe, with the properties backing the loans owed by the top 10 borrowers being valued at about half the value of the loans.
The society is preparing to report a surge in loan write-offs in its 2009 accounts.
Auditors KPMG are advising Irish Nationwide on the provisions to be taken.
The loan-loss figures, which have yet to be signed off, are expected to be so high that the capital needed from the Government will be at the top of the €1.2 billion to €2 billion range disclosed by Irish Nationwide late last year.
EBS will sell a total of about €900 million in loans to Nama, while Irish Nationwide faces heavier losses on the €8 billion – 80 per cent of its loan book – that it will transfer to the State agency.
Irish Nationwide is preparing to transfer a much larger volume of loans to Nama in the second and third wave of transfers covering the next tier of borrowers. These loans are facing heavy write-downs as they are secured on UK land and development assets which have fallen sharply in value.
The building society is carrying out a review of its €4 billion UK loan book with advisers from Ernst Young to determine the full extent of the loan losses.
Staff from Irish Nationwide’s head office in Dublin, including head of commercial banking Declan Buckley and commercial manager Gerry Downey, have been reviewing the UK loan book in the Belfast office from where the society’s UK loans were managed.
