The National Asset Management Agency (Nama) has pledged to be “rigorous” in recovering loans on behalf of the taxpayer, in particular those made to errant property developers at the height of the boom.
Speaking to the Leinster Society of Chartered Accountants in Dublin today, Nama chairman Frank Daly insisted no borrower is "too big" to fail.
"The onus will be on borrowers to demonstrate their viability, not on Nama to make a leap of faith based on borrowers' reputation or record," he said.
Some of the developers, Mr Daly said, had not yet abandoned the “extravagant mindset” of the 2003-2007 era.
Nama has already held face-to-face meetings with the first 10 borrowers or their representatives whose loans have been transferred to the Government’s bad loan agency.
These borrowers were now fully aware of what is expected in terms of the “thoroughness and stringency of their business plans”, he said
In his address, Mr Daly said: “It is very difficult to understand how borrowers on relatively modest incomes could have been advanced large sums of money to invest in undeveloped sites in unpromising locations.”
“There are serious questions to be asked about the governance of institutions which created a system of incentives for their staff which enabled this lending to take place,” he added.
The chairman also updated delegates on the amount of loans that have now been transferred from the banks to the agency.
He said some €10 billion of the loans of the largest 10 borrowers with AIB, Bank of Ireland, Irish Nationwide, EBS and Anglo Irish Bank have been transferred. Nama paid €4.85 billion for the loans, representing an overall discount or “haircut” of about 51 per cent.
“That discount is unlikely to change very much after we have acquired the residual of the first tranche loans from Anglo,” Mr Daly said.
With the second and third loan tranches of about €21 billion transferring over the coming months, the agency aims to have close to half of the overall transfer completed by the end of July, he said.
Mr Daly said he expected the pace of loan transfers to accelerate in the second half of the year as smaller and less complex loans can be valued and transferred more easily.
Nama’s objective is to transfer the remaining loans from the five institutions by the end of the year and certainly no later than end of February 2011, the deadline set by the Eurpopean Commission, he said.
