THE NATIONAL Asset Management Agency (Nama) made a loss of €7 million in its first two months of operation, according to its first set of quarterly accounts, published yesterday.
The loss was recorded by the master special purpose vehicle (SPV), a National Treasury Management Agency (NTMA) subsidiary charged with issuing the government-guaranteed debt that is used to buy eligible bank loans.
The accounts cover the period from January 27th to March 31st. Just €58,000 in interest was generated by Nama during this period, as the first tranche of loans – €814 million – was only transferred to the agency on March 29th.
“To put this number into context, it should be noted that interest income was generated over a two-day period in the first quarter of 2010 from a relatively small portfolio of loans,” Nama chairman Frank Daly and chief executive Brendan McDonagh stated in a letter to Minister for Finance Brian Lenihan on June 30th. “As later loan tranches are acquired by Nama, the amount of interest income will increase to offset interest costs and expenses,” the letter states.
The master SPV had total operating income of €8.9 million. This was mostly related to the “release of prepaid acquisition costs”. Its expenses amounted to just more than €16 million.
The biggest expense incurred in the first quarter was €8.9 million paid for due diligence work on the loans it acquired. The agency also paid €2.45 million in secondment costs to accountants PricewaterhouseCoopers in the UK for “specialist personnel to work with Nama on “key aspects of the set-up phase”. Just under €2.2 million was reimbursed to the NTMA for the costs of staff and services.
In addition, just more than €1 million was paid in “master and primary servicer” fees; €306,000 in legal and tax fees; and €242,000 to financial advisers.
An unrealised loss of €1.35 million on derivatives was also booked.
The one bright spot for the agency was that it made a €548,000 foreign exchange gain.
Nama also paid €118,000 in the first quarter in fees to its nine-person board.
The quarterly accounts show that Nama acquired €814 million in loans from EBS Building Society and Irish Nationwide Building Society for €371 million on March 29th. This represented a discount of 54 per cent.
A total of 87 loans were transferred by the institutions, of which 30 were deemed to be performing and the balance non-performing.
The haircut applied to the performing loans was 10.2 per cent. Nama paid €140 million for €156 million worth of loans. The discount applied to the €658 million in non-performing loans was just under 65 per cent, with Nama valuing the assets at €231 million.
In terms of the non-performing loans, 74 per cent were considered to be impaired, while the balance were on “watch”. The haircut applied to the 33 most impaired loans was 76 per cent.
The agency paid just €105 million for these loans, which had a nominal value of €454 million.
Only the two building societies had transferred loans to Nama in the period covered.
