THE INTERIM head of the National Asset Management Agency (Nama) has said the first bank loans may not be transferred to the agency until the end of January due to delays in the application and approval process.
Speaking at a conference organised by UCD’s Commercial Law Centre, Nama’s interim chief executive, Brendan McDonagh, said while Nama would be set within the next two weeks, the largest loans may not start being transferred until the end of January.
The remaining borrowers who have loans of €77 billion moving to Nama would transfer by a target of the end of July 2010, he said.
The draft business plan, published last month, says that the top 10 borrowers and their €16 billion loans would move to Nama by next month with all €77 billion in loans moving by June-July 2010.
Mr McDonagh said Nama had worked hard in the background with potential participating banks “to move as quickly as possible”.
However, he warned the July 2010 target was “entirely dependent on the readiness of each financial institution in having the information prepared on each individual loan for the Nama due diligence process”.
Nama may take enforcement action against defaulting borrowers before then, he said, but each individual borrower must first be given an opportunity to “present an updated business case within a reasonable timeframe to make a pitch for survival”.
Financial institutions have 60 days from the establishment of Nama to apply to join but must first seek shareholder approval at extraordinary general meetings.
Mr McDonagh expects to be able to sell on overseas property loans faster than domestic loans as foreign markets recover faster than the home market, according to the interim head of the agency.
About 27 per cent of the assets to be acquired by Nama are overseas, primarily in the UK, he said, and he would “expect these markets to recover more quickly”.
Some €22.5 billion of the loans moving to Nama are outside the Republic of Ireland, according to the agency’s draft business plan.
Mr McDonagh said he hoped Nama would at least break even over its 10-year lifetime.
He told the conference the banking sector had paid insufficient attention to basic risk management principles such as stress-testing property lending and to the key issue of supply and demand.
There had been no rigorous analysis of whether the scale of the rise in property prices could be justified by economic fundamentals, he said in his presentation.
Mr McDonagh said Nama would be objective, fair, reasonable, confidential, respectful, cost conscious and realistic.
Gerard Hogan SC told the conference there was nothing in principle within Nama that would lead to a constitutional challenge.
Gerry Keenan, chairman of the Irish Association of Investment Managers, said that he expected bank funding costs to drop significantly by the early part of next year as a result of Nama being established.
