THE MINISTER for Finance has said he is considering setting up the National Asset Management Agency (Nama) on “a non-statutory interim basis” so it can carry out “initial scoping work”.
The move will expedite the setting up and operation of Nama ahead of the planned passing of legislation this summer, officially creating the State’s “bad bank”.
Brian Lenihan said initial work on preparing legislation to establish and govern the operation of Nama was “under way” in parallel with preparations for the operation of the new agency.
“I am currently considering the establishment of Nama on a non-statutory interim basis with a view to undertaking the initial scoping work required,” he said in reply to a Dáil question. “This will include work on assessment of the human resource requirements and potential recruitment processes.”
The National Treasury Management Agency (NTMA), under whose aegis Nama is being set up, is planning to manage loans with a book value of €80 billion to €90 billion which the new agency will buy at a discount.
The day-to-day administration of the loans is likely to remain with the banks, as the NTMA is unlikely to want to recruit significant numbers of staff to man the agency.
The NTMA is also considering hiring outside consultants with expertise managing problem loans to take control of the assets working on a contract basis.
International companies such as US corporate advisers FTI Consulting, which recently held talks with the Government, have expertise in resolving bad loans.
Another company specialising in this area is European Resolution Capital (ERC), which was set up to advise on bad bank projects.
Swedish banker Jan Kvarnstöm, an advisor to one of Sweden’s bad banks, Securum, in the early 1990s is a partner at this company.
The NTMA is thought to be assessing a number options for selling off bad property assets.
One option involves the possibility of creating a large number of property funds to be sold off to investment groups, private equity firms and pension funds. The funds, which would comprise commercial investment and developments properties from across a broad geographical area, would be auctioned off by the NTMA over a period of several years.
The State could make a return by guaranteeing finance for the initial fund purchases to kick-start sales, in return for a high rate of interest and a share of any profit made from further property sales.
