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NAMA paid zero for E3.5bn loans

Thursday, January 16 14:15:42

In answer to a parliamentary question, asked by Reform Alliance Member Lucinda Creighton to the Minister for Finance concerning NAMA, it was revealed that NAMA paid the banks €0 for €3.5 billion of their loans they acquired.

Responding, a NAMA spokesman said the total nominal or par value of loans acquired for a nominal consideration was of the order of €3.5bn.

“There were a number of reasons why this occurred. The main reason related to defective legal security, meaning that the security was not fully enforceable or, in some cases, entirely unenforceable, as some were unsecured loans. In all cases where defective security was identified as a problem, it was NAMA’s practice to allow the participating institutions sufficient time to perfect security – this extended to a period of twelve/eighteen months in some instances. A zero or low acquisition value was only applied where protracted efforts by the original financial institutions to perfect security proved to be unsuccessful,” said NAMA.

Deputy Creighton said that NAMA paying €0 for over €3.5 billion in original lending, “is another staggering revelation of the depths of negligence and ineptitude that plagued our Irish Banking system,” she said.

“€3.5 billion represents 5pc of the entire €72 billion NAMA loan book. The idea that Bank of Ireland, AIB or Anglo Irish Bank could have lent out €3.5 billion that according to NAMA was completely worthless is an extraordinary revelation. What’s worse however is that no single manager in any of these banks or chief executives at the time has been brought to account for this negligence,” added Ms Creighton.

“These are not loans on commercial real estate where the value may have gone down or reduced, this is €3.5 billion of original value commercial real estate in boom times that now, according to NAMA at the time of acquisition of loans, had no value.”

“Like the United Kingdom, serious consideration should be given to the introduction of a criminal penalty for reckless lending to be put into law."

"Bankers who had responsibility for lending out €3.5 billion in Commercial Real Estate loans yet forgetting to fill out the necessary legal documentation to secure the assets should face criminal sanctions for the enormity of their negligence.”