NAMA

The National Asset Management Agency, first signalled by the Minister for Finance in April last year, is aimed at cleaning up the banking system by taking property-linked loans off their balance sheets.

• NAMA covers five banks: AIB, Bank of Ireland, Anglo Irish Bank, EBS and Irish Nationwide.
• Figures given in the NAMA business plan estimated the paper value of the loans to be taken from banks at €77 billion, for which NAMA will pay around €54 billion.

The exact figures will not be known until the process of taking over the loans is completed some time this year.

The loans

• The eligible loan book for transfer is estimated at €77 billion. The top ten borrowers owe €16 billion of that.
• According to NAMA's business plan, Ireland makes up almost 70% of the total, followed by Britain at just over 20%.
  6% are in Northern Ireland, 2.7% in the US and then smaller amounts still in Spain, Italy, France, Portugal, Germany and the Czech Republic.
• NAMA is assuming a default rate of 20% on the loans it takes on. It says €62 billion will be repaid by the borrowers, and that loan default or debt restructuring will occur on €15 billion.

Each loan will be valued separately, taking into account the quality of the collateral and the likelihood of getting a return.

Over time, NAMA hopes to manage and then sell off the property to get its money back.

The NAMA legislation gives the agency extensive powers, and limits the opportunities to legally challenge its work.

The Government is keen to stress that the developers who borrowed the money in the first place will still be liable for the full cost of the original loan, and will be pursued by NAMA if they default.

NAMA will pay the banks in Government bonds, but the debts linked to this will be recorded outside the State's national accounts.

To receive EU approval for this, NAMA will set up a 'Master SPV (special purpose vehicle)', which will be 51% owned by private investors and 49% by NAMA.

This will be responsible for buying, managing and selling off the loans identified by NAMA. It will have capital of €100m and private investors will be represented on its board.

Staff

• At its height the agency will have 75 to 100 staff. Its chief executive is Brendan McDonagh.
• Credit and risk will have up to 12 staff. Portfolio management will have up to 30 staff - looking at strategy, disposals, property management. This division will also outsource work for planning consultants and project managers and employ a number of asset managers and portfolio managers.
• There will be up to 14 staff in the banking and lending division, with more senior managers here too - responsible for the management and restructuring of loans, and working on bank relationships.
• There will be 12 staff at the business services division, and five legal and tax staff. NAMA says getting the best staff is one of the key issues it faces.

How will we know how NAMA is doing?

Every October NAMA has to submit an annual statement to the Finance Minister specifying its activities, objectives and policies for the next year. This will be made public.

Its annual accounts, which also have to be submitted to the minister, will list all debt securities issued, all advances, all of its asset portfolios, its fees and expenses and its balance sheets. These will be audited by the comptroller and auditor general.

It will issue quarterly accounts which will be made public. And the heads of NAMA are required to show up at the committee of public accounts if they are asked.