The head of the National Asset Management Agency has told an Oireachtas committee the agency will 'inevitably' be faced with the prospect of knocking down certain developments.
Brendan McDonagh of NAMA told the Oireachtas Joint Committee on Finance and Public Service that the agency would take a 'strictly commercial view' of unfinished building projects, and would not give funding to complete them for the sake of it.
Mr McDonagh also told the committee it was now estimated that a third of the loans it was taking on were producing cash in some form, compared with an initial estimate of 40%.
Mr McDonagh also said the agency had already had face-to-face meetings with borrowers whose loans had been transferred from the banks. He added that NAMA would not be 'rolling over' interest for borrowers in future. Mr McDonagh said around 12.5% of NAMA's total portfolio was on interest roll-up, meaning no interest is due to be paid until the term of the loan ends.
'We will not waste time with borrowers who do not wish to co-operate or who have not yet accommodated themselves to the current realities of the property market', he said.
After the transfer of the first batch of loans, for which NAMA is paying €8.5 billion for loans with an original value of €16 billion, Mr McDonagh said work was now underway on the transfer of the next batch of loans, worth €13 billion, which are due to be transferred in the second quarter of this year.
He said he hoped to have all loans from three of the five financial institutions completed by the third quarter of the year. Asked about the delay in transferring the first loans from Anglo, he said the process had been 'long and difficult' and he expected it to be completed in the coming weeks.
The NAMA chief said that what the agency had found in banks - including poor loan documentation, assets not properly secured and inadequate stress-testing - was due to a 'mindless scramble' to funnel lending into one sector of the economy.
Mr McDonagh also said the NAMA board planned to submit an updated business plan to the Finance Minister by the end of June, which would take account of what was happening in the property market.
Mr McDonagh said NAMA had already advanced funds to help finish some projects, but only where it thought they were economically viable.
In reply to a question from Labour's Joan Burton, he said there was nobody currently on the NAMA staff who had previously held a senior position at Anglo Irish. He also said NAMA had so far issued around €3.5 billion in bonds to banks.
The head of the National Treasury Management Agency (NTMA), John Corrigan, was also before the committee.
Asked about pay at the agency, he said NTMA employees were subject to the pension levy, and the agency had secured an 8% cut in total pay costs. He also said the NTMA currently had only two people in its banking unit, but was in the process of appointing a further two.