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20% of developers unviable - NAMA chief

Brendan McDonagh says 10% of developers "self-indulgent"
Brendan McDonagh says 10% of developers "self-indulgent"

NAMA chief executive Brendan McDonagh has said the agency has now approved the sale of property assets valued at about €4.6 billion. This is an increase from the €3.9 billion figure reported at the end of July.

Mr McDonagh unveiled the figures as he appeared before the Joint Oireachtas Committee on Finance, Public Expenditure & Reform today. NAMA Chairman Frank Daly was also at today's committee hearing.

The NAMA CEO told the committee that assets held outside of the country would represent the best prospect of generating the sales that debtors need in order to meet their repayment targets over the next couple of years.

''A significant proportion of the underlying property is located in the south-east of England and this is attracting strong interest from international investors,'' he stated.

He said the agency is not interested in doing business on an uncompetitive basis. ''Whether we sell loans or approve the sale of property, our interest is best served by ensuring that we achieve the best attainable price and that requires the participation of a number of genuine bidders,'' Mr McDonagh said.

He also said that NAMA has reached conclusions on whether to buy or not to buy final outstanding loans worth up to €2.6 billion. He also confirmed that the agency has now appointed receivers in 84 cases.

He added that he expected to conclude some "substantial" transactions over the coming months.

Mr McDonagh said 20% developers were "unviable". He said 65% to 70% of debtors were co-operating and wanted to see the process through. But he said there were about 10% of developers who were "self-indulgent".

The NAMA CEO said that NAMA would be starting legal action against borrowers who had transferred assets to their spouses to put them out of the reach of the agency. He said the agency has also just devised a strategy to sell loans - rather than the underlying properties - through brokers.

NAMA chairman Frank Daly told today's committee meeting that the agency could either be a fully commercial organisation focused on maximising the return to the taxpayer or a fully transparent public body but it could not be both.

Mr Daly responded to calls for greater transparency by saying some of the commentary had been uninformed and unrealistic in expectation.

He said the agency is committed to full accountability in accordance with the law. He said it is subject to regular scrutiny by the Finance committee and by the Public Accounts committee.

''Our accounts are audited by the Comptroller and Auditor General who has full access to all our records and has a permanent presence at our offices'', he added.

Developers taking salaries of €75,000-€200,000

NAMA chairman Frank Daly told the committee that the agency did not set salaries for developers. But it approved business plans from which developers took salaries. These business plans had seen overheads reduced.

He said that developers frequently took salaries of between €75,000 to €100,000. He said in some cases there were salaries paid of €200,000 but in these situations there would be several billion euro of taxpayers money at risk.

He added in many cases he would have preferred to walk away from some of the developers but he said that the developers knew the business.

The NAMA CEO told the Committee today that residential property prices are down by about 10% since last year, with a 3% fall seen in commercial prices.
Brendan McDonagh said the agency has about 2,000 houses on its books while it also has about 8,000 apartments. He said the agency is trying to move the sale of houses along, where there is some demand in a price sensitive market.

He said the NAMA board had signed off on a ''highly developed product'' allowing house buyers to defer payment on up to 20% of the property's value in an attempt to shift some of these 10,000 residential properties and revive the property market.

The agency was in the "latter stages" of discussions with Bank of Ireland, AIB and Permanent TSB to participate in the payment deferral scheme and had invited the non-NAMA banks to join the scheme.

He also predicted the agency will make a pre-impairment profit of €500,000 for 2011.