Special Report 76:  Press Release: National Asset Management Agency ? Acquisition of Bank Assets

2 November 2010

The Comptroller and Auditor General, Mr John Buckley, has today published a report on the arrangements for the acquisition of bank assets by the National Asset Management Agency. 

The first financial statements of NAMA will be drawn up for the period ending 31 December 2010. In the meantime, the purpose of this initial report is to give an early account of how NAMA is implementing its functions.

NAMA currently anticipates that it will acquire loans with a book value of around ?73 billion from around 850 borrowers. 

In the first set of loan acquisitions, NAMA paid ?7.7 billion for loans with a book value of ?15.3 billion ? an average discount of around 50%.  The loans acquired were valued taking account of underlying collateral pledged by borrowers and an adjustment for long-term economic value.   The state aid element of the payment, as represented by the excess of the amount paid over the current market value of the loans, was estimated at ?1.7 billion (28%).

Debt issued to pay for the loans comprised ?7.3 billion in securities guaranteed by the Minister for Finance and ?0.4 billion in subordinated debt.  Interest payable on the subordinated debt and its ultimate redemption depend on NAMA?s financial performance.

The report also outlines how NAMA identified the eligible bank loans, gathered and validated loan and borrower data, valued the loans and acquired them from the five credit institutions participating in the NAMA scheme.

The report sets out the steps taken by the Board of NAMA to introduce structures and systems to position it to govern and manage its operations and resource the Agency.  While those are still evolving, the steps taken to date are reasonable.  The practical operation of the systems will be kept under review in the course of financial audit.

A summary of findings is attached.

Notes for Editors

The Comptroller and Auditor General is an independent constitutional officer with responsibility for the audit of public funds.  He reports to Dáil ?reann.

The full text of the report is available on the website of the Office of the Comptroller and Auditor General (go to www.audgen.gov.ie).

For further information about the report, please contact John Riordan at 01 603 1027 or via email at john_riordan@audgen.irlgov.ie