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NAMA backtracks on Bank of Ireland loan takeovers

After consulting with NAMA and Brussels, the government decides only to take loans valued over €20m – up from €5m.

BoI chairman Pat Molloy: the bank will now transfer fewer loans to NAMA than previously agreed.
BoI chairman Pat Molloy: the bank will now transfer fewer loans to NAMA than previously agreed.
Image: Niall Carson/PA Wire

BANK OF IRELAND has announced that the National Asset Management Agency will take fewer loans off its books than previously agreed.

In a statement released this morning, the bank that the government had decided only to take over loans with a book value of €20m, compared to the previous total of €5m.

The decision – made after consultation with NAMA and the European Commission – means that NAMA will now only take over a total of €10.1bn in loans compared to a total of €12.2bn originally intended.

The statement quoted Minister for Finance, Brian Lenihan, who said that NAMA “had refined its estimates of the discounts on the remaining loans to be transferred to a high level of accuracy,” after “the granular loan-by-loan data available to NAMA from these transfers and the comprehensive and detailed information now available to it on the remaining loans.

“It is now possible for NAMA to forecast with confidence the final overall discount to be applied to the remaining tranches of loans.”

Bank of Ireland, the country’s largest lender in terms of portfolio value, has already handed over €3.75bn in loans to NAMA, receiving €2.4bn in exchange – equivalent to a haircut of 36%.

The €2.1bn that the bank will now retain on its own books comprises of €1.9bn in land and development loans, and €200m in associated loans. In June of this year, the bank had identified €1.6bn of these loans as being impaired. Bank of Ireland had already set aside €800m for managing these impairments.

It was confirmed this morning that BoI was adequately capitalised to meet the Central Bank’s targets for the end of the year.

About the author:

Gavan Reilly

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