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Niall carson
project eagle

Nama lost €220 million on sale of loan book, says report

In a scathing statement today, Nama says that the entire report is flawed, categorically rejecting the findings.

THE NATIONAL ASSET Management Agency (Nama) has rejected a report which says that it could have sold loans based in Northern Ireland for more than £1.32 billion.

The long-awaited Comptroller and Auditor General’s (C&AG) report into the sale of Project Eagle was published today, saying that the agency could have made more than that.

The report, however, makes no claim of irregularities. It does say that the State lost around £190 million (€220 million).

The C&AG report finds that Nama had over-discounted the loans, giving 10-15% discounts where 5.5% would be more applicable. It adds that NAMA did not keep an “adequate record of key decisions and events even though the sales process deviated from standard”.

It adds that Nama board minutes do not “record clearly the basis for decision about a minimum price for the portfolio.

NAMA incurred a net loss in 2014 of £162 million from Northern Ireland debtor asset sales, most of which related to Project Eagle. This was in addition to losses of £478 million on the loans which had already been recognised in impairment charges.

Nama, however says that is incorrect. It says that many of the loans were impaired and not selling them in 2014 would lead to the state holding the loans until 2020.

In a scathing statement today, Nama says that the entire report is flawed, categorically rejecting the findings.

The report’s key finding is based on an incorrect assumption regarding the discount rate used to value the portfolio. It incorrectly assumes NAMA should apply the same discount rate to this poor quality loan portfolio as it applied to much higher quality assets in Dublin and London. As a result the report overstates the estimated value of this portfolio.

“NAMA’s view of the discount rate is supported by four specialist international firms (KPMG, Eastdil Secured, Cushman & Wakefield and Lazard). The C&AG’s position is unsupported by the market.

The report’s conclusion that a better price could have been achieved is hypothetical and highly speculative. It produces no credible evidence to show any other buyer or group of buyers would have paid more than was achieved.

The C&AG report says it “draws no conclusion about the merits of the decision” to sell the loans as a package.

Frank Daly, Nama’s chairman, said that the agency had done its utmost to achieve the best price possible.

“It is very clear to us that had Nama retained that Eagle portfolio, there would be no investor interest in buying it today or in the foreseeable future at anything close to the £1.3 billion we achieved in 2014.”

Fianna Fáil’s Finance spokesperson Michael McGrath said that the report “contains very strong criticism of Nama’s handling of the sale”.

The C&AG makes strong and very striking criticism [relating] to the process of Nama’s sale of Project Eagle.

“(It reaches) the conclusion that the process wasn’t as open as it should be in terms of opening up the competition to all potential bidders. The fact is that the amount of time available for potential bidders to carry out the necessary due diligence may well have had an impact for taxpayers. It is a very significant and important conclusion that has been reached.

“Instead, Nama proceeded with the sale to an alternative bidder, Cerberus, whose final bid came in just €11 million above the minimum price threshold that Nama had set at board level.

“The criticisms are very serious, very significant, they certainly warrant an investigation here in the Republic.

“One cannot but reach the conclusion that in March 2014 – when Nama and indeed the Minister was informed of the inappropriate, unorthodox fee arrangement that was in place between Pimco, Brown Rudnick, Tughans and Mr Cushnahan – that the whole process should have been stopped at that stage.”


McGrath also says that the “shadow of (former Nama adviser) Frank Cushnahan looms large in the report”.

Last week it was revealed that Cushnahan had been secretly recorded accepting a £40,000 (about €48,000) cash payment from a Nama borrower.

The report says that allegations of a conflict of interest against Cushnahan and his involvement in an arrangement to share “success fees” with parties interested in buying the loans “warranted more action by Nama”.

Read: Timeline: The seismic controversy over the Project Eagle land sale as it unfolded from start to finish

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