Most of you are probably thinking that NAMA has completed its acquisition of loans and is now exclusively dealing with its asset management phase. You’d be wrong. There are some legacy matters outstanding with the acquisition of €74bn of par-value loans for which NAMA paid €32bn.
Cast your minds back to February 2010 when the European Commission approved the NAMA scheme. It was a term of the approval that the valuation of each loan acquired by NAMA was to be verified by the European Commission. There was nothing at all controversial about this requirement, and as NAMA got into its acquisition of loans, the European Commission appeared to be approving the valuations promptly.
In May 2010, NAMA completed the acquisition of its first tranche of loans, apparently relating to the Top 10 borrowers, which had a book value of €15.3bn. This acquisition was approved by the European Commission in August 2010, just three months later.
NAMA completed the acquisition of its second tranche with a par-value of €11.9bn in August 2010, and again, approval from the European Commission was forthcoming three months later in November 2010.
NAMA merged tranches 3 and 4 together which had a par value of €19.2bn and NAMA completed the acquisition of these tranches in June 2011. NAMA completed the acquisition of its fifth and final tranche in March 2012 with a par value of €27.6bn. These three tranches have not been approved by the European Commission, and given the 19-month period that has elapsed since June 2011, you might think there was cause for worry.
So what is the hold-up, and should we be justified in being worried?
This week in the Dail, the Sinn Fein finance spokesperson Pearse Doherty asked the Minister for Finance Michael Noonan to provide an explanation for the delay. Below is the response which is utter gibberish. You might want to look at the response from Minister Noonan eight months ago, which also said the approvals were expected “shortly”.
The full parliamentary question and response are shown below:
Deputy Pearse Doherty: To ask the Minister for Finance if the European Commission has approved the valuations and transfers of loans from the participating institutions to the National Asset Management Agency, that were the subject of tranches three and four which had a book value of €19.2 billion and were transferred to NAMA in June 2011 and tranche five which has a book value of €27.6 billion which was transferred to NAMA in March 2012; if the European Commission has not provided its full approval; and the reason for the delay.
Minister for Finance, Michael Noonan: I wish to re-assure the deputy that there has been no delay in dealing with the final tranches of loans acquired by NAMA.
The deputy maybe aware that following the completion of NAMA’s due diligence of acquired loan assets, the Financial Regulator of Ireland carries out its own independent validation of the transfer process. This was also done in the case of the earlier tranches and is in line with European Commission guidelines designed to ensure that there is full transparency in relation to state aid. I am advised that in relation to the final tranches this validation work will be concluded shortly and at that point my Department will be in a position to apply to the European Commission for its full approval.