NAMA responds to Construction Industry Federation report

The National Asset Management Agency completely rejects the flawed and one-sided analysis of the Agency published today by the Construction Industry Federation (CIF).

NAMA’s key points in response to CIF Report are:

  • The Report is not objective.
  • CIF would prefer NAMA to help developers deal with their problem loans at the expense of the taxpayer while allowing them siphon off and profit from their performing loans.
  • Report is factually incorrect in respect of many of its criticisms of NAMA (NAMA has never said it is unwilling to bring in external finance. NAMA has never said it is unwilling to provide working capital etc)
  • Report blithely ignores the fact that NAMA is implementing policy of Oireachtas and terms of approval by EU.
  • Current plans to expand role of NAMA testifies to international confidence and credibility in its operations.

The CIF has engaged in regular criticism of the Agency since it was first conceived. That criticism has been grounded in a naive expectation by the CIF that NAMA would protect the developers and the broader construction sector from the impact of the excesses of the property bubble and its subsequent collapse in which some members of the CIF played a significant role.

Central to the CIF’s argument over the past 18 months or so has been the notion that NAMA should take problem loans off the hands of developers and banks while leaving both these parties to benefit from their portfolio of performing loans at the expense of the taxpayer. This was never the intention of NAMA which has to deal with the borrower on a holistic basis to optimise the potential recovery.

A further conceit on the part of the CIF is the notion that NAMA is an independent entity which can make up its own rules as it proceeds. In fact NAMA is bound to implement a clearly defined policy set out by the Oireachtas and approved by the EU Commission. This specifically requires NAMA to deal with borrowers and banks holistically so that they cannot walk away from the consequences of their poor decision making and continue to profit from those investments which are profitable or performing.

Beyond that there are a number of inaccuracies in the Report which should be highlighted.

  • NAMA does not discourage external capital. NAMA has worked with borrowers to enable joint venture projects to be pursued with third parties where it made commercial sense for all parties.
  • NAMA has no problem with accepting bids in excess of what the Agency paid for assets. The bids have been for loans. To suggest otherwise is a nonsense. This is at variance with the CIF previous position when they sought assurances from NAMA that loans would not be sold to third parties.
  • NAMA has worked with borrowers and other Non NAMA banks to dispose of €1 billion of property assets since March 2010.
  • NAMA has approved advances of close to €400 million since March 2010 to enable the completion of developments where it makes commercial sense to do so. The Agency does not advance monies on speculative developments such as developers experienced before the crisis.

Finally, it is worth pointing out that in recent days, the remit of NAMA has been expanded by request of the Government and Regulators in Ireland and the troika of international agencies including the IMF, the ECB and the European Union.

In addition the EU has yesterday approved the valuations made by NAMA in respect of the second tranche of loans acquired by the Agency. This means that the EU has now approved the valuations for some 11,000 loans acquired by NAMA.

Speaking today a spokesman for NAMA said:“The construction industry has an important role to play in our recovery but self-serving reports like this suggest that the leaders of that industry are continuing to live in denial of the crisis that NAMA is dealing with. NAMA did not cause the problems in the construction sector or the banks but we are trying to find solutions and fix them in a way which does not penalise the taxpayer. The CIF needs to realise that the world has changed and they would be better off helping their members deal with that changed world and working constructively with NAMA rather than criticising how this Agency works.”