Nama to acquire EUR 16b of toxic debt at 47% discount

Ireland's National Asset Management Agency (Nama) announced on Tuesday that is applying an average discount of 47% for the purchase of the first batch of toxic property loans from five of the country's lenders.

This batch consists of 1,200 individual loans with a total face value of EUR 16 bn. Nama is paying EUR 8.5 bn.

Further loan acquisitions are to follow in April.

The Irish government established Nama last year to unburden the country's banking system of crippling property-related loans. The bad bank has estimated it will acquire EUR 77 bn of loans. The anticipated default rate is 20%.

The scheme covers five financial institutions, including Anglo Irish, a major lender to property which was nationalised last year to prevent its collapse. The other participants are Bank of Ireland, AIB and building societies EBS and Irish Nationwide.

Nama has already transferred the loans from the two building societies.

Ireland accounts for 70% of the loans, while the UK accounts for more than 20%. Small percentages of the total relate to US, France, Germany, Spain, Italy, Portugal and the Czech Republic.

Even with the Nama scheme the Irish banking system faces a funding shortfall of some EUR 30 bn. Taxpayers will have to provide a significant portion of this sum.

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