NAMA looks north

The Northern Ireland NAMA Advisory Committee has begun its task of protecting the value of the region’s property and assets that are due to be taken into the National Asset Management Agency. Meadhbh Monahan looks at the role of the ‘bad bank’ in the province.

An estimated £4.6 billion of Northern Ireland assets will be transferred to NAMA, the asset management agency which was established with the aim of transferring key property-related exposures from the balance sheets of the participating financial institutions in return for Irish Government-guaranteed securities.

Initially established to deal with the banking and property crisis in the Republic, the remit of the institution will stretch across the border, because, according to the Northern Ireland NAMA Advisory Committee Chairman, chartered accountant Peter Stewart: “the lending lunacy seems to have stretched to every corner of the 26 counties and there might have been a certain flow from North to South as well as that from South to North.”

NAMA representatives state that the agency will acquire loans and manage them with the aim of achieving the best possible return for the taxpayer over a seven to 10-year timeframe. The property related loans will be replaced with guaranteed securities which will remove uncertainty about the soundness of banks’ balance sheets. This in turn is expected to provide the institutions with liquidity and make it easier for them to access capital in the international capital markets.

Private sector investment of €51 million has also been given to NAMA to ensure that the acquired debt and transactions are ‘off balance sheet’ for general government debt and balance purposes.

Speaking to the Northern Ireland Chamber of Commerce on 14 May, Peter Stewart said the objectives of the advisory committee included “dealing expeditiously with the assets acquired”, i.e. bank loans, and “protecting or otherwise enhancing the value of those assets”.

He added: “We will discuss at committee the strategy to be engaged by the agency in relation to such assets based in Northern Ireland taking into account the situation of the market and of the economy in Northern Ireland and the anticipated impact of our intended strategy.”

Stewart reassured his audience that there would not be a conflict between the aims and objectives of NAMA and the best interests of the Northern Irish economy. “It will be in the interest of all of us that the underlying assets be disposed of in a phased and orderly manner and, where necessary, we will take whatever steps we consider necessary, and are within our power, to facilitate the return of an efficient market to the whole of this island.”

Doubts have been raised locally by Business Alliance (comprised of CBI, the Centre for Competitiveness, Institute of Directors and the Chamber of Commerce), which says: “Most of the debate about NAMA has been in regard to the impact on banks and in particular the consequences of a ‘fire sale’ of the £4.6 billion assets which are located in Northern Ireland and are eligible for transfer to NAMA.”

The alliance adds: “There has been little discussion about the consequences, unintended or otherwise, for businesses in Northern Ireland who may find themselves involved in NAMA and who are not fully aware of what NAMA could mean for them.” Its members are particularly worried about companies being drawn into NAMA even though they have performing loans and pose minimal or no risk to the financial institution.

Finance Minister Sammy Wilson welcomed the formation of the advisory committee, saying: “Since the announcement of NAMA in April 2009, I have liaised closely with Minister [Brian] Lenihan to ensure that Northern Ireland interests are dealt with efficiently and effectively. As one of my key priorities was formal Northern Ireland input into the NAMA decision making process, I welcome the announcement of the Northern Ireland representatives, Mr Frank Cushanan and Mr Brian Rowntree, on the advisory committee.”

Committee members

Peter Stewart (Chairman)
Managing Director of O’Donovan Stewart and Company, chartered accountants

Frank Cushnahan
Chairman of OFMDFM’s Audit Committee

Eilish Finan
Former Chief Financial Officer for AIG Global Investments

Ronnie Hanna
Former Head of Credit Risk for Ulster Bank

Brian McEnery
Senior partner in Horwath Bastow Charleton, chartered accountancy and business advisory practice

Brian Rowntree
Chairman of the Northern Ireland Housing Executive