Nama admits ‘deficiencies’ in sale process that led to €10m loss
THE chief executive of the National Asset Management Agency (Nama) has admitted to “deficiencies in the process” of selling a portfolio of loans that resulted in a €10m loss in 2012.
In an appearance before the Public Accounts Committee (PAC) yesterday, Nama CEO Brendan McDonagh said “we fully accept and regret that there was a miscalculation on the part of Nama... as certain loans were misclassified” as part of the sales process.
The transaction, known as Project Nantes, involved a package of loans connected to Avestus, the property partnership formed by developer Derek Quinlan.
While Nama achieved a cash surplus of nearly €68m on the overall Avestus portfolio, the portion included in Project Nantes lost money.
The project was the subject of a report by the Office of the Comptroller and Auditor General, which found earlier this year that Nama had committed “errors and inconsistencies” in setting a target price for the sale. It found there was no basis to conclude Nama had realised the best possible price.
The Comptroller and Auditor General Seamus McCarthy told the PAC that Nama failed to hold a competitive bidding process for the assets or to get an independent valuation, which made it impossible to know whether a better deal might have been struck.
He also said that Nama had failed to document the details of the Avestus transactions, which Nama acknowledged should have been done.
In a relatively even-tempered hearing, Mr McDonagh pointed out that although Nama may have set its €125.5m price target on the project too low, it nonetheless realised gross proceeds of €210m across the Avestus portfolio.
He said that Nama had paid back its original €32bn debt to the State and was on track to deliver a total surplus of more than €4bn to the Exchequer before winding up in 2025.
The Government has included a €1.5bn payment from Nama in the latest Exchequer figures from Q3 – the last before next week’s Budget.
Mr McDonagh also told the committee that the impact of Covid would delay Nama’s plans to dispose of its remaining assets. The agency reported a loss of €49m in the first quarter and Mr McDonagh said the pandemic had lowered asset values and transaction activity.
He told the committee Nama was in the process of reducing its staff numbers from 211 at the beginning of the year to 143 by mid-2021 and then further to just 80. Nama had peak staff of 369 at the end of 2014.
‘We fully accept and regret that there was a miscalculation’