Belfast Telegraph

Sunday 23 November 2014

Theresa Villiers warns against fire sale of Nama's £3.3bn Northern Ireland loan book

Properties and loans in Northern Ireland controlled by the Republic's 'bad bank' shouldn't be sold off in a fire sale, the Secretary of State has warned.

Theresa Villiers said sales from Nama's portfolio north of the border should not be rushed – but should be spread over time instead to ensure a better return.

London-based investment bank Lazard has been hired to prepare a sale of the agency's Northern Ireland portfolio, which is believed to have a face value of between €3.5bn (£2.9bn) and €4bn (£3.3bn).

It is known that Nama has already recouped €170m (£140m) through asset sales in Northern Ireland, reducing the size of the potential portfolio.

Ms Villiers cautioned against a quick sale, suggesting that a "longer-term approach" could ultimately end up yielding more.

"There's often a case for saying that ultimately they might end up getting more back on their bad loans if they spread them over time, or they work with the entrepreneurs concerned. That's really the focus. Getting a sensible, pragmatic (approach), rather than rushing for some sort of fire sale of assets," Ms Villiers said.

"Often a longer-time approach could end up yielding more in terms of return on those loans."

Ms Villiers said she had lengthy discussions concerning Nama with Sammy Wilson, the former Stormont Finance Minister, until he was replaced by colleague Simon Hamilton last summer.

She said she had not discussed the issue with Mr Hamilton, but believes he would also have similar concerns that there could be a potential negative impact of "a mass, very fast, accelerated enforcement on all the bad loans".

"Decisions that Nama makes, or whoever takes over from Nama, will obviously have an impact on the Northern Ireland economy so the more thought that can go into assessing local economic conditions, and just taking a pragmatic approach that at least considers the option of spreading loan payments, rather than a very, very hurried approach to dealing with them," she said.

In February Nama chairman Frank Daly told the Institute of Directors that the agency's strategy was to supply asset sales to the market to the extent that it can absorb that supply.

Asked about Nama's Northern portfolio, a Nama spokesman said yesterday: "We are engaged in a process which will take some time to review the various options and that's ongoing."

In February Mr Hamilton suggested he would be open to the assets being sold sooner rather than later. He said the assets held by Nama could be used to boost the Northern Ireland economy "if they were managed in a way which unleashed their potential in the short term rather than waiting for them to realise their value in the longer term".

"We will continue to work with Nama to seek to ensure that Northern Ireland's interests are protected in all circumstances," he added.

Meanwhile, Ms Villiers also said that there were genuine signs of recovery in Northern Ireland, assisted by greater optimism from the Republic.

Chancellor George Osborne announced Northern Ireland's first enterprise zone for Coleraine, Co Londonderry, in the Budget and Ms Villiers said the hope would be to replicate this elsewhere if successful.

STORY SO FAR

Nama – the Irish Republic's State-controlled 'bad bank' – is believed to control loans with a face value of up to 44bn, but in reality worth about 41bn for property in Northern Ireland.

In February it emerged that US-based investment management firm Pimco was interested in buying the entire Northern Irish portfolio.

The potential sale process was nicknamed Project Eagle.

Further reading

NAMA loan sale: Prepare for £1bn property overdrive

US firm Pimco in purchase bid for Northern Ireland pubs, offices and shops on Nama's books 

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk