Bad bank NAMA set to absorb NI loans in May

Michael Neary with John Armstrong, who warns that NAMA could impact on as many as 200 individuals and businesses

Northern Ireland land and property loans may be examined by the Irish government's "bad bank" Nama, as early as May.

Nama was set up to take on mainly toxic assets from the banking system, including around 4.8bn euros of NI property-related loans.

Experts say as many as 200 individuals or businesses in NI could be affected.

Developers with loans likely to go to Nama have been urged to prepare business plans as soon as possible.

Micheal Neary, from business advisory firm Grant Thornton, said "time is now critical" and urged local businesses not to "sit on their hands".

He said was surprised that none of Northern Ireland's property developers featured in Nama's first tranche of loans which represented ten of the largest loans valued at £16bn.

Nama is taking over large property loans from the Dublin-based banks. Many of Northern Ireland's biggest developers have borrowings from these banks.

In 2005, well before the peak of the property boom, the now failed Anglo Irish bank boasted that its Belfast office had a £1bn loan book.

Mr Neary said the quality of business plans will have a major impact on Nama's decisions.

Review

"It is incumbent on property developers in Northern Ireland to focus, prepare and plan in the expectation that local development loans could be part of the second tranche of loans to be bought from the participating banks in the next few months," he added.

He explained that developers will be expected to submit detailed business plans within 30 days after their loan has been acquired by Nama.

The agency will then review each developer's business plan, before a financial review is taken by an independent advisory firm.

Nama will then decide whether to accept or reject the plan, or ask the developer to revise it.

He explained that if the plan was approved, Nama would continue working with the borrower and monitor their subsequent performance against targets set out in the plan.

He said: "In cases where the plan is rejected, or the borrower does not cooperate, Nama will initiate the enforcement process."

John Armstrong, Managing Director of the Construction Employers Federation said that it wasn't all bad news.

Nama has also set aside £5bn to support viable projects to develop sites, which Mr Armstrong said would also be determined through the business plans that property developers submit.

He said, "Nama will be taking a very commercial approach so any development sites that they see are viable, they will be prepared to fund to allow works to be completed."