Lombard Street slams Irish National Asset Management Agency

Lombard Street Research (LSR) has slammed Ireland’s National Asset Management Agency (Nama) for a second time after urging the government not to go ahead with the agency last year.

According to LSR, Nama “was a flawed idea and it has developed into a failure”.

LSR says Nama not only removed impaired loans from Irish banks, but also unimpaired loans, which caused the banks extra problems.

The firm now recommends Nama act as a developer for the Irish real estate sector, rather than just a liquidator.

Nama also did not restructure any of the debt, according to LSR, even though the value of the loans and their collateral kept falling.

LSR adds more international investors might have been attracted to the initiative if it had the ability to restructure debt.

The firm now recommends Nama act as a developer for the Irish real estate sector, rather than just a liquidator.

It should also allow itself to restructure some debt and take other steps to make itself more welcoming to new sources of capital. (article continues below)

LSR also says Nama should stop buying unimpaired loans and effectively forcing a radical shake-up of Ireland’s construction industry.

However, Frank Daly, the chairman of Nama, defended the agency after it lost only €1 million in the first half of this year, according to its second quarter statement at the beginning of this month.

Brendan McDonagh, the chief executive, says it is already setting out “detailed objectives” for its debtors following a review of its business plan.

“Based on our experience of engagement with borrowers to date, we expect that the majority of borrowers will see the benefit of co-operating fully with us to achieve the best commercial outcome, but where they don’t or won’t, Nama will have no option but to start enforcement proceedings against them.”

Nama has yet to assign final valuations of eligible assets but says it is due to complete them before February.