Brian Lenihan’s full statement on banking released this morning also has a section on NAMA.  Interestingly it states:

The Government has decided, having consulted with the NAMA Board and the European Commission, that where the total exposure of a debtor is below a €20 million threshold in AIB and Bank of Ireland, that debtor’s loans will not now be transferred to NAMA. The threshold had previously been set at €5 million. … I have been advised by NAMA that there are 650 debtors with property-related debts of between €5m and €20m in these two banks. They account for just €6.6bn of the aggregate €80bn volume of NAMA eligible loans.”

So, €6.6bn worth of smaller loans will not be transferred to NAMA after all, as “Loans of this size can be efficiently managed by the banks themselves through their network of local representation and relationships.”   Which makes one wonder why they needed to be transferred in the first place?

It would be interesting to know the geography of these €5-20m properties.  One assumes that there is a lot of housing and land outside of the principal cities which have just exited the potential NAMA portfolio.  What will be left is the more viable, larger developments in more prime locations (along with the more marginal stuff transferred from Anglo, Irish Nationwide and EBS).  One assumes this means that a large chunk of the marginal sites and the owners who have less experience and weaker or no business plan have fallen out of NAMA’s remit.  This will certainly make the life of NAMA easier, and make it more likely to succeed, with the banks themselves left to work out what to do with the properties.  Presumably they will either try to make them going concerns or off-load them at a loss.  It will be interesting to see how such offloading might affect the work of NAMA given that these impaired assets will no longer be coordinated by a single entity.

Rob Kitchin