Nama to seek pay cuts
SIMON CARSWELL and STEVEN CARROLL
The National Asset Management Agency (Nama) has said it is not setting a cap on developers’ pay but will force large pay cuts across their companies as it seeks reductions of up to 75 per cent in the cost of running their businesses.
The agency, which was set up by the Government to take the most toxic loans out of the banks, is aiming to approve business plans submitted by the 30 biggest borrowers by the end of next month.
According to the plans, developers must provide details of how they plan to reduce overheads, including pay, by between 50 per cent and 75 per cent of what they were at the peak of the booming property market.
Nama said the banks had allowed developers to grow their businesses to “unsustainable and unrealistic levels of overheads”.
“We are not getting into what individuals should be paid,” said a spokesman for the agency. “But it is inevitable that there will be very significant pay reductions for executives working in the businesses if their overheads are reduced by up to 75 per cent.”
Developers who assist Nama can hold on to their family homes if they can afford to do so on their reduced pay, as the agency will not call on personal guarantees on loans while they are co-operating. However, Nama will force developers to sell overseas houses and holiday homes to repay loans.
Weekend newspaper reports suggested that some of the 10 most heavily indebted developers may pay themselves salaries of up to €200,000 a year under their business plans. Nama would not comment on specific salaries, saying the division of an overall pay bill approved by Nama under a business plan was a matter for developers.
Speaking on RTÉ radio yesterday, Minister for Justice Dermot Ahern said the scale of salaries might not seem right to the public but the developers would not be let off the hook.
If Nama wanted co-operation from developers to finish building projects in order to ensure a return for the taxpayer, then it had to take pragmatic decisions, said Mr Ahern.
“Ultimately, there will be excessive pain for these people one way or the other – either it is bankruptcy or they co-operate with Nama,” added the Minister.
The agency has a first legal charge over their assets so developers will “potentially lose their family homes and all the assets that they have”, said Mr Ahern. “There will be an awful lot of pain meted out to these people who took out excessive loans, and because of the burst they’re not worth what they used to be.”
The agency said it intended to work with developers who co-operated in selling assets and completing projects with a view to repaying loans and helping Nama to recover the highest amount for the taxpayer.
Where developers do not co-operate the agency will take enforcement action, he said, adding it was working on about 12 potential cases to bring developers to court or take control of their businesses.
Nama said it would judge whether it was better value to install an insolvency expert to run their business if a developer’s business plan was too costly. The spokesman for Nama said the agency was “astounded” that insolvency professionals had asked for up to €800 an hour for a 500-hour assignment – a fee of €400,000 for one job – in a competitive tender for contract work with the agency.
Nama will only hire at the lower end of the range offered, from €180 an hour, the spokesman said.
Some €27 billion in loans owing by the 32 most indebted developers has been acquired by Nama in the first two tranches of loan transfers to the State agency.
Nama is buying €74 billion in loans linked to 840 borrowers from five participating lenders. The agency is paying about €40 billion for the loans, which is creating massive losses at the institutions, forcing the Government to inject capital and to effectively nationalise four of the five lenders.
Minister for Finance Brian Lenihan has said all loans will be moved to Nama by the end of the year after he approved the fast-tracking of the transfers to remove uncertainty around the process.
The Governments fast track approach to consigning developer’s loans to NAMA with super speed expedience is nothing short gross negligence.
This is giving the Toxic Banks a unbelievable opportunity to off load otherwise worthless toxic assets
Then we here that these same developers can now stay in their stately homes thanks to a deal worked out by the new gangsters in NAMA and that they will also receive a salary of up to 200,000:00 Euros and this when the Fianna Fail & Green Government will tell the people of Ireland that they must take 15,000,000,000:00 out of the economy to safeguard Jobs and growth in the same economy.
For God sake how is taking 15,000,000,000 billion out of the economy going to help grow the economy? Cuts are needed but we are not going to get them where they are needed namely in the hugue saleries paid to the top directors in semi state bodies ,mMinsters,TD’s and Top civil servents Are they even livening in the same country that I am struggling to live in?
The one minster we have in Wicklow was “busy” been fated in the Marriott Hotel in Druids Glen last Thursday
source Wicklow Times
while the rest of us are bewildered by the latest display of the pampered out of touch brigade in Government arriving in their plush Merks at Government Buildings .
None of these seem to be worried that they could be on the dole queues anytime soon in written all over their faces.
If you do anything good in your life promise yourself that you will not vote for any one of these Leaches ever again