Banks Deliberately Misled NAMA In Bid To Make Billions From Taxpayers

Even After They Were Rescued, It Appears The Lying Continued

The new Financial Regulator is being asked to investigate claims that Irish banks deliberately fed false and misleading information to NAMA in a bid to cheat the Exchequer out of billions of euro.

NAMA - the national asset management agency set up by the government to take over control of toxic loans held by banks - would have massively overpaid for the loans if they took the word of the banks at face value.

Fianna Fail TD Michael McGrath said the figures provided to NAMA on the loan-to-value ratio of the loans being transferred to NAMA "were so wrong across the board" that it "had to ring alarm bells that something more was going on".

The loan-to-value ratio was a key figure used to calculate what discount would apply to the loans on their transfer.

When NAMA carried out due diligence assessments on the loans it severely increased the discounts.

Mr McGrath said he knew this was a serious charge, but "the evidence was overwhelming".

The banks involved were AIB, Bank of Ireland, Anglo Irish Bank, Irish Nationwide and EBS.

NAMA chief executive Brendan McDonagh, giving evidence to the Dail's powerful Public Accounts Committee, agreed that there were "questions to be asked and to be answered."

When Mr McGrath put it to him that the Garda Fraud Squad or Office of the Director of Corporate Enforcement should investigate the "systemic" nature of the misinformation from the banks, Mr McDonagh said he could not disagree.

Mr McDonagh said the first port of call should be the Financial Regulator, who would have access to a lot of the information, and promised NAMA would help in any way it could.

Fine Gael deputy Michael Darcy later asked NAMA chairman Frank Daly if he believed the banks had attempted fraud.

Mr Daly said the figures given to NAMA were certainly misleading adding: "You can speculate about what was behind it."

In its original plan when established in September 2009, NAMA estimated its discounts would average at 30%, based on the information given to it that the average loan-to-value ratio was 77%.

However, the ratios it now seems were closer to 100%, and the discounts should have been estimated at 53%.

In the end, the discounts so far applied by NAMA have averaged 58%.

Based on the total value of the loans involved at the time €82 billion, the 28% difference in the discount amounts to approximately €23 billion.

NAMA chairman Frank Daly insists he believes the banks have now put their delusions behind them.

NAMA expects to complete its task of taking over all €73 billion worth of loans from the country's banks in the coming weeks, at a cost of over €30 billion.

Mr Daly said it was a key principle of the agency to pursue all borrowers for the money they owe, and would work with them to develop three-to-five year plans for repaying their loans.

He said NAMA had already instructed borrowers to reduce their salaries, and has told to developers to return property which they have moved into their spouse or family member' names.