Ireland’s Bad Bank Said Heading for $3.4 Billion Lifetime Profit

  • Irish real estate values may get boost from Brexit vote
  • Agency has previously forecast 2.3 billion-euro profit

Ireland’s National Asset Management Agency, which took over billions of euros of soured debt following the financial crisis, will probably make a lifetime profit of about 3 billion euros ($3.4 billion), according to a person familiar with the matter.

In June, the so-called bad bank said it may beat its 2.3 billion-euro surplus forecast if growth held up, without providing more details. The agency’s remaining loans are valued at about 6 billion euros, said the person who declined to be identified because the figure isn’t yet public.

NAMA’s current projection is that it may deliver the 2.3 billion-euro profit subject to market conditions, an outside spokesman for the agency said in an e-mailed response to questions.

The Irish government set up NAMA in 2009 to purge the country’s banks of more than 70 billion euros of risky commercial real estate loans. Davy, the Dublin-based securities firm, said last month NAMA is “highly likely” to raise surplus guidance before the end of year, citing a meeting with executives, with Brexit set to boost the value of Irish real estate.

“The fact that Irish 10-year bond yields have declined in the aftermath of the
Brexit referendum has actually made investment in Irish commercial real estate more attractive,” broker CBRE Group Inc. said in a report this month. “If anything, it has boosted the volume of enquiries for prime real estate.”

The agency has become embroiled in controversy in recent weeks, with the nation’s financial watchdog concluding it lost as much as 190 million pounds ($246 million) when it sold its Northern Irish loan portfolio in 2014. NAMA “categorically rejected the key conclusions reached” in the report.

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