NAMA IS set to take over [euro]28 billion worth of loans from State-owned Anglo Irish Bank, which has already received [euro]3.8 billion from the Government this year.

Anglo Irish Bank was one of the biggest property lenders during the development bubble, and fears about its solvency prompted the Government to place it in State ownership in January.

The bank has received [euro]3.8 billion in exchequer funding since then in a bid to recapitalise the institution, which was forced to take a [euro]4 billion hit on the value of its loan book earlier this year.

Just before it was nationalised, it emerged that former chairman, Sean FitzPatrick had received a total of [euro]127 million in secret loans from the bank.

Yesterday, Minister for Finance Brian Lenihan announced that Nama will take on [euro]28 billion of the loans on its book, meaning that in return it will receive that figure in Government bonds.

Figures published yesterday by the Government show that the bank's customers owed it a total of [euro]72 billion at the end of March.

Of this [euro]17.7 billion was related to land and development. There was a further [euro]11 billion loans associated with these debts. The numbers also show that 60 per cent of this was in Ireland, 28 per cent in Britain, 8 per cent in the US and the balance in other jurisdictions.

The figures also show that the quality of its loan book is poorer than those of its rivals, AIB, which is also receiving [euro]28 billion in support from Nama, and Bank of Ireland, which has been earmarked for [euro]16 billion.

The figures show that at the end of March, [euro]23.6 billion worth of loans to its clients were either overdue or "impaired", meaning that [euro]1 in every [euro]3 that it lent to clients was at risk not being repaid. The vast majority of its impaired loans related to commercial and residential property development.

In Bank of Ireland's case, [euro]11 billion of its total of [euro]135 billion loan book was overdue or impaired, a total of 8 per cent. AIB has classed [euro]33 billion, 25 per cent of its loan book, as "criticised", while it says just over [euro]10 billion of these are impaired.

The Department of Finance pointed out yesterday that Mr Lenihan has said several times that the State-owned bank would have to be included in the process.

Sources suggested yesterday that the bank has more problems with liquidity, that is cash at its disposal to generate new business, than either AIB or Bank of Ireland.

Banking analysts pointed out that while the State owns the bank, it will have to be treated in the same way as its rivals, and will have to meet any liabilities to the exchequer that arise as a result of the Nama process.

Anglo was the worst hit of the Irish banks when the global financial system collapsed a year ago.

Along with the loans to Mr FitzPatrick, a number of other scandals hit its reputation.

It emerged that it lent money to high-profile clients to buy its shares, placing no real obligation on them to repay it. Irish Life Permanent deposited cash with Anglo for a short period in a bid to allow it disguise the fact that it was losing deposits.

BARRY O'HALLORAN

Bank of Ireland

BANK OF Ireland is selling [euro]16 billion worth of development and associated loans to the Government through Nama. This is slightly lower than anticipated.

Analysts estimated that the Government pay about [euro]12.2 billion for the loans, representing a discount of about 24 per cent on the face value as they sit on the bank's books. The bank's loan book is being reduced in size by about 12 per cent as a result of the transfer.

About [euro]12 billion of the face value of the loans being acquired by Nama are development, including [euro]6.8 billion in Ireland and [euro]5.2 billion in the UK. The remainder being acquired are loans associated with developers such residential properties and commercial property investments, including offices and shops.

The losses incurred in the transfer of the loans to Nama is expected to leave the bank requiring further capital of [euro]300 million to [euro]500 million, which is in addition to the Government's investment of [euro]3.5 billion taken by way of preference shares in return for a 25 per cent indirect stake.

Market analysts expect the bank to be able to raise capital privately through a rights issue, which is likely to be underwritten by the Government. Minister for Finance Brian Lenihan said that the Government expected institutions "to explore all available options for raising such capital".

He said that it was "the Goverment's preference that private market solutions are found and implemented". He added that he expected the banks and building societies participating in Nama to increase the equity component of their capital - in other words, the loss-absorbing reserves - as the bad loans are transferred.

While the bank is likely to be able to tap private investors for capital, the Government is poised to take a stake in the bank by way of ordinary shares should it fail to raise money.