* NAMA may return profit to the state - government report
* Minister says accelerated target strikes right balance
* NAMA tasked with developing "Canary Wharf of Dublin"
(Adds details, quotes)
By Padraic Halpin
DUBLIN, July 16 Ireland said on Wednesday its
state-run "bad bank" would repay at least 80 percent of its
senior debt two years earlier than forecast in 2016 and unveiled
plans for a new business district to rival London's Canary
Seen as a major liability for Dublin's finances until
recently, the National Asset Management Agency (NAMA) has been
taking advantage of a surge in demand for Irish real estate and
expects to pay back half its 30 billion euros ($40.5 billion) of
senior debt by the end of the year.
The government said last week it would support an
accelerated disposal strategy that would see NAMA, one of the
world's largest property groups, offload at least 80 percent of
its assets by the end of 2016.
"The advice of some investors was to dispose of all of
NAMA's assets in one great big sale and there's an appetite in
the market for that now," Finance Minister Michael Noonan told a
news conference after publishing a review of NAMA's progress.
"The new redemption target strikes the right balance between
reducing debt and maximising the return to the taxpayer."
Established in 2009, NAMA paid 32 billion euros ($43
billion) to purge Irish banks of 74 billion euros of risky loans
after a property crash left them near collapse and pushed the
country into a three-year EU/IMF bailout that ended last year.
Spain created a similar body to clean up its financial sector.
A resurgence of investor confidence paved the way for
Ireland to gradually return to bond markets since 2012 and NAMA
has also taken advantage of what its chairman has called a
"remarkable turnaround" in sentiment. It had its busiest quarter
for sales in the three months to end-June.
The "bad bank" has completed asset sales of 16 billion euros
so far, focusing initially on its portfolio of properties in
Britain. It generated over 5 billion euros from sales in Ireland
this year compared to 3.7 billion euros for the whole of 2013.
"DUBLIN'S CANARY WHARF"
Noonan said he had considered bringing forward NAMA's
wind-down date to 2018 from 2020 but opted to allow the agency
to ease the burden on a slowly recovering construction sector.
NAMA has said it could deliver half of Dublin's housing
demand over the next five years to ease concerns over a lack of
supply and it fleshed out plans on Wednesday for an ambitious
development project on the city's docklands.
At twice the size of the existing Irish Financial Services
Centre (IFSC), the adjacent venue for international finance, the
two sites combined would equate to 40 percent of the commercial
floor space of London's 97-acre Canary Wharf business district.
The investment agency, which has brought big foreign
employers like Google, Facebook and IBM to the country, has
warned that Dublin badly needs more top-end office space.
Noonan said the docklands space had the potential to add the
equivalent of 15 percent of the city's office stock, greater
than the 6 percent Canary Wharf represents in London.
"I think it has the potential to be the Canary Wharf of
Dublin," Noonan said. "The objective would be to ensure that on
that piece, which I believe is extremely valuable, that
taxpayers would get a very big payback."
The government review said it was reasonable to expect that
NAMA would be in a position to repay its senior and subordinated
debt and may also return a profit to the state, an outcome NAMA
chairman Frank Daly said he believed would be delivered.
However the review cautioned the targets may not be met if
the property market does not perform as NAMA expects.
The commitment to repay the bulk of debt ahead of schedule
was also good news for the country's banks and will enhance the
potential value of state-owned Allied Irish Banks when
the government looks to cut its 99 percent, Noonan said.
Ireland's banks hold the debt supporting NAMA on their
balance sheets, a particular drag for Allied Irish which held
15.6 billion euros of the low-yielding bonds at end-2013.
(Reporting by Padraic Halpin; Editing by Janet Lawrence)