© Grant Thornton International. All rights reserved. Chartered Accountants NAMA Forum 23 March 2010 Michael McAteer FCA

© Grant Thornton International. All rights reserved. Contents NAMA – The numbers The workings of NAMA Business plans

© Grant Thornton International. All rights reserved. Potential size of development portfolio Banks in NAMA BankSize of BookValue (€bn) AIB18%24.1 BOI11.8%15.5 Anglo39%28.4 INBS83%8.3 EBS4.7%0.8 Total77.1

© Grant Thornton International. All rights reserved. Banks outside NAMA Banks not currently in NAMA Ulster Bank have an exposure of €15 bn We estimate that the other non NAMA banks would have a combined exposure not less than UB Therefore the total exposure is greater than €100 bn

© Grant Thornton International. All rights reserved. Asset Location

© Grant Thornton International. All rights reserved. Timeline of Loan Transfer to NAMA

© Grant Thornton International. All rights reserved. Our view of workings of NAMA Until time of transfer Financial Institution (FI) continues to manage account with duty of Care After transfer it appears that NAMA will engage with FI to manage the account on behalf of NAMA (Section 107) Outside the top 100/150 connections FI will continue to provide "relevant services" incl. restructuring and enforcement services Effect of above is that Banks work out areas will continue to have day to day responsibility for accounts – albeit a different "Boss“ (NAMA)

© Grant Thornton International. All rights reserved. Other points to note NAMA has FI rights under existing security incl. power to appoint Receiver under debenture NAMA has additional rights to appoint a Statutory Receiver (SR) in all cases SR has far more powers and could make good limitation of powers that might be in debenture An appointment of a SR cannot be displaced by an Examiner

© Grant Thornton International. All rights reserved. Other points to note Guaranteed powers of Statutory Receiver incl. –Power to sell –Power to rent –Power to trade and manage –Power to rescind, repudiate, vary or cancel contracts –Redeem any prior security –Apply for planning permissions etc

© Grant Thornton International. All rights reserved. Why do borrowers need to prepare business plans? to assess if NAMA can facilitate the borrower with working capital requirements in the short term? NAMA estimate they will have circa 75 employees working in portfolio management lending and credit risk NAMA have a panel of advisors circa 40 to review the plans NAMA will need plans after the loans are transferred NAMA has circa €5bn to invest in developments

© Grant Thornton International. All rights reserved. What will happen to them once submitted? NAMA will make an early determination of credit worthiness based on previous performance and level of impairment major credit decisions will be made by the NAMA board and credit committee the original participating institutions will continue to administer the loans under NAMA control

© Grant Thornton International. All rights reserved. What the business plan should include – some general pointers plans should be prepared from the bottom up 3 years is the focus originally no more that 50 pages, but complexity will dictate content detailing what working capital is required and why it should be given

© Grant Thornton International. All rights reserved. What the business plan should include – the executive summary summary of current group facilities both NAMA and Non NAMA overall summary of NAMA repayment plan business plan summary to include –property descriptions –ranking of properties based on completion, hold or sale –management involvement including incentivisation. cash requirements with time frames short, medium & long term disposal schedule all cash generating options available to the borrower

© Grant Thornton International. All rights reserved. What the business plan should include – the financial and project information property summaries at an individual, entity and group level integrated 3 year P&L, B/S and cash flow on a consolidated or aggregate basis details of any projected breaches in covenants and peak cash flow requirements details of funding proposals and cash requirements detail underlying assumptions projections prepared under base case Plus downside and upside scenarios. taxation issues

© Grant Thornton International. All rights reserved. Other items that should be included the management team including remuneration and any incentives details of commitments, pledges and guarantees given to any 3 rd parties (incl. non NAMA) transfers/sales out of the group local market analysis the corporate structure legal considerations

© Grant Thornton International. All rights reserved. Advice we are giving clients embrace NAMA and be proactive how realistic are the assumptions? have a team including a property expert/QS prepare sensitivity analysis base case should be prudent show that you are vital to the fulfilment of the business plan

© Grant Thornton International. All rights reserved. Conclusion NAMA maybe the only supplier of capital for completion of projects engagement is essential by the borrower preparation on a reasonable basis each project needs to be reviewed separately the business plan process is an opportunity for borrower to put best foot forward fail to prepare... prepare to fail

© Grant Thornton International. All rights reserved. Michael McAteer FCA T: +353 (0) E: