NAMA reveals new practice in Irish banks : give a borrower a loan, give the borrower a second loan to pay interest on the first loan, and classify the first loan as performing « NAMA Wine Lake

NAMA reveals new practice in Irish banks : give a borrower a loan, give the borrower a second loan to pay interest on the first loan, and classify the first loan as performing « NAMA Wine Lake: Banks engaged in a practice whereby they advanced a loan (let’s call it Loan #1) to a developer for say €100m. They then advanced a second loan (Loan #2) for €11m, and the purpose of advancing Loan #2 was to enable the developer to pay interest on Loan #1 and Loan #2! And because the interest on Loan #1 was being paid as normal and in accordance to the loan agreement, the bank was able to say the loan was performing! SurelyIreland’s banking regulator wasn’t aware of such practice…?