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Crunch talks with banks and EU delay Nama
31 January 2010 By Pat Leahy and David Clerkin
The National Asset Management Agency (Nama) is facing further delays in buying its first toxic loans from banks and will not start its operations early next month as planned.
The government’s plans to get the new agency up and running have been set back by delays in preparations in some of the banks and in obtaining clearance from the European Commission. Nama must also source investors to take a stake in the special purpose vehicle (SPV) that will be used to buy the loans.
The delays are expected to add weeks to the planned timescale for transferring loans, which had been scheduled to begin by February 12. The agency cannot acquire any assets before approval for the scheme and for an overall bank restructuring programme is secured from the European Commission.
Government sources are confident of early EU approval, but commission sources have told The Sunday Business Post that it does not expect to give a verdict on whether the scheme complies with EU law until the end of February at the earliest.
One key deadline for Nama is to have loans transferred before March 30, the last day of Bank of Ireland’s financial year, though, this weekend, government sources remained confident that the process would be under way by then.
Meanwhile, Nama officials are continuing their efforts to source private investors to contribute more than €50 million to establish the SPV. Failure to establish the SPV would mean that the debts taken on by Nama, originally estimated at €54 billion, would be counted as part of the national debt As well as studying the Nama scheme, European Commission officials are also examining a complaint that it breaches state aid rules, made by Eugene Regan, a Fine Gael senator and former commission official. The commission will rule on the government’s application and Regan’s complaint together.
Regan has made a detailed submission against Nama and met with commission officials last week. A commission spokesman said it was ‘‘looking closely at the complaint, and would take it into account in its overall assessment of Nama vis-a'-vis state aid rules’’.
Senior sources in the EC competition directorate said that a key point would be whether the state was paying a fair value for the toxic assets, and that Irish banks in the scheme were not receiving a subsidy, which would distort competition. The Nama scheme has been criticised by some economists for overpaying for the toxic assets.
It is open to the commission to approve the scheme but to attach stringent conditions to its operation and to the restructuring plans submitted by the individual banks. For example, banks are expected to be forced to sell off specific assets.
The commission could order changes in the NAMA scheme itself.
Regan suggests that the Nama scheme should not be extended to Anglo Irish Bank and also that performing loans should be excluded from its remit.
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