In Brussels this week, the European Commission approved, under EU state aid rules, the establishment of the National Asset Management Agency (NAMA) in Ireland, thus giving the Irish government the green light to start the transfer of impaired loans.
According to a statement issued by the EU, “The Commission is satisfied that the scheme is in line with its guidelines on impaired asset relief for banks that allow state aid to remedy a serious disturbance in a Member State’s economy.”
The Minister for Finance, Mr Brian Lenihan TD, welcomed the European Commission’s decision to give its approval to the establishment of NAMA and described the event as a “milestone.”
Mr Lenihan said that the process of transferring the eligible loans from the “ownership of the designated credit institutions to NAMA will shortly proceed.”
“The government has at all times made clear that NAMA’s powers will only be used to ensure that NAMA achieves its purposes and does not put non participating institutions at a disadvantage,” concluded Mr Lenihan.
It is hoped that the scheme will help address the issue of “asset quality” in the Irish banking system by allowing banks to offset their impaired assets thus allowing the market to return to normality.
Competition Commissioner Joaquín Almunia said, “Ireland’s financial sector has been one of the most affected by the global financial crisis in Europe and the burst of the Irish real estate bubble has only compounded the problems.”
The EU commissioner explained that this “impaired asset measure,” is specifically targeted at real estate assets and therefore key to “cleaning up Irish banks’ balance sheets.”
He noted that the purpose of NAMA is to restore stability to the Irish banking system and that the scheme is open to “all systemically-important credit institutions established in Ireland.”
According to The Commission this week’s approval concerns only the NAMA scheme. A close eye will be kept on the actual transfer price of the transferred assets when they are included in NAMA. A claw back mechanism will be put into place by the EU in case of excess payments.
The Commission is relying on a number of commitments from the Irish authorities to ensure that NAMA functions correctly without itself affecting the market by distorting competition through the use of some of the specific powers, rights and exemptions granted in the NAMA Act.
Commenting on this weeks decision Labour Party Deputy Leader Joan Burton said that the approval of NAMA by the EU Commission “hardly comes as a surprise as it was the only proposal put on the table by the Irish government.”
“It is now up to the public servants involved in the NAMA process to ensure a robust valuation process that doesn’t leave taxpayers exposed to billions in losses.”
This is the second asset-relief scheme approved by the Commission after that submitted by Germany in May 2009 and cleared end July.
Five institutions will participate: Anglo Irish Bank, Allied Irish Bank, Bank of Ireland, Irish Nationwide Building Society and Educational Building Society.
According to a statement issued by the EU, “The Commission is satisfied that the scheme is in line with its guidelines on impaired asset relief for banks that allow state aid to remedy a serious disturbance in a Member State’s economy.”
The Minister for Finance, Mr Brian Lenihan TD, welcomed the European Commission’s decision to give its approval to the establishment of NAMA and described the event as a “milestone.”
Mr Lenihan said that the process of transferring the eligible loans from the “ownership of the designated credit institutions to NAMA will shortly proceed.”
“The government has at all times made clear that NAMA’s powers will only be used to ensure that NAMA achieves its purposes and does not put non participating institutions at a disadvantage,” concluded Mr Lenihan.
It is hoped that the scheme will help address the issue of “asset quality” in the Irish banking system by allowing banks to offset their impaired assets thus allowing the market to return to normality.
Competition Commissioner Joaquín Almunia said, “Ireland’s financial sector has been one of the most affected by the global financial crisis in Europe and the burst of the Irish real estate bubble has only compounded the problems.”
The EU commissioner explained that this “impaired asset measure,” is specifically targeted at real estate assets and therefore key to “cleaning up Irish banks’ balance sheets.”
He noted that the purpose of NAMA is to restore stability to the Irish banking system and that the scheme is open to “all systemically-important credit institutions established in Ireland.”
According to The Commission this week’s approval concerns only the NAMA scheme. A close eye will be kept on the actual transfer price of the transferred assets when they are included in NAMA. A claw back mechanism will be put into place by the EU in case of excess payments.
The Commission is relying on a number of commitments from the Irish authorities to ensure that NAMA functions correctly without itself affecting the market by distorting competition through the use of some of the specific powers, rights and exemptions granted in the NAMA Act.
Commenting on this weeks decision Labour Party Deputy Leader Joan Burton said that the approval of NAMA by the EU Commission “hardly comes as a surprise as it was the only proposal put on the table by the Irish government.”
“It is now up to the public servants involved in the NAMA process to ensure a robust valuation process that doesn’t leave taxpayers exposed to billions in losses.”
This is the second asset-relief scheme approved by the Commission after that submitted by Germany in May 2009 and cleared end July.
Five institutions will participate: Anglo Irish Bank, Allied Irish Bank, Bank of Ireland, Irish Nationwide Building Society and Educational Building Society.
