NAMA:A FURTHER €16 billion in land and development loans will be moved to the National Asset Management Agency (Nama) from Allied Irish Banks and Bank of Ireland, bringing to €89 billion the total loans to be transferred to the State agency.
Legislation will be passed next year – following the anticipated general election – to speed up the transfer of all loans to Nama by the end of March 2011, so they can be moved in one tranche with a single discount applied.
The banks must submit detailed plans by the end of April showing the assets they intend to sell. The additional €8 billion in capital to be raised by the banks is broken down as follows:
Allied Irish Banks – €5.265 billion, bringing to almost €9.8 billion the bank still has to raise;
Bank of Ireland – €2.2 billion;
Educational Building Society – €438 million, bringing to €963 million still to be raised;
Irish Life and Permanent – €98 million, bringing to €243 million the total still to be raised.
The additional targets set by the Central Bank bring to almost €13.2 billion the sum to be raised to bring capital targets to 12 per cent from the regulator’s level of 8 per cent.
Bank of Ireland has been given until the end of February to raise the €2.2 billion from private sources through sale of new shares underwritten by the Government. The bank said it intended to raise the €2.2 billion by its own means from existing shareholders and “other capital markets sources”.
If it fails, the State will be left with a shareholding of more than 70 per cent from its current level of 36 per cent, pushing the bank as the fifth Irish lender into majority Government control.
The Government will give AIB and EBS until the end of February to raise the additional capital. However, the State is likely to be the only source of capital for AIB, given the money required. This is expected to increase the State’s ownership to more than 96 per cent from 18 per cent, effectively nationalising it and wiping out the investment of shareholders.
Irish Life and Permanent has until the end of May to raise the capital from private investors.
The sale of EBS is likely to be delayed as the two bidders – Irish Life and Permanent and a private equity group led by Dublin-based Cardinal Capital Group – assess the new bailouts. The Central Bank is preparing for legislation early next year to deal with failed banks. It will ask outside parties to verify its stress tests next year.
