THE NATIONAL Asset Management Agency (Nama) is making plans for foreign banks not protected by State guarantee to Irish lenders to participate in the €90 billion “bad bank” scheme.
The inclusion of loans granted by non-Irish banks would reduce some of the complexity in Nama’s work, as many of the developers who have loans moving to the new agency also have loans outside Ireland. With plans well-advanced for the publication next week of draft legislation to establish Nama, this may also reduce potential for disruption to the scheme from foreign banks taking court action against Irish developers.
Officials expect that loans to the 50 largest property developers will be move into the new agency by Christmas. The transfer of these loans, worth some €30 billion, will relieve pressure on participating banks. The price at which they will be acquired has yet to be determined.
However, Minister for Finance Brian Lenihan said yesterday that the information he has seen to date suggests it is “not inevitable” that the process would result in the State taking a majority stake in the two big banks, AIB and Bank of Ireland.
Mr Lenihan was speaking at the publication of the annual report of the National Treasury Management Agency (NTMA), which said Nama may be classified as being outside the government sector with liabilities held “off balance sheet”. He said he hoped the Nama scheme would not prove to be a “happy hunting ground” for lawyers.
Asked about potential disruption to the Nama plan by recent court action taken against big developers by ACC Bank, he said the Government was interested in a “joined-up approach” towards reparing the banking system with Nama.
He said the Government had not expressed any particular concern to ACC, as all creditors were entitled to pursue their money. “What I can tell at this stage, the legislation will address all the relevant issues.”
The NTMA chief Michael Somers, who told the Dáil Public Accounts Committee in May that he knew very little about the plan “apart from what has appeared in the newspapers”, said he did not see another solution to the banking crisis. “Just to be absolutely clear, I’m all in favour of Nama and always have been because we have to clean up the banking system,” he said
Dr Somers said that the Government has “turned the corner” in its efforts to restore confidence in Irish sovereign debt in the international capital markets, with long-dated debt again available to the State.
However, he and Mr Lenihan indicated that such confidence was predicated on the Government achieving big spending cuts. Each also said a No vote in the second Lisbon Treaty referendum would damage Ireland’s reputation in the markets.
Mr Lenihan defended his remarks about the possibility of reviewing the national minimum wage. “If the minimum wage was causing unemployment in any particular sector the Government will have to examine that and that’s only common sense. I find it hard to believe that anyone could disagree with that proposition.”
He also disputed claims by Siptu president Jack O’Connor that Taoiseach Brian Cowen should rein in the Department of Finance. “I can assure Jack O’Connor that there are no hawks ruling my department. I’m in charge of my department,” he said.
“I’m not aware of any friction between the Taoiseach and myself in relation to these policies. These are the policies of the Government.”
Asked if it is was safe to assume that nobody would be sent to jail as a result of the Anglo Irish Bank affair, Mr Lenihan said it was “not safe” to do so. “I don’t think you can assume that at all in relation to this matter. I think one of Anglo Irish Bank’s directors, Mr Alan Dukes I think, expressed his frustration at the delay in the progress of these investigations. I indicated that I shared that concern.”
