Irish ‘NAMA’ Bad-Bank Plan Wins European Commission Approval


By Colm Heatley
Feb. 26 (Bloomberg) -- Ireland’s plan to create a so-called
bad bank won approval from the European Commission, paving the
way for the transfer of 80 billion euros ($109 billion) of
property loans from the country’s lenders to the newly created
agency.
The Brussels-based commission said the plan to set up the
National Asset Management Agency, or NAMA, is in line with
guidelines governing state aid in the 27-nation European Union.
“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,” said EU Competition Commissioner Joaquin Almunia in
an e-mailed statement today. “This impaired-asset measure,
which is specifically targeted at real estate assets, is
therefore key to cleaning up Irish banks’ balance sheets.”
Ireland is creating the bad bank to purge lenders including
Allied Irish Banks Plc and Bank of Ireland Plc of toxic loans as
property prices have fallen 50 percent amid the worst recession
in the country’s modern history. The loans will be bought at a
discount and their transfer to the bad bank couldn’t start until
the commission approved the plan.
The commission said it “will assess the compatibility,”
and “in particular the actual transfer price, of the
transferred assets” when they are separately notified by the
Irish authorities. “These individual reviews will include a
claw-back mechanism in case of excess payments,” it said.
Finance Minister Brian Lenihan said Feb. 22 that, subject
to European approval, he expects the first loans to be
transferred to NAMA within the next few weeks.

The scheme was open to all systemically-important credit institutions established in Ireland, including subsidiaries of foreign banks, with a 60-day application window that expired on 19 February. Five institutions will participate: Anglo Irish Bank, Allied Irish Bank, Bank of Ireland, Irish National Building Society and Educational Building Society.

Today's approval concerns only the NAMA scheme. The Commission will assess the compatibility (and, in particular, the actual transfer price) of the transferred assets when they are separately notified by the Irish authorities. These individual reviews will include a claw back mechanism in case of excess payments.

Finally, the Commission relies on a number of commitments from the Irish authorities to ensure that NAMA, whilst it performs its goal of maximising the recovery value of the purchased assets, does not lead to distortions of competition through the use of some of the specific powers, rights and exemptions granted in the NAMA Act. The Commission will also review individual restructuring plans to ensure that the participation of the financial institutions in this measure is followed up with appropriate restructuring measures to promote the return of those institutions to long term viability.

You have to wonder what has been approved here. It sounds very like "a scheme, the purpose of which will be revealed at a later date, which is gonna be great"

An unknown adventurer started the scheme that showed, more completely than any other did, the utter madness of the people. It was entitled "company for carrying on an undertaking of great advantage, but nobody to know what it is."

http://www.thesouthseabubble.com/

as far as I can see (in the USA at present so somewhat behind the curve) theres nothing here that says anything about AIB and its dividend ? Can they (if they can rustle up 1/4 market cap like that) now pay the pref shares in cash or?