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
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.