THE NATIONAL Asset Management Agency (Nama) is looking at ways of providing mortgage finance to banks in an attempt to energise the Republic’s moribund property market.

State agency chairman Frank Daly told a group of property professionals yesterday that he wants to begin talks with the State’s two biggest banks on means of providing finance to homebuyers.

Such a move could require a change in the legislation that established Nama, depending on what steps it finally decides to take.

He also reiterated the agency’s determination to take action against 30 of the larger developers whose debts Nama now owns and whose business plans it does not consider viable.

Nama is concentrated on the task of retrieving the €88 billion worth of loans it has bought from five banks over the last year.

Mr Daly explained that the agency sees it as part of that brief to help generate sales in the market. He said the banks had a liquidity problem while Nama, which has around €1 billion on its balance sheet, has resources.

The agency is not planning to lend money directly to homebuyers but is instead willing to provide some of the finance required by the banks to loan the money out in the first instance.

This will allow it to share some of the risk with the banks which now require borrowers to provide up to 30 or 40 per cent of the funds for a property before they will lend them money.

Nama would provide a portion of that finance to the banks, which would in turn would allow them to lend more money to customers.

The agency would only provide finance to allow people to purchase properties on Nama’s books. Mr Daly also said sales would have to be at prices that buyers are willing to pay.

The proposals are still at an early stage and are unlikely to be finalised before the end of the summer. But the plan is similar to an idea floated by Nama board member Steven Seelig in an interview with The Irish Times last month.

Mr Seelig, who worked for the International Monetary Fund before he became a director of the agency, argued that this would be the best way of dealing with the oversupply of properties in the market at present.

He also made the point that the quicker the property market recovered, the less money Nama would have to lend in the first place.

The asset management agency will spend €37 billion buying the €88 billion worth of property development loans from the five participating banks – AIB, Anglo Irish, Bank of Ireland, EBS and Irish Nationwide.

Nama has pledged to recover all of the money loaned to developers. A high proportion of the overall debt relates to residential developments where individual properties are not selling or selling slowly because the banks are unwilling to provide mortgages to buyers.

Mr Daly was addressing the launch of the new Society of Chartered Surveyors Ireland in Dublin.

The Nama chairman added that some developers were attempting to prolong the process as much as they can while not dealing with the problems.

“It is likely that we will end up enforcing against these debtors in the near term,” he warned.

The agency recently appointed Kieran Wallace of KPMG as statutory receiver to 15 properties owned by developer Paddy Kelly. Mr Daly’s remarks were interpreted as meaning that it is close to taking similar action against other developers.

The agency was also active in persuading one-time leading property player Derek Quinlan to put Citigroup’s European headquarters in London on the market.

Mr Quinlan owns this jointly with Glenn Maud and borrowed a reported €300 million from Irish banks to finance its purchase in 2007.