THE DEPARTMENT of Finance spent the weekend finalising the financial details on the National Asset Management Agency (Nama) amid reports that the Government will issue up to €60 billion in Government bonds in return for the €90 billion in impaired property loans from the banks.
Details of the valuation being placed on the bad loans will be outlined by Minister for Finance Brian Lenihan in a speech to the Dáil on Wednesday. The Minister is also expected to indicate if the State will be required to take a majority shareholding in AIB, with speculation mounting that this scenario is now likely.
The Government is also thought to be considering including a binding agreement that would require the banks to increase lending to small businesses as part of the Nama deal.
Mr Lenihan is expected to inform the Dáil that the majority of the payments to banks will be made through so-called Nama bonds. The balance will be paid through subordinated bonds, which will introduce an element of risk-sharing.
In addition, he is expected to comment on the direction he believes the smaller Irish banks – EBS, Irish Life Permanent (ILP) and Irish Nationwide – should take when the bad property loans are stripped from their balance sheets. The creation of a third banking force through the merger of EBS, ILP and Irish Nationwide has been mooted recently, with Bank of Scotland Ireland also expressing an interest in participating in such a merger, as revealed in The Irish Times last week.
Labour finance spokewoman Joan Burton said yesterday that Mr Lenihan should publish a Government position paper in advance of Wednesday’s debate so the Dáil could give the Nama valuation serious consideration.
“It is common for such position papers to be published with embargos prior to Budget statements and this occasion is of similar, even greater, importance.
“The Minister has also said he proposes to publish his own cost estimate for the Labour Party’s temporary nationalisation proposal. I am somewhat surprised at this as there has been no consultation with my party on how this costing is to be carried out. I do not believe it is appropriate for the Minister to use the resources of the Civil Service in a partisan way to engage in political point-scoring.
“I am, of course, anxious to have an independent estimate of potential costs for any policy option that may be debated by the Dáil but such an exercise should be carried out in a non-political way.
“It is invidious of Minister Lenihan to engage in this exercise when there has been no clear statement of the costings of the Nama option itself.”
Of the Nama plan, Ms Burton added: “Already there are disturbing reports of some developers seeking to make part of their asset portfolios ‘Nama proof’ by the transfer of these assets to spouses or abroad. The Minister needs to clarify this issue quickly before we experience another decade of public scandal.”
