What is it?NAMA stands for the National Assets Management Agency and its creation was first announced in the April 2009 Budget. It is to be run under the control of the National Treasury Management Agency. The Governmant line is that NAMA is firstly an asset management company dealing with assets transferred from banks. NAMA will not be a bank as it will not be taking deposits from the public and will not have a banking licence. The idea is that the NAMA will buy all of the land and property development loans of the six Irish banks of covered by the State guarantee. In May, the Government approved the appointment of Brendan McDonagh as interim managing director of NAMA.
Why was it created?
By taking problem property loans off the hands of the banks, the Government hopes to put those institutions in a position where they can resume lending with a clean bill of health, their balance sheets strengthened and uncertainty over their bad debts reduced. NAMA will probably become the biggest landowner in Ireland. Developers might not yet realise it - but every single land and investment property they own which has outstanding debt could end up in the new National Asset Management Agency.
So, the banks give over their bad debts. What do they get in return?
NAMA will give the banks government bonds, which it is hoped will result in a freeing up of credit within the economy. NAMA will then manage the bank’s bad loans over a considerable period of time.
How big will the transferred loans be?
The total potential value of the loans which will be taken on by NAMA will be between €80 billion and €90 billion. It is expected that the top 50 borrowers will account for some €40bn–€50bn of the expected total due to be taken over by the new state agency.
Even if the total debts are bought by Nama at two-thirds of their face value – the bill could be in the region of €60 billion. (Ireland’s national debt is currently €54 billion).
What is the time-scale for NAMA?
It could be 12 to 18 months before NAMA gets going properly - although it is expected to be legally rubber-stamped in the autumn. It may need to exist for another 10 to 15 years - it is definitely no short-term fix.
Why was it created?
By taking problem property loans off the hands of the banks, the Government hopes to put those institutions in a position where they can resume lending with a clean bill of health, their balance sheets strengthened and uncertainty over their bad debts reduced. NAMA will probably become the biggest landowner in Ireland. Developers might not yet realise it - but every single land and investment property they own which has outstanding debt could end up in the new National Asset Management Agency.
So, the banks give over their bad debts. What do they get in return?
NAMA will give the banks government bonds, which it is hoped will result in a freeing up of credit within the economy. NAMA will then manage the bank’s bad loans over a considerable period of time.
How big will the transferred loans be?
The total potential value of the loans which will be taken on by NAMA will be between €80 billion and €90 billion. It is expected that the top 50 borrowers will account for some €40bn–€50bn of the expected total due to be taken over by the new state agency.
Even if the total debts are bought by Nama at two-thirds of their face value – the bill could be in the region of €60 billion. (Ireland’s national debt is currently €54 billion).
What is the time-scale for NAMA?
It could be 12 to 18 months before NAMA gets going properly - although it is expected to be legally rubber-stamped in the autumn. It may need to exist for another 10 to 15 years - it is definitely no short-term fix.
No comments:
Post a Comment