THE NATIONAL Asset Management Agency (Nama) is to be set up within the next two weeks with the appointment of an interim board and chief executive officer, according to Green Party Government Minister Eamon Ryan.
The Minister for Communications, Energy and Natural Resources told the Irish Planning Institute’s annual conference in Wexford that the Government was likely to “take further shareholdings” in the banks.
He said that the mechanisms of how Nama would operate, including how it would take control of toxic bank loans with a book value of between €80 billion and €90 billion, will be revealed pending the publication of a Bill to set up Nama on a statutory basis.
At a separate conference, economist Alan Ahearne, an adviser to the Minister for Finance, said that nationalising the banks would signal that the country’s banking system had “completely failed”.
Speaking at the Engineers Ireland conference in Tullamore, Dr Ahearne said that nationalisation was “a last option with lots of downsides”, which is often perceived by the markets “as a sign that a bank has failed completely”.
It is understood that the bad property loans being acquired from the banks by the State’s “bad bank” agency are likely to continue to be administered by the banks themselves but managed by the Government’s new agency.
However, the National Treasury Management Agency (NTMA), under whose aegis Nama is being created, may outsource the administration of some loans to third-party contractors who specialise in overseeing troublesome loans.
The NTMA is not planning to recruit large numbers to staff the new agency or directly attempt to administer the loans itself.
The treasury agency is expected to rely on the same framework used for the other bodies under its control, such as the National Development Finance Agency, which employs outside contractors to help run and operate the agency.
Nama’s board and management team is expected to comprise individuals with experience in banking and property.
The NTMA has been inundated with applications for jobs at the new agency since it set up Nama’s website 10 days ago.
It has received several hundred applications and CVs from individuals who have worked in banking, property, law, tax and accountancy.
In assessing the banks’ riskiest loans, Government officials have found that 25-30 borrowers account for a large proportion of the development loans across the guaranteed lenders. In one bank, about 100 borrowers account for 60 per cent of these loans.
While conceding that the Government’s approach to the banking crisis was “not flawless, not without risk”, Mr Ryan said that Nama had been “thought through”. It was “not a bank rescue package, or a developers’ rescue package”, he said, but a “public interest package”.
Unsustainable lending by the banks had landed Ireland and other countries in a “very tangled mess, and untangling it is very difficult”, said Mr Ryan. But he said the Nama approach, rather than nationalisation, was “more likely to get development going again”.
Nama, with its large landbanks, would have a planning and development role “as important as its debt-collection function”, he said.
During the boom, “vast areas of land in the wrong places” had been zoned for development in pursuit of a “growth illusion”, creating urban sprawl. Mr Ryan said we “should acknowledge and recognise that, and be honest and learn from that”.
He favoured a site value tax to encourage more dense urban development. “Local authorities need to have financial responsibility, and be given budgetary powers to raise and spend money, otherwise they will never be treated seriously,” he said.
