The National Asset Management Agency (Nama) will be given sweeping powers to intervene in the property market under draft legislation published this evening by the Government.
The legislation also restricts the scope of any legal challenges to the State's “bad bank”.
“Unless the High Court thinks that that refusing an injunction would result in an injustice, it will not grant an injunction where a remedy in damages is available to the person seeking the injunction,” the draft Bill says.
The legislation empowers the new body to appoint statutory receivers to enforce the security on a property and to seek special court orders to be vested with the legal ownership of property.
Nama will also be empowered to apply to the courts to compulsorily acquire land from defaulting bank borrowers.
While the legislation says Nama will set the price at which it acquires assets from banks, it does not outline the level of the discount that will be applied to the value of the assets on bank balance sheets.
Minister for Finance Brian Lenihan said the Government will determine its estimate of the likely cost of the scheme before the start of the Dáil debate on the legislation, scheduled to begin on September 16th.
Only then will it be possible to accurately gauge the likely losses that banks will incur as a result of their participation in Nama, and their likely requirement for new capital.
The Government will use legal regulations to set out the valuation methodology to be deployed by Nama, Mr Lenihan said.
The methodology will recognise that the current market for property-backed loans and underlying assets are very illiquid. While not requiring banks to accept “firesale” prices, the methodology will aim to set a “reasonable” price having regard to a longer-term perspective on the property market.
