Almost €5 billion of loans could be at risk in Northern Ireland once the Nama bank for bad debts is established, it was claimed today.
The North's Deputy First Minister, Martin McGuinness, warned against a fire sale of land by the State body in the Republic as he answered questions at Stormont.
“The big concern here in the North, and it is mainly in land banks, is that there could be a fire sale which would effectively have a very damaging and distorting effect on the economy,” he said.
“There is a commitment by the Irish government through [Finance] Minister [Brian] Lenihan that they are very conscious of the concerns that we have in the North and I think the recent meeting between [Northern Ireland] Finance Minister [Sammy Wilson] and himself was very useful.”
Concern had been expressed in Northern Ireland that huge amounts of Republic-owned property north of the border could be sold off quickly, causing commercial prices to fall.
Nama is due to be established this autumn with legislation is due before the Dáil on Wednesday.
Nama will take more than €90 billion worth of debt from Irish banks so that they can be encouraged to start lending again. Mr McGuinness said €4.8 billion was invested in Northern Ireland, mainly in land.
During the years of the Celtic Tiger when the Republic’s economy was booming new office blocks and apartment buildings developed quickly.
Irish developers quickly began looking further afield for expansion opportunities during an era of easy credit and spiralling property prices.
By the mid-2000s, prices in Northern Ireland were also climbing to record levels attracting many investors from the Republic. When the market collapsed last year it left many developers unable to make their repayments.
Mr McGuinness said the €4.8 billion of local assets left exposed had considerable implications, equivalent to a quarter of the output of the entire economy in Northern Ireland.
“The cross-jurisdictional implications are significant in the absence of statements on the discount to be applied to the Irish bank loans and the precise length of time that Nama will operate,” he added.
PA