The Government’s proposed National Asset Management Agency (Nama) will buy loans worth €77 billion at a discount of 30 per cent. The Minister for Finance Brian Lenihan told the Dáil that NAMA would pay approximately €54bn for loans it takes over from Irish banks. According to the Minister this amount is an estimate based on the long-term economic value of the assets against which the loans were secured.
According to the Minister for Finance the current market value of the loans was calculated on the basis that the value of property had fallen by 50% since the peak in 2007. This set the current value of the property at €47bn. The €7bn difference (i.e.€54bn – €47bn), according to the Minister, is the amount the property will have to increase in value over the coming years if the tax-payers investment is to break even.
The loans to be transferred by the various banks are as follows:
AIB - €24bn.
Bank of Ireland - €16bn.
Anglo Irish Bank - €28bn.
Irish Nationwide Building Society - €8bn
EBS - €1bn
These loans will be swapped for bonds from NAMA which the banks will be able to exchange for cash from the European Central Bank. 36 per cent of the assets to be taken over by NAMA are land, 28 per cent are development property and 36 per cent are commercial loans.
The Minister for Finance said the majority of loans will have been valued and transferred to NAMA by the middle of 2010.
Outline of Proposed New Guarantee Scheme September 16, 2009
Statement by Minister for Finance to the Dail on Banking, January 19, 2010
Speech by Minister for Finance on NAMA Bill Second Stage
Statement by Minister for Finance on the NAMA legislation draft paper, July 30, 2009
Information about the Bank Guarantee Scheme, October 20, 2009
Ministers Statement on taking Anglo-Irish Bank into public ownership, January 15, 2009
Information about the Bank Guarantee Scheme October 20, 2008
All the above Articles can be found at http://www.finance.gov.ie/news-centre