80% say NAMA ‘good for economy’

UP TO 80% or respondents in a survey believe NAMA will be good for the economy and banks.

Carried out by Bloxham Stockbrokers the survey found growing support for NAMA, with the majority of respondents saying the decision to set up the bad bank has reflected well on the economy.

They added that as it evolves NAMA, which will absorb €77 billion of bad and doubtful property and development loans, will continue to improve sentiment towards the Irish economy.

The research gauges investors’ attitudes to developments in the Irish banking sector and the Irish economy and is second the survey carried out by brokers.

As many as 77% of institutional investors who responded to the survey and 63% of retail respondents said the case for investing in Ireland has improved over the last 12 months.

They said that was the case for both Irish equities and bonds.

The findings were published as the European Commission cleared the way for the formal establishment of the bad bank.

It means the initial loan transfer of €17bn, representing the debt of the top 10 Irish developers, will now transfer to the bank by the end of March after a number of false starts. The survey also reveals expectations for the economy remain unchanged from last July’s survey.

Up to 65% of those who took part have expressed confidence that the economy will start to recover before the second half of next year.

A quarter of retail respondents and 38% of institutions said they expected the economy to start recovering in 2010, in line with the expectations of most economists, who say the economy will start to move out of recession by the third quarter of 2010, Bloxham said.

“While much progress has been made, reflected in the strong bond market performance recently, the restructuring and recapitalisation of the Irish banking sector remains pivotal to the economy’s performance,” Bloxham said.

Analysts with French bank Societe Generale estimate Allied Irish Bank needs to raise €4.4bn and Bank of Ireland an additional €2.7bn to bring their equity capital levels up to standards set by the international markets.

International analysis in recent months suggests banks will have to achieve an equity ratio of 8% going forward to satisfy tougher capital requirements being demanded by international authorities in the wake the global banking crisis.

Bank of Ireland and AIB have indicated they will take steps to bring their capital ratios up to 6% over the next few months.

SocGen said it believes there is good reason “to be more positive on the future of the Irish economy and banking sector“.