Early approval unlikely to shift formal transfers deadline

SINCE it was proposed last summer, NAMA has essentially been a numbers game.

Key numbers include the value of loans being transferred from the five institutions involved (€80 billion, or so); the discount percentage figure the Government will eventually get when buying those loans (roundly believed to be 30%); the actual monetary amount that will be paid for them (approximately €54bn) and to what extent each bank will need recapitalisation after the transfer. Another number that has cropped up in recent times is exactly how many more weeks must we wait until formal transfers begin.

That seems to be the main clarification from yesterday’s formal approval from the European Commission, the green light removing the final hurdle to transfers starting. Certainly, the number of dissenting voices over the project as a whole has not diminished.

The Department of Finance said last week, pending approval from Brussels, it would like to see loan transfers to NAMA commencing in late March.

While approval could bring that date forward, a reported deadline of March 5 for starting the process isn’t official, according to the Government and the department is sticking with its previous timeframe, despite the earlier-than-expected formal approval from Europe.

The first tranche of loans, focusing on the €17bn or so relating to big-name property developers, is still likely to be completely transferred to NAMA by the end of the second quarter.

Also sticking to their guns, yesterday were the opposition, with Fine Gael finance spokesperson Richard Bruton claiming that EC approval merely confirms thinking that the Government’s bank rescue strategy isn’t working.

“The Government’s promise that NAMA will be the great salvation and stimulus for the economy will, instead, turn out to be a formula for continuing delay, credit contraction and job decimation.

“It’s increasingly clear that an incompetent Government was duped by the banks into bailing them out at massive risk to the taxpayer, without any benefit for the country,” he added.

Analyst reaction seems to be slightly more positive, however. “This essentially means that NAMA is definitely being put in place. It will be the start off the process of restructuring the Irish banking system and part of the overall clean-up operation.

“Ultimately, if there is nothing like NAMA in existence then we won’t get credit flowing again, but there is still the question of just how much credit will flow on the back of NAMA,” said Oliver Gilvarry, banking analyst with Dolmen Stockbrokers.

All the renewed talk about lending to business, however, hasn’t cheered up representative bodies.