NAMA Mark II could take control of banks’ good assets

THE banking authorities may set up a NAMA Mark II to take control of billions of euro worth of good assets currently held by the Irish banks, as part of the enforced strategy insisted on by the IMF and the ECB as part of the €85bn bailout.

The National Asset Management agency has acquired over €70bn in bad property loans from the banks, but the next phase could involve a number of options, a spokesman for the Central Bank said.

The plan will be to “secure the future the Irish banks”, he said, and will be agreed in conjunction with the ECB and the IMF.

Financial Regulator Matthew Elderfield told a Dublin newspaper yesterday part of the restructuring could result in billions of good assets, including the entire foreign operations of some banks, making their way into a “new NAMA”.

The final shape of the restructuring will be known by the end of the first quarter.

Options under consideration also include a good bank/bad bank function within individual banks.

The sale of assets is another, while restructuring, and the extension of the country’s so-called bad bank to take over additional assets, will all be examined to find the speediest way of cutting the banks down to a size to ensure they can never again threaten the solvency of the state.

This drastic downsizing has been insisted on as part of the €85bn bailout and the new banking structure will have to pass muster with the ECB and the IMF before it can be adopted.

Emer Lang, banking analyst with Davy, said “a fundamental downsizing and reorganisation of the Irish banking system is considered essential to improving the sector’s funding profile”.

She warned the process would not be that easy.

AIB has been unable to sell its British business while Bank of Ireland and IL&P have made slow progress in selling on its mortgage books in that market.

It all points to a lack of appetite for Irish-owned banking assets, she said.

Given the challenging timeline and the hostile banking environment “forced sales at a loss will merely increase banks’ capital requirements, a point acknowledged by the regulator,” she said.

“Hence some sort of restructuring vehicle, or ‘new NAMA’ as it is referred to, may provide an interim solution.”