Michael Noonan defends Nama funding

Nama’s funding to debtors and receivers as it aims to help finance 20,000 new homes is “at appropriate market rates of interest”, Finance Minister Michael Noonan has said.

Following the announcement last December of Nama’s plan to finance the building of the homes, a complaint was submitted to the European Commission’s Competition Directorate by a number of property developers, who claimed the financing by the Government agency raised issues about state aid.

The five builders – New Generation Homes, MKN Properties, David Daly, Paddy McKillen and Michael O’Flynn - argued when the State received EU approval in 2009 to establish Nama the goal of the agency was to help repair the balance sheets of the banks, and the agency has now gone beyond its remit.

The complaint also stated Nama enjoys a number of competitive advantages because its finance costs are considerably lower than those of private sector operators.

However, in a written Dáil reply to Fianna Fáil finance spokesperson Michael McGrath, Minister Noonan said “the rates offered to Nama debtors and receivers by Nama are unrelated to Nama’s own funding cost”.

“Where NAMA provides funding to facilitate development by its debtors or receivers, it is provided at appropriate market rates of interest,” he said.

Minister Noonan said Nama has produced detailed evidence, through the Department of Finance on the complaint to the EU Competition Directorate.

He said: “Department of Finance and Nama officials also have met with DG Comp [the directorate] to discuss this evidence and DG Comp’s questions in detail. Senior Department officials maintain an open dialogue with DG Comp as they progress their work.”

“The clear intention of Nama’s residential funding initiative is to enhance returns over and above any other viable strategy, provide funding on terms comparable to those available elsewhere in the market and ensure there is no impact on competition more generally,” the minister said. He said the Commission had not yet reached a decision.

Deputy McGrath said: ”There is a lot at stake in relation to this case. An adverse finding from the European Commission on this could have very serious consequences for Nama and indeed the State.


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