Massive NAMA gamble set to march on within next few weeks
The agency is still awaiting the final sign-off from the EU and will then take on board the toxic loans of the 10 biggest developers, amounting to some €19 billion, by the end of March.
The move will mark a huge transfer of financial responsibility to the taxpayer from builders who overstretched themselves in the property bubble, by the largesse of the bankers who recklessly lent to them.
By the end of April, about half of the €77bn in bad loans to be taken on board by NAMA will have changed hands.
NAMA will mark the properties down by an average of 30%, despite a number of high-profile commercial property sites slumping in value by about 80%
The bulk of the bad debts will be absorbed by NAMA – and under-written by the taxpayer by the autumn.
The toxic loans are to be bought off the banks for €54bn, and controversially, about one-in-six of the debts will be deliberately over-valued to take account of a supposed rise in price over the next decade.
Once NAMA is up and running, Finance Minister Brian Lenihan says guidelines will force the banks relieved of the debts to free up capital for struggling small and medium businesses.
But opposition parties insist the Government will not be firm enough with the institutions, who will inevitably put their profit margins first and continue to withhold lifeline credit.
The NAMA valuations and transfers of finance to the banks will also reveal how much the Bank of Ireland, AIB and nationalised Anglo Irish need in re-capitalisation from the public purse.
The three institutions have already received €11bn from the taxpayer and experts estimates they will demand a similar figure again this year.
The Finance Department refuses to rule out the money coming from the state’s current account – a move that would pile billions of euro more onto the national debt which is already costing the country €450m a week to roll over.
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