No loans to NAMA, but regulator to review ILP

THE Financial Regulator will carry out a review of Irish Life and Permanent’s operations, but the lender will not be selling any loans to NAMA because it largely avoided lending to developers.

The bank said it believes its current capital requirements are sufficient based on initial talks with the Regulator. Unlike the other Irish banks, ILP has been immune to the NAMA debate having gone through its loan portfolio and not finding any development loans and any assets that needed to be transferred to the agency.

Its share price has also performed much better than that of AIB and Bank of Ireland, hovering around €1.50 above them.

It has, however, been advised by the Financial Regulator that a “prudential capital assessment review” will be carried out on the institution over the coming months in the context of the institution’s restructuring plans.

Although he didn’t outline exact plans, Mr Lenihan is said to be in favour of merging EBS, Irish Nationwide and Irish Life’s banking arm to create a third force in Irish banking.

Meanwhile, EBS, which needs capital of €875 million said it was “extremely grateful” to the Government for the financial support while Irish Nationwide chief executive Gerry McGinn also said his institution was also grateful, but warned it will shortly post “significant losses for 2009”.

EBS moved to stress that this is the first time it has received Government capital, while pointing out others in the sector have already benefited from a previous recapitalisation.

“EBS will seek to reduce this capital amount of €875m through a range of programmes and strategies,” it said.

The society said the Government’s recapitalisation commitment will allow it to continue to play a “very important role in the Irish financial services market”. “Throughout the current financial crisis, EBS has performed a very proactive role and today the society accounts for 20% of all new home loan lending, 50% of the first-time buyers market, and 20% of the retail deposit market,” it said last night.

Mr McGinn said Irish Nationwide losses are due to the “high level of provisions required on our commercial lending book”: “This injection of capital will cover the losses for 2009 and the uncertainty we will have over the extent of discount emanating from the transfer of impaired assets to NAMA.”

Irish Nationwide requires €2.6bn to meet its capital requirements, according to the government.