Irish government ingests sour loans
(2 December 2009 – Europe) Two of Ireland’s banks are hoping to receive around €28.2 billion (A$46 billion) for property loans that went bad during the global financial crisis; as the government sets up a ‘bad bank’ to buy the loans at a discounted price.
Both houses of parliament have approved plans to use tax payers’ money to purchase the sour loans at a discounted rate; the ‘bad bank’, called the ‘National Assets Management Agency’ (NAMA), will have a total book value of €77 billion and will pay around €54 billion for the assets.
Allied Irish Bank said in a statement that it hoped to receive €17 billion and the Bank of Ireland said it could receive 11.2 percent if a 30 percent discount is applied to the loans.
The Bank of Ireland said it would be recommending participation in NAMA to shareholders at a meeting in January.
Ireland was struck heavily by the recession and the domestic property market went into melt down during the global financial crisis; during September it was reported that property prices had plunged by 50 percent.
The Bank of Ireland said that the ‘precise quantum of the assets’ to transfer to NAMA and the terms of their transfer have yet to be established and a loan-by-loan exercise will be involved.
Brian Lenihan, finance minister, said that he estimated a discount on loans of around 30 percent, however there can be no assurance that this will be the case at this time.
Allied Irish Bank said in a statement that it hoped to receive €17 billion and the Bank of Ireland said it could receive 11.2 percent if a 30 percent discount is applied to the loans.
The Bank of Ireland said it would be recommending participation in NAMA to shareholders at a meeting in January.
Ireland was struck heavily by the recession and the domestic property market went into melt down during the global financial crisis; during September it was reported that property prices had plunged by 50 percent.
The Bank of Ireland said that the ‘precise quantum of the assets’ to transfer to NAMA and the terms of their transfer have yet to be established and a loan-by-loan exercise will be involved.
Brian Lenihan, finance minister, said that he estimated a discount on loans of around 30 percent, however there can be no assurance that this will be the case at this time.
Subscribe