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The government’s draft NAMA Bill is intended to assist Ireland’s banks in the financial crisis.

The government’s NAMA scheme is itself a form of State Aid and is in breach of Article 87 (3) (b) of the EU Treaty. In principle it is, therefore illegal. The scheme is not currently activated but the effects of the government’s disclosed intentions are manifest in the economy. The Commission has previously found a declaration by a government, to advance State Aid, is a form of State Aid. Complaints about the current consequences of the NAMA plan have been voiced publicly by;

a. The manager of the Park Hotel, Kenmare, Co. Kerry;
b. The Chief Financial officer of ACC Bank;

The government has claimed the origins of the NAMA scheme lie in “advice” from international institutions including the EU Commission, the International Monetary Fund and the European Central Bank.

The attribution of credit to the EU Commission for NAMA is presumed to be a reference to Commission Communication 2009/C 72/01. This Communication was an “easing” of State Aid regulation as applied to bank restructuring.

In fact, the government’s scheme is not in conformity with Commission Communication 2009/C 72/01.

The NAMA scheme is of such a scale as to raise concern about the sustainability of public finances by over-indebtedness. The EU Commission expresses concern that asset relief should not undermine public debt capacity.

The NAMA scheme, far from being limited to the minimum necessary, is extended to the maximum, limited only by the creative skill of the government. Government spokespersons have given indications that the “transfer value” is intended to lie in a range of 66% to 75% of bank book value. The EU Commission mandates that the bank must bear the maximum level of loss. NAMA, as “floated” by government, seeks to reverse this principle.

The government has failed to make public the impact on the [public] balance sheet. No information has emerged from government to show the impact, on public debt, of NAMA.

The government has failed to make public the disclosure of impairments and assessment of eligible banks. This requirement is mandated by the Commission.

The government has disclosed its intention to avoid imposing on the banks the losses associated with impaired assets to the maximum extent. The full measure of bank loss is the difference between current market value and bank book value. The government’s indicated “transfer value” is much closer to book value than market value.

Only Anglo Irish Bank has been wound up or nationalised. The government has failed to evaluate losses or correctly identify losses, as evidenced by the absence of adminstration or nationalisation of any other bank. There is good reason to think some, at least, Irish commercial banks are insolvent. That there is uncertainty on the point is evidence of government default.

The government has failed to disclose details of the daily portfolio values presumably received by the government from the banks. Alternatively, the banks have failed to make such values or disclose them to the government. The Commission mandated this daily exercise for participating banks.

The government has maximised uncertainty about the proper value of of the banks’ assets. The government has consistently refused to declare the “transfer value” it has in mind; it cites the mantra “case by case” to justify this. The Commission expressed the need to make public disclosure of asset values by [the government].

The government has conflated “complex assets” with the impaired assets of Irish banks (the outcome of a real property bubble). The Commission identifies “toxic assets” as the source of most bank asset impairment. Irish banks did not suffer to any appreciable extent from such assets; Irish impaired assets are in the real estate category. These latter are not “complex”. Their values are low due to the bubble bursting and the effects of recession.

The government has ignored the necessity to secure adequate remuneration for the Irish state. The NAMA scheme has no chance of recovering, for the Irish state, the cost of taking the impaired assets from the banks. The Commission mandated the recovery of all losses by the State from the participating banks.

The government has failed to ensure the beneficiary banks bear the losses incurred in the transfer of assets. The Commission’s requirement on the point is expressed in different ways; it says the banks must bear the losses to the maximum and that the State should secure adequate remuneration.

The government has denied the relevance of “market values” for impaired assets and asserts its intention to value impaired assets on a “case by case” basis, without distinguishing between market value and tranfer value and without assigning assets to “baskets”(as explained in Communication 2009/C 72/01). The government has failed to properly examine the value of impaired assets. By deferring the valuation exercise and avoiding transparency it is evading the Commission’s requirements.

The government is intent on setting impaired asset values at too high a level. The assets are predominently real estate assets and the effect of the government action will be similar to the negative experience produced in Japan from a similar cause. The Commission noted the Japanese example in requiring States to avoid such an effect, a frozen real estate market a decade long.

The government has attributed the Irish financial crisis to the collapse of Lehman Bros., rather than to a property bubble. This prevents any proper remedy being applied to Ireland’s public debt and banking crisis.

The government’s NAMA plan exposes Ireland to proceedings by the EU Commission and/or non-participating banks and to claims for damages by those banks and the claw -back of Aid from the participating banks.

At a time when the finances of the State are so badly stretched, Ireland cannot afford this.


  1. A litany of failures by Government. Speaks volumes.

  2. Well done. Did you receive the information which you requested? Or even an indication that it would be supplied?

  3. Very well done. A solid and straightforward summary on Nama.

  4. The ECB has effectively given the go ahead to NAMA, by agreeing to cash these bonds. As wrong headed as this may be, I very much doubt there will be from the EU commission.I agree taht we are headed for a Japan sitaution but at least Japan had a manufacturing base? What do we have?

  5. This is a very easy to read summary and should be known to every citizen. However, this Government has had a bailout blitz, first The Church by underwriting for the sex abuse scandal. Then the Banks with NAMA and the next one, the vaccine companies for UNTESTED vaccine.While the Government looks after it ‘big business buddies’ the ordinary decent people stoically struggle on. No help from the Government for them. How sad!

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  1. […] to produce posts which are clever, in the best sense of that much-abused word. Whether it’s pointing out that NAMA is illegal under EU legislation or pointing out that what you read in a Dail transcript is not what was actually said in the Dail […]