Danger stalks bid to revive 'zombie banks'
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WITH the banks having effectively stopped lending, we desperately need to get NAMA up and running quickly so that they can get bad loans off their balance sheets. Until NAMA starts operating, the Irish banks will be no more than Japanese-style 'zombie banks'.
The most recent figures from the Central Bank show that bank lending fell by €95m in February alone. And the virtual halt in new bank lending is gradually asphyxiating the economy.
Establishing a "bad bank" such as NAMA is almost certainly an essential step to unblocking the flow of credit to the starved Irish economy.
But all we have had so far are the outline proposals revealed by Finance Minister Brian Lenihan and economist Peter Bacon at their joint press conference on April 8.
Almost a fortnight has passed since then and we are still no closer to getting NAMA off the ground. Not alone has the legislation setting up the new body yet to be published, but no thought seems to have been given to the difficulties in staffing NAMA.
Given the incestuous nature of Irish business and finance most of the professionals, bankers, solicitors, accountants etc in this country have already had dealings with the developers whose repossessed assets will be managed by NAMA.
So most if not all of the NAMA staff above the level of receptionist will have to be recruited from abroad. Which of course creates further potential problems. What steps will NAMA take to ensure that these overseas staff don't come with skeletons hidden in their cupboards?
Luckily, as part of the NTMA, salaries shouldn't be a problem in attracting the right people. NTMA boss Michael Somers, who is reputed to be paid over €1m a year, has always insisted that his organisation be able to pay market rates when recruiting staff.
But NAMA will very quickly become the largest property owner in the State. And as a state-owned body how will it resist the inevitable pressure from politically well-connected developers seeking to buy back their assets on the cheap? If it isn't careful, NAMA could cause Irish crony capitalism to plunge to new depths.
NAMA will almost certainly play a major part in eventually restoring the Irish economy and banking system to health.
Just remember, no-one said it was going to be easy.
- George Garvey
