Noonan defends Nama against State Aid claims
The Minister for Finance, Michael Noonan, has insisted that Nama's funding to debtors and receivers in its ambition to finance 20,000 new homes is "at appropriate market rates of interest".
Last December, following the announcement of Nama's plan to finance the building of the homes, a complaint was submitted to the EU Competition Directorate of the European Commission (DG Comp) by a small number of property developers. They alleged that there may be state aid implications to Nama's proposal to fund the house building.
The five builders - New Generation Homes, MKN Properties, David Daly, Paddy McKillen and Michael O'Flynn - argued that when the State got EU approval in 2009 to establish Nama it was intended to repair the banks' balance sheets and that the Government has gone beyond what was agreed with Brussels.
The complaint also stated that as a State agency Nama enjoys a number of competitive advantages - its finance costs are nine percentage points lower than those of private sector operators and, unlike them, it does not have to price in the cost of replacing sites and housing stock.
However, in a written Dail reply to Fianna Fáil Finance spokesman, Michael McGrath, on the issue, Minister Noonan stated: "The rates offered to Nama debtors and receivers by Nama are unrelated to Nama's own cost of funding.
"Where Nama provides funding to facilitate development by its debtors or receivers, it is provided at appropriate market rates of interest."
Minister Noonan added that Nama has produced detailed evidence regarding the complaint to the EU Competition Directorate while Department of Finance and Nama officials also have met with DG Comp to discuss the evidence and DG Comp questions.
Mr Noonan stated: "The clear intention of Nama's residential funding initiative is to enhance returns over and above any other viable strategy, provide funding on terms comparable to those available elsewhere in the market and ensure there is no impact on competition more generally."
Deputy McGrath said yesterday: "There is a lot at stake in relation to this case. An adverse finding from the European Commission on this could have very serious consequences for Nama and indeed the State. "I sincerely hope that a decision on this can be reached shortly. The truth is that both the public and private sector need to ramp up the delivery of housing."