Thursday 23 February 2017

Small loans due for NAMA to be handled by local banks says report

Emmet Oliver

MANY smaller property loans -- once destined go into NAMA -- will have to be handled locally by banks as they were taken out by local small and medium enterprise (SME) owners, the IMF review document says.

The new Fine Gael/Labour Government has said it won't be putting these loans, valued at less than €20m each, into NAMA, despite promises by the last Government.

However, the issue remains a difficult one as removing these loans is part of the deleveraging process ordered by the EU and the IMF.

The new Government admits that while it does not want the loans to go to NAMA, it may have to come back to the issue at some point.

Deleveraging

"The Government does not currently intend that NAMA will further assist with the deleveraging process. It considers that the banks are better placed to deal with smaller land and development loans as these loans are often cross-guaranteed by SMEs,'' says the latest IMF Ireland review report.

Alternative measures to putting these loans into NAMA will have to be designed, the Washington-based organisation said.

The Government has given AIB and Bank of Ireland until the end of this month to come up with such alternatives.

"The implementation of deleveraging will be subject to ongoing review,'' said the IMF.

Flexibility

The Government has given the banks some level of flexibility.

"If these plans are not feasible, we will find and implement alternative ways to meet the deleveraging goals and may reconsider the possibility of transferring the remaining loans to NAMA,'' is how the Government describes its policy, published as part of the IMF document.

The IMF made it clear yesterday that it had imposed a series of targets (known as benchmarks) on the banking sector.

They have all been agreed by the Government already, but do tie the Government to a strict timetable. For example, Irish Nationwide and Anglo must be merged by the end of the year.

Irish Independent

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