Brendan Keenan: NAMA will only dent the banks' loan books
Published 27/02/2010 | 05:00
GOOD timing, or bad? The appearance of the worst monthly credit figures so far, on the same day as the NAMA bank rescue scheme was given approval by the EU Commission, allowed both government and opposition to say: "Told you so."
Ministers can claim that the sharp fall in lending to business in January shows the need to get NAMA (the National Asset Management Agency) up and running, so that the banks' capacity to lend will increase. Opposition parties can say that, 18 months on, the Government has not been able to get credit moving, and NAMA won't make any difference.
Both have a point. Taking €80bn off the banks' lending books and sending it to NAMA does indeed improve the banks' theoretical lending capacity. But it will be negligible, because the remaining loans will still far exceed their deposits.