Friday 16 November 2018

European Commission finds NAMA did not breach EU rules in State Aid case

Nama building
Nama building
Louise Kelly

Louise Kelly

The European Commission has found that NAMA did not breach EU State aid rules following a review based on a complaint received.

The Commission was assessing whether NAMA breached its rules on State aid by providing certain property developers it supported with funding at preferential interest rates, which were not otherwise available to non-Nama developers.

"We have carefully looked at allegations that NAMA's activities would distort competition in the Irish property development market," Commissioner Margrethe Vestager said.

"Our assessment shows that NAMA's activities did not breach EU rules - it has acted as a private operator would have done, and in line with its objective to obtain the best possible financial return for the State and Irish taxpayers."

In December 2015, the Commission received a complaint from five property developers Michael O’ Flynn, Paddy Mc Killen, David Daly, Patrick Crean and MKN Properties Limited.

They alleged that NAMA distorts competition in the Irish property development market by granting loans at very favourable conditions to property developers, which are existing creditors of NAMA.

The complainants also alleged that NAMA itself benefitted from various illegal State aid measures in Ireland, including a State guarantee on its funding.

The Commission's assessment concluded that NAMA extends new loans to property developers where it is commercially viable to do so.

It also found that State support to NAMA had already been approved under the Commission's 2010 decision.

Finally, the Commission found that extending financing to certain property development projects where it is commercially viable to do so is in line with NAMA's objective to obtain the best possible financial return for the State.

NAMA welcomed the decision and said it pressing ahead with its funding programme "with a view to maximising the return on commercially viable residential units from sites under the control of its debtors and receivers".

The developer group responded to the decision, stating that it was "impossible to rationalise the decision given the evidence available, the actions of NAMA and changes in NAMA’s operations and interest rates since the complaint was made and indeed recent comments by the Taoiseach in relation to NAMA and State Aid".

The group said that the main thrust of the complaint was the transformation of NAMA since 2015 and that this had not been addressed in the decision. 

"This is most alarming and undermines the credibility of the decision."

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