Anglo Irish Bank chairman Alan Dukes has said that a second 'bad bank' may be needed to deal with all the distressed non-NAMA loans still stuck on bank balance sheets.
He said that while NAMA removed a large amount of property loans from the system, a second bad bank would fully clean up the balance sheets of the main banks and make them attractive to the markets.
He said Anglo was going to be managing a large portfolio of non-NAMA bound loans in its new recovery bank, but AIB and Bank of Ireland would be managing similar loans.
"Why don't we put all those distressed assets in one place?'' he asked. He was speaking at the Chartered Accountants Leinster Society lunch.
Mr Dukes said he was hoping the idea would be debated and that Anglo had already made such a suggestion to the EU Commission. He said Anglo didn't necessarily have to be part of the new structure.
Asked if this meant NAMA had not worked fully, Mr Dukes said: "Even after NAMA there will still be some distressed assets and they will have to be dealt with."
Mr Dukes admitted that the second 'bad bank' would need government capital, as it would hold a banking licence and need to meet the Financial Regulator's requirements.
Mr Dukes's comments suggest Anglo is facing a tough task managing up to €38bn of non-NAMA loans, which range from commercial loans and SME loans to other smaller property loans.
Mr Dukes was also upfront about the challenges facing Anglo at present, describing its attempts to retain deposits as "very difficult''. He said the funding position was not critical, but was not easy. He refused to talk about an Anglo bid for Quinn Insurance.
"We'll have to do something like NAMA,'' said Mr Dukes of his idea in relation to other loans. He said NAMA was not sponsoring the idea and neither way any other party.
He didn't elaborate on the kind of loans or scale of loans that might go into any new 'bad bank'.
Instead people had to look towards the future shape of the banking market. He said AIB and Bank of Ireland were likely to move back into duopoly control of the banking sector, with few foreign banks entering the market here.
Mr Dukes also said there was no point postponing the Budget cuts.
"I would do the adjustment as soon as I possibly could,'' he said.
Mr Dukes was a finance minister in the 1980s in a coalition government with Labour.
He said the difference between now and then was then bond markets were "liquid'', but they were now "seized up''.