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EU is silent on NAMA

THE EU Commission has not revealed which conditions it will attach to its approval of the National Asset Management Agency (NAMA).

Brussels is expected to approve the country's 'bad bank' scheme, which would take over impaired loans from financial institutions, by tomorrow.

EU rules on government aid mean the banks would need to have a realistic prospect of returning to profitability in three years, and reducing their debts to sustainable levels in five.

One possible outcome is that the commission will approve the start of NAMA operations, but with a review in six months or so.

However, EU officials have not provided details of the conditions they will require prior to expected approval of the scheme. Separate State aid-related decisions on the restructuring plans of individual Irish banks are likely to be taken later.

It's expected that the EU statistical service, Eurostat, will be closely monitoring the plan to make sure the investors are also taking on sufficient risk to allow the NAMA debt stay off the Government books.

However, the governor of the Central Bank Patrick Honohan has said Irish banks will need further capital after transferring loans to NAMA.

Mr Honohan said he was confident that the measures introduced would confirm the solidity of the banks and help restore confidence in the finances of the State.


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