EU likely to give judgment 'within weeks' on Nama

THE EUROPEAN Commission is likely “within weeks” to hand down its judgment on the National Asset Management Agency (Nama) amid rising expectation the EU executive will approve the €54 billion “bad bank” scheme.

The ultimate decision rests with the newly-installed competition commissioner Joaquin Almunia, who met in Brussels this week with Minister for Finance Brian Lenihan.

His office is assessing whether the plan complies with strict rules set down by the commission on the treatment of impaired assets in asset-relief schemes.

Mr Almunia’s predecessor, Neelie Kroes, approved a German scheme last year, calling for “ex ante transparency” on the real economic value of assets transferred into the scheme. Nama is broader in its scope, however, and has attracted considerable attention within the commission.

Some well-versed sources believe Mr Almunia could make his judgment known by the start of next month, bringing Nama’s difficult gestation to an end more than seven months after Mr Lenihan published draft legislation on the plan. His decision is subject to review by other branches of the commission and could well be delayed.

Once approved, the agency is likely to move very quickly to begin the process of acquiring property loans from Ireland’s ailing banks.

The deadline falls today for institutions to apply to join Nama.

While the overall plan is now expected to be approved by the European authorities, a large number of Nama’s transactions will still be subject on a case-by-case basis to EU approval and audit under State-aid rules.

It still remains unclear whether the commission will seek to make amendments to the plan. However, informed sources said nothing has emerged in the eight weeks since the Government notified the plan to Brussels to suggest the EU authorities were seeking radical changes.

Talks between Irish and EU officials, ongoing since the Government started drafting the legislation last year, intensified in recent days. While well-placed sources say some technical and other issues remain to be signed off, the absence of “red flags” is taken to mean the outlook is positive.

On the Irish side, there is a level of confidence in the plan as submitted because parts of the legislation were changed during the drafting phase at the suggestion of EU officials.

In a parallel but separate process, Mr Almunia’s office is assessing restructuring plans from Allied Irish Banks, Bank of Ireland and the nationalised Anglo Irish Bank. The immediate prospects of all three institutions will depend on their engagement with Nama.

When he was still EU economics commissioner four months ago, Mr Almunia said on a visit to Dublin that he wanted to see the Nama legislation enacted “as soon as possible”.

He said then that Nama was an instrument that was needed to tackle the problems across the Irish banks and “to organise an orderly restructuring and consolidation of the banking sector”.