Government to provide key data on extent of stake in Nama institutions

Fri, Aug 28, 2009, 01:00

THE GOVERNMENT is preparing to provide key data next month on the ultimate extent of the State’s likely shareholding in the institutions participating in the National Asset Management Agency (Nama).

Sources say Minister for Finance Brian Lenihan will, at the start of the Dáil debate on Nama next month, set out the likely requirement for new capital in each participating bank and building society when €90 billion in loans move to the new agency.

Although the plans are still tentative and may be subject to change, the Government would do this by telling “a story” in respect of the impact of the Nama process on all of the institutions. This may well include data as to the likely level of loan impairments in each institution and the resulting impact on their core capital.

It remains to be seen if the Government would specifically set out the likely level of new capital required in each case, but sources say the level of information set out will be such that the calculations will be made within the market.

Sources say varying levels of State ownership of key institutions may be implied by the data. This could include the State taking a majority shareholding in certain cases, they say. However, they emphasise that State shareholdings would be conditional on the institutions failing to raise new capital from private sources.

A key strand of the Nama plan is that the Government hopes private investors will come forward.

If they do not, the Government has indicated that any new State capital going into Allied Irish Banks (AIB) and Bank of Ireland would go in as pure equity.

Certain sources believe an indication that the State is prepared as a result of the Nama process to take a big or a majority shareholding in some of the main institutions might ease passage of the legislation through the Oireachtas.

Canadian Imperial Bank of Commerce (CIBC), which is known to have made an informal investment proposal to AIB, indicated yesterday that is considering acquisitions outside Canada that can be funded from excess capital generated by its main businesses.

Its chief executive, Gerald McCaughey, said there were opportunities in “many jurisdictions that we have and are looking at”.

While not specifying an opportunity, he said CIBC was more interested in buying assets instead of institutions in the US or making investments with partners.

AIB said this month it had received an approach from an unidentified third party seeking to take a minority stake, but said the talks were conditional on the outcome of the Nama process. – (Additional reporting, Bloomberg)