Banking sector welcomes decision to set up asset agency

 

BANKS' REACTION:THE DECISION to create a National Asset Management Agency (Nama) was welcomed by representatives from the sector yesterday, in sharp contrast to Opposition politicians.

A spokesman for AIB said it welcomed the support the Government was giving the banking sector, but added that there was a lot of detail that had to be worked through.

A spokesman for Bank of Ireland said it welcomed the announcement as it did the decision to extend the Government guarantee of bank liabilities. In his Budget speech, Minister for Finance Brian Lenihan said the Government was to put a State guarantee in place for the future issuance of debt securities with a maturity of up to five years.

“Bank of Ireland will actively engage with the NTMA and the Government to explore how these initiatives will apply to Bank of Ireland and assist in continuing to support customers, aiding economic recovery and, over time, rebuilding value for stockholders.”

Pat McArdle, economist with Ulster Bank, said the announcement was welcome “but does not answer any of the big issues which are, what will the price be and how will this affect bank capital, two issues which have bedevilled such schemes in other countries.”

Turlough O’Sullivan of employers’ group Ibec said that, on balance, it supported “the establishment of a National Asset Management Agency and believes the measure will further stabilise the banking sector and will help re-establish lending to businesses and households. It is critical that this is done in such a way that taxpayers’ interests are protected”.

Isme, which represents small and medium-sized businesses, said the establishment of the agency was a welcome development if it stabilised the sector and re-established lending to businesses. Chambers Ireland said the agency, if managed correctly, could underpin the national banking system and deliver enhanced credit flows at reasonable terms for businesses and the economy.

Joe Carr, managing partner with business advisers Mazars, said the Government was putting all its “scarce eggs” into this one intervention basket. “They need to do much more to explain why this sector is so important and how it will benefit both business and the consumer. This is a big decision and needs to work.”

He said the only area of the economy where the State was intervening was banking, and questioned whether more State intervention was not required. “It is clear that the Government is following a strategy which assumes that the free market will lead us into economic recovery.”

Siptu president Jack O’Connor said the agency “represents the socialisation of the toxic debt accumulated by the banks through reckless lending and contrasts sharply with the imposition of the 2 per cent levy and the doubling of the health levies on middle and lower income families”.