Concern among companies in the North about implications of Nama

BELFAST BRIEFING:A real worry for many Northern Ireland businesses revolves around future financing, writes FRANCESS McDONNELL

NORTHERN IRELAND’S tried and tested tea and biscuits approach to doing business may yet hold the key to unlocking what the “Nama effect” will be in the North.

It is rare for a business meeting of any kind in Northern Ireland to start without refreshments and at the very least a modest plate of biscuits. So it is fair to say senior members from the SDLP and the Institute of Directors (IoD) in the North had certain expectations when they travelled down to meet Brian Lenihan last week in Dublin.

The Minister for Finance may not have hosted a tea party as such but, according to the SDLP’s deputy leader and South Belfast MP Dr Alastair McDonnell, he definitely served up the right message.

Dr McDonnell said Lenihan’s “constructive” approach helped provide some reassurance on key issues now facing businesses and the North’s economy in general, not least of which is Nama.

There is concern among companies in the North about what implication the assets agency may have. Some 35 per cent of business banking in Northern Ireland is controlled by Irish banks and, according to Joanne Stuart, chairwoman of the IoD, there are real anxieties about the fact “both performing and non-performing loans” may be transferred to Nama.

“There a widespread misunderstanding among some businesses that Nama will deal only with toxic assets. We understand this is not going to be the case and the issue of non-performing and performing loans is one aspect which we need clarification on” Stuart said.

The SDLP and IoD delegation have asked Lenihan to provide clarification on a number of key issues, aside from the obvious possibility of a firesale of properties in the North.

“There are important questions for Northern Ireland companies surrounding credit rating if, for example, their loans are transferred. There is also the issue of the business relationship that a company may have developed with a bank. What happens to that if their loan is suddenly transferred to Nama?” Stuart said.

A real worry for many Northern Ireland businesses revolves around future financing and in particular obtaining or extending loan facilities. Stuart said many firms are struggling to secure the necessary finance to keep their business running.

The IoD and the SDLP asked the Minister to look at how banks which operate in Northern Ireland and that are now in large part owned by the Irish Government might provide real assistance to firms in the North.

The decision by Brian Lenihan and his officials to host a meeting with the IoD and the SDLP is an important first step.

The meeting would not have taken place in the first place if it had not been for the efforts of Dr McDonnell. Dr McDonnell personally believes Northern Ireland is facing a do or die situation in relation to banks. He believes decisions made in Dublin as well as London have a direct impact on the daily lives of everyone living in the North.

“We’re caught in no man’s land between the Irish and British banking system and we have got to be pro-active. Bank of Ireland and Allied Irish Banks have considerable property assets in Northern Ireland.

“But it is not just the property equation which is a factor here. If banks retrench back to Dublin or to London for example what impact does that have on our economy? If they only retain large corporate clients and don’t cater for smaller businesses then that has serious implications for the Northern Ireland economy.”