FINE GAEL has lodged a formal objection to the National Asset Management Agency with the European Commission, a move that represents a last-ditch effort to scupper the Government’s “bad bank” scheme.
As officials in the commission’s competition division examine the Government’s application under State aid rules to proceed with the plan, the main Opposition party has written to Brussels setting out a range of concerns.
The complaint was prepared by Senator Eugene Regan, who said he was acting on behalf of the party when making a 20-page submission to Brussels last month.
Mr Regan said yesterday that he will be meeting EU officials in connection with his complaint, which said that the nationalised Anglo Irish Bank should not take part in Nama as it would be better to wind down the institution.
“We’ll take into consideration any comment relevant to the process of assessment,” said a commission spokesman when asked about the status of objections to state aid applications.
Arguing that the Government had presented EU approval of Nama as a formality, Mr Regan urged the commission to examine critically the rescue scheme for banks with a view to limiting its scale and scope to minimise its costs to taxpayers and the State.
His submission said the manner in which it is proposed to implement the Nama plan “is non-compliant with EU state aid rules in general and the commission’s guidelines on the treatment of impaired assets” in particular.
“While the choice of asset relief scheme is decided by member states, the scale and scope of the Nama project to be undertaken by the Irish Government, as set out in the draft Nama business plan, is entirely disproportionate to the size of the Irish economy and budgetary resources and threatens the financial viability of the State itself.”
Mr Regan also said the scheme flouts key guidelines issued by the European Central Bank, including those which say that transparency in the valuation of assets “is of the essence” and that “adequate risk-sharing is a necessary element” to minimise the cost to Government.
Mr Regan said the scheme suffered from a lack of transparency, adding that “inadequate burden-sharing” meant practically all risk was transferred to the State. Suggesting the scheme would have a “negative impact” on the public finances due to its size, he also criticised the failure to conduct valuations and the “unrealistic assumptions” underlying hypothesised valuations.
“Assumptions regarding equity in loan portfolios are suspect as these are cross-collateralised to other assets and there are unenforceable performance guarantees,” he wrote.
