EUROPE:COMPETITION commissioner Neelie Kroes has promised to protect the interests of Irish taxpayers when Brussels considers whether to approve the creation of the National Asset Management Agency (Nama).
“We have to ensure that there is a fair level playing field; that it is not using more taxpayers’ money than is strictly needed, and that there is a viable future for the banks,” said Mr Kroes, who held talks with Minister for Finance Brian Lenihan on Nama when she visited Ireland in July.
She told The Irish Timesyesterday that the Nama plan would have to satisfy the conditions laid down in the European Commission's guidelines for providing state aid to banks. She said her officials were already discussing the outlines of the proposal, and would follow its progression through parliament before she would be able to make a final decision.
“I’m absolutely determined to find a way in which we can come to a conclusion the sooner the better,” said Ms Kroes, who under EU law has the power to force the Government to amend its bank stabilisation proposal.
The commission guidelines published in July set important criteria for governments to follow when providing restructuring aid to banks – aided banks must be made viable in the long-term without further state support, their owners must carry a fair burden of the restructuring costs and measures must be taken to limit distortions of competition in the single market.
Commission officials are expected to examine the final shape of the Nama legislation to ensure that the State is not overpaying for the toxic assets. This scenario would see taxpayers take on an unnecessary burden and potentially provide Irish banks with a competitive advantage over rivals. The officials will also seek to ensure that Irish banks are not being given preferential access to Nama when compared to foreign-owned banks with Irish arms.
Gaining EU approval for “bad bank” proposals is not a given. This week the European Commission extended a review of a €22 billion loan portfolio guarantee between ING bank and the Dutch government, saying the state may have paid too much.
The Dutch government is due to receive 80 per cent of the cash generated from the portfolio, which it took on at a 10 per cent discount to par value. In a statement on Tuesday the commission said it felt the deal unduly favoured ING bank. “The commission continues to have doubts that the price paid by the Dutch government, equivalent to a transfer price of 90 percent of the face value, is justified.”
