Separate firms to manage loans 'a con'
LEVIES COULD be imposed on individual financial institutions with the Government’s introduction of individual companies to deal with the loan books of each bank, according to Fine Gael finance spokesman Richard Bruton.
He was speaking about the introduction by Minister for Finance Brian Lenihan of “Special Purpose Vehicles” (SPVs), or firms to work on each bank’s loans.
The Opposition described it as a “fundamental shift” in the legislation to create the National Asset Management Agency (Nama), and as a “con job”.
But Minister for Finance Brian Lenihan said the SPV “is an essential device for ensuring that our national debt is off balance sheet in Eurostat terms”.
The Minister pointed to a model used by the French system. “It’s the ownership structure of the French model which kept the French model off balance sheet for European purposes. And the European statistics office has issued a similar indication in relation to this model in this context.”
He said a master SPV may “create a number of subsidiaries each of which will be responsible for the loan book of an individual financial institution”, but any subsidiary “will be 100 per cent owned by the master SPV”.
During the committee-stage of the Bill to create Nama, Mr Bruton said there were “profound questions” to be asked about this move.
He had understood “the Minister’s whole approach to Nama was that once these assets were acquired they would pursue them in the best overall interest that there wouldn’t be consideration of one institution’s assets over another. But now we find quite surprisingly that you’re talking about individual SPVs for the loan books of individual banks. If this is the direction we’re going then it would seem that you could have bank levies that would be related to the individual losses that occurred because you’re going to have separate companies.”
Mr Lenihan had opposed such levies.
He added: “I would buy into some of what you’re saying about SPVs if I thought you would agree to some of the later amendments in regard to the role of the Comptroller Auditor General or some equivalent authoritative body being able to investigate the establishment of Nama and report back to a strong Oireachtas committee.”
Labour spokeswoman Joan Burton said it was extraordinary the Nama Bill could have got as far as committee stage without the SPV architecture being set out in detail. The Dáil was not told about the scheme, she said, even though Government officials were seeking an opinion on it in July from Eurostat. This issue was fundamental to the day-to-day running of a Nama, and it was extraordinary that it could be introduced at such a late stage.
Seán Barrett (FG) said, “I think there’s a con job going on here. This is a smoke screen. This is to prevent the Green Party from suddenly realising that they are being conned.” Fine Gael deputy finance spokesman Kieran O’Donnell accused the Minister of being “vague and elusive. You are now going to create a daddy SPV and a load of baby SPVs. But who’s going to be driving?” Andrew Doyle (FG) said “surely to God this is so fundamental to the way Nama is operated, it’s worthy of a clear definition on its own”.