TAOISEACH BRIAN Cowen reaffirmed the Government’s determination to do what is required in the interests of the country after the Cabinet approved the draft legislation on the National Asset Management Agency (Nama).
Mr Cowen said that after the publication of the Bill and the recent McCarthy report the Government would be open to the reaction of other parties as it considered how it would implement tough decisions in a fair manner that would protect the most vulnerable.
“I believe that social partnership with the stakeholders is the way we can move forward,” said Mr Cowen.
He insisted that the Government had already taken some very tough decisions but had always been fair in the way it had gone about its task.
The Cabinet yesterday discussed the options facing it in the autumn as well as the Nama Bill at its last meeting before the summer break. It will meet again on August 26th.
The highly complex draft Nama legislation, which runs to 150 pages and contains more than 200 sections, will be published on the Department of Finance website tomorrow. A final version of the Bill will be published at the end of August before it goes to the Dáil.
It has emerged that the British treasury expressed serious concern to the Irish authorities over the past month about the potentially damaging impact of the agency on the property market in the UK.
They feared that a valuation of assets at current “fire sale” prices could have triggered a serious decline in the relatively stable property market in the UK.
Close to €22 billion of the assets being taken over by Nama is in the UK, mainly in London and in Northern Ireland. Another €5 billion relates to the rest of the world with €3 billion of that in the United States.
At the recent meeting of the North-South Ministerial Council in Dublin the Northern Ireland First Minister, Peter Robinson, expressed serious concern about the impact of Nama on the North’s property market. He was concerned it might sell property assets quickly and at greatly reduced prices, and that this would affect property values in the North.
The administration in the North, and treasury officials in London, have been reassured that the agency’s strategy will be to value assets on a long-term basis rather than on current values.
Government sources said yesterday the market value of the assets being taken over by Nama will be based on the underlying collateral, adjusted for the longer- term economic value in line with EU guidelines. This means that the value of the assets will not be calculated on the current very low property prices but will be calculated on a long-term valuation model. The legislation will not spell out a standard specific adjustment to the value of the “bad loans” as it will vary on a case-to-case basis.
“There will obviously be a big difference in the potential write-down on loans for property development in Leitrim or Roscommon by comparison with those for prime sites in Dublin,” said the Government source.
