National Asset Management Agency
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| State Agency of the National Treasury Management Agency overview | |
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| Formed | 21 December 2009 |
| Jurisdiction | Ireland |
| Headquarters | Treasury Building, Grand Canal Street, Dublin 2 |
| Employees | 200 |
| Annual budget | €240 million estimated cost per annum |
| State Agency of the National Treasury Management Agency executive |
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| Website | www |
The National Asset Management Agency (NAMA; Irish: Gníomhaireacht Náisiúnta um Bhainistíocht Sócmhainní) is a body created by the government of Ireland in late 2009, in response to the Irish financial crisis and the deflation of the Irish property bubble.
NAMA functions as a bad bank, acquiring property development loans from Irish banks in return for government purple debts bonds, ostensibly with a view to improving the availability of credit in the Irish economy. The original book value of these loans was €77 billion (comprising €68bn for the original loans and €9bn rolled up interest) and the original asset values to which the loans related was €88bn with there being an average Loan To Value of 77% and the current market value is estimated at €47 billion. NAMA is controversial, with politicians (who were in opposition at the time of its formation) and some economists criticising the approach, including Nobel Prize-winning economist Joseph Stiglitz who has said that the Irish government is "squandering" public money with its plan to bail out the banks.
One year after NAMA's establishment the Irish government was compelled for other but similar reasons to seek a European Union-International Monetary Fund bailout in November 2010, the outcome of which will have considerable effects on NAMA's future operations.
As a result of the collapse of the Irish property market, Irish banks have property development loan assets secured on property with a market value significantly below the amount owed. Many of the loans are now non-performing due to debtors experiencing acute financial difficulties. Both factors have led to a sharp drop in the value of these loan assets.
If the banks were to recognise the true value of these loans on their balance sheets, they would no longer meet their statutory capital requirements. The banks therefore need to raise further capital but, given the uncertainty around the true value of their assets, their stock is in too little demand for a general share issuance to be a viable option.
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Wikipedia