Page last updated at 05:57 GMT, Wednesday, 16 September 2009 06:57 UK

What's in a Nama?

Nama protest in Dublin
There have been protests in Dublin against the proposed Nama legislation

By Shane Harrison
BBC Northern Ireland Dublin correspondent

A piece of legislation is going through the Dail that could affect the value of your home in Northern Ireland.

The bill is setting up an agency called Nama, the National Assets Management Agency.

Funded by the taxpayer it will buy up to 90bn euros of good and bad loans at a discount from banks in the Republic of Ireland and then release those assets, including an estimated £5bn worth of property owned in Northern Ireland, back into the market place.

Close to the border just outside Dundalk there is an unfinished housing estate, protected by fencing, that is a symbol to many of the sudden death of the Celtic Tiger.

Property was at the heart of the Republic's economic boom and now its bust.

Banks lent huge amounts to developers but their assets - their houses and lands - have now plunged in value and the banks are in trouble, lending less and less money.

So business, finding it hard to get access to capital, is suffering.

Simon Carswell the financial correspondent of the Irish Times said the hope is that Nama will encourage the banks to resume lending.

"What Nama will do over a period of between seven and ten years is: it will sit and hold those assets, manage them, develop the un-completed houses and sell them over a period of time so that it can re-coup its money," he said.

Debt

The Nama proposal is extremely controversial in the Republic.

The opposition parties reject it and polls suggest the public doesn't like the idea either.

Many believe Nama is an Irish tax-payers' bail-out of the banks and the property developers that could saddle future Irish generations with long term debt.

Not so, says the government.

It claims the the property developers will be the big losers and the banks will have to share the financial risk.

It is estimated Nama may end up controlling up to £5bn worth of property in Northern Ireland.

Something that could have huge implications for the price of homes and development land.

Everyone should be worried, but we're in government. We are competent in trying to deal with this
Gerry Kelly
Sinn Fein

How Nama handles that portfolio worries both DUP and Sinn Fein ministers who both want a say in how the agency deals with its toxic asset problem north of the border.

Gerry Kelly and Sammy Wilson have both been in Dublin for meeting with the Irish Finance minister, Brian Lenihan.

"There are going to be implications for property and property prices in Northern Ireland," said Northern Ireland Finance Minister Sammy Wilson.

"How it's handled of course will have an impact as well.

"And if there's an attempt to realise some of those assets, and the money from them, very quickly and so flooding the market it could have dramatic short term effects on the market and that's something which I'm sure the finance minister here (in the Republic of Ireland) will want to avoid."

"Everyone should be worried, but we're in government. We are competent in trying to deal with this," said Stormont Junior Minister Gerry Kelly.

"It takes an all-Ireland approach. That's what the North South Ministerial Council is all about. Sinn Fein pushed for the finance ministers to meet.

"We're glad that they have met so watch this space but it needs an all-Ireland approach and if ever there was an argument for that the situation we're in at the moment argues that most forcefully."

A firesale of Northern Ireland property is unlikely - it wouldn't make commercial sense.

Equally unlikely is Dublin allowing Belfast have a direct input into Nama decisions.

But that is not to say the Republic's authorities will not be mindful of concerns north of the border.



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SEE ALSO
Nama Q & A
16 Sep 09 |  Northern Ireland
Irish government bails out banks
16 Sep 09 |  Europe
No NI firesale over toxic bank
14 Sep 09 |  Northern Ireland


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