How NAMA works

How NAMA works
The National Asset Management Agency Bill in its current format applies to the six financial institutions which were covered by the Irish government's deposit guarantee scheme. Those institutions were Bank of Ireland, Allied Irish Banks, Anglo Irish Bank, EBS, Permanent TSB and Irish Nationwide. Other institutions, such as Ulster Bank, which are not covered may choose to join the scheme.[9]

Then-Minister for Finance, Brian Lenihan said the banks would have to assume significant losses when the loans, largely made to property developers, are removed from their books. If such losses resulted in the banks needing more capital, then the government would insist on taking an equity stake in the lenders.[10] Economist Peter Bacon, who was appointed by the government to advise on solutions to the banking crisis, said the new agency had potential to bring a better economic solution to the banking crisis and was preferable to nationalising the banks.[11]

The assets were to be purchased by using government bonds, which led to a significant increase in Ireland's gross national debt.[10]

The Bill provided for NAMA to be established on a statutory basis, as a separate body corporate with its own Board appointed by the Minister for Finance and with management services provided by the National Treasury Management Agency.[12][13]

The Bill envisaged that NAMA would arrange and supervise the identification and valuation of property-backed loans on the books of qualifying financial institutions in Ireland, but would delegate the purchase and management of these loans to a separately created Special Purpose Vehicle (SPV).[14]

Master Special Purpose Vehicle

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