Shares Rise As NAMA Debate Continues

The market has reacted positively to the ongoing debate on the National Asset Management Agency, (NAMA).

This morning, shares in Irish banks rose in early trading with AIB up 29% in the first 20 minutes of trade in Dublin this morning, to stand at €3.40.

Bank of Ireland shares also gained rising almost 17% to stand at €3.35 as investors reacted to the NAMA plan.

Shares in Bank of Ireland and AIB also made significant gains on US stock markets.

Today, the Taoiseach Brian Cowen told the Dáil that "not passing the legislation to establish the National Asset Management Agency would condemn the Irish economy to a period of stagnation and isolation".

Speaking during the resumed Dáil debate on NAMA, which will buy an estimated €54bn worth of impaired property loans from the banks, Mr Cowen said NAMA was the only answer to the economic crisis.

He said that the assets purchased by NAMA have to improve in value by 10% (on current market values) over ten years to break even and he said the benefits of that will accrue to the taxpayer.

However, also speaking in the Dáil, Fine Gael Leader Enda Kenny described NAMA as the 'economics of the madhouse'.

Deputy Kenny told the Green party that if they vote with the Government in favour of NAMA, then they have become members of the privileged elite and lost touch with the people of Ireland.

He suggested that share prices in banks have risen significantly, because NAMA is a great deal for the banks "but not for the taxpayer".

In addition, Deputy Gilmore also questioned the Government's assumption that the value of properties would increase by 10% over the next ten years.

He said that figure was based on analysis of the rental sector, a sector which is not normal, because he said commercial rents cannot be revised downward, so they present a warped picture.

Government figures show the NAMA plan will require significant capital injections for some financial institutions.

Last night AIB said it would require an additional €2bn of capital.

It will try to raise that money by selling assets or raising it from investors, otherwise the capital will have come from the State.

Yesterday Minister for Finance Brian Lenihan said most of the loans will have been valued and transferred to NAMA by the middle of next year.

€54bn is to be paid for loans with a book value of €77bn - a discount of almost 30%.

(BMcC/GK)