By AFP | Feb 27, 2010
EU approves giant Irish property clean-up scheme
European competition regulators on Friday approved Irish moves to park a nominal 80 billion euros' worth of dubious land and property investments in a state vehicle.
The estimated purchase price is 54 billion euros (73.5 billion dollars), which the commission deemed an acceptable level of state aid under rules allowing EU countries to "remedy a serious disturbance" in markets.
"The European Commission has approved, under EU state aid rules, the establishment of the National Asset Management Agency (NAMA), an impaired asset relief scheme for financial institutions in Ireland," said a statement from Brussels.
"Ireland's financial sector has been one of the most affected by the global financial crisis in Europe and the burst of the Irish real estate bubble has only compounded the problems," added Competition Commissioner Joaquin Almunia.
Almunia described the scheme as "an important step" towards restoring "a normal and responsible functioning of the market.
"Five institutions are participating: Anglo Irish Bank, Allied Irish Bank, Bank of Ireland, Irish National Building Society and Educational Building Society.
This week, the Irish government took a 15.7-percent stake in Bank of Ireland as Finance Minister Brian Lenihan warned that state ownership may be the only way of making the banking system viable.
The BoI received a 3.5-billion-euro bailout from the Irish government last year, as the nation's banking sector was ravaged by the global financial crisis, a domestic property market meltdown and a deep recession.
The Irish state already controlled 25 percent of BoI through special preference shares, which can be converted into ordinary shares if the capitalisation investment is not reimbursed.
Other International News:
|