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This is now up on the Department of Finance site. Here are the links and some extracts from the Minister's statement.
Making matters rather more uncertain the government has already said it will be amending this draft when it brings it into the Dáil.
http://www.finance.gov.ie/documents/...103drftleg.pdf
Explanatory note is here
http://www.finance.gov.ie/documents/memoexpnama.pdf
Minister's statement is here
http://www.finance.gov.ie/viewdoc.asp?DocID=5875
From the statement:
How will NAMA work?
Step 1
NAMA will buy loans from the participating banks at a significant discount – these loans will be from the riskiest part of the bank portfolios, the land and development loans, as well as certain associated loans.
This will take these riskier loan classes away from the balance sheets of the banks concerned and make the banks safer and more secure for depositors and investors.
Step 2
NAMA will pay the banks concerned for these loans. It will do so on the basis of valuations carried out by experts and in accordance with pre-defined valuation methodology. The banks’ book value of the loans will not be a factor and the banks will have to recognise a loss on their books at the time of the transfer for the difference between the book value and the amount paid by NAMA.
The payment for the loans will be in the form of Government securities and/or guaranteed securities, and the principles of the valuation methodology are set out in the draft legislation and the Minister will be making detailed regulations based on these principles. The valuation methodology along with all other State aid aspects of the NAMA initiative will be subject to approval of the EU commission.
This method of payment will ease pressures on the banks arising from the tighter liquidity conditions that have prevailed for the past year or so, giving them access to cash or near-cash assets in place of the much less liquid property loan assets they had before. Again, this will make for more stable and secure financial institutions, better able to lend and support the domestic economy
Step 3
NAMA will manage these loans, either directly or indirectly, so as to obtain the best achievable return from them. In the meanwhile, it will collect interest due and pursue debts so as to ensure its own income stream and to recoup the Government investment over time.
NAMA in effect puts itself in the place of the bank that originated the loan, and will have all the same rights to pursue debts, where necessary. Borrowers who continue to meet their contractual obligations, of course, have no reason to worry – their rights are fully protected.
....
More on valuation a little later in the statement:
The principles of the valuation methodology are set out in the draft legislation and the Minister will be making detailed regulations based on these principles. The methodology will recognise that the current market for property backed loans and the underlying assets are very illiquid and will not require the banks to accept ‘fire-sale’ values. But nor will it be guided in its pricing by the property prices and expectations regarding property prices that underpinned the original lending decision. It will aim to set a reasonable price having regard to a longer term perspective on the property market. The valuation methodology and indeed the scheme as a whole will require EU State Aid approval.
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Originally Posted by He3
