Correspondent's Choice

The following story about bad Irish banks was published by EurActiv on 23rd February 2010.

Ireland’s plans to establish a new agency to buy up bad loans from Irish banks are in limbo while the EU considers whether the scheme breaks state aid rules.

A spokesperson for the European Commission told EurActiv that the EU executive is examining Ireland’s 54 billion euro National Asset Management Agency (NAMA) and will announce its decision before the end of the week.

In the meantime, the transfer of toxic loans to the new agency has been put on hold, according to Dublin.

The Commission approved a German ‘asset-relief scheme’ in May 2009 and adopted a Communication on the Treatment of Impaired Assets in spring 2009.

“Asset relief schemes provide a window of opportunity for banks to offload assets impaired by the crisis to eliminate uncertainty regarding the value of their balance sheet and, more importantly, to be able to continue performing their most important task, which is to lend to the economy,” the spokesperson said.

However, it emerged earlier this month that the International Monetary Fund (IMF) had told the Irish government that the NAMA scheme may not boost lending to households and small businesses.

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