Ireland setup NAMA to allow its banks to move on from their bad loan problems. The government bought loans from the banks, assessing their value on a loan-by-loan basis. Although NAMA was kept off the country’s balance sheet, the state’s guarantee of the agency’s bonds had a negative impact on its credit quality. NAMA succeeded in allowing banks to resume new lending and some argue it should have been extended.
Key learning objectives:
Explain why NAMA was established
Explain the criticisms of the loan-by-loan valuation approach
Describe NAMA’s legacy