The National Asset Management Agency (NAMA), the state-run bad-bank of Ireland, which curtailed the Irish banking crisis quickly and effectively by buying all toxic loans owned by banks in the mainstream banking system. Now that things are starting to improve in Ireland – it is hitting the fiscal targets set by Brussels, has returned to modest economic growth and saw the 7th highest level of foreign direct investment in Europe – NAMA is setting about its next phase, investment.
The bank has just announced that it will invest 2 billion Euros minimum in building projects. Frank Daly, chairman of the bank said the move was due to anticipated supply shortages, and could create 35,000 jobs, 25,000 of which would be in the beleaguered construction industry. Daly said:
"Subject to suitable opportunities arising, we plan to invest at least €2bn in Ireland in development capital in order to preserve, enhance and complete commercial and residential projects in Ireland over the period to 2016.
"This includes the completion of properties which are currently under development but, more importantly, it means the development of land in anticipation of future supply shortages and demand."
NAMA has taken a lot of stick because of the amount of tax payer money it spent buying bad loans, but a consensus is now forming behind the bank as being the right path for Ireland to take, and one that perhaps Spain should have followed.
While Spain continues to worry investors with uncertainty about potential for hidden toxicity in its property loans sector, Ireland's approach made honesty the best policy for the banks, and while it did have to spend a lot, at least there is safety in that the full extent of the problem was aired and is being dealt with accordingly – something that investors can and are getting behind.
- Wednesday 13 June 2012