National Asset Management Agency Bill 2009

Committee Stage Amendments

The Minister for Finance announced that the Government on Thursday approved a number of amendments to the National Asset Management Agency Bill to be introduced at Committee Stage in the Dail next week. The Minister stated –

‘I welcome the passing of Second Stage of the NAMA Bill in the Dáil on Tuesday. The Government now proposes to improve the text of the Bill to ensure that NAMA can achieve its objectives of stabilising the banking system and supporting economic recovery.’

The bulk of the amendments are technical changes but some are more significant. The main amendments are:

• As signalled in the Minister’s Second Stage speech, the Bill will be amended to ensure that the maximum amount to be paid to a participating institution in subordinated debt is 5% of the aggregate amount due to that institution.
• A new provision will require borrowers to co-operate and act in good faith with participating institutions during the preparation for the transfer of loans. This should improve the accuracy of information provided and the efficiency of the transfer process.
• The issuance of securities in respect of acquisition by NAMA of bank assets is limited to €54 billion. This can be subsequently amended by a Dail resolution.
• The Bill will be amended to require NAMA to produce a code of practice setting out how it will engage and interact with non-participating institutions. As with other codes this will be subject to Ministerial approval.
• Amendments to the valuation methodology sections will bring greater clarity to the issues to be addressed in the draft valuation regulations.
• The section dealing with the valuation panel will be amended so that the Minister can only refer a valuation assessment back to the valuation panel where he considers the valuation is too high.

Consultations with the EU Commission are ongoing. In addition the Government has decided that some further measures will be addressed at Report Stage:

• A proposal on the taxation of windfall gains on re-zoned land has been approved and a provision on  this will also be introduced at Report Stage

• A provision will also be introduced to ensure the proposed future levy, in the event that NAMA makes a loss, is put on a statutory basis.

• Section 169 which restricts borrowers who default from buying assets from NAMA will be amended to clarify the scope of the provision.

The Government is also taking the opportunity in the NAMA Bill to introduce changes in relation to Building Societies and to the Central Bank.

An amendment to the Building Societies Act 1989 provides that if the Minister wished to provide capital to a Society, it in turn could issue a special share to the Minister for Finance in return for the capital investment.  The amendment also provides that the Minister, where he holds such a share, will have certain powers such as appointing directors, blocking or approving resolutions etc. These powers are to protect his, and the taxpayers’, interests. The issue of any special share would have to be approved by a society’s members.

The amendments to the Central Bank Act 1942 relate to the membership of the Central Bank Board and the Regulatory Authority and are designed to enable the membership of the new unitary Central Bank of Ireland to be put in place so that the process of reform can be underway in advance of the enactment of comprehensive legislation to implement the reform of the financial regulatory structures.