ECB Opinion on NAMA

Time Magazine

MrMicra wrote: »

Will the European Commission guidance on State Aid to Banks have an impact on the willingness of the ECB to lend us money? NAMA as presently evisioned is not in compliance with this guidance.

AFAIK State Aid only becomes a concern when it has competition implications, i.e. where it is to the advantage of one competitor in a business over another. Article 87 states "Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market."

It would seem that a general bail-out of "the banking sector" fails to favour certain undertakings.

Additionally, EC88 has the get-out clause that "... aid which that State is granting or intends to grant shall be considered to be compatible with the common market ... if such a decision is justified by exceptional circumstances."

I'm pretty sure that "we're going to lose our financial sector if we don't do this" would count as an exceptional circumstance.

redarmyblues

Would a recapitalised Irish banking sector lend to Irish Businesses? I mean capital returns from a country whose government must tax more and spend less will shrink in line with spending. I know I would lend to a customer who was investing in the UK before I would lend to a customer who was investing here.

MrMicra

The_Economist wrote:

AFAIK State Aid only becomes a concern when it has competition implications,

Does the ECB's concern that the NAMA scheme should comply with the commission guidance imply that they might not lend us money if we do not comply.

Excuse my ignorance but is there a legal relationship between the ECB and the commission?

many thanks to the economist and eonomist monetaire for their help.

ECB wrote:

1.6 The Minister may make regulations providing for adjustment factors to be taken into account in determining the long-term economic value of a bank asset and the property comprised in the security for a credit facility, having regard to: (a) Community State aid rules and any relevant Commission guidance

The Commission has clarified how states may legally intervene to help their banking sectors. The Comission has clarified what is acceptable state aid in the current crisis.

The full document as a PDF:
http://tinyurl.com/lgaexo

The full document:
http://tinyurl.com/mpf7yl

The Press Release:
http://tinyurl.com/meq8ab

If you look at the press release it requires:
"full transparency and disclosure of impairments, which has to be done prior to government intervention" this has not taken place at all the level of impairment is a commercial secret and it will be an offense under the proposed legislation to reveal this information.

The commission do allow for:
"valuation based on real economic value (rather than market value), implemented by independent experts and certified by bank supervisors"

Part of the NAMA bill at the moment explicitly keeps the mechanism for valuation of impairments secret. This provision will be illegal.

The commission also advise:
"validation by the Commission of the valuation of the assets"
"adequate remuneration for the State, at least equivalent to the remuneration of State capital and coverage of the losses incurred from the valuation of the assets at real-economic-value by the bank benefiting from the scheme"





This is their advice as to the current legal position.

gar32

gar32 wrote: »

Look the ECB are just in it for the interest they get from all the euro countries. The ECB out of political hands because there is too much money to be made by the super rich of this world. We need to stop the ECB from making money off everyone’s backs and the Euro should be printed in direct relation to the economy. Then the country could use any tax for helping the people not paying national debt which I believe is going to be a long time benign paid off if something is not do fast.

Regards Gar32

Seems like the whole show of the Euro ECB is on the rocks. Lets see if France & Germany can get everyone else out of this one