Northern Ireland business organisations have expressed concern that trading companies could find themselves drawn into the Republic’s National Asset Management Agency (NAMA).
NAMA was set up to take over toxic loans of Irish banks involved in land and property development.
It will acquire around €77bn (£70bn) in loans — around €5bn from Northern Ireland — in return for €54bn of government bonds, with a view to improving the availability of credit in the Irish economy.
But the Business Alliance — made up of the CBI, Centre for Competitiveness, IoD and the NI Chamber of Commerce — said it has concerns about a number of potential issues for local businesses.
Among the areas of concern is the fact that companies may be drawn into NAMA even though they have performing loans and pose minimal or no risk to the financial institution.
“Many businesses are not aware that approximately 40% of loans being transferred to NAMA will be performing.
“This could potentially be damaging to their reputation if NAMA continues to be perceived as a holder of solely non-performing loans,” the group said.
“Trading companies who find themselves drawn into NAMA could also find that their ability to access future project or working capital finance is impaired — at this stage it is unclear how NAMA or their existing bank will address this issue,” it said.
NAMA has begun transferring selected eligible bank loans from participating institutions — including Anglo Irish Bank, Bank of Ireland and First Trust/Allied Irish Bank, which have operations in Northern Ireland.
Most of the debate about NAMA has been in regard to the impact on banks, in particular the consequences of a ‘fire sale’ of the £4.6bn assets which are located in Northern Ireland and are eligible for transfer to NAMA.
The Business Alliance welcomes the establishment of a Northern Ireland advisory committee, which will be chaired by NAMA board member Peter Stewart.
Finance Minister Sammy Wilson has agreed with Irish Finance Minister Brian Lenihan that some Northern Ireland appointees will sit on the committee.
Speaking on behalf of the Business Alliance, the IoD’s Joanne Stuart, said “There is a major communication exercise to be undertaken to inform companies in |Northern Ireland of the implications of NAMA.
“Many companies might find they are part of NAMA despite continuing to trade well and without any non-performing loans.”