Allied Irish Banks intends to participate in the National Asset Management Agency (NAMA) bank asset acquisition programme in Ireland. Under the NAMA Programme, NAMA will acquire eligible bank assets from AIB, which will include performing and non-performing loans. NAMA has not yet identified which of AIB’s loans it intends to acquire under the NAMA Programme.
AIB estimates that NAMA will acquire from AIB land and development loans and certain associated loans with an aggregate value of approximately EUR24.2 billion on a gross loan basis. AIB intends to retain the bonds and subordinated bonds and use them as a source of further liquidity to support its business activities.
Participation in the NAMA Programme will enable AIB to sell certain land and development loans and associated loans to NAMA and thereby determine its losses associated with those loans. It is expected that this will increase market certainty because the NAMA assets in general are perceived to carry a higher risk than other classes of assets on the group’s balance sheet.
The board is of the opinion that participation by AIB in the NAMA Programme will underpin market confidence in AIB by removing a key element of uncertainty and will generate the following benefits, it enables AIB to gain greater access to wholesale funding as counterparties become more comfortable with the company’s risk profile and improves customer confidence in AIB.
NAMA will also supports the company in building a larger more stable deposit base. It also enhances the company’s ability to access capital, pursue the its strategy and improve the resilience of the group’s balance sheet.
The acquisition by NAMA of all of the NAMA Assets from all of the participating institutions will be completed by July 2010 with the first tranche expected to transfer in January 2010, subject to approval by shareholders.
