Finance Minister Brian Lenihan welcomed this morning's decision by the European Commission to approve the National Asset Management Agency.
He said the process of transferring the biggest property-linked loans from the banks would begin shortly. This would initially cover loans with an original value of €17 billion from the top ten borrowers.
NAMA has told the Minister the transfer of these loans is likely to occur in March. It has also told the Minister it is on target to complete the process by the final quarter of this year.
The European Commission said NAMA, which will take on loans from five Irish financial institutions, was in line with EU state aid rules. European Competition Commissioner Joaquin Almunia said the measure was the key to cleaning up Irish banks' balance sheets.
Read the full commission statement here
Watch the commission announcement here
Five institutions will participate in NAMA: Anglo Irish Bank, AIB, Bank of Ireland, Irish Nationwide and EBS. NAMA is expected to buy loans with a nominal value of around €80 billion for an estimated price of €54 billion.
'This is an important step towards the overall restructuring of the sector and its return to a normal and responsible functioning of the market,' Mr Almunia said.
NAMA will look at prices paid for assets
The European Commission pointed out that today's approval concerned only the NAMA scheme, and that it would assess the transfer prices of the assets being transferred when it was notified by the Irish authorities. 'These individual reviews will include a claw back mechanism in case of excess payments,' it said.
The Commission added that it was relying on commitments from Ireland to ensure that NAMA did not lead to distortions of competition through the use of some of the specific powers, rights and exemptions granted in the NAMA Act.
'The Commission will also review individual restructuring plans to ensure that the participation of the financial institutions in this measure is followed up with appropriate restructuring measures to promote the return of those institutions to long term viability,' it added.
In a statement this lunchtime, Mr Lenihan said the way assets are valued by NAMA would be changed after talks with the EU, but he said that in overall terms, the valuation method is broadly in line with what was originally proposed. He said he would not give another estimate of the potential discount on the loans faced by each financial institution.
The Minister said NAMA would report to the European Commission annually on its use of certain powers in the legislation.
The EU has made a number of decisions on various State aid schemes as a result of the financial crisis. Read an overview of the measures put forward by different countries here
