Alexander Nye

Publisher

Yale University: School of Management: Yale Program on Financial Stability (YPFS)

Media Date

7-26-2019

Media Type

Document

Content Type

Working Paper

Country/Region

Ireland

Language

English

Crisis

European Sovereign Debt Crisis (2008 - 2012)

Case Series

2020 YPFS Preliminary Discussion Drafts

Intervention

Bad Bank; Broad-Based Asset Management Program

Additional Information

When the aftermath of the September 2008 collapse of Lehman Brothers burst a long-running real estate bubble in Ireland, it triggered a banking crisis. In spite of various responses by the Irish government, the financial viability of Ireland's banks (as well as the government's fiscal position) continued to deteriorate in early 2009 (Bacon 2009, 8-9). The Irish government attributed the problem to impaired real estate assets sitting on bank balance sheets and created the National Asset Management Agency (NAMA), a majority privately owned asset management company (AMC), to remove these assets from the banks (Carroll and Dodd 2012, 8-9). From its establishment under the NAMA Act on December 21, 2009, NAMA purchased assets with a face value of approximatelyGBP77.4 billion forGBP31.7 billion (Oireachtas Inquiry 2016, PDF Page 315). As of December 31, 2018, it had disposed of all butGBP2.3 billion of these assets. NAMA was considered one of the best performing AMCs of the era and enjoyed an expansive legal mandate, but it was not sufficient to solve Ireland's economic woes (Cas and Peresa 2016, 25) (Sibley 2017, PDF Page 3). Although NAMA was still operating as of 2019, it was projected to wind down in 2021 and yield a profit ofGBP4 billion (Cas and Peresa 2016, 16) (NAMA 2019, 9-10) (NAMA Second Progress Report 2018, 19).

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