Europe's competition watchdog has given its approval to an Irish scheme to help banks clear bad assets from their balance sheets as they seek a return to normal lending.
The European Commission said Ireland's National Asset Management Agency (NAMA), which will buy devalued real estate from financial institutions, was in line with European Union state aid rules.
"This impaired asset measure, which is specifically targeted at real estate assets, is key to cleaning up Irish banks' balance sheets," European Competition Commissioner Joaquin Almunia said in a statement on Friday (26 February).
The Commission said Irish authorities expected the agency to buy land and loans with a nominal value of about €80 billion euros for an estimated purchase price of 54 billion euros.
Five institutions will participate: the Anglo-Irish Bank, the Allied Irish Bank, the Bank of Ireland, the Irish National Building Society and the Educational Building Society.
"This is an important step towards the overall restructuring of the sector and its return to a normal and responsible functioning of the market," Almunia said.
The scheme had been on hold pending the green light from Brussels which was considering a complaint by Irish Senator Eugene Regan, who had claimed that NAMA breaks state aid rules (EURACTIV 23/2/10).