Cross country analysis of asset management corporations: impact on property markets

Ireland’s entry into the EU in 1973 marked a prolific step in the country’s economic development, manifesting in an era of financial liberalisation that was defined by banking deregulation, the development of new financial instruments and increased leverage within the market. The financial crisis of 2008 and subsequent collapse of the property market led to burgeoning levels of non-performing loans in Ireland’s banking sector. The Irish government took a pivotal step in December 2009 with the implementation of the National Asset Management Agency (NAMA) whose function was to acquire troubled assets and loans from the country’s struggling financial institutions. NAMA accumulated a portfolio of €73.8 billion loans and assets, meaning that it is one of the world’s largest property holding corporations. NAMA is not the first corporation of its kind, and accordingly, this research draws comparative analysis from international practice of asset management corporations (AMCs), as a government intervention strategy. Prominent country cases include the Resolution Trust Corporation in the United States in the late 1980's, the Swedish experience of Securum in the early 1990's, The Thai Asset Management Corporation that was formed in 1998 and the Resolution Collection Corporation created in Japan in 1998 also. The cross-institutional analysis pays particular attention to each of the respective models objectives and designated time-span, governance, vehicle structure, asset eligibility, valuation methodologies applied in the transfer of assets, loan workout strategies and various mechanisms of disposal. These underlying processes are fundamental to the overall performance of the AMC’s and are applied to the NAMA model to establish any institutional strengths and flaws in terms of both design and operation. The paper focuses upon the property investment market on the island of Ireland, as this comprises 48 % of the NAMA portfolio. With the property market in Ireland displaying signs of renewed confidence and increasing levels of liquidity, the study aims to evaluate NAMA’s role in this recovery.