Most well managed banks these days--I mean in normal times- might be lending 120% of deposits, the 20% being borrowed, usually short term. Some would argue that they should lend less than 100%, and not be borrowing anything for onward lending. They also should ensure a certain ratio between their own capital and their total loans, and 8% has been considered a benchmark for that. (Now that is to go up, but its a bit more complicated than this, so lets just assume 8% is what Irish banks should be aiming at)
Post NAMA--that is, after the two main banks pass over c. €40 bn. of their loans ("assets") to the State- their ratio of loans to deposits will fall to c. 120% from todays 150% +. That is the main benefit of NAMA to the banks--their Balance Sheets will look less risky. But that will cost them c.€10 bn. in capital losses, which they will have to find. (They have already found c. €3 bn from recent years' profits). On the other hand, because loan totals will have dropped, they will need to show less capital than otherwise, to reach 8% of total assets. In aggregate, they may need to find extra capital now of c. €5 bn., which is probably do-able without asking the State to contribute. (I'm talking only about AIB/BOI).
However, their capacity to lend extra money will be very limited, if it is available at all, because of the need to keep total loans at no more than, say, 120% of deposits, and given the severe difficulty of raising deposits, especially when many media commentators and politicians are screaming about the risks of putting money into the banks after the State guarantee runs out, etc. Some commentators would even be glad to see control of Irish deposits drifting to outside Ireland, and to be used for funding loans to customers in other countries. We would be rightly banjaxed then, and I would be sure the government would do a lot to prevent that (by avoiding the nationalisation and subsequent resale of these banks). . The other problem impacting on the banks' lending capacity, of course, is that the government itself desperately needs whatever funds the banks can lend, which means the private commercial borrowers will be left behind. At a time when, as now, foreign lenders are generally pulling out of the Irish market, the prospects of current government policies producing any extra loans for Irish industry are dim, at most. Rgds BrianODoherty.ie