Property investor challenges Ireland's bank

An Irish property tycoon has launched a legal challenge to the country's National Asset Mangement Agency (NAMA). In a case that could stop the governments efforts to make a profit on its gamble on commercial property.

Property magnate Paddy McKillen, has a large portfolio which includes Dublin's Clarence Hotel (co-owned with Bono and The Edge from leading rock group U2). Wants to stop Ireland's NAMA from acquiring some 2.1 billion euros in property loans secured on his assets because he argues the transfer will undermine his business.

It is the first legal challenge againsts NAMA. All repayments on McKillen's loans were being met and the 150 million euro annual income from the properties, which include shopping centres, offices and five star hotels such as London's Claridges, covered interest repayments on the loans nearly two times over. To defend his case Mr McKillen has hired Nobel prize-winning economist Joseph Stiglitz as an expert witness in the case.

The Irish government  has said that it could cost up to 50 billion euros to rectify years of reckless lending, during the years of the "Celtic Tiger" economy. Calls for quick sales to inject cash back into government coffers has highlighted NAMA's sales strategy.

If Mr McKillen wins his case the agency fears other developers will launch similar actions potentially reducing its cashflow.