The government's National Asset Management Agency (Nama) has told the banks the investment property assets they own themselves are not eligible for transfer to the new body and they must continue to hold the assets on their books pending further write-downs.

The decision will come as a particular blow to Anglo Irish Bank which had €1.4bn of investment properties on its books at the end of March. Some of this the bank owns outright; other parts of the portfolio consist of funds pledged to customers involved in investment property.

Several banks enquired about the issue during talks with Nama representatives in recent weeks. Nama is solely concentrating on loans, rather than physical property, a National Treasury Management Agency (NTMA) representative told the Sunday Tribune last week. Nama is operating under the aegis of the NTMA.

The heads of the bill to set up Nama will be issued within a fortnight with certain developers studying the text very closely to see if there are grounds for a legal challenge.

Nama is open, however, to developers purchasing loans they own which are not in arrears. It is understood this came up at talks between Nama representatives and Ulster Bank and ACC recently. The state agency said it had no objection to this, but it was unlikely hard-pressed developers could come up with the money.

In another development the EU Commission has now officially told the government it is permissible to transfer even loans with no arrears into Nama. The commission position was described last week as "flexible" by government sources. A strict interpretation of commission rules would prevent performing loans from being transfered.

Anglo and other banks have ended up with investment properties on their balance sheets after private clients declined to purchase the stock because of plunging returns.

Among the sites that were not syndicated to private clients due to the downturn in the property market were a 20% stake in Arnotts and a 50% shareholding in the €350m Opera Centre shopping centre in Limerick, which is currently before An Bord Pleanála.

The private client divisions of the banks, particularly Anglo, were anxious to buy into property developments as they earned fees up front when they were syndicated out to its private clients and then an annual management fee was paid to them. They also received additional payments if and when properties were sold. This helped boost staff members' bonuses.