The draft report designed to address Ireland's banking crisis, by economic consultant Dr Peter Bacon, recommends that bank executives and
loan officers are removed as much as possible from the process of writing down loans to developers or the scheme will have less chance of being successful.

Dr Bacon, currently working with the NTMA, has advised the government to set up an asset-management agency to handle the bad loans, and their related security, over a long period. He has advised the government to transfer a minimum of 50% of development and commercial property loans belonging to AIB and Bank of Ireland and other banks to the new agency. Effectively hundreds of individual loans, and accompanying security, would be housed and "managed" in the agency.

The report is in favour of one asset agency, rather than two or three separate bad banks, which Bacon has told the government would be ineffective and fragmented.

The report points out that loan officers at the banks made the original decisions to advance the loans which have now fallen into arrears and as a result these individuals are less suitable to take part in the writing-down process.

The Swedish banking crisis also involved excluding bankers who were involved in loan advances.

The Swedish authorities believed that banks tend to want to keep customers on a long-term basis and consequently are less suited to aggressively writing down loans and ordering a foreclosure on the assets.

It is understood Dr Bacon is strongly of the view that bank officials should be kept at a distance from the process as a result.

Instead the asset-management agency would use a panel of experienced international property valuers and distressed debt experts to carry out the write-downs. The Bacon report also supports private-sector involvement in the agency.

In recent weeks NCB Stockbrokers has estimated that €16bn could be provided from the National Pension Reserve Fund and from private sources to remove the loans and assets from bank balance sheets.

Bacon has declined to comment on his report. But the government is seriously studying its contents and may move on a scheme when it announces its emergency budget in early April.