The National Asset Management Agency (Nama) is likely to refuse to take loans off the Irish banks that are non-recourse, meaning billions of euros worth of loans will not be moved across to the new agency. Non-recourse loans limit developers' exposure to loans and were offered by the banks as they desperately tried to grow their loan books during the property boom.

According to those planning Nama's operations, any loan that is not properly secured with underlying assets will not be transferred or accepted by the new agency, which is to rid the banks' balance sheets of most property developers' loans.

In a typical scenario, where a syndicated investment fund was purchasing a property, individual investors were required to put in €100,000 in equity and then were given €400,000 worth of borrowings on a non-recourse basis, meaning that if the investment went wrong the investor was liable only for €100,000 of equity. Some of the banks were so desperate to grow their loan books that they also lent the equity to investors without personal guarantees, meaning the investors can now walk away without any liabilities.

Many of the loans were used to acquire sites, fuelling price rises but now creating a huge headache for banks as land prices have fallen by about 80% since the property market crashed.

Nationalised Anglo Irish Bank, which reported record losses last week, sought €255m from investors in 2007 for its Select Geared Property Fund with a view to adding non-recourse bank borrowings of €339m to complete the fund. That fund owns properties in Dublin and Britain.

Nama is also likely to refuse loans of less than €5m meaning that, as expected, smaller developers will not have their loans transferred.