In March 2010, the Government delegated to the NTMA certain banking system functions of the Minister for Finance related to the oversight and management of the State’s interest and holdings in those financial institutions covered by the 2008 Government guarantee. Following this the NTMA established a specialist Banking Unit and a small number of skilled professionals were recruited from the private sector to create a team capable of dealing with the very significant banking sector challenges facing the State. In March 2011, following a competitive tender process, the NTMA appointed a panel of legal firms (A&L Goodbody, Arthur Cox and Matheson) under a framework agreement to provide legal services to the NTMA Banking Unit. As part of the same competitive tender process, the NTMA also entered into a general agreement with Arthur Cox to provide general legal services on an ad hoc basis to the NTMA Banking Unit. The appointments were made on the basis of agreed discounted hourly rates and/or fixed fees where appropriate. The agreements were awarded for a period of three (3) years and services were drawn down as and when required – accordingly, there was no contract value specified.
In April 2011, the Minister for Finance announced the creation of a stand-alone unit accountable to him through the Department of Finance to provide State oversight of the banking system and drawing on the resources of the NTMA to carry out its work. The delegation of banking system functions to the NTMA was revoked with effect from 5 August 2011 and the NTMA Banking Unit has since then been seconded to the Department of Finance where they form part of the Department’s Shareholder Management Unit. The agreements referred to above were subsequently novated to the Department of Finance with effect from January 2012 to support the performance of the Department’s banking functions. The agreements explicitly provided for the novation of the agreements to other State entities; this possibility was explicitly provided for when the agreements were entered into.
The work the various legal firms undertook for the NTMA Banking Unit prior to the revocation of the NTMA’s banking functions on 5 August 2011 was principally as follows:
i) banking and financial services advice,
ii) capital markets including advice regarding bond issuances,
iii) private and public company merger and acquisition advice,
iv) EC and competition advice including State aid issues and general competition law compliance,
v) insolvency and corporate recovery advice including liquidation, examination, and receiverships,
vi) regulatory advice including advice on the licensing of credit institutions, categorisation and treatment of regulatory capital,
vii) Employment law advice and
viii) Litigation and dispute resolution advice including advice regarding corporate litigation.
The agreements are due to expire in March 2014 and the Department of Finance will therefore be requesting tenders for a panel of legal firms to replace the existing panel in advance of that date.
In the report into the Department of Finance’s appropriation accounts for 2012 the C & AG commented as follows:
“The Minister for Finance delegated a number of banking system functions to the National Treasury Management Agency (NTMA) under Statutory Instrument (S.I.) no. 115 of 2010. This delegation was revoked with effect from 5 August 2011 under S.I. no. 395 of 2011 and the NTMA banking unit has since then been seconded to the Department of Finance. At the direction of the Minister, the costs of the unit, comprising staff costs and certain consultancy costs, continue to be met by the NTMA.”
The C & AG also commented in the C & AGs 2009 report, prior to the novation of the contracts, as follows:
“Administrative costs incurred by State agencies in relation to banking stabilisation measures have been substantial in absolute terms, but are small relative to the scale of the costs, financial commitments and risks associated with the banking stabilisation measures. Access to timely and professional advice is a vital input to decision making in this context. At the same time, it is important to ensure that sound procurement and contracting practices are followed to ensure that the expenses being incurred are no more than is warranted in the circumstances.”
