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Tuesday, 4 Mar 2014

Written Answers Nos. 42 - 58

NAMA Investigations

Questions (42)

Michael McGrath

Question:

42. Deputy Michael McGrath asked the Minister for Finance if the National Asset Management Agency has conducted an independent economic assessment of the proposed €20 million investment at Scotch Hall in Drogheda; his views on whether it is a prudent use of taxpayers money; and if he will make a statement on the matter. [10652/14]

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Written answers

A key element in NAMA's strategic planning is recognition of the need for investment to preserve and enhance the value of assets securing its loans.  Reflecting this, NAMA announced in May 2012 that it would provide funding of €2bn in Ireland over the period from 2012 to 2016 to enable construction projects currently in progress to be completed and to develop new projects to meet prospective supply shortages in certain market segments.  In delivering on this commitment, NAMA is both making a vital contribution to the recovery in activity and employment that is now underway in construction and related sectors and to the provision of infrastructure to meet Ireland s current and future growth needs.

Decisions in relation to development funding are determined by NAMA s assessment of the projects most likely to generate a strong commercial return to the taxpayer.   In assessing projects, a key factor is the level of advance interest by potential purchasers or tenants and typically approved funding is drawn down only on a phased basis in line with the achievement of pre-agreed sales or rental commitments. I am satisfied that NAMA s approach to project appraisal is thorough and rigorous.   I have been assured that decisions around the case raised by the Deputy have followed such an approach.

However, it would not be appropriate for me, as Minister for Finance, to comment on individual projects or to become involved in the day-to-day detail of NAMA s development funding strategy, that is a matter for the Board of NAMA.  

Financial Services Ombudsman

Questions (43)

Michael McGrath

Question:

43. Deputy Michael McGrath asked the Minister for Finance if he will clarify a matter concerning the Financial Services Ombudsman and the provisions of the Central Bank and Finance Authority of Ireland Act 2004 which has been raised in correspondence (details supplied); and if he will make a statement on the matter. [10658/14]

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Written answers

Firstly, I must confirm to the Deputy that it is not appropriate for me to comment on or become involved in an individual borrower's dispute with a financial service provider. 

The Financial Services Ombudsman (FSO) was set up to adjudicate on unresolved disputes between complainants and financial service providers in an independent and impartial manner.  It would not be appropriate for me to comment on individual cases before him.

However, the Financial Services Ombudsman Bureau has informed me that Sections 57BX (3) and (3A) of the Central Bank Act 1942 (as amended) provide inter alia that:

(3) A consumer is not entitled to make a complaint if the conduct complained of- (a) is or has been the subject of legal proceedings before a court or tribunal ... (3A). Despite subsection (3)(a), the Financial Services Ombudsman may accept a complaint against a regulated financial service provider who has begun legal proceedings in relation to a matter to which the complaint relates, but only if that Ombudsman reasonably suspects that the regulated financial service provider has begun those proceedings in order to prevent the making of the complaint, or to frustrate or delay its investigation.

The FSO is of the view that there is nothing in the applicable legislation to prevent a financial service provider from issuing legal proceedings whilst a complaint is being dealt with by the FSO. It is the general view of the FSO that, in relation to complaints about a product that is still active, the terms and conditions relative to that product will continue to be applicable while the complaint is being investigated by the FSO. The contractual legal terms between the financial service provider and the complainant in relation to an active product continue to apply for example, loan repayments still have to be met. Conversely the legal rights of a provider to enforce its rights under the contract also continue to apply whilst the complaint is being investigated by the FSO. 

Where a complaint has been made to the FSO and a financial services provider subsequently issues legal proceedings whilst the complaint is being dealt with by the FSO, the FSO will make a determination as to his jurisdiction to continue with the investigation of the complaint, taking into account the above factors under Section 57BX (3) & (3A) in addition to the FSO's general discretion under two other sections of the Act: Section BX(2) of the Act which provides inter alia that the Financial Services Ombudsman has sole responsibility for deciding whether a complaint is within his jurisdiction and; Section 57BZ of the Act which provides: "(1) Without limiting section 57BY, the Financial Services Ombudsman can decide not to investigate a complaint, or to discontinue an investigation of a complaint, on the ground that - .... (d) there is or was available to the complainant an alternative and satisfactory means of redress in relation to the conduct complained of, ".

In circumstances where, in the opinion of the FSO, issues between the parties are more appropriately dealt with by a court in legal proceedings, the FSO may in the exercise of his discretion under these sections determine not to investigate or to continue to investigate a complaint on the ground that there is an alternative and satisfactory means of redress in relation to the conduct complained of. I am informed by the Financial Services Ombudsman Bureau that in each case where legal proceedings are issued, the FSO reviews that case on an individual basis, taking into account the particular circumstances of the case and taking into account the statutory provisions and criteria as outlined above and within the context of the legal powers available to the FSO. I am also informed by the Financial Services Ombudsman Bureau that the issuing of legal proceedings by a financial services provider does not automatically lead to the FSO ceasing investigation of that complaint.  

NAMA Investment Funds

Questions (44)

Michael McGrath

Question:

44. Deputy Michael McGrath asked the Minister for Finance the National Asset Management Agency's current estimated cost of funds; and if he will make a statement on the matter. [10745/14]

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Written answers

I am advised by NAMA that its cost of funds is currently less than 2.0% per annum. NAMA s cost of funds derives from both the interest cost on its debt securities (senior and subordinated) and its interest rate hedging cost. NAMA has entered into interest rate hedging which acts as an insurance mechanism to hedge its interest expense against interest rate increases over its lifetime. NAMA s cost of funds will vary over its lifetime, depending on the mix of its liability base, the associated costs of these liabilities and its hedging strategy.

NAMA Portfolio Value

Questions (45)

Michael McGrath

Question:

45. Deputy Michael McGrath asked the Minister for Finance the average rental yield achieved by National Asset Management Agency on its property assets associated with its portfolio of loans; and if he will make a statement on the matter. [10746/14]

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Written answers

Rental yield information is collated and recorded on a property-by-property basis across all of NAMA s loans as this is the framework within which loans are managed. An average rental yield across NAMA's entire portfolio is not collated. Given the wide diversity across NAMA's loan security in terms of asset class, geographic location and other significant qualitative considerations such as remaining lease terms, lease covenants, etc., the derivation of an average yield is not required by NAMA in the context of the day-to-day management of its loans.

NAMA Debtors

Questions (46)

Michael McGrath

Question:

46. Deputy Michael McGrath asked the Minister for Finance the number of National Asset Management Agency debtors that have been put into receivership since its inception; and if he will make a statement on the matter. [10747/14]

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Written answers

I am advised by NAMA that, by 21 February 2014, it had been necessary to enforce against 296 debtor connections or part thereof.  NAMA acquired loans of close to 800 debtors which had 5,000 borrowing entities. An enforcement strategy by NAMA is pursued in circumstances where the debtor s business plan is not considered acceptable, the debtor is in default and is not cooperating or where some other event has occurred that could potentially threaten NAMA s position as a creditor.

 

NAMA Staff Unauthorised Disclosures

Questions (47)

Michael McGrath

Question:

47. Deputy Michael McGrath asked the Minister for Finance the status of investigations into allegations of the leaking of confidential information by former National Asset Management Agency staff; and if he will make a statement on the matter. [10748/14]

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Written answers

These matters are currently under criminal investigation by An Garda Síochána and I am precluded therefore from commenting further. 

NAMA Bonds

Questions (48, 49, 50)

Michael McGrath

Question:

48. Deputy Michael McGrath asked the Minister for Finance AIB’s holding of National Asset Management Agency bonds; the interest rate being paid on these bonds; and if he will make a statement on the matter. [10749/14]

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Michael McGrath

Question:

49. Deputy Michael McGrath asked the Minister for Finance Bank of Ireland’s holding of National Asset Management Agency bonds; the interest rate being paid on these bonds; and if he will make a statement on the matter. [10750/14]

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Michael McGrath

Question:

50. Deputy Michael McGrath asked the Minister for Finance PermanentTSB’s holding of National Aasset Management Agency bonds; the interest rate being paid on these bonds; and if he will make a statement on the matter. [10751/14]

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Written answers

I propose to take Questions Nos. 48 to 50, inclusive, together.

I can confirm for the Deputy that BOI, AIB and ptsb held the levels of NAMA bonds outlined below as of 24th February 2014. The senior bonds currently earn an interest rate of six month euribor which was set last September at a rate of 0.345%.  This year, for the first time, NAMA intends to pay the fixed coupon of 5.264% on its subordinated debt which was set by reference to the 10 year Irish Government bond yield when the subordinated debt was first issued in March 2010.

Bank

Senior bonds

Sub-debt

AIB (inc EBS)

€15.82 bn

€0.47bn

BOI

€3.99 bn

€0.28bn

ptsb

€2.16bn

-

Total

€21.98bn

€0.75bn

NAMA Staff Data

Questions (51, 52)

Michael McGrath

Question:

51. Deputy Michael McGrath asked the Minister for Finance the number of new National Asset Management Agency employees who are subject to longer notice periods than previously applied; and if he will make a statement on the matter. [10752/14]

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Michael McGrath

Question:

52. Deputy Michael McGrath asked the Minister for Finance if contractual restrictions on former National Asset Management Agency staff working on property related matters with which they had previously had exposure during their tenure of employment are being revised for both new and existing staff; and if he will make a statement on the matter. [10753/14]

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Written answers

I propose to take Questions Nos. 51 and 52 together.

In early 2013, the NTMA Chief Executive committed to a review of NTMA policy in respect of notice periods and post-termination restrictions on employment. Accordingly, the law firm Matheson was engaged by the NTMA to:

(i) advise on market norms in the private sector in terms of notice periods and post-termination restrictions;

(ii) assess the adequacy of the protections in the current NTMA employment contracts/codes of conduct where   employees leave the NTMA to join a commercial entity in the private sector that might gain an unfair advantage by employing them;  and

(iii) recommend changes that could be made in this area by the NTMA.This review applied across all the NTMA's business areas, including NAMA. All NAMA staff are employees of the NTMA and under Section 42 of the National Asset Management Agency Act, 2009 the NTMA assigns staff to NAMA. Other than a small number of staff reassigned from other functions within the NTMA, NAMA staff are employed on the basis of specified purpose contracts their employment lasts for as long as NAMA requires their particular function.

Matheson's principal recommendations were as follows:

- longer notice periods of 3 to 6 months to be introduced for middle and senior NTMA management employees.

- garden leave provisions to be included in all NTMA employment contracts.

- post-termination of employment restrictions (including cooling-off periods and non-solicitation of employees) to be considered on a case-by-case basis in respect of senior NTMA management employees in particular. However, Matheson stressed that the imposition of such restrictions would need to be balanced against the NTMA's need to recruit good candidates for whom such restrictions may act as a significant disincentive to taking up employment with the NTMA. Furthermore, to maximise the prospects of enforceability, Matheson advised that any such restrictions would need to be drafted as narrowly as possible.

 It was proposed by Matheson that any required changes resulting from these recommendations would be introduced for new NTMA employees and for existing NTMA employees on promotion. The NTMA has accepted the Matheson proposals and is implementing them on this basis.

With regard to staff assigned to NAMA, it should be noted that the 3 month notice period and garden leave provision were already in operation since the first persons were assigned at start of 2010.  A provision prohibiting certain activities in an employee's subsequent employment for a defined period of time has also been introduced on a case by case basis for new employees, in cases where employees have moved from fixed to specified purpose contracts, and on promotion. All new NAMA staff will be subject to the new provisions.

The Deputy will also be aware of s202 provisions in NAMA Act which are lifelong provisions with respect to confidentiality for all current and former staff assigned to NAMA.

NAMA Debtor Agreements

Questions (53)

Michael McGrath

Question:

53. Deputy Michael McGrath asked the Minister for Finance his plans to review the maximum salary that may be paid to developers whose loans are held by National Asset Management Agency; and if he will make a statement on the matter. [10754/14]

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Written answers

I am advised by NAMA that it does not pay a salary to any debtor. NAMA seeks to ensure that income generated by assets securing its loans is applied towards repaying a debtor's indebtedness.  However as part of the debtor business plan, debtors may be permitted to retain an agreed portion of this income to cover business overheads. Debtors are allowed a salary out of business overheads where this is necessary to manage and preserve the value of the assets securing NAMA's loans.   NAMA advises that all overheads are reviewed as part of its regular review of each debtor's performance and developments in the wider economy. I would remind the Deputy that, as Minister for Finance, I have no role in relation to the day-to-day detail of NAMA's strategy in this area.

As the Deputy may be aware, as the NAMA Chief Executive has previously advised the Agency has permitted 167 principals to retain salaries out of the overheads of the business.  NAMA's analysis shows that 3 individuals managing multi-billion euro portfolios are authorised to retain income of €200,000.  There are no cases in which principals have been authorised by NAMA to retain salaries in excess of €200,000.                                                                                                         

 

NAMA Debtor Agreements

Questions (54)

Michael McGrath

Question:

54. Deputy Michael McGrath asked the Minister for Finance the number of agreed business plans the National Asset Management Agency currently has in place with developers; and if he will make a statement on the matter. [10755/14]

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Written answers

I am advised by NAMA that it has completed the assessment of all 775 debtor business plans.  I am advised that NAMA has three core strategies in place for debtors. A strategy of debtor support is in place for debtors who have 43% of NAMA debt, a restructuring strategy is in place for debtors with 26% of NAMA debt and an enforcement strategy is in place for debtors with 31% of the NAMA debt. Pages 23 to 27 of the NAMA Annual Report 2012 provides further information on the various approaches which have been adopted by NAMA in its management of debtors.

NAMA Social Housing Provision

Questions (55)

Michael McGrath

Question:

55. Deputy Michael McGrath asked the Minister for Finance the reason a high proportion of housing units identified by the National Asset Management Agency as suitable for social housing are not being taken up by local authorities; and if he will make a statement on the matter. [10756/14]

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Written answers

Decisions relating to the location of social housing are a matter for local authorities by reference to national and local planning and housing policy.  A major factor is the amount already in place in certain areas where the local authority and housing agency does not see it as being desirable to have increased levels of social housing. Neither NAMA nor the Minister for Finance has a role in relation to this policy.    NAMA has made 4,500 houses and apartments available through its debtors and receivers for social housing. It is a matter for local authorities and approved housing bodies to determine the suitability of these units by reference to the relevant policy and take the practical steps necessary to complete the lease or purchase the properties.

As at year end 2013 demand had been confirmed for 2,055 of these properties, of which 492 have been delivered, there is active negotiation between its debtors/reciever and the Housing Agency for a further 300 properties and contracts have been agreed in 104 cases,  while  a unit by unit review is being conducted by the on the remainder.  Where demand is confirmed, NAMA facilitates the sale or lease of the properties by NAMA debtors or receivers or directly by NAMA through the NARPS model to the local authority or an approved housing body, which assume responsibility for allocation and management of the properties. A full breakdown of the distribution of these properties is available on the NAMA websites at www.nama.ie/about-our-work/social-housing

NAMA Debtor Agreements

Questions (56)

Michael McGrath

Question:

56. Deputy Michael McGrath asked the Minister for Finance the number of application for rent reviews received by developers whose debts are owned by the National Asset Management Agency; the number which were successful; and if he will make a statement on the matter. [10757/14]

View answer

Written answers

I am advised by NAMA that it has received 320 applications for rent abatement through its debtors and receivers.  Of these 276 applications have been approved, 34 are currently being assessed and 10 have been refused.  The aggregate annual value of approved rent abatements is, to date, €18m.  NAMA has also granted long-term rent reliefs with a value in excess of €40m. 

 

IBRC Mortgage Loan Book

Questions (57)

Luke 'Ming' Flanagan

Question:

57. Deputy Luke 'Ming' Flanagan asked the Minister for Finance with regard to Irish Bank Resolution Corporation mortgages, if the liquidators will act in the best interest of the taxpayers and allow all interested bidders, to bid; if the liquidators are acting legally by excluding interested bidders; and if he will make a statement on the matter. [10797/14]

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Written answers

There is an obligation on the Special Liquidators to ensure that maximum value is extracted from the loan sales process for the benefit of all the creditors of IBRC including the State.

The Special Liquidators appointed PwC as independent advisors to value the residential mortgage portfolio and also to provide independent advice in developing a robust and credible sales strategy for the sale of the residential mortgage portfolio which would ensure that maximum value was obtained for all creditors of IBRC.

Following the representations received from borrowers and the independent advice provided by PwC, it was decided that the residential mortgage portfolio be sub-divided into four portfolio tranches with a view to maximising market interest and return within the timelines set out in the Ministerial Instruction. I am advised that the Special Liquidators did consider the concept of offering individual mortgages for sale however a number of issues impacted on the decision including cost, timing, professional advice received, borrower only bids, confidentiality of personal information, execution risk and delivering best results for the creditors.

I am advised that the Special Liquidators are confident that a portfolio sale of the residential mortgage book will deliver the maximum value from the sale of the residential mortgage portfolio and thus maximise the return for the creditors of IBRC including the Irish taxpayer.  

IBRC Mortgage Loan Book

Questions (58)

Lucinda Creighton

Question:

58. Deputy Lucinda Creighton asked the Minister for Finance further to the Irish Bank Resolution Corporation special liquidator's statement that PwC were the party responsible for conducting a review on the cost implications to the creditors of IBRC, if they sold Irish Nationwide Mortgages on an individual borrower basis to those who could afford to refinance the loan at the reserve value; if he will publish the PwC review; and if he will make a statement on the matter. [10874/14]

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Written answers

There is an obligation on the Special Liquidators to ensure that maximum value is extracted from the loan sales process for the benefit of all the creditors of IBRC including the State. On the appointment of the Special Liquidators, I instructed them to arrange for the valuation of IBRC s loan assets by independent advisors and to ensure that the valuation of all loan assets was completed on or before 30 November 2013. In this respect, the Special Liquidators appointed PwC as independent advisors to value the residential mortgage portfolio.

PwC were also appointed to provide independent advice in developing a robust and credible sales strategy for the sale of the residential mortgage portfolio which would ensure that maximum value was obtained for all creditors of IBRC. The Special Liquidators were instructed to ensure that the sale of all Company loan assets was agreed or completed by no later than 31 December 2013 or as soon as practicable thereafter.

In view of the commercially sensitive nature of the material contained in the PwC report the Special Liquidators regret that they are not in a position to provide a copy or put it into the public domain.

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