Written Answers Nos. 271-282
271. Deputy Mick Wallace asked the Minister for Finance if he will establish a commission of inquiry to be conducted into the sale of the National Asset Management Agency's Northern Ireland portfolio in particular, and the workings of the agency in general; and if he will make a statement on the matter. [28596/15]
View answerAs I have previously outlined, most recently in response to Parliamentary Questions Nos. 238 of June 23rd 2015 and 133 of June 17th 2015, NAMA is already subject to a high level of public accountability compared to other commercial bodies, including commercial bodies in the State sector and I do not believe further measures are required at this time.
In accordance with their obligations under Section 53, 54 and 55 of the NAMA Act 2009, NAMA must submit an Annual Statement before 30th September each year (s53), audited Annual Accounts and Financial Statements after each financial year (s54), and Quarterly Reports four times a year (s55). I am obliged to lay all of these reports before the Oireachtas and I endeavour to do so on a timely basis. The most recent Quarter 1 2015 Report will be laid before the Oireachtas and published shortly.
Pertinent to the Deputy's question, the Chairman and Chief Executive are also accountable to the Public Accounts Committee (PAC) and other Oireachtas committees and to give evidence to those committees whenever required to do so. The Deputy will, therefore, be aware that the Chairman and CEO appeared before the PAC on 9th July 2015, specifically regarding the sale of the Agency's Northern Ireland Portfolio, and welcomed the opportunity to publically state their position on record. The recording and transcript of the Committee hearing is available on the Oireachtas website and the opening statements of both the Chair and Chief Executive are also available from the NAMA website (https://www.nama.ie/about-us/publications/speeches/ ).
NAMA's accounts are also audited by the Comptroller and Auditor General (C&AG). In addition, the C&AG has already produced three special reports on NAMA (each of which are available on both NAMA and the C&AG's websites) and I understand that a fourth, regarding Value for Money (VFM), is in the early stages of preparation. If there is concern about a specific aspect of NAMA's work, it is within the power of the Comptroller and Auditor General to scrutinise any aspect of it. Regarding the specific request made by the Deputy, I note that as part of its upcoming third triennial review of NAMA (s226), the C&AG has confirmed that it will perform a value for money review and as part of this will be looking at the Project Eagle portfolio sale to determine if NAMA did achieve best value. The C&AG is best positioned to independently review this transaction and make such a determination.
Finally, as I stated in my response to Parliamentary Question No.150 on 7th July 2015, there is no suggestion that the allegations recently made in the Dáil by the Deputy, and others, relate to any wrongdoing on the part of NAMA.
Taking all of the above into consideration, I do not contend that a specific inquiry into this sale process is required nor, as stated previously, is there merit in the argument that NAMA should be made more accountable.
272. Deputy Mick Wallace asked the Minister for Finance if the National Asset Management Agency informed his Department of the process involved in selling off its loan book in Northern Ireland; and if he will make a statement on the matter. [28597/15]
View answerI refer the Deputy to my response to Parliamentary Question No. 150 of 7th July 2014 to the same question.
As advised, I was not directly involved in the process itself but was kept regularly informed on an ongoing basis by the NAMA Chairman on overall progress in relation to the sale of the NAMA Northern Ireland loan portfolio. As the Deputy will appreciate, decisions on sales transactions are a matter for the NAMA Board in the context of its statutory independent commercial mandate.
With respect to two particular aspects of this transaction which have received some recent scrutiny:
- I was notified by the NAMA Chairman of the decision being taken by the NAMA Board with regard to the withdrawal of Pimco and the reasons behind this decision; and
- I also was aware that the Northern Ireland Executive sought to put a letter of intent/memorandum of understanding in place with the successful bidder to ensure the management of the portfolio post acquisition was supportive of the Northern Ireland economy. While I was aware of this, I had no role in this regard. The management of the portfolio in Northern Ireland following its acquisition from NAMA is a matter for the successful buyer and the relevant authorities in Northern Ireland.
My response to Parliamentary Question No. 150 on 7th July 2015 also sets out the particulars of my engagement with NAMA and with the Northern Ireland Executive in light of the political sensitivities in Northern Ireland to NAMA's exposure to Northern Ireland, the potential sale of such a large portfolio and the impact it may have on the Northern Ireland economy.
273. Deputy Mick Wallace asked the Minister for Finance if he has ever applied section 227 of the National Asset Management Agency Act 2009; and if he has, if he will publish the relevant reports; and if he will make a statement on the matter. [28598/15]
View answerAs has been referred to in numerous responses to Parliamentary Questions, recent examples being Parliamentary Question No. 230 on June 30th 2015 and Parliamentary Question No. 133 on 23rd June 2015, and as was widely publicised at the time of its publication, through press conferences and broad media coverage, my officials have indeed produced a special report on NAMA's activities in compliance with Section 227, subsection 3, of the NAMA Act. This report was published and laid before the Houses of the Oireachtas on 16th July 2014.
Following the completion of the report, and taking into account what NAMA has achieved to date, my officials concluded that:
- NAMA has made significant progress in achieving its overall objectives.
- Based on NAMA's performance to date and its financial projections in light of the strength of current investor interest in Ireland, NAMA is well positioned to achieve its objectives.
- As a result, NAMA's continuation is necessary to achieve these objectives.
Section 227(3) of the NAMA Act requires as soon as may be after 31 December 2012 and every 5 years after that while NAMA continues to be in existence, the Minister shall assess the extent to which NAMA has made progress toward achieving its overall objectives, and decide whether continuation of NAMA is necessary having regard to the purposes of this Act.
I would encourage those with an interest in NAMA's progress to date to read the Section 227 Report as well as the C&AG's special reports on NAMA and NAMA's quarterly and annual reports as they are each a rich source of information on NAMA's activity from inception.
The Departments of Finance Section 227 Report is available via the following link: http://www.finance.gov.ie/sites/default/files/NAMA_Section_227_Review_web2_0.pdf
Section 227(1) also empowers the Minister to direct NAMA to report to him or her regarding progress with regard to the achievement of NAMA's purposes and requires the Minister to lay any such report, when produced, before the Houses of the Oireachtas.
To date, I have not yet deemed it necessary to apply Section 227(1) given the strong working relationship between my Department and NAMA and the many other oversight provisions contained within the NAMA Act 2009.
In accordance with Section 54, NAMA's Annual Report and Financial Statements are laid before the Houses of the Oireachtas. The level of disclosure in NAMA's Annual Report and Financial Statements is comprehensive and professional. I would encourage anyone interested in the workings and performance of NAMA who have not yet read these reports to take the time to do so as they detail the Agency's performance each year.
NAMA is also required to report to me on a quarterly basis giving detailed information about its loans, its financing arrangements and its income and expenditure. These reports, which also include other information specified under Section 55 of the NAMA Act, track NAMA's progress on a quarterly basis and are also laid before the Oireachtas.
In addition, under Section 53 of the NAMA Act, NAMA is also required to submit to me an Annual Statement by 30 September each year setting out its proposed objectives for the following financial year, the scope of activities to be undertaken, its strategies and policies and its proposed use of resources. This Statement is also laid before the Oireachtas.
The Annual and Quarterly Reports, Annual Statements, along with many other pertinent publications are available from NAMA's website from the following link: https://www.nama.ie/about-us/publications/
In addition to its annual financial audits, the Comptroller and Auditor General, in accordance with Section 226 of the NAMA Act, also carries out periodic reviews of NAMA some of which assess particular themes and others which assess the extent to which the Agency is meeting its objectives. The findings of these reviews were published in the following reports, each of which was also laid before the Oireachtas.
Special Report 76: National Asset Management Agency Acquisition of Bank Assets
Special Report 79: National Asset Management Agency Management of Loans
Special Report 81 National Asset Management Agency - Progress Report 2010 - 2012
The Comptroller and Auditor General's progress reports are available on both the NAMA and C&AG websites. Section 227 is one of a number of sections within the National Asset Management Agency Act 2009 which provides for oversight and publication of reports regarding NAMA's performance.
274. Deputy Mick Wallace asked the Minister for Finance if he will provide details of all meetings that took place between his Department and the National Asset Management Agency's Northern Ireland advisory committee; and if he will make a statement on the matter. [28599/15]
View answerAs stated in my response to Parliamentary Question No 153 on 7th July 2015, there were no meetings between my Department and the Northern Irish Advisory Committee (NIAC) of NAMA.
I also advised in the same response that the principal responsibility of the Northern Ireland Advisory Committee was to advise the NAMA Board in relation to strategy for its Northern Ireland assets. The Northern Ireland Advisory Committee was established with my agreement by the main NAMA Board and reported directly to the main NAMA Board.
I am advised that the NIAC had no role in relation to NAMA debtors or to the assets securing their loans; that no discussion of particular debtors or particular assets was permitted at NIAC meetings and that no specific information relating to debtors or assets was ever provided to external members of the NIAC. The NIAC had no decision-making powers.
The Deputy will note that the NAMA Board, with my agreement as Minister for Finance, having regard to the implications of the sale of the Northern Ireland loan portfolio for the Northern Ireland Advisory Committee, resolved to dissolve the Committee following its meeting on 8th September 2014.
275. Deputy Mick Wallace asked the Minister for Finance his views on the €200 million loss made on the sale of the National Asset Management Agency's Northern Ireland loan portfolio; if he was aware of such a loss before the sale was made; and if he will make a statement on the matter. [28600/15]
View answer285. Deputy Michael McGrath asked the Minister for Finance the reason the National Asset Management Agency's €5.6 billion loan book sold in Northern Ireland was sold as a single block, thus excluding smaller investors, six years before the agency’s wind-up date; and if he will make a statement on the matter. [28786/15]
View answerI propose to take Questions Nos. 275 and 285 together.
The timing of loan and asset sales is a matter for the NAMA Board by reference to its statutory independent commercial mandate, in accordance with Section 10 of the NAMA Act, passed by the Houses of the Oireachtas, to obtain the best achievable financial return for the State and to do so expeditiously.
The NAMA Chief Executive, in his opening address to the Public Accounts Committee on 9th July 2015, which is available on the NAMA website (https://www.nama.ie/about-us/publications/speeches/ ), clearly sets out the Board of NAMA's commercial rationale for both the timing and format of its Northern Ireland loan portfolio. These included the portfolio's heavy concentration in provincial and secondary property markets and the limited evidence at the time of the sale of any prospect of a sustained recovery in those markets over the medium term. The NAMA CEO specifically stated that the asset portfolio securing NAMA loans was very granular and had few major assets which might have been of interest to purchasers if NAMA had decided to proceed to sell the assets on an asset-by-asset basis.
Taking these factors into account, I am advised that NAMA set a reserve minimum sales price which equated to the net present value of its projected cashflows from this portfolio over the medium-term, and only agreed to sell the portfolio when that minimum price was obtained. The portfolio sold for what it was worth at the time.
Though I am not specifically made aware of the detailed outcome of each sales process such as level of proceeds, gains or losses, as was the case with Project Eagle, I am realistic in recognising that NAMA will, in some instances, recognise a loss on the sale of some of its loans and assets.
However, I would like to point out that losses recognised on NAMA sales stem from poor underwriting at the time these loans were issued and from the significant deterioration in property values securing these loans. The decline in asset values prior to November 2009 was reflected in the purchase price at which NAMA acquired these loans from the banks at steep discounts to the amounts borrowed. The further decline in asset values after November 2009 was reflected in NAMA's books through impairment provisions meaning that the amount NAMA expected to recover from these loans continued to fall with prices. At the time of the portfolio sale a further impairment was recognised. I am informed that given the nature of the portfolio there is no reason to believe that this impairment would not have been recognised by NAMA in subsequent financial statements if it had not sold the portfolio. The portfolio sold for what it was worth at the time. The NAMA Board believes it did achieve best value for the portfolio.
On the more general point, the Deputy will also note that NAMA is obliged to repay its senior debt. That debt is guaranteed by the Irish Government and therefore is a contingent liability for Irish taxpayer. During 2014 NAMA repaid €9.1 billion of senior debt for which the proceeds of this portfolio made a significant contribution. NAMA has to sell loans and assets to enable it to repay its debt and this requires the NAMA Board to make commercial decisions, based on the best available information, on the sale of loans and assets.
The Deputy will note that, to date, NAMA has redeemed €19.35 billion of the €30.2 billion it issued in senior debt. The significant progress it has made in terms of senior debt redemption has been a major factor in prompting credit ratings agencies to upgrade Ireland's creditworthiness. These upgrades have, in turn, contributed to significant reductions in Ireland's borrowing costs. I agreed with the NAMA Board as part of my 2014 Section 227 review that NAMA would aim to repay 80 per cent of its senior debt by end 2016.
Profit or loss on loan sales is accounted for in NAMA's Annual Report and Financial Statements and Section 55 Quarterly Report and Accounts published by NAMA for the relevant period. These reports are available from NAMA's website: https://www.nama.ie/about-us/publications/
276. Deputy Mick Wallace asked the Minister for Finance his views on the fact that the 2014 National Asset Management Agency's annual report does not mention industry performance metrics, despite the fact that it promised the Oireachtas Committee of Public Accounts that it would do so; and if he will make a statement on the matter. [28601/15]
View answerI refer the Deputy to page 41 of NAMA's Annual Report and Financial Statements for 2014, which is available from the NAMA website at https://www.nama.ie/about-us/publications/annual-reports/ and which contains a section called "Rate of Return Benchmark".
In this section NAMA notes that during 2014 the NAMA Board approved an Entity Return on Investment (EROI) target benchmark of 20%. The project EROI return as at end-2014 was 24%.
The EROI benchmark is calculated based on the comparison of NAMA's projected terminal surplus/(deficit) position, as per latest forecasted cashflows, with NAMA's initial investment, as adjusted to exclude the €5.6 billion in state aid which NAMA was required to pay to the Participating Institutions.
277. Deputy Mick Wallace asked the Minister for Finance in view of the recent revelations of the selling off of assets at fire sale prices, if he will confirm the value of assets and loan portfolios that remain to be sold by the National Asset Management Agency; and if he will make a statement on the matter. [28602/15]
View answerNAMA has not engaged in "fire sales" and the suggestion by the Deputy that it has done so is inaccurate.
NAMA's demonstrable strategy in each of its main markets has been to release assets for sale in a phased and orderly manner consistent with the level of demand and the absorption capacity in each market. In the period to the end of 2013, this meant concentrating sales in Britain, particularly London, where commercial investment property yields had fallen in some cases below 3%. Over that period, sales in Britain accounted for 73% of NAMA's total sales proceeds.
In contrast, I am advised that NAMA's strategy in Ireland over that period was to limit asset disposals into the market, particularly in the period to end-2012 when prices were still trending downwards. Reflecting this, in the period to end-2012, NAMA had disposed of less than €1 billion or 5% of its Irish portfolio. This information is set out in my Section 227 Review of NAMA, which was published in July 2014.
NAMA advise me that the Agency's focus during that period was primarily on ensuring that debtor properties were efficiently managed, that rental and occupancy were optimised and that rental income was fully captured. NAMA also sought to assist the Irish market's recovery by offering a limited number of assets for sale to test investor appetite and help bring about price discovery. I am advised that NAMA did so in a number of cases with the benefit of NAMA vendor financing. The interest generated by those transactions strongly pointed towards a basis for the market's ultimate recovery. NAMA, however, waited until that recovery was fully underway before increasing the flow of assets to the Irish market.
I would argue that this patient approach, which has been supportive of market recovery, is not how an agency engaged in "fire sales" would behave. Indeed, NAMA inform me that the Agency strongly resisted attempts from opportunistic buyers looking to acquire Irish assets at what could be regarded as "fire sale" prices in 2010 and 2011, instead, as mentioned, focusing on the sale of appropriately yielding British assets in order to fund its operations, fund its investments in Irish assets to enhance their longer-term value and to retire debt.
It is my experience that those who suggest that NAMA sold assets prematurely tend to draw attention to the same handful of transactions in 2011 and 2012. Such critics ignore the fact that NAMA had to sell some assets in Ireland to help generate some level of transactional activity and seed a recovery in the Irish property market. In addition, NAMA sold assets in order meet its end-2013 debt repayment target, a target which was monitored by the Troika. NAMA has, since mid-2013, been able to sell substantially more assets at far more favourable pricing and, in turn, accelerate its senior debt repayments and progressively remove that contingent liability on Irish taxpayers - further enhancing our economy's recovery.
The value of loans and assets as at end-2014 was, as per NAMA's Annual Report and Financial Statements for 2014, which is available on the Agency's website, €13.44 billion. I intend to publish NAMA's Quarterly Report and Accounts for the period to end-March 2015 shortly.
278. Deputy Mick Wallace asked the Minister for Finance if he will provide, in tabular form, a list of the persons who served on the National Asset Management Agency's Northern Ireland advisory committee, and the period of service of these persons on the committee; and if he will make a statement on the matter. [28603/15]
View answer284. Deputy Michael McGrath asked the Minister for Finance the date on which a person (details supplied) ceased to be a member of the National Asset Management Agency's Northern Ireland advisory board; and if he will make a statement on the matter. [28785/15]
View answer286. Deputy Michael McGrath asked the Minister for Finance if he will provide a list the persons who served on the National Asset Management Agency's Northern Ireland advisory board; the dates during which they served; and if he will make a statement on the matter. [28787/15]
View answerI propose to take Questions Nos. 278, 284 and 286 together.
I would, firstly, direct the Deputies to my response to Parliamentary Question No. 154 on 7th July 2015, which also provided this information. However, for convenience, the period of service of all members of NAMA's Northern Ireland Advisory Committee is provided again in tabular form as follows:
|
Name |
Member |
Appointment |
Resignation/End of Tenure |
|
Frank Daly (Chair) |
NAMA Board Chairman |
13-Oct-11 |
08-Sep-14 |
|
Peter Stewart (Chair)* |
NAMA Board Member |
04-Feb-10 |
10-Oct-11 |
|
Brian McEnery |
NAMA Board Member |
25-Feb-10 |
08-Sep-14 |
|
Eilish Finan |
NAMA Board Member |
06-May-10 |
21-Dec-13 |
|
Ronnie Hanna |
NAMA Executive |
06-May-10 |
08-Sep-14 |
|
Willie Soffe |
NAMA Board Member |
10-Mar-11 |
08-Sep-14 |
|
Brian Rowntree |
External Member |
16-Apr-10 |
08-Sep-14 |
|
Frank Cushnahan |
External Member |
16-Apr-10 |
08-Nov-13 |
* Peter Stewart was Chairman of the Committee until his resignation from the Board and Committees on 10 Oct 2011. He was replaced as Chairman of the Committee by Frank Daly.
279. Deputy Mick Wallace asked the Minister for Finance if he will provide, in tabular form, a list of the persons who have worked as portfolio managers in the National Asset Management Agency; the period of service of these persons; and if he will make a statement on the matter. [28604/15]
View answerI refer the Deputy to NAMA's annual reports and financial statements for 2010, 2011, 2012, 2013 and 2014 which provided extensive information on NAMA's organisational structure and staff resources. These reports are available at the following link: https://www.nama.ie/about-us/publications/
The information sought by the Deputy in relation to former NAMA staff, including their respective period of service, is not publicly available due to contractual and data protection reasons. All NAMA staff are employees of the NTMA and are assigned to NAMA in accordance with Section 42 of the NAMA Act. NTMA staff are employed on the basis of confidential individually negotiated contracts.
280. Deputy John Lyons asked the Minister for Finance the steps he is taking to ensure that the over 5,000 Standard Life shareholders, who opted to receive their money from the sale of the business as a capital payment, will not suffer a financial loss, or be subject to tax, as a result of significant postal delays, through no fault of their own; if he has liaised with An Post to identify the cause of the delay; if he will also liaise with the Revenue Commissioners, and introduce a measure similar to that undertaken in 2014, in a similar incident with Vodafone shareholders; and if he will make a statement on the matter. [28640/15]
View answerThe UK company Standard Life plc, offered its shareholders the option of having return of value payments due to them treated as income or capital, with treatment as income being the default position in the absence of shareholders choosing an option within a specified time which has now elapsed.
The Revenue Commissioners have informed me that, from an Irish tax perspective, the position is that if the Standard Life return of value payment is received as income by an Irish resident taxpayer it will be taxed under Income Tax rules. If it is received as capital it will be taxed under the Capital Gains Tax rules.
In last year's Finance Act, I included provisions allowing for a measure of tax relief to the many thousands of Irish shareholders with a small shareholding in Vodafone plc who inadvertently found themselves subject to an unintended liability to income tax, PRSI and USC rather than a nil capital gains tax liability arising from a return of value payment from that company. I did this because the shareholding of very many of those individuals arose originally from their investment in Eircom plc and, as a result of which investment, they continue to carry capital losses. I considered, given the particular background in that case, that to leave those shareholders with income tax and other liabilities on foot of a decision they inadvertently made or did not make at all would have been inequitable. This particular background is not a feature of the Standard Life return of value case.
The fact that notifications of the options made by some individuals in the Vodafone case last year were delayed in the post beyond the deadline date in that case or were otherwise not dealt with by the company as shareholders would have wished were not factors in my decision to provide the relief, the reason for which I have outlined above.
I am not in a position to say who or what is responsible for the problem that has arisen for the Irish shareholders in Standard Life plc. While I can understand the frustration of the shareholders, I do not think it an unreasonable point to make that the State should not be required to intervene by way of changing tax legislation on each occasion that a difficulty arises resulting from the administrative arrangements put in place by commercial public limited companies for dealing with their shareholders.
All that said, I will give careful consideration to the views and concerns expressed by the Deputy, as well as those of others that have been expressed to me in this matter, in the course of my preparations for the forthcoming Finance Bill.
281. Deputy Colm Keaveney asked the Minister for Finance if his Department, with reference to Ireland’s economic outlook, has conducted any risk analysis on the impact of a Greek exit from the eurozone; the impact of any slowdown in the Chinese economy, including the knock-on impacts on the global commodities markets; if he will provide an assessment of these risks; the way he plans to hedge against them in the short-to-medium term; and if he will make a statement on the matter. [28680/15]
View answerMy Department continually monitors a broad range of economic developments and advises accordingly. For instance, in the Stability Programme Update (SPU) that was published in April the impact of alternative scenarios (such as weaker-than-assumed world growth) on the Irish economy and on the public finances was considered.
In relation to the possibility of a Greek exit from the euro area, I recently met with the Governor of the Central Bank to assess the implications of such a development; in addition, the Governor of the Bank and the Head of the NTMA briefed the Economic Management Council on developments.
It is clear that our trade and investment links with Greece are relatively small; moreover, the architectural improvements in the euro area in recent years should limit the scope for contagion. Having said that, I and my officials will monitor the situation on an ongoing basis.
Furthermore, the euro area Heads of State and Government (HoSG) have agreed that, subject to the Greek authorities implementing legislation in a number of policy areas over the next week or so, negotiations on an ESM programme of financial assistance can begin. This is a positive development and it is to be hoped that the authorities legislate accordingly. Remaining within the euro area is the best way forward for the Greek people.
I am conscious of recent developments in China which, as one of the largest economies in the world, has been a key driver of global growth in recent years. Any slowdown in the Chinese economy could dampen global demand and Ireland could not be immune from such developments. Indeed, the SPU analysis shows that 1 per cent reduction in world output would have a negative impact on Ireland's output of a similar magnitude, with adverse implications for the public finances.
Everything else being equal, lower demand from China for various commodities would lead to a reduction in their price.
To provide a buffer should future economic growth surprise on the downside, the Government will continue to implement the necessary structural reforms to increase the potential growth of the economy and continue the improvement in our fiscal position.
282. Deputy Mary Mitchell O'Connor asked the Minister for Finance if he will instruct the senior management of Allied Irish Banks to reconsider the decision to outsource bank jobs. [28684/15]
View answerAs the Deputy will be aware under the Relationship Frameworks the State does not intervene in the day to day operations of the banks in which it holds investments or their management decisions regarding commercial matters and hence any discussions around matters such as outsourcing are a matter for the bank, the relevant staff and their union representatives. Notwithstanding this position, my officials do take an active interest in how the bank's cost base evolves to ensure that the State's interests as shareholder are protected and to ensure that the Government's remuneration policy is enforced.
I have been informed that AIB has announced plans to outsource additional IT Services to third party providers and will now enter into formal consultation processes with employee representatives as required both by law and in line with engagement principles agreed with the IBOA.
I have been further informed that the companies involved in the proposed outsourcing are establishing Delivery Centres in Ireland (in consultation with the IDA). Both organisations are committed to expanding their operations in Ireland to service their Global clients and one of these already provides IT Services to AIB. The bank also advises that there are no planned compulsory redundancies as part of this activity.
