As part of its Annual Report for 2018, NAMA revised its projected surplus to be returned to the State to €4 billion, subject to prevailing market conditions. This figure was reaffirmed in the Section 53 Annual Statement 2020 which was laid before the Houses of the Oireachtas in October 2019. The realisation of the surplus depends on the success of NAMA’s ongoing deleveraging and the completion of its Dublin Docklands SDZ and residential funding programmes.
NAMA’s €4 billion surplus represents a projected entity return on investment (EROI) of 37%. The EROI is based on the comparison of NAMA’s projected terminal surplus position 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 as part of the loan acquisition price. NAMA’s EROI target benchmark, as approved by its Board in 2014, is 20%.
It is important to note that the surplus has yet to fully crystallise and that the transfer of surplus funds to the Central Fund can only begin after NAMA's remaining subordinated debt and equity obligations have been repaid in full, which is expected to be in mid-2020. It is envisaged that €2 billion will be transferred to the Exchequer in 2020 with a further €2 billion being transferred in 2021. This timeline is contingent on NAMA’s projected surplus of €4 billion remaining unchanged and prevailing market conditions that may determine the timing and disposal proceeds of residual assets.
Any NAMA surplus paid, while Exchequer positive, will not impact the general government balance, in line with Eurostat rules. It will be a decision for the Government as to how any surplus returned by NAMA will be utilised within the framework of the fiscal rules at that time. The intention has always been to use such receipts from the resolution of the financial sector crisis to pay down our national debt and reduce our debt servicing costs.