Dáil Éireann Debate, Wednesday - 18 April 2012
1Deputy Michael McGrath asked the Minister for Finance if he is satisfied with the performance of the National Assets Management Agency to date; if he is confident that the agency will at least break even over its lifetime; when he expects the agency to wind up on completion of its work; and if he will make a statement on the matter. [19413/12]
Amharc ar fhreagraNAMA was established by the Oireachtas to remove systemic risk to the Irish banking system through the acquisition of land and development and associated loans from participating institutions and to obtain the best achievable return to the State from these acquired loans.
Since 2009, when it was established, NAMA has achieved significant milestones, including the valuation, purchase and transfer of relevant loans from the participating institutions. The establishment and development of the agency itself to carry out the tasks mandated to it by the National Asset Management Agency Act 2009 has also been an important achievement. The agency is now fully engaged in its core role of managing and selling the assets under its control with a view to achieving the best financial return for the State. The agency advises me that it has completed its initial engagement with close to 800 debtors. At this stage, it has assessed 99% of debtor business plans which has enabled it to identify and implement strategies to maximise the returns from the loans and underlying property assets.
The recently completed independent Geoghegan review found that NAMA had achieved a lot in a very short time and had done so while building the organisation from the ground up, and all of this while dealing with a very complex issue. Given the considerable work and achievements of the agency over such a short period, it is clear that its performance to date has been satisfactory. However, clearly much remains to be done over the coming years to ensure a successful outcome.
The NAMA board is reviewing its strategy in the light of developments in the Irish economy and in the property market since it published its business plan in July 2010. I am advised by NAMA that the key factors which the board considers critical in terms of NAMA's ultimate profitability include the performance of various economies in which its debtors' assets are located, the timing and sustainability of any recovery in the property market in Ireland, the sustainability of the UK property market, the availability of finance and the extent to which it can maximise the level of income produced by its loans and the property assets securing them.
Additional information not given on the floor of the House.
Following a recent exercise conducted by NAMA, the agency confirmed its expectation to at least break even. NAMA advises me that it is firmly on course to recoup for the taxpayer, at a minimum, the consideration paid to the participating institutions for the acquired loans in addition to funds advanced to protect and enhance the property assets securing these loans. Based on the agency's record to date, I have no reason to doubt the agency's confidence that it will achieve its targets over its lifetime, and I have asked the NAMA board to keep me informed of developments.
I note that the agency's own projections indicate that it expects to have completed its work within the initially projected ten year timeframe. This is an issue that will be kept under review. As the Deputy is aware, the National Asset Management Agency Act provides for an initial assessment by me of the extent to which NAMA has made progress in achieving its overall objectives and whether continuing NAMA is necessary for the purposes of the National Asset Management Agency Act. This assessment is to be carried out in 2013. In the interim, NAMA will continue to meet its extensive requirements for accountability, which include provision for the chairperson and CEO of NAMA to appear, if requested to do so, before a committee of the Oireachtas; reporting on a quarterly basis on a wide range of matters, including details in relation to loans, and which quarterly reports are laid before each House of the Oireachtas; preparing an annual statement setting out the objectives and the projections for the performance of NAMA for the year ahead, which again is laid before each House of the Oireachtas; and submissions of annual accounts to be audited by the Comptroller and Auditor General which are laid before each House of the Oireachtas. The Committee of Public Accounts may examine NAMA on these audited annual accounts.
I thank the Minister for his reply. I am sure he will agree that the performance of NAMA, the most important State agency in our economic history, will be critical to the country in the next few years. We now have the benefit of almost two and a half years of NAMA being in operation. The agency has a difficult job of dealing with the fall-out from the collapse of the property market and the construction industry. It is in a position of absolute dominance in the Irish property market.
Last month, NAMA came before the Joint Committee on Finance, Public Expenditure and Reform. I asked the chairman, Mr. Frank Daly, if he was confident that NAMA would at least break even over the course of its lifetime. He stated his belief that it would and that he was confident it would.
Based on what the Minister knows at this point and accepting that these are still early days, is he confident that NAMA will receive the €31 billion it paid for the loans plus the running costs of the agency? When does the Minister expect the agency to complete its work and wind up?
NAMA advises me that it recently carried out an analysis which indicated that the agency would repay all its senior bonds by the end of 2020, with a small surplus given one scenario and a relatively small loss given another scenario. It is predicting a break even, under present circumstances, on the basis of that analysis.
NAMA has also provided me with the unaudited accounts to the end of 2011. These indicate that NAMA expects to generate pre-impairment profit of €1.01 billion in 2011. Taking an impairment charge of €810 million into account, this should generate a profit for 2011 of €200 million. The calculation of the impairment charge is, of course, subject to final agreement between NAMA and its auditors and the Comptroller and Auditor General. I have no function in that process.
NAMA also assures me that it expects to make a pre-impairment profit in 2012.
I repeat my key question. Does the Minister for Finance, as Minister in charge of NAMA, share the confidence of the chairperson of NAMA that the agency will, at least, break even over the course of its lifetime? The Minister has restated the position of NAMA itself. We are well aware of that. It is on the public record. I want to know the Minister's own view. Does he agree with what the chairman has said? Can he confirm that?
I also asked about the timeframe for the operation of NAMA. Does the Minister envisage NAMA completing its work by 2020? Does he agree that it would be appropriate, given the changes in the Irish economy and the property industry since July 2010, that the business plan should be updated so that we can do a rigorous analysis of where NAMA is today?
It is unreasonable of the Deputy to expect me, in the first quarter of 2012, to take a different view from NAMA about what the situation may be in 2020. All I can do is to give him the assurances NAMA has given to me and, separately, to the Joint Committee on Finance, Public Expenditure and Reform. I accept those figures as the best possible estimate at this time.
As I said in my reply, there are many moving parts. We do not know what will happen in the property market in Ireland. It looks now as if there is the beginning of slight growth in the property market in Ireland. We are not sure what will happen in the property market in the United Kingdom or in the economies of countries where NAMA has significant portfolios. However, on the basis of the information available to NAMA at present, which the agency has shared with me, I share the view of NAMA that it will at least break even by 2020 and will complete its task in accordance with the Act.
