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NAMA Loans Sale

Dáil Éireann Debate, Tuesday - 21 May 2013

Tuesday, 21 May 2013

Ceisteanna (59)

Niall Collins

Ceist:

59. Deputy Niall Collins asked the Minister for Finance if the National Asset Management Agency has changed its strategy to give greater preference to loan sales rather than direct asset disposal; and if he will make a statement on the matter. [23914/13]

Amharc ar fhreagra

Freagraí ó Béal (5 píosaí cainte)

As the Deputy is aware, NAMA is obliged under section 10 of the NAMA Act to obtain the best achievable financial return to the State on the assets acquired by it. I am advised by NAMA that there has been no change in its strategy. For any particular asset or group of assets, NAMA assesses whether the best return to the taxpayer is achieved through the sale of the underlying property by a debtor or receiver or through the sale of the loan by NAMA itself.

As set out in response to recent parliamentary questions on the topic of NAMA loan sales - Questions Nos. 179 to 182, inclusive, of 16 October 2012; Question No. 167 of 16 January 2013; Questions Nos. 279 and 280 of 19 February 2013; and Question No. 216 of 23 April 2013 - NAMA has adopted a very thorough approach in line with accepted international market best practice for the sale of loan portfolios. NAMA operates a phased and orderly programme of disposal of both assets and loans to achieve the best possible outcome for the taxpayer. NAMA’s policy in regard to loan sales, as with the sale of properties by its debtors and receivers, is that other than in exceptional circumstances, loans should be openly marketed. To date, loan sales have been mainly triggered by third party approaches. After receiving such approaches, NAMA’s practice is to appoint loan sale brokers to market the loans and to deal with offers from the original bidder and from other interested parties.

As the Deputy is aware, the unaudited accounts for NAMA for the fourth quarter of 2012 were published last month and these accounts highlight the progress that NAMA has been making in delivering on its business plan. A detailed account of debtor strategies will be included in NAMA’s annual report and financial statements for 2012 which have been submitted to me and will be published in the coming weeks.

NAMA has maintained a strong cash position, generating over €10 billion in cash, it has repaid €4.75 billion in NAMA bonds and I am advised that it will meet its target to redeem €7.5 billion by the end of this year. In addition, NAMA is playing a key role in supporting employment in the property and construction industry and is continuing to work with a wide range of public bodies, including Government Departments, local authorities and State agencies.

The reason I put down the question is that I noticed a lot of recent activity in NAMA has centred around the sale of loan portfolios as opposed to the sale of actual property assets. There was one high profile sale, Project Aspen, which was in regard to a joint venture, and another which was subsequently cancelled in regard to a portfolio called Project Club. I know the Minister has issued guidance to NAMA in regard to how the sale of property assets is to be conducted with a view to ensuring they are open market sales. The Minister referred to a certain procedure involving the appointment of loan brokers who then put the portfolios out to the market under certain circumstances. He might advise as to whether he has issued comparable guidelines to NAMA in respect of the sale of loan portfolios as he has already done in respect of the sale of property assets.

As the Deputy knows, NAMA operates under the NAMA Act and, in general, it operates totally independent of politics. The Deputy knows that while one may inquire for information from NAMA, it is a criminal offence to make representations to NAMA. The same rules apply to the Minister for Finance as to everybody else, apart from the specific bars the Minister has under the Act. The way I proceed is that the chairman of NAMA, Mr. Frank Daly, keeps me informed of all the major issues. When required, I seek the advice of the gentlemen I appointed to advise me in accordance with the Act, sometimes on the telephone or, about once a quarter, they come in and we have a formal meeting on that basis. That is the way it works. There is a general awareness of what is going on. As I said, it is a property organisation that is operating independent of politicians, but it is, of course, accountable to the Dáil. Its CEO and chairman report to the Dáil committee quite frequently and they report to the Minister on an ongoing basis.

We need a very big debate in regard to the direction NAMA is taking, given the fact it has now bunched these loans into projects such as Project Aspen and Project Club. I am glad Project Club has been cancelled because there are serious questions in regard to individuals around that. Given the decision to sell portions of projects instead of individual assets, it is very clear NAMA is now incapable of managing the loans. We were told, from the establishment of NAMA, that it was to pursue developers to the ends of the earth to get the last penny from them. However, if these loans are sold on as they are, below par or at par value, these developers will in many cases walk free from their debts - that is the reality.

We have to ask why NAMA is not using the measures established under the last Finance Bill or the real estate investment trusts, or REITs, legislation, which allows these assets to be transferred, which would have a benefit for the Irish economy, and why it is actually mass-selling projects at this time. Is it incapable of doing its job, which, we must remember, is as an asset management agency, or is there a fundamental shift in the way NAMA is approaching matters? We have seen the cancellation of Project Club. How can we be sure developers who owned the original loans are not advising potential bidders? What is there to stop that? The Minister knows I have put down a number of parliamentary questions in this regard and I am glad these assets have been brought off the market since then.

As I have said, it is an independent organisation put in place by the Houses of the Oireachtas and I have confidence in it as an organisation. I believe it is doing what it says on the tin. It is behaving in accordance with its mandate and it is profitable at present. I have no plans to introduce amending legislation at present and I am not going to interfere with its process either. It is accountable both to the Minister and to the Houses of the Oireachtas. I will maintain that accountability but I will not interfere in commercial decisions being made by NAMA. As property prices rise in the country, I hope it will continue to be successful.

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