Written Answers Nos. 66-78
66. Deputy Mick Wallace asked the Minister for Finance his views on whether the NAMA policy of deleting e-mails of former staff who are not deemed business-critical will impact on the ability of any future commission of investigation into NAMA to fully examine all evidence available; and if he will make a statement on the matter. [16450/17]
Amharc ar fhreagra85. Deputy Mick Wallace asked the Minister for Finance if he is satisfied that the NAMA policy of deleting e-mails of former staff who are not deemed business-critical is in line with the governance standards of State bodies; and if he will make a statement on the matter. [16449/17]
Amharc ar fhreagraI propose to take Questions Nos. 66 and 85 together.
I am advised that NAMA's records management policy is entirely in line with best practice among public and private organisations. I am also advised that implementation of the policy ensures that all key records held by NAMA are retained and that they will therefore be available, if required, for any business purpose including in the event that a commission of inquiry is established into the sale of Project Eagle.
It is widely recognised that records management is a prerequisite to the effective management of FOI obligations by FOI bodies. Indeed, the Code of Practice for FOI published by the Department of Public Expenditure and Reform in 2015, in accordance with Section 48 of the FOI Act, states that in order to facilitate the smoother operation of FOI in public bodies, there is a compelling need for sound record management practices and systems. The Code further states that FOI bodies should implement records management policies that address the management, retention and destruction of records and that such policies should recognise the 'life cycle of records'.
The same perspective is reflected in best practice in other jurisdictions. For example, in the Code of Practice on Records Management, issued under Section 46 of the UK FOI Act to UK public bodies, the following is one of the key recommendations: "Authorities should define how long they need to keep particular records, should dispose of them when they are no longer needed and should be able to explain why records are no longer held".
I am advised that, in order to comply fully with its legal obligations under the FOI and Data Protection Acts, NAMA implements records management policies and practices which ensure that all records of business and longer-term value are stored in appropriate document repositories and retained for the appropriate period. This means that search and retrieval processes can be conducted efficiently and expeditiously so as to ensure that NAMA meets its statutory obligation to respond to FOI requests within the requisite deadline of four weeks. NAMA's records management policy enables the extensive records' search required under FOI to be carried out with more efficiency, given that the volume of searchable records is reduced by the deletion of records of transitory or short-term value. I am advised that NAMA's records management policy and approach has been endorsed by its internal auditors, PwC.
The deletion of ephemeral or transitory records on an ongoing basis is in accordance with established best practice from corporate governance, records management and FOI perspectives. I am advised that NAMA would not be able to meet its legal obligations under the FOI Act to respond to requests within the statutory deadlines in the absence of effective records management policies and practices.
A requirement of NAMA's Records Management Policy is that records that have a business or long-term value, including email records, are stored in central document repositories, including NAMA's Document Management System (DMS) and its file server. These repositories are searched in response to FOI requests.
NAMA's policy is to retain the mail servers of staff for at least one year after their departure from the Agency. This is to facilitate business continuity and to enable line managers to ensure that business and long-term value records are saved to the appropriate repository.
67. Deputy Micheál Martin asked the Minister for Finance the way his Department and officials are promoting Ireland as an alternative location for various sectors, particularly the financial sector, following Brexit. [12052/17]
Amharc ar fhreagraIn addition to the challenges posed to Ireland by the withdrawal of the UK from the EU, the Government recognises that there will also be opportunities for Ireland arising from Brexit. The Government is keen to maximise those opportunities where possible. In that regard, international financial services (IFS) has been identified as an area of potential opportunity arising from Brexit in relation to the movement of business from existing UK locations in addition to other businesses seeking a new EU location post-Brexit.
In March 2015, the Government launched the lFS2020 Strategy, a whole-of-Government approach to further driving the growth and development of the IFS sector in Ireland. The Strategy, led by a dedicated Minister of State for Financial Services Eoghan Murphy, is supported by all relevant public and private sector stakeholders who work closely and successfully on a joint basis.
The IFS2020 Strategy combines long-term strategic thinking with the flexibility to react to domestic and international developments, including Brexit. The Strategy, through annual Action Plans, provides a clear framework to maximise any opportunities that might arise from Brexit by ensuring that Ireland's offering for businesses considering a move of their activities out of the UK can compete with other potential locations. The annual Action Plans enable a tailored response to deal with these challenges and opportunities as they arise.
A key strategic priority of IFS2020 is the promotion of Ireland as a location for IFS and world class innovative products and services. The 2017 Action Plan continues to emphasise the strong commitment to this strategic priority. This Plan, which was developed in close consultation with all IFS stakeholders, was launched by Minister of State Murphy at the European Financial Forum in Dublin Castle last January. The 2017 Action Plan places a strong focus on Brexit: it underpins the Action Plan and also features within the suite of 40 individual measures to be actioned in 2017 by the different public and private sector stakeholders involved in IFS2020.
One of the key measures contained within the Action Plan for 2017 relates to the public sector financial services sub-group led by my Department. This sub-group has a strategic and prioritised approach to the implications of the UK EU referendum on the financial services sector, including IFS. In that regard, it works closely with the Cabinet Committee on Brexit.
The IFS Ireland banner brand was a key IFS2020 deliverable which was launched in 2016. The banner brand is the shared identity which all IFS stakeholders Government and industry bodies use to promote Ireland on the international stage using a clearly identifiable logo and single approach across the public and private sectors. An accompanying website, www.ifsireland.com, has also been established. Over recent months, Minister of State Murphy has launched the banner brand in the North American and Asian markets.
An IFS2020 Communications sub-group has also been established to further progress and develop IFS messaging to ensure the promotion of Ireland's IFS sector is maximised. This Communications sub-group continues to work both with private and public stakeholders to ensure that there is consistent messaging on Ireland's IFS offering.
The Action Plan for 2017 also commits the public sector and industry to actively engage on overseas promotion and marketing of the IFS sector to ensure a co-ordinated and strategic approach to the promotion and marketing of Ireland as a centre of excellence for IFS. This includes a co-ordinated programme of overseas trade missions, a shared public sector/industry IFS calendar, the promotion of IFS as part of ministerial visits to key financial services markets, including the St. Patrick's Day visits programme, and the deployment of the IFS Ireland banner brand by IFS industry associations.
Since the UK EU referendum in June 2016, Minister of State Murphy has undertaken significant visits to Asia (twice) and North America (twice), as well as numerous IFS engagements in London and Europe. The main purpose of such visits is to promote Ireland as a destination for financial services investment. Minister of State Murphy has used these visits to engage with key public sector and industry stakeholders to raise the profile of Ireland's IFS sector as part of the Government's ongoing programme of engagement in response to Brexit.
As part of the promotion of Ireland as a location for financial services, Minister of State for Financial Services Murphy hosted the second annual European Financial Forum (EFF) in Dublin Castle on 24 of January 2017 which attracted approximately 700 delegates from 30 countries representing around 400 organisations. As organisations consider their Brexit contingency plans, the Forum provided a unique opportunity to promote Ireland's IFS sector. Next year's EFF will be held at the end of January, 2018.
Budget 2017 allocated additional resources to the enterprise agencies, IDA Ireland and Enterprise Ireland, in the context of Brexit. The enterprise agencies continue to identify potential sources of new Brexit-related investment and are actively pursuing opportunities across a number of sectors, including financial services. IFS2020 is also integrated into the wider Government planning including the Action Plan for Jobs 2017 and the new Trade and Investment Strategy (Ireland Connected) which aim to drive market consolidation and diversification, and improve competitiveness.
Minister of State Murphy continues to work closely with all public and private sector stakeholders, including the enterprise agencies, to promote Ireland as the location of choice for specialist financial services and to achieve the IFS2020 job creation target of 10,000 net new jobs over its five year lifetime by its target date of 2020.
69. Deputy Thomas P. Broughan asked the Minister for Finance if his Department has requested NAMA to comment on claims made in a recently published report by a person (details supplied) produced for a developer regarding the value realised for the State from the operations of NAMA; and if he will make a statement on the matter. [16421/17]
Amharc ar fhreagra70. Deputy Catherine Connolly asked the Minister for Finance if he retains confidence in the board of NAMA in view of the fact that the practices of the current management have led to a loss of up to €40 billion for the State; his plans to change the structure or personnel in NAMA in view of the fact that the State will lose billions more in the future if the current practices are adhered to; and if he will make a statement on the matter. [16445/17]
Amharc ar fhreagra79. Deputy Richard Boyd Barrett asked the Minister for Finance if he has read the recent report by a person (details supplied) into NAMA, which claims it has failed in delivering its remit and has potentially lost €18 billion for the State; and if he will make a statement on the matter. [16467/17]
Amharc ar fhreagra87. Deputy Gino Kenny asked the Minister for Finance his views on the recent report by a person (details supplied) into NAMA's remit; and if he will make a statement on the matter. [16471/17]
Amharc ar fhreagraI propose to take Questions Nos. 69, 70, 79 and 87 together.
I would refer the Deputies to my comments made at the opening of the debate last week on the report of the Committee on Public Accounts regarding the sale of NAMA's Project Eagle portfolio, where I expressed my views on the recent criticism of NAMA following publication of a report commissioned by an ex-debtor of NAMA.
Deputies will be aware that during my opening comments I advised members of this House that before they accept as fact this analysis, they should read NAMA's response to this report, which is available on its website, www.nama.ie. NAMA has drawn attention to the fact that the report lacks rigour and objectivity and that it is fundamentally undermined by basic errors and invalid assumptions.
The main premise underlying the report's analysis assumes, unrealistically, that NAMA could have held the loans for seven years without generating any income from asset sales. It fails to acknowledge the Troika's requirement that NAMA redeem 25% (€7.5 billion) of its senior debt by end-2013, a target which could not have been achieved unless NAMA debtors had sold some of the assets under their control.
The report also fails to acknowledge the fact that NAMA's senior Government-guaranteed debt of €30 billion represented a contingent liability for Irish taxpayers and that it was a major concern for investors and for those lending to Ireland, including the Troika. In that context, it is unrealistic and naïve in the extreme to suggest that debtors and receivers could have withheld all assets from sale until 2017 and that NAMA did not have to reduce its guaranteed debt from an early stage.
The report also fails to acknowledge that NAMA is required by law to carry out its work expeditiously. Had NAMA debtors and receivers not sold Irish assets, NAMA would have been accused of hoarding and of preventing market recovery. It also fails to take account of the impact of NAMA sales in generating recovery in the Irish property market.
As the Deputies are aware, NAMA's purpose and objectives are set out in the NAMA Act as established by the Oireachtas. NAMA's primary objective is, as per Section 10 of the NAMA Act, to obtain the best achievable financial return for the State and to deal expeditiously with its assets in achieving this objective.
NAMA's continued strong performance since inception means that the NAMA Board now expects to achieve a surplus of up to €2.3bn over its life, subject to market conditions. I have stated consistently that I support the work of NAMA and I have full confidence that the Board and management of NAMA are achieving their commercial mandate in accordance with the NAMA Act.
71. Deputy Thomas Pringle asked the Minister for Finance his views on the proposals set out by a group (details supplied) for an alternative banking model which would combine the existing services and capacities of credit unions and post offices; and if he will make a statement on the matter. [16247/17]
Amharc ar fhreagraThe Programme for Government commits the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs to thoroughly investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions. It also calls for the investigation of a new model of community banking that could provide a suite of banking services through the Post Office Network, such as the Kiwibank model in New Zealand, where the Post Office-owned bank provides a comprehensive suite of financial services, from personal loans and bank accounts to credit cards, business banking, and insurance.
The Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs have undertaken a period of consultation on this matter. The consultation closed on 29 March.
The Public Banking Forum of Ireland met with the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs to present their proposals over the period of consultation. A representative of the Department of Finance attended the meeting. The Public Banking Forum of Ireland presented an initial document outlining their proposals and noted that a final version of the document would be completed within approximately four weeks.
The Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs, assisted by the Department of Finance, will be producing a report for both the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs and the Minister for Finance setting out the conclusions of the investigation into Local Public Banks. This report is expected to be completed by mid year.
72. Deputy Pearse Doherty asked the Minister for Finance when the persons affected by the tracker mortgage scandal will receive full redress and compensation; and if he will make a statement on the matter. [16435/17]
Amharc ar fhreagraThe Central Bank requires lenders to complete the Tracker Mortgage Examination in four phases, being:
- Phase 1: Development and Submission of Detailed Plan;
- Phase 2: Information Gathering/Review/Report Submission;
- Phase 3: Calculation of Redress and Compensation (where relevant); and
- Phase 4: Implementation of Redress Programme (where relevant).
It is critical that each lender carries out a thorough, comprehensive and robust review, which achieves fair outcomes for all customers. Therefore, while significant progress has been made, due to its scale and complexity, it will take some further time to complete the Examination.
The Central Bank has indicated that Phase 1 of the Examination is now complete.
Phase 2 of the Examination is ongoing. As at December 2016, nine lenders have submitted Phase 2 reports. The remainder are still engaged in their Phase 2 reviews and interim reports/status updates have been provided as appropriate. The Central Bank has invoked its powers to set specific timelines for lenders to complete Phase 2 of the Examination, the last of which will be completed by no later than end September 2017. By this date, the Central Bank expects all lenders to have identified all impacted accounts and have commenced engagement with most impacted customers. While the Central Bank expects that Phase 2 will be completed by end September 2017, payment of redress and compensation and the Central Bank's assurance will continue beyond this point for some lenders. The Central Bank expects lenders to commence Phase 3 and 4 as impacted customers are identified. However, it is important to note that Phases 3 and 4 (calculation of redress and compensation and implementation of the redress programme) can run concurrently with Phase 2.
In all, approximately 9,900 customer accounts have been identified as impacted by lenders as part of the Examination as at end February 2017. The vast majority of customers identified to end February 2017 have already been contacted and rates have been rectified on more than 90% of the accounts requiring such rectification. In some of these cases, redress and compensation has also been completed. To end February 2017, approximately €78 million has been paid in redress and compensation to approximately 2,600 impacted customers arising from the Examination.
74. Deputy Catherine Murphy asked the Minister for Finance if his attention has been drawn to the legal advice referred to by the former Central Bank Governor (details supplied) in respect of his statement regarding banks' ability to hide losses; and if he will make a statement on the matter. [16447/17]
Amharc ar fhreagraGiven the limited information supplied by the Deputy I am unable to assist with the question as posed. If the Deputy can provide further details such as a reference to the particular comments made by the former Governor then I will be in a better position to respond.
75. Deputy Michael McGrath asked the Minister for Finance the amount of lending carried out by a company (details supplied) to the construction sector to date; his views as to whether the State can do more to ensure the construction sector has access to finance to build the required homes and office accommodation around the country; and if he will make a statement on the matter. [16413/17]
Amharc ar fhreagraISIF has already invested in a number of financing platforms and projects in the construction sector and is actively examining other opportunities. ISIF is a co-investor in a number of funds designed to make finance available for new construction and particularly for sites without planning permission. Examples of these investments include:
- Activate Capital, which has to date provided funding for approximately 2,325 new residential units in the Dublin area with potential to support construction of up to 11,000 new units;
- Ardstone Residential Partnership, which has to-date acquired sites with the potential to deliver up to 2,113 new housing units to be delivered over 5-7 years and is targeting a total delivery of up to 3,750 new units;
- Wilbur Ross Cardinal Commercial Real Estate Mezzanine Debt Fund, with a focus on multiple real estate sectors, providing both pure finance and development capital, has already advanced funding for 1,700 new residential units.
Activate Capital is a private €500 million fund, which is financed through a €325 million loan note provided from ISIF and a €175 million loan note provided from KKR. Given Activate Capital has private shareholders, it would not be appropriate to disclose the Fund's commercially sensitive information, including the level of drawdown from the fund. This approach is in line with the normal banking confidentiality rules that apply to all private companies.
ISIF is considering a number of additional investments that would support housing provision, including a Housing Investment Fund to fund the delivery of new mixed-tenure residential developments of social and private housing, in a way that is both off-balance sheet and commercial. ISIF is also engaged in dialogue with a range of Higher Education Institutions ("HEIs") to support HEI capital programmes, emphasising on-campus student accommodation. ISIF gave a €54m long term debt facility to DCU for student accommodation and overall campus development programme. ISIF is exploring the possibility of providing equity finance to a number of operators in the build to rent sector.
Regarding infrastructure to enable residential development, ISIF seeks to work with the Local Infrastructure Housing Activation Fund (LIHAF), Local Authorities and commercial investment. A private sector pilot project for c. 3,000 units is being progressed. Public sector projects also for c. 3,000 units are being considered.
76. Deputy Joan Burton asked the Minister for Finance when he expects the partial sale of a bank (details supplied) to be realised; if, in view of the shortage of capital investment here, he will commit to using the funds generated from the sale for essential capital investment; and if he will make a statement on the matter. [16370/17]
Amharc ar fhreagraAs I have indicated previously, an IPO is the optimal route to recouping value from our investment in Allied Irish Banks (AIB) and I have identified two potential windows for a sale in 2017. These are a window in May/June this year and a window in the Autumn. Fortunately we are under no pressure to sell and the timing will be influenced by market conditions.
As the Deputy will be aware, the Ireland Strategic Investment Fund (ISIF) holds the AIB shares on behalf of the State as part of its directed portfolio. It is important to note that payments from the ISIF to the Exchequer arising from the proceeds of the disposal of the State's shareholdings in the banks are provided for under Section 47, (4) of the NTMA (Amendment) Act 2014. This legislation allows the Minister to direct the NTMA to make such payments to the Exchequer in respect of the proceeds of any such disposal or to take other steps as set out in the section in respect of such proceeds.
Regarding the sale of financial assets, these types of transactions do not result in a beneficial impact to the General Government Balance under the European System of Accounts framework. This is due to the fact that it is classified as a 'financial transaction' whereby it is essentially the exchange of one form of asset (shares, equities, loans) for another kind (cash). Consequently the sale of any shareholding in AIB would not count as general government revenue. Thus there will not be an increased capacity to spend on capital projects as a result of the sale of shares in AIB without affecting the general government balance.
While not improving the deficit, cash proceeds arising from the sale of AIB shares that are transferred to the Exchequer would reduce the Exchequer borrowing requirement and result in lower general government debt. A lower level of debt is not only beneficial in terms of the fiscal sustainability of the State but would also result in reduced interest payments in future years. The strategy of reducing the national debt is consistent with the Government policy of repaying the borrowing previously undertaken to finance the recapitalisation of the banking sector during the financial crisis. As I have previously stated, it is my position that the proceeds from the sale of the State's shareholdings in Irish banks, including AIB, will be used to reduce the outstanding level of public debt.
78. Deputy Michael McGrath asked the Minister for Finance his views on the possibility of the credit union movement providing funds for investment in social and affordable housing; the engagement that has taken place to date between the sector and his Department; and if he will make a statement on the matter. [16416/17]
Amharc ar fhreagraI am pleased that the credit union sector is considering various proposals to increase its income and develop its business model. My Department has received a number of such proposals from both the Irish League of Credit Unions and from the Credit Union Development Association. Proposals from both representative bodies, in relation to the funding of social housing, are at various stages of development. While the Department of Housing, Planning, Community and Local Government is the Department primarily responsible for the formulation and implementation of policy and for the preparation of legislation in relation to housing, any such proposals would require approval of the Registrar of Credit Unions at the Central Bank before they could be implemented.
The Central Bank has informed me that it has received information regarding proposals for credit unions to provide funding for social housing and is currently engaging with the sector on those proposals. It further stated that while it does not comment on specific proposals, such investments could be facilitated by future regulations made by the Central Bank, where appropriate. The Central Bank also stated that it is willing to consider the type of regulations that would be required to facilitate such proposals. However, the Central Bank's key consideration in evaluating such proposals is its statutory mandate to ensure the protection of members' savings by credit unions and to ensure the well-being of the sector generally.
Officials from both my Department and the Department of Housing, Planning, Community and Local Government have met with the representative bodies on a number of occasions to examine how credit unions can assist in the area of social housing. Officials from both Departments have also met with the Central Bank. Separately, communication is ongoing between the Department of Housing, Planning, Community and Local Government and my Department.
On 1 January 2016 I commenced the final sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 (2012 Act) following discussions with credit union representative bodies. Following commencement of the legislation, the Central Bank introduced the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, regarding a number of areas including savings, borrowing, lending, investments and liquidity.
Investment regulations made specific reference to section 43 of the Act and to further classes of investments in which a credit union may invest its funds. The regulations provide that investments in projects of a public nature include, but are not limited to, investments in social housing projects. The Central Bank will review the investment regulations for credit unions, including a public consultation, in 2017.
Notwithstanding any potential changes that may be made to the regulations, the legislative requirement for credit unions to ensure investments do not involve undue risk to members' savings will remain the overriding factor which must inform all credit union investment decisions.
