As part of its Annual Report for 2018, NAMA recently revised its projected surplus to be returned to the State to €4 billion subject to market conditions prevailing. The realisation of this surplus also depends on the success of NAMA’s ongoing deleveraging and completion of its Dublin Docklands SDZ and residential funding programmes.
Based on the end 2018 projected surplus NAMA has estimated a entity return on investment (EROI) of 37%. The EROI benchmark is calculated 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 this 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 2020.
It is currently envisaged that the available surplus will be transferred to the Exchequer in 2020 and 2021. It is estimated that €2 billion will be transferred 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.
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.