Mr. Nick Ashmore:

Rather than give a formal written statement, we brought a short presentation. I propose to talk through that. I am not sure if the slides are available. Can they be shared?

I refer to the first slide. By way of context, as the Chair said, I am the director of the Ireland Strategic Investment Fund, ISIF. That sits within the broader architecture of the National Treasury Management Agency, NTMA. The agency is overseen by a group, which is the board. It has a number of governance committees and a number of functions, which are laid out in the slide. There is the Ireland Strategic Investment Fund; the National Development Finance Agency; the funding and debt management unit, which handles of the bond issuances and treasury management; the New Economic and Recovery Authority, NewERA; and the State Claims Agency. Of the governance committees, the investment committee is specific to ISIF. We all share the same core set of common services and resources with the corporate functions, which Mr. Black leads. We thought it might be helpful to talk through the various funds that have either existed or currently exist in terms of the management of sovereign wealth.

I will move on to the next slide. The original sovereign fund in Ireland was the National Pensions Reserve Fund, NPRF, which was established in 2001 under the National Pensions Reserve Fund Act 2000. It was established for the purpose of meeting as much as possible of the cost to the Exchequer of social welfare pensions and public service pensions to be paid from 2025 until at least 2055 or later. It came into operation in April 2001. Given the long-term nature of the fund, its allocation was 80% towards equities and 20% towards bonds at a high-level asset allocation and at expression of the risk appetite of the NPRF commission, which was tasked with the management and ownership of the fund. Over time, and in order to achieve diversification and exploit other potential sources of additional long-term return while managing the risk within the same risk profile, the strategy evolved to include other asset classes such as small capitalisation equities, corporate bonds, commodities, absolute return funds, private equity, property and infrastructure.

The fund had its own independent governing body, namely, the NPRF commission, which was appointed by the Minister for Finance. A team was established within the NTMA to manage the fund. It adopted both strategic and dynamic asset allocation to efficiently manage the fund against changing market dynamics. The investment strategy was developed and then implemented within the NTMA. It sought to have a high level of transparency to a wide set of stakeholders and, ultimately, both sought but also had to have a high degree of flexibility in its approach, given the way that mandates evolved and markets regimes changed. Ultimately, the financial crisis took hold over the country.

I will move onto the next slide, which is about the history of the fund. It shows the evolution of the NPRF as the funds were brought in. Over that first period of time, there was an annual contribution of 1% of GNP. That equated to approximately €1.5 billion a year on top of the original €7 billion that was contributed at the start, which largely formed the proceeds from the sale of Eircom in the public offering. The fund had a fairly straightforward run over those first seven or eight years. Then a couple of things happened. First, 2008 was a particularly hard year in the markets and the fund took a hit. As we started to move through 2008, 2009 and 2010, the inception of what we call the “directed portfolio” took place. That was the use of a portion of the fund to fund investments into AIB and Bank of Ireland as part of the Government recapitalisation of those institutions. Ultimately, the fund invested approximately €20.7 billion into AIB and Bank of Ireland. At the end of 2021, which is our last published set of figures, that was reflected by a residual value of about €4.8 billion and approximately €11 billion of proceeds received to that point. That has since evolved. At that point, we still owned approximately 71% of AIB and approximately 8% of Bank of Ireland. Bank of Ireland’s shareholding has now been completely liquidated and the shareholding in AIB has been traded out down to 53%. We still have a slight majority holding in AIB within the directed portfolio. The NTMA has no real role in the management of the directed portfolio. We simply execute on behalf of the Department. The SFAD team within the Department manages that investment on behalf of the Minister.