Mr. Seamus McCarthy:

The National Asset Management Agency is tasked under the National Asset Management Agency Act 2009 to acquire loans from certain Irish financial institutions, to protect and enhance the value of the assets it has acquired and to dispose of those assets or the underlying collateral in a timely manner. A key objective for NAMA in its management and ultimate disposal of the assets is to maximise the return to the State.

The process of transfer of the targeted loan assets to NAMA was completed in 2011. The acquisition values for the loans were finalised in 2012. NAMA has paid a total consideration of €31.8 billion for the loans acquired. This was 43% of the gross amount of €74 billion owed to the financial institutions by the related debtors. That debtor liability transferred in full to NAMA.

To facilitate effective management of the individual loans, NAMA has grouped them on a debtor connection basis. Each portfolio of loans is managed collectively. NAMA undertook a comprehensive business plan process whereby each debtor connection was required to submit a business plan for the connected portfolio of loans, setting out proposed debt repayment strategies.

NAMA concluded its assessment of the individual debtor business plans in 2012. Arising from this process, it has adopted a management strategy in respect of each of its debtors. At the end of 2012, NAMA had agreed a support or disposal strategy in 76% of cases. In the remaining 24% of cases, an enforcement strategy was determined as the optimum approach.

The financial statements for 2012 received a clear audit report, which issued on 2 May 2013. Without qualifying my audit opinion, I have drawn attention to Note 2.1 in the financial statements. This describes NAMA's main funding source, which is in the form of short term borrowing with a Government guarantee. The note explains the basis on which the board is satisfied that it was appropriate to prepare the financial statements on a going concernbasis. Some of the key financial highlights for 2012 are: NAMA generated a profit, after impairment, of €228 million; interest on loans recognised in the year amounted to €1.2 billion; just under €3 billion was raised in 2012 from the sale of underlying collateral and loan assets; the 2012 impairment charge of €518 million on loans and receivables reflects a net deterioration over the year in NAMA's projected cashflows from its loan assets - the total accumulated impairment charge to end 2012 was €3.3 billion; the carrying value of loans and receivables at end 2012 was €26 billion before impairment; by end 2012, NAMA had redeemed €4.75 billion of its initial borrowing.

Two special reports on NAMA have been published by my office to date. The first report, published in October 2010, reviewed the asset acquisition process and the governance and procurement structures put in place. The second report, published in May 2012, reviewed the loan acquisitions to date and the profile of the collateral underlying the loans acquired. It also looked at how NAMA manages its relationships with borrowers and at the results of its initial debt management activities. It found that a major challenge faced by NAMA was to ensure that remittances by debtors out of their rental income were based on up-to-date control listings.

Under section 226 of the NAMA Act, I am required to carry out an assessment of the extent to which NAMA has made progress in achieving its overall objectives. The analysis to underpin the report has been substantially completed and the report is now being drafted. I expect that the report will be finalised in the coming months.