Brian Hayes (Dublin South West, Fine Gael)

I thank Deputy McCarthy for raising this very important matter. As the Minister for Finance, Deputy Noonan, stated in the Seanad some time ago, he does not propose to change the NAMA legislation at this stage.

NAMA has advised that in agreeing business plans with debtors, it normally looks for a reduction of 50% to 75% in overall costs and that any remuneration paid to debtors comes from this much reduced budget. I am very much aware of the concerns about the remuneration packages that certain NAMA debtors are being allowed to take from the overheads figure agreed by NAMA. However, unpalatable as this may seem, I can accept the assurances from NAMA there really is no better alternative if we wish to ensure the maximum return is made to the Irish taxpayer. In recent weeks, the chairman of NAMA has made this point to both the Committee on Finance and Public Expenditure and the Committee of Public Accounts.

The chairman further stated he would love to be able to tell Deputies that the agency could refuse to deal with all 850 developers, throw them out and get someone else to run the businesses. However, he made it clear that while this would be a very popular decision, it would not make commercial sense because, regardless of what they had done, the developers were the people in place who knew their own businesses.

NAMA has informed me that, in general, employing an external asset manager to manage the assets would cost significantly more than the cost of retaining the original debtor. The chief executive officer of NAMA recently stated that the cost of an external manager would range in the region of 1.5% of the asset value per annum. He pointed out that on an asset of €100 million value, one could pay €150,000 to a private sector individual to manage it but one might be able to get a debtor to do it for €60,000 or €70,000. According to NAMA, the majority of debtor remuneration packages fall into the €70,000 to €100,000 range, including all benefits-in-kind. However, in the two cases the Deputy alluded to, the debtors' remuneration package authorised by NAMA as part of the budget for overheads is €200,000. I am aware that €200,000 is an extraordinary amount of money for most of us. The lower figure of €75,000 is an amount that many people would love to earn. However, the figures are driven by the need to maximise value for the taxpayer.

I am informed by NAMA that these packages generate a much better return to the taxpayer than the option of enforcement and the employment of asset managers for considerably large portfolios of assets. Several billion euro of taxpayers' money could be at stake. NAMA is required to get the best return by having the person it believes is best placed to help it to achieve its returns. In many of these cases, the alternative would be to pay exorbitant rates of up to €180 per hour to receivers who could take a long time to work out the assets. Using this figure, a 40-hour week would amount to over €7,000 in fees per week. NAMA assures me that it drives as hard a bargain as it possibly can, or as is practical, on behalf of the taxpayer with developers whose loans it controls. The reality is that if developers do not have an incentive to work with NAMA, they are most unlikely to engage with NAMA and the agency will be forced to foreclose through the appointment of receivers. In that case the return to NAMA, and as a consequence the taxpayer, would likely be significantly reduced. The fact that NAMA has had to take enforcement action in 91 cases shows that many developers consider NAMA's terms and conditions to be too onerous. It also shows that NAMA is not soft on developers and is looking to impose tough conditions. NAMA has assured the Minister for Finance that it will continue to make decisions about working with developers or taking enforcement actions on a case-by-case basis, in line with its commercial mandate. The objective of the incentive is to get the debtor working, not so much for himself but for the taxpayer and for NAMA. Although this is difficult to accept - I appreciate the Deputy's remarks in that respect - in the view of NAMA it is the most appropriate means of achieving its objectives as an organisation at this time.

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