Ruth Coppinger (Dublin West, Socialist Party)
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7. To ask the Minister for Finance the projected value of National Asset Management Agency bonds to be redeemed for each year from 2015 to 2018, broken down by bank. [17575/15]

Ruth Coppinger (Dublin West, Socialist Party)
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My question relates to the value of NAMA bonds to be redeemed for year from 2015 to 2018, broken down on a bank by bank basis, and the cost of NAMA to the State.

Michael Noonan (Limerick City, Fine Gael)
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The NAMA chief executive stated in his opening address to the Committee of Public Accounts on 18 December 2014 that NAMA is aiming to redeem a cumulative 80%, or €24 billion, of its senior debt by the end of 2016 and hopes to have redeemed all of it by the end of 2018.  He stated that these targets were predicated on conditions in the Irish market remaining favourable and on NAMA being in a position to retain sufficient specialist staff to enable it to generate the optimal financial return from the realisation of its residual loan portfolio. I am advised by NAMA that any redemption of senior bonds ispro rata by reference to the amounts held by each institution.  The current breakdown of outstanding NAMA senior bonds by holding institution is set out in the following table. Of the total of €12,590,000 of senior notes outstanding, AIB holds €8.78 million, or 69.7%, of the total; Bank of Ireland holds €2.213 million, 17.6%, of the total; Permanent TSB holds €1.202 million, or 9.5%, of the total; and the Central bank of Ireland holds €395,000, or 3.1%, of the total.

Ruth Coppinger (Dublin West, Socialist Party)
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The entire matter of NAMA needs to be reviewed. Beginning in March 2010, NAMA purchased loans from five banks for par value or the total borrower debt owed on them in October 2009, which amounted to €74.4 billion. It paid for the loans with NAMA bonds carrying a face value of €31.8 billion. As the bonds were guaranteed by the then Minister for Finance, they are effectively Government debts. However, to avoid NAMA debt appearing on the government balance sheet, NAMA was set up as a special purpose vehicle which allowed it to remain off the balance sheet under EURSTAT rules. Like the establishment of Irish Water, it is an accounting trick because the State is effectively on the hook for the debt. NAMA should really be counted as part of the national debt.

A breakdown of the par value of the loans for each bank reveals a significant discrepancy with what NAMA paid for them. NAMA was originally intended to turn a profit of €1 billion but one could argue that it has cost the taxpayer €40 billion.

Michael Noonan (Limerick City, Fine Gael)
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Generally speaking what the Deputy outlined is correct but while the nominal value was €74 billion, the purchase price of €31 billion was paid with bonds. As NAMA sells its loan books, it can repay the bonds. It has committed to repaying 80% by 2016. It is in a position to pay back all of its senior bonds and junior debt and still be in surplus. NAMA is not going to cost the State anything. Indeed, the latest predictions indicate that NAMA will have a surplus, which means in simple terms that it will turn a profit, at the conclusion of its transactions. The burden will not fall on the shoulders of the taxpayers because the sale of the loan books is paying off the aforementioned €31 billion. It is making good progress in this regard.

NAMA is fully accountable. I do not think the House generally knows that the Comptroller and Auditor General has responsibility for auditing NAMA and that five or six staff from that office are permanently assigned to examining all transactions in NAMA.

Ruth Coppinger (Dublin West, Socialist Party)
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The hope is that NAMA will make money but when NAMA refers to making a profit, it means that it hopes to recoup more than €31.8 billion from the NAMA bonds it gave the banks for the loans, as well as interest on the bonds and its running costs. However, this ignores the loss of €39.6 billion that the State incurred through the State owned banks because of the 57% haircut crystalised on loans as a result of the establishment of NAMA. When NAMA states that it is making a profit, it is disregarding the loss to the State of nearly €40 billion entailed in setting it up. It is hoped that money will be recouped through the sale of AIB but that is based on an underestimate on the true cost of bailing out AIB and Bank of Ireland. If AIB is privatised and sold off, it is likely that the State will not get much back because that is how these things usually go.

The figure the Government cites for AIB is usually €20.7 billion but the true figure is closer to €30 billion. Similarly, with Bank of Ireland, the Government usually cites €4.7 billion, but the true cost is over €7.6 billion. What is the Minister's view on that?

Michael Noonan (Limerick City, Fine Gael)
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On the write-downs between the nominal value of the loans of around €74 billion and the €31 billion to which the Deputy referred, those losses were taken by the creditors who had borrowed from the banks. The losses are not to the taxpayer but to the individual creditors who effectively went broke. There are several examples of this, the most prominent of which are in the building and development industry. There are many others in ordinary businesses across the country which went broke during the crisis and there was a write-down of their loans.