Michael McGrath (Cork South Central, Fianna Fail)
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8. To ask the Minister for Finance when the National Asset Management Agency will complete its original mandate; what he expects the financial outturn to be; if he will formally expand the role of the agency; when he expects the agency to be formally wound up; and if he will make a statement on the matter. [1325/16]

Michael McGrath (Cork South Central, Fianna Fail)
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As we move towards the end of the current Dáil, it is timely that the Minister for Finance give the House an update on the work of NAMA. When does the Minister expect NAMA to complete its original mandate given in 2009? What does anticipate the financial outturn to be? Will he formally expand the role of the agency? It is moving towards taking the role of a development agency. When does he expect NAMA to be formally wound up?

Michael Noonan (Limerick City, Fine Gael)
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I thank the Deputy for this very important question. Yesterday, I signed off on the most recent quarterly report for NAMA to go to the Government next week. We will publish it immediately after that, providing a very full update on the quarterly position with reflections back on the annual position.

Under section 10 of the NAMA Act 2009, NAMA's principal commercial objective is to achieve the best achievable financial return for the State, having regard to the cost of acquiring and dealing with bank assets and its own cost of capital and other costs. The NAMA board is seeking to fulfil this objective through three major strategic initiatives, each of which is predicated on conditions in the Irish market remaining favourable and on NAMA being in a position to retain specialist staff.

First, NAMA aims to, and remains confident it will, redeem all of its senior debt, originally €30.2 billion, by 2018. This is two years ahead of schedule. By the end of 2015, it had redeemed a cumulative 73%, or €22.1 billion of its senior bonds, and it is well on its way to meeting its end of 2016 target of 80%, or €24 billion.

Second, NAMA has committed to facilitating the timely and coherent delivery of key grade A office, retail and residential space within the Dublin docklands strategic development zone, SDZ, where a number of assets secure NAMA loans. Already, out of a total of 3.8 million sq. ft. of commercial space to be ultimately delivered, 2.5 million sq. ft. is either under construction or has received or sought planning permission.

Third, NAMA has committed to funding the delivery of 20,000 residential units on a commercial basis by the end of 2020 on sites securing NAMA's loans in the greater Dublin area and in other locations.

NAMA is satisfied, based on current market conditions, that these commercial and residential delivery programmes can be funded without compromising its debt redemption targets and will enhance its projected terminal surplus.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for the reply. Can the Minister confirm that the estimated financial surplus at the end of NAMA's work is approximately €2 billion? NAMA paid approximately €32 billion for loans with a total book value of €74 billion. The fact that NAMA plans to support the construction of 20,000 homes on a commercial basis by 2020 is to be welcomed, provided it does not become a recipe for high cost housing and a source of huge financial returns for professional advisers. These homes are needed and will probably represent only approximately one fifth of the total number of extra homes that will be needed over the period.

Is NAMA moving from being an asset management agency to development agency? Does the Minister still envisage that it will complete its work by 2020 or even sooner, or does he envisage a longer-term role for NAMA as a development agency as opposed to what was originally intended?

Michael Noonan (Limerick City, Fine Gael)
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There are three points to be made.

When the chairman of NAMA, Mr. Frank Daly, spoke at a meeting of the Joint Committee on Finance, Public Expenditure and Reform, he said that subject to market conditions remaining favourable, NAMA "will have generated a surplus of the order of €2 billion to hand over to the Exchequer". That has been confirmed by the chairman. There was market failure on the housing side, as the Deputy knows, but it is repairing itself very rapidly now. To compensate for the market failure, we have got NAMA to provide houses. They are starter homes, by and large, as well as some apartments. There is a mix. I think there is a split of approximately 70:30. They are well under way. NAMA is seeking to meet its quota for 2016. It is doing this on commercial grounds. There is no anti-competitive practice or anything like that.

Michael McGrath (Cork South Central, Fianna Fail)
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Although the provision of 20,000 homes by 2020 would be an important contribution towards meeting the housing supply need that undoubtedly exists in this country, the Minister will appreciate that it would represent just a fraction of the total requirement. Other issues in the private sector, including access to finance and the viability of development projects that are seeking to get under way, still need to be tackled in conjunction with the work that NAMA is doing. Can the Minister confirm his plan for NAMA as it goes forward? It has to conclude its existing mandate under the relevant Act. The Minister has given his approval for NAMA to be involved in the construction of 20,000 homes by 2020, principally in the greater Dublin area. Does he envisage that this work will mark the end of NAMA's role? When will NAMA cease to exist?

Michael Noonan (Limerick City, Fine Gael)
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NAMA expects that its deleveraging work will be completed by 2018. Its focus over the period from 2018 to 2020 will be on the completion of the docklands residential funding programme. As I have said, NAMA is in a position to fully pay all of its senior bonds. It also expects to pay its subordinate debt in full by 2020. In light of the extensive work and challenges that face NAMA over the coming years, I have no plans to formally expand the role of the agency beyond its current remit. It is also too early to speculate whether NAMA will have made sufficient progress on its various strategies to warrant consideration of its dissolution in advance of 2020, which is the date that was originally envisaged. We are leaving 2020 there as the relevant date. Perhaps NAMA will make more rapid progress than we envisage. I would like it to complete two important economic and social projects - the strategic development zone in Dublin and the house-building programme - that will stretch out for five years after its deleveraging work has been completed satisfactorily.