Thursday, 22 November 2018
Ceisteanna - Questions - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
3. To ask the Minister for Finance the status of the work of the National Asset Management Agency, NAMA; the expected surplus to be returned to the State; the way in which it will be used; when the agency will be wound up; and if he will make a statement on the matter. [48710/18]
NAMA is an agency that does not tend to be discussed here until controversies arise. I want to receive an update on its work, the surplus it is expected to return, the number of loans that remain on its books, when it expects to be wound up and what the Minister intends to do with the surplus he expects to be delivered.
It is expected that NAMA will substantially complete its work by the end of 2020-21. Over 2020 and 2021 it expects a surplus currently projected to be €3.5 billion to be available for return to the State. NAMA announced last year that it had redeemed all of its €30.2 billion in senior debt, which was guaranteed by the State. Since April 2018, it has commenced the redemption of its €1.6 billion in subordinated debt. Notwithstanding the successful achievement of repaying the State's contingent liability three years ahead of schedule, there is still a significant body of work yet to be completed by NAMA. While it is currently estimated that it will return a surplus in the region of €3.5 billion to the Exchequer, this surplus has yet to fully crystallise. It is important to note that the realisation of this surplus depends on the success of NAMA's ongoing deleveraging, its Dublin docklands SDZ programme and the residential funding programme. The final phase of its deleveraging will be slower, with few major sales, but it expects the final major sales to be completed by the end of 2018. The focus to 2020 will be on the Dublin docklands SDZ and residential delivery programmes.
NAMA was mandated in late 2009 to deal expeditiously with its acquired loan portfolio and obtain the best value from it. It has been very successful in achieving this mandate. It continues to de-risk its positions in order that, by 2020, the real estate and financial assets supported by NAMA funding will comprise a relatively small portfolio of liquid commercial and residential exposures. NAMA's end-of-life strategy is being considered actively, with the maximisation of the return of any surplus to the State in respect of these remaining assets.
On the end-of-life strategy, did the Minister state it will be the end of 2021 before the agency is wound up? My understanding until now was that the projected date for the winding up of the agency was 2020. The Minister might deal with that issue.
Will the Minister give me an update on the carrying value of loans that remain with NAMA? At the end of 2017, the figure was €3.2 billion, net of impairments. Approximately 10% of that portfolio was London based and 64% Dublin based, with the remainder based around the rest of the Republic of Ireland. Will the Minister update us on that issue? Will he advise me whether there is a crossover between NAMA and the new Land Development Agency? Does he intend to have a transfer of expertise and personnel? What relationship is there between the two agencies?
Will the Minister clarify the end date and the nature of the work that will be outstanding after NAMA's last loan portfolio is sold?
On the exact timing, the information I have is that the agency will have its work completed between 2020 and 2021. I expect the work to continue into 2021.
The Deputy asked about the remaining portfolio. I do not have any information that is more up to date than what the Deputy has just given me.
The answer to the Deputy's third question regarding the intersection between the work of NAMA and the work of the Land Development Agency, LDA, is that there are personnel who have worked in NAMA who will now be working in the LDA. In particular, I believe the new chief executive of the LDA has an extensive background in NAMA.
The surplus has to be put in the context of the crystallisation of losses of over €40 billion when the NAMA transfers went through from 2009 and 2010 onwards.
On the timeline, there is a need for clarity on the work NAMA will be undertaking from the date of the last portfolio sale which, if I heard him correctly, the Minister has signalled is likely to be at the end of this year. He is saying, however, that the agency will continue to operate until 2020–21. My understanding all along was that the agency would complete its work and be wound up by 2020. The Minister might clarify what the agency will be doing from the time of the sale of the last loan portfolio. Managing loan portfolios was its core function. What will it be doing from the last sale until it is wound up? The Minister mentioned the Dublin docklands SDZ and the delivery of other housing programmes.
I will deal with each of the Deputy's points in turn. We expect the final major sale by NAMA to take place by the end of the year. The work it will do up to 2020 will have two elements. The first will involve the delivery of the Dublin docklands SDZ, in which it plays a considerable role, and the delivery of a residential programme there and at a number of other sites. The second piece of work will concern how it will de-risk various positions in order that, by 2020, its assets, be they financial or State assets, will comprise a very small percentage of the total number of exposures with which it will have to deal.
There is work under way on the work NAMA might do after the sale. We are discussing the issue with the agency. As the Deputy knows, we have an agreement with the Commission on the point at which the agency will come to an end. We will be delivering on that commitment, about which I want to be unambiguous.
I am increasingly conscious of the amount of expertise and skills we have built up in the NAMA organisation. I want to engage in dialogue with the agency to determine how we can retain them for the State, if we can, while still meeting the commitment made to the European Commission which we will be honouring.