Written answers

Tuesday, 7 June 2011

Department of Finance

National Asset Management Agency

9:00 pm

Photo of Tom BarryTom Barry (Cork East, Fine Gael)
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Question 29: To ask the Minister for Finance if he will consider the establishment of an agricultural review board within the National Asset Management Agency, in view of the fact that it is shutting down viable agricultural industries and forcing the unnecessary slaughter of animals. [10267/11]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I do not consider it necessary to establish an agricultural review body within the National Asset Management Agency. In the particular case which may have prompted the Deputy's question, NAMA did not consider it appropriate that it should manage the loans, which had been advanced for agricultural purposes and where the property development element was not material, even where the loans were eligible by reference to the criteria set out in the Act and in the statutory regulations. Under Section 84 (1) of the NAMA Act, NAMA is not obliged to acquire each and every eligible bank asset. The loans, in this instance, had been acquired in advance of due diligence being carried out and when their purpose became apparent, the NAMA Board made a decision to reverse the transfer. I understand that the loans have now been re-acquired by the bank concerned.

The NAMA Board has established four statutory committees - the Audit Committee, the Credit Committee, the Finance and Operating Risk Committee and the Risk Management Committee - under Section 32 of the Act as well as two advisory committees - the Planning Advisory Committee and the Northern Ireland Advisory Committee - under Section 33. NAMA has acquired the property loans of about 850 debtors. The loans of the largest 180 debtor connections, accounting for €61 billion of debt, will be managed directly by NAMA. The rest will be managed by the institutions under delegated authority. It is expected that nearly all, if not all, debtors who have farming interests or a significant interest in agri-business will fall into the latter category of debtor. Accordingly, at this stage, it is not considered necessary to establish a committee or unit within NAMA dedicated to dealing with agricultural interests. However, NAMA has agreed to review its procedures where farming assets involving livestock are concerned.

With regard to the suggestion that NAMA is shutting down viable businesses, NAMA assures me that it is committed to contributing to the objectives of the National Asset Management Agency Act which, inter alia, require it to contribute to the social and economic development of the State, in addition to protecting the interests of the taxpayer by ensuring that the value of any assets securing its loans is not diminished. Furthermore, as part of the business plan process and ongoing management of the debtor relationship, NAMA is actively engaging with debtors to get their assets to produce income and is approving decisions relating to the underlying security including lease agreements between the debtor and third parties where it makes commercial sense to do so. There is no reluctance on the part of NAMA to approve commercially viable arrangements. NAMA assures me that it is a particular priority for the agency, where it has acquired loans, to minimise the adverse impact on the viability of any business or on the sustainability of any jobs that may be at stake. NAMA fully recognises the importance of ensuring the continued viability of businesses, which can generate cash flow to repay debt and provide sustainable employment.

I am advised by NAMA that it is currently developing sectoral policies which will govern its strategic approach towards key sub-sectors in its loan portfolio. However, its policy will be publicised only after the completion of the debtor business plan process. In that context, NAMA has advised that it has now reviewed the business plans of the largest 40 debtors whose loans it has acquired and that the business plans of most other large debtors are currently at advanced stages of preparation. A debtor's business plan essentially consists of individual asset plans for each of his properties. For those debtors who can satisfy NAMA as to their viability, the agency will agree specific asset plans for each of their assets (whether that involves disposal or completion, etc.). In determining a plan for any asset, NAMA will assess the supply and demand for similar assets in the same area or region. In particular, the Agency will also be very mindful of whatever planning policies have been set by the local authority in each instance.

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