Written answers

Wednesday, 23 May 2012

Department of Finance

National Asset Management Agency

10:00 pm

Photo of Caoimhghín Ó CaoláinCaoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 34: To ask the Minister for Finance the action that he has taken to make the National Assets Management Agency more cost efficient. [25629/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Under Section 18 of the NAMA Act the board of NAMA is charged with ensuring that NAMA performs effectively and furthermore, NAMA is required to account for its costs in it s quarterly and annual reporting and is required under section 58 of the NAMA Act to account to a Dáil Committee ion the economy and efficiency of its use of resources. NAMA incurred a heavy burden of cost in its first year arising predominantly from due diligence costs associated with the acquisition of loans and costs associated with the Agency's establishment.

The due diligence costs were required to be undertaken to ensure that loan valuations were in line with the valuation methodology approved by the EU Commission. It was important that the consideration paid by NAMA for its acquired loans was in line with EU approval and accordingly it was necessary to undertake detailed legal, property and loan due diligence to ensure that loan acquisition prices were fairly and rigorously determined. Costs were also incurred in creating a new organisation from scratch capable of meeting the complex challenges set for the Agency. These costs are not recurring.

I am satisfied that NAMA, which is now fully established and which has completed its loan acquisitions and valuations, is operating and delivering according to its statutory objectives in a cost effective and efficient manner.

It is also of note that by reference to the size of its loan portfolio, nominally €74 billion, NAMA's cost are at the lower end of the scale and compare favourably with similar entities in the private sector.

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