Michael McGrath (Cork South Central, Fianna Fail)
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80. To ask the Minister for Finance if he, in the course of a meeting he attended with NAMA on 5 February 2014, requested NAMA to consider whether it could advance the repayment schedule of senior bonds through accelerating asset disposals with a view to making bank assets more saleable; and if he will make a statement on the matter. [22655/17]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that I, as Minister, do not have a role in NAMA's commercial decisions. However, while respecting NAMA's independence, I and my officials regularly engage with NAMA regarding its performance and strategy.

I maintain a regular dialogue with the NAMA Chairman and receive appropriate updates regarding NAMA's ongoing progress and future plans. I also meet on occasion with the NAMA Board, which provides me with an opportunity to share my views and understand the Board's views.

Turning to the specific question, I assume the Deputy is referring to the article published on 16 April 2017 in the Sunday Times, referencing my attendance at a NAMA Board strategy day on 5 February 2014. That article makes reference to NAMA's memo of the away day, which was released by NAMA under the Freedom of Information Act 2014. I provide below the text of relevant section of NAMA's memo to which the Deputy refers:

"The Minister noted that following Ireland’s emergence from the Bailout Programme, one of the Government’s key priorities was to reduce Ireland’s debt to GDP ratio from the current 120% to the European average of 94%. The Minister noted the wider implications and impact of NAMA’s performance for the country and particularly for the banks. In this context he noted that the proceeds from a sale of Ireland’s bank shares could be used to reduce the national debt and requested that NAMA consider whether it could advance the repayment schedule of Senior Bonds through accelerating asset disposals with a view to making bank assets more saleable."

Though this is NAMA's note of the meeting and not my own, I do not disagree with their summary of the sentiment I expressed.

It is important to place these comments in the context of what was happening more broadly at the time. Ireland's debt to GDP was around 120%, excluding the State's contingent liabilities relating to NAMA and IBRC.

NAMA had achieved the major milestone of redeeming €7.5bn of its government guaranteed senior debt by YE2013 and had issued an additional €12.9bn of senior debt in support of the IBRC liquidation for which it had been directed to act as a backstop bidder.

Through concerted efforts across the economy, we had generated positive momentum around Ireland's recovery and recently had exited the EU-IMF Programme of Support in December 2013. We faced the challenge of sustaining and building upon that momentum in a way that allowed for continued debt reduction and productive investment in Ireland that facilitated not just a recovery of the FDI sector but a real recovery in the broader domestic economy. At that point we were all making decisions every day that would impact how and at what speed our underlying domestic economy would recover and we had an ongoing responsibility to remain vigilant for opportunities to lay the foundation to accelerate a sustainable recovery of the Irish economy.

NAMA played a key role in various aspects of that sustainable recovery. NAMA's ability to meet its objectives provided clear signals to the market evidencing Ireland's recovery. NAMA bonds also remained a significant contingent liability for the State and posed a challenge to the recovery of the banks as holders of significant amounts of NAMA debt.

It was in the context of NAMA's contribution to Ireland's broader recovery - including the recovery of our banking sector - that I would have challenged NAMA to take advantage of the buoyant market dynamics to accelerate bond redemptions without threatening its objectives under the Act. By achieving its objectives expeditiously, in line wit the NAMA Act, NAMA would assist in the normalisation of the Irish banks and the broader market.

These were entirely appropriate challenges to pose to the NAMA Board during its strategy day. It is important to note that my comments to the NAMA Board did not constitute an instruction nor a direction. These were challenges posed to the NAMA Board in the context of their overriding objectives as defined in the NAMA act.

It remained a matter for the Board to assess these challenges and to determine the most appropriate strategy for fulfilling NAMA's obligations.

As the Deputy is aware there were clear interdependencies between NAMA, the banks and the wider Irish economy. In this context, it is not surprising that such linkages were a matter of discussion between the Minister for Finance and the NAMA Board at a crucial period in establishing Ireland’s recovery.

The Deputy will also be aware that my officials were concurrently preparing a report under Section 227 of the NAMA Act in the period 2013-14. The report, published in July 2014, assessed the extent to which NAMA had made progress toward achieving its overall objectives and whether the continuation of NAMA was necessary for the purposes of the Act. The report concluded that NAMA had made significant progress in achieving its overall objectives, and based on its performance and financial projections in light of the strength of investor interest in Ireland, was well positioned to achieve its overall objectives and so continued to be necessary.

In the context of this report, consideration was given to various strategic alternatives that may facilitate NAMA achieving and ideally surpassing its objectives. The Section 227 Review is available on the Department of Finance website via the following link: www.finance.gov.ie/sites/default/files/NAMA_Section_227_Review_web2.pdf.

Following that review, I fully endorsed the view of the NAMA Board that, like any rational commercial operator, it should take advantage, to the greatest extent possible, of favourable Irish market conditions by increasing the flow of assets to the market while remaining faithful to its purpose and objectives under the NAMA Act.

Finally I would point out that, as this note relates to a meeting from over 3 years ago, I was referring to potential future sales of the State’s bank assets generally and not with any specific transaction in mind.