It’s been a long year for the 69-year old Minister for Finance, Michael Noonan which has recently been capped by a very difficult budget, so you can understand that he might be demob happy for Christmas and in no mood to answer questions on his brief. His Department of Finance however should be fresher – after all, it was the Troika that was preparing the technical paper on debt restructuring, not the Department and it was An Taoiseach’s own hard graft and fearsome reputation in Europe which deters others from tangling with him which led to the game-changing debt deal in June; the Department has been twiddling its thumbs.
Yesterday in the Dail, Minister Noonan was asked a series of questions by the Sinn Fein finance spokesperson Pearse Doherty about NAMA and IBRC which can only have led the Minister to the inevitable conclusion that since they do the same job, are of a similar size, have the same expiry date of 2020 and they compete with each other for customers and resources, that NAMA and IBRC should be merged. And since NAMA appears to be a leaner, more adaptable, more profitable and better managed organisation, it should take the lead role in any merger.
However you will need be patient with the responses from the Minister, as he and his Department appear to have clocked off for 2012 and gave meandering and stonewalling responses. The summarised questions and suggested answers from here. are summarised below:
Why do IBRC staff earn more than NAMA staff? It’s a mixture of sacrifice and waivers by the top NAMA earners, plus better cost control with appointments.
How much loans are NAMA and IBRC presently managing? At 30th June 2012, IBRC was managing loans with a face value of €28bn less provisions of €11bn – in other words a net of €17bn. NAMA was managing €28bn by reference to NAMA acquisition values less provisions of €3bn post-acquisition or a net of €25bn.
When will NAMA and IBRC be wound up? 2020.
What are the latest profit figures for IBRC and NAMA? For the six months ending 30th June 2012, IBRC lost €504m whilst NAMA made a profit of €222m.
What are the objectives of NAMA and IBRC? Both are ultimately there to maximise the return to the taxpayer from the loans they are managing.
Do they compete against one another? Oh yes, for both resources and customers.
Maybe Minister Noonan might take a longer break from one of the most challenging financial roles in European politics – his tired responses betoken a minister who seems to have permanently clocked off. Here are the actual parliamentary questions and responses.
Deputy Pearse Doherty: to provide an explanation as to the reason there are at least six staff at the Irish Bank Resolution Corporation earning more than €400,000 per annum whilst no staff at the National Asset Management Agency earn salaries in 2012 of more than €400,000 per annum.
Minister for Finance, Michael Noonan: Following the appointment of the current CEO of IBRC in September 2009, the entire executive of the Bank was replaced with an appropriately skilled senior management team, to lead the newly formed IBRC (the combined former Anglo Irish Bank and former INBS) through the process of wind down. I have been informed that external search consultants were utilised in open and transparent recruitment processes, to identify and hire senior management with the requisite skills to deal with the challenges of working out the Bank’s distressed loan books. I have been advised that remuneration in IBRC complies with the recommendations put forward by CIROC with regards to the remuneration applicable to the positions of the CEO and senior management of the Bank.
Deputy Pearse Doherty : provide the financial quantum of loans net of provisions being managed by the National Asset Management Agency at 30 June 2012 and being managed by the Irish Bank Resolution Corporation at the same date.
Minister for Finance, Michael Noonan: I am advised by NAMA that the financial quantum of loans net of provisions managed by it is disclosed in the Section 55 accounts to 30th June, which are published on the NAMA website, http://www.nama.ie. IBRC’s 2012 Interim Report, which covers the period from January to June 2012, discloses the information sought. The IBRC Interim Accounts can be found at: http://www.ibrc.ie/About_us/Financial_information/Latest_interim_report/.
Deputy Pearse Doherty: provide the latest estimate of the dates by which the National Asset Management Agency and the Irish Bank Resolution Corporation will be wound up.
Minister for Finance, Michael Noonan: IBRC is working in accordance with a plan which has been approved by the EU for the work out of the organisation by 2020. It is important in this context to be clear the interim accounts produced by the bank refer to “winding up of the loan book in an orderly manner by 2020” as opposed to a winding up of the bank. This difference is important for technical reasons and also to provide options as to how the overall cost of the bank can be settled in an appropriate timeframe. I can confirm that, under current arrangements, the scheduled payments on the Promissory Notes are due to continue until 2031. I note that the NAMA Board has indicated that it expects to have completed its work by 2020.
Deputy Pearse Doherty: provide the profit or loss of the National Asset Management Agency for the six months ending 30 June 2012 and the profit or loss of the Irish Bank Resolution Corporation for the same period.
Minister for Finance, Michael Noonan: I am advised by NAMA that profit after tax was disclosed in the Section 55 accounts to 30th June 2012, which are published on the NAMA website, http://www.nama.ie. IBRC’s 2012 Interim Report, which covers the period from January to June 2012, discloses the information sought. The IBRC Interim Accounts can be found at: http://www.ibrc.ie/About_us/Financial_information/Latest_interim_report/.
Deputy Pearse Doherty: outline the metrics by which he assesses the ongoing performance of the National Asset Management Agency and the Irish Bank Resolution Corporation.
Minister for Finance, Michael Noonan: The Shareholding Management Unit of my Department monitors the performance of IBRC on a regular basis. The Unit fulfils this duty through a number of instruments including a Monthly Operating Plan Report, agreed between my Department and IBRC, which provides a detailed analysis of the financial performance of IBRC including its capital position, balance sheet deleveraging, asset quality and operating costs against both the agreed EC restructuring plan and also against management team’s own forecasts. In addition the Unit meets Senior Management in the bank on a monthly basis to challenge business performance and receive timely updates on deleveraging progress.
NAMA is assessed by reference to the objectives set for it by the Oireachtas as set out in Section 20 of the NAMA Act 2009. NAMA was, as the Deputy is aware, established to (1) remove systemic risk to the Irish banking system through the acquisition of land and development and associated loans from participating institutions and (2) to obtain the best achievable return to the State from these acquired loans. NAMA has completed the first of these major undertakings through the valuation, purchase and transfer of relevant loans from the participating institutions. In the process, NAMA has injected over 30 billion in liquidity into the Irish banking system. Alongside this, the establishment and development of the Agency itself to carry out the tasks mandated to it by the NAMA Act 2009 has been another important achievement.
NAMA is now fully engaged in its core role of managing and selling the assets under its control with a view to obtaining the best financial return for the state. The progress that is being made is exemplified by the fact that, since inception, NAMA has generated total cash flows of over €10 billion, circa €6.6 billion in asset sales, with a further €2 billion in the pipeline, and circa €3.5 billion in non-disposal income, mainly rental receipts from properties controlled by its debtors and receivers.
As a result of its current cash and liquid asset balance and strong cash-generation capacity, NAMA is firmly on course to meet its ultimate objective of redeeming over its projected ten-year life to 2020, at minimum, the Senior Bonds issued as consideration for the acquired bank assets in addition to recovery of its carrying costs and the working and development capital expenditure advanced in the course of its work. I am advised by NAMA that it has already redeemed €3.25 billion of its debt and is in doubt as to its ability to meet its end-2013 target of redeeming €7.5 billion in Senior Bonds. The achievement of this target, which forms part of the Troika programme, is important in terms of Ireland’s return to the debt markets.
Whilst these are the primary measures against which NAMA’s work is viewed, I also note that it is playing a vital role in helping to encourage activity in the Irish commercial and residential property markets through initiatives including vendor finance, €2 billion of which is expected ultimately to be made available to prospective purchasers of commercial property controlled by its debtors and receivers, and its 80:20 Deferred Payment Initiative for prospective house buyers. NAMA has also announced plans to invest up to €2 billion over the next four years in its Irish assets, which has significant employment potential and will ensure that we are positioned to meet the future growth needs of the economy through, for instance, delivery of the accommodation needs of future Foreign Direct Investment.
Deputy Pearse Doherty: further to Parliamentary Question No. 311 of 18 September 2012, when he said that the National Asset Management Agency does not compete with the Irish Bank Resolution Corporation for resources and customers, and following the statement by the chief executive officer of IBRC (details supplied) at the Oireachtas Finance, Public Expenditure and Reform Committee on 31 October 2012 when he said “we are not the only organisation in the country which has this type of portfolio, as we go through the process of building teams, they are at risk, they get poached, and not only by other State owned organisations but also by foreign organisations which have difficult and distressed portfolios which they need to work out” and his response to Parliamentary Question No. 256 of 6 November 2012 in which he confirmed that 14 staff had been recruited by NAMA from IBRC, if he will reconfirm his position that there is no competition between NAMA and IBRC for resources.
Minister for Finance, Michael Noonan: Many financial institutions will compete for suitably experienced staff in the Irish market, whether it is with the Irish covered banks, non-Irish banks or specialist financial services platforms. However I would not characterise the level of competition for resources between IBRC and NAMA as anything other than normal market competition.