It is unacceptable that we have been waiting more than three weeks for Minister for Finance, Michael Noonan to publish the Directions he issued to NAMA on 7th February 2013 which included a direction to make €1bn available to Irish Bank Resolution Corporation, the insolvent bank now in special liquidation. Remember when Minister Noonan pulled the stunt last year with the payment of the Anglo promissory note on 29th March 2012, the Direction that was issued to NAMA was published the very next day. Minister Noonan said two weeks ago he would publish the Directions by last Friday week 22nd February 2013, and still nothing.
In the Dail this week, we learned a little more about the €1bn credit line from NAMA – which we own – to IBRC, a bank which is dangerously insolvent. Remember we only know about this credit line, thanks to the obiter dicta of NAMA chairman Frank Daly at a gathering of journalists on 21st February 2013.
In response to questioning from the Sinn Fein finance spokesperson Pearse Doherty, Minister Noonan said
(1) The Direction was issued on 7th February 2013
(2) NAMA didn’t charge an arrangement fee, but is charging the one-month Euribor rate plus a premium of 140 basis points as interest. The one-month Euribor rate is presently 0.12% per annum. So NAMA is presently charging 1.52% per annum on a €1bn loan facility to a deeply insolvent bank.
(3) The NAMA board – see here for the members – approved the facility on 7th February 2013
The full parliamentary questions and responses are here.
Deputy Pearse Doherty: To ask the Minister for Finance if he will explain the decision to provide €1 billion credit facility from the National Assets Management Agency for the use of the special liquidator of the Irish Bank Resolution Corporation; when the decision was made; what the credit facility is intended to be used for; the way the €1 billion if used will be repaid to NAMA; if he had to seek permission to use NAMA for such a credit facility from another entity such as the European Central Bank; if the funding of the credit facility comes from cash assets at NAMA; and if NAMA can still meet its bond repayments due at the end of 2013.
Deputy Pearse Doherty: To ask the Minister for Finance further to the announcement by the National Asset Management Agency on 21 February 2013 that it has made a €1bn credit line available to Irish Bank Resolution Corporation, if he will confirm the interest rate and arrangement fee that applies to the facility and any moneys advanced under it.
Deputy Pearse Doherty: To ask the Minister for Finance further to the announcement by the National Asset Management Agency on 21 February 2013 that it has made a €1bn credit line available to Irish Bank Resolution Corporation, if the NAMA action was subject to a NAMA board decision; and if it was, the date of the board decision..
Minister for Finance, Michael Noonan: I propose to take questions 64, 94 and 95 together.
On the 7th February 2013 I issued a Direction (NAMA/3/12/IBRC Act) to NAMA pursuant to the IBRC Act 2013 to provide such credit facilities to a special liquidator on such terms and conditions, as are specified in the direction. NAMA has complied with this Direction and made a €1 billion credit facility available to the special liquidator. The interest rate as per the facility agreement is referenced to the daily one-month euribor rate plus a margin of 140 basis points. The facility will be advanced to IBRC (in Liquidation) as needed for both the general corporate purposes of the Company and to discharge the Company’s obligations to derivatives counterparties under derivative collateral arrangements and/or obligations to the NTMA under the NTMA ISDA Master agreement. The amounts drawn under this facility shall constitute and rank as costs of the liquidation of the Company.
I am advised by NAMA that following receipt of the Direction, the Board of NAMA met on Thursday, 7th February 2013 and approved the €1 billion facility. NAMA has made this facility available to the Company in accordance with its approved liquidity policy and from its own liquid assets. The granting of this facility does not impact on NAMA’s ability to redeem its senior bonds in accordance with the previously indicated senior bond redemption targets.