Press release
Minister McGrath publishes the Section 227 5-year review of NAMA
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The Minister for Finance Michael McGrath TD has today published the third review of NAMA under Section 227 of the NAMA Act 2009, which covers the period 2019-2023.
This report notes the extensive progress which NAMA has made in achieving its overall objectives. The Agency has consistently generated profits since 2011 and has transferred a cumulative total of €4.25 billion to the Exchequer, comprising €3.85 billion from its lifetime surplus and over €400m corporation tax payments. The NAMA Board currently projects that it will generate a lifetime return of at least €4.9 billion by the end of 2025 assuming that market conditions in Ireland remain benign over the next two years and it retains the requisite staff resources to complete its work in a commercial and professional manner.
The report notes that NAMA is taking commercial and operational steps to implement a phased and orderly wind down by end 2025.
The Minister has also provided an update on the Special Liquidation of IBRC which is on track to substantially conclude by the end of 2024.
Similar to the experience of other workout vehicles internationally, it is likely that there will remain some residual activity for both entities after their work concludes. The Minister has recommended that a Resolution Unit is established, resourced by the National Treasury Management Agency, to manage any such residual activity from both entities from 2026 to ultimate completion.
Speaking on the publication of the NAMA Section 227 Review, and the update on the Special Liquidation of IBRC, the Minister for Finance, Michael McGrath T.D. stated:
“Nearly 15 years since the establishment of NAMA, and, over 10 years since the commencement of the Special Liquidation of IBRC, it is now timely to make appropriate arrangements to facilitate them to conclude their work.
I am very pleased to today announce that the Special Liquidation of IBRC is on track to substantially conclude in 2024, and that NAMA is implementing its phased and orderly wind down and is expected to conclude its operations by the end of 2025.
Similar to the experience of other workout vehicles internationally, it is likely that there may remain some residual activity for both entities after this time. Therefore, a Resolution Unit will be established, resourced by the National Treasury Management Agency (NTMA) from 2026 to manage any such residual activity to completion.”
Providing an update on the section 227 review of NAMA, the Minister said:
“The third report into NAMA under Section 227 of the NAMA Act, which I published today, clearly shows the progress that NAMA has made across its mandate as it progresses into the final stages of winding down. The Agency has been very effective in managing its loan portfolio and maximising the value of its assets, successfully delivering on the commercial mandate set for it by the Oireachtas and generating profits consistently over a 13-year period. By the end of 2023, NAMA generated €47.7 billion cash from its acquired portfolio and has reduced the total carrying value of its loan portfolio to €0.45 billion as at the end of 2023. I welcome the indication from the NAMA Board that it will generate a lifetime return of at least €4.9 billion by the end of 2025 assuming that market conditions in Ireland remain benign over the next two years.
This strong commercial performance has exceeded expectations and NAMA’s success has been augmented by the Agency’s considerable achievements in relation to its supplemental objectives. NAMA has facilitated the delivery of housing at significant scale – 34,000 new homes were funded or enabled by NAMA by end-2023. Moreover, NAMA made a major and long-lasting contribution to the regeneration of Dublin Docklands through the delivery of extensive new commercial and residential space.
I commend the significant progress which NAMA has made, with a strong track record of achieving and exceeding key milestones over its lifetime. Internationally, the Agency has been cited as one of the best examples of a successful implementation of a State backed asset management company in response to the global financial crisis.
I would like to thank Brendan McDonagh, CEO of NAMA, the board, management and staff for their continued efforts in maintaining this focus in the interests of the Irish taxpayer as the Agency progresses into its final stage.”
Providing an Update on the Conclusion of the Special Liquidation of IBRC, the Minister said:
“In February 2013, joint Special Liquidators, Kieran Wallace and Eamonn Richardson, were appointed to IBRC with immediate effect, to wind up its business and operations.
The IBRC loan portfolio had a par value of €21 billion, consisting of over 15,000 borrower groups and was supported by collateral based in 22 different jurisdictions worldwide.
At the time of the publication of the Tenth progress update report in 2023, the remaining loan book had a par value of €3.6 billion. The State had received c.€1.7bn from the Special Liquidation in respect of its unsecured creditor claims, interest on these claims, and its holding of the preference shares in the bank. Any remaining funds left in the liquidation once all remaining tasks are completed will be returned to the State as the owner of the equity in the former bank. The first surplus transfer of €35 million took place in December 2023.
As the Special Liquidation of IBRC is wound down in 2024, any residual activity will be transferred to NAMA for management during 2025, in advance of the transfer of any remaining residual activity to a Resolution Unit, resourced by the NTMA from 2026, as set out in the Section 227 Review of NAMA.
I would like to thank the Special Liquidators and their staff for their continued work in completing the Special Liquidation of IBRC in a manner that achieves the best possible return on the remaining assets.”
Notes:
Section 227 Review of NAMA:
Section 227 of the NAMA Act requires the Minister for Finance to assess the extent to which NAMA has made progress towards achieving its overall objectives, and to decide whether the continuation of NAMA is necessary having regard to the purposes of this Act.
This is the third review of NAMA and covers the period 2019-2023.
By the end of 2023, NAMA had generated €47.7 billion cash from its acquired portfolio. The total carrying value of the NAMA portfolio had fallen to less than €2 billion by the end of 2018, the reference date for the last published NAMA review under Section 227, and this represented just 6% of its original acquired portfolio.
NAMA has further reduced the total carrying value of its loan portfolio to €0.45 billion as at the end of 2023.
The report recommendations are as follows:
• NAMA continue to proceed with its deleveraging activity and resolution of its residual loan book to deliver the optimal return from the assets securing those loans.
• NAMA concludes its work by end-2025 through a phased and orderly wind down, with the priority focus on completing most of its deleveraging activity before the end of 2024.
• Consistent with the experience of other workout vehicles, the report notes that there may remain some residual NAMA assets and activity unresolved at the end of 2025. I therefore recommend that a Resolution Unit is established, resourced by the NTMA, with responsibility for managing any NAMA residual activity from 2026 to its completion. It is important that any residual activity to be transferred to a resolution unit is minimised in so far as practicable.
• The Department of Finance, NAMA, and the NTMA engage with a view to the efficient establishment and resourcing of this NTMA Resolution Unit including the introduction of necessary legislation to enable its establishment and operation.
Update on the Conclusion of the Special Liquidation of IBRC in 2024:
The Tenth Progress Update report on the Special Liquidation of IBRC was published in September 2023. As at the end of 2023, the State had received c.€1.7bn (€1.6bn capital and €0.1bn interest) from the Special Liquidation in respect of its unsecured creditor claims, interest on these claims, and its holding of the preference shares in the bank. Any remaining funds left in the liquidation once all remaining tasks are completed will be returned to the State as the owner of the equity in the former bank.
Notwithstanding the fact that the Special Liquidation is currently targeted to substantially conclude in 2024, there is likely to remain some residual activity after this time. For instance, while asset disposals are projected to take place throughout 2024, these will be dependent on market conditions remaining conducive to such transactions. Therefore, it is prudent to consider the approach to managing any such residual activity to completion from 2025.
