NAMA is established as a statutory body corporate and its powers and functions derive from the National Asset Management Agency Act, 2009 ('the Act'). Among the Act's principal objectives is to address a serious threat to the economy and to the systemic stability of credit institutions in the State generally by providing for the establishment of NAMA.

Under Section 10 of the Act, NAMA's purposes are to contribute to the achievement of the purposes of the Act by:

1. acquiring bank assets from PIs;
2. dealing expeditiously with the acquired assets; and
3. protecting and enhancing the value of assets acquired by it in the interests of the State.

In doing so, it is required, in so far as possible, to obtain the best achievable financial return for the State having regard to the cost to the Exchequer of acquiring and dealing with bank assets, its cost of capital and other costs, and any other factor which NAMA considers relevant to the achievement of its purposes.

Section 11 of the Act lists NAMA's functions which include the following:

1. acquire eligible bank assets from PIs;
2. hold, manage and realise assets;
3. perform such other functions, related to the management or realisation of the acquired assets, as are directed by the Minister; and
4. take all steps necessary or expedient to protect, enhance or realise the value of acquired assets including the disposal of loans for the best achievable price, securitising or refinancing portfolios of loans and holding, realising and disposing of security.

Section 11 of the Act was amended by Section 15 of the Irish Bank Resolution Act 2013 ('IBRC Act 2013') to include "such other functions as are conferred on it by or under the Irish Bank Resolution Act 2013".

Section 12 of the Act outlines the powers which have been granted to NAMA to enable it to achieve its purposes and to perform its functions.

The Minister may issue written guidelines and binding directions to NAMA. All guidelines and directions must be published by the Minister as soon as practicable following issue. Up to the end of March 2013, five directions had been issued by the Minister to NAMA under Section 14 of the Act and another four directions had been issued under the IBRC Act 2013 (all are published on www.nama.ie).

The first assessment of NAMA's progress in achieving its overall objectives is to be carried out by the Minister and separately by the C&AG² as soon as may be after 31 December 2012, in accordance with Section 226 and Section 227 of the Act.

² To date, the C&AG has produced two special reports on NAMA, the first in November 2010 and the second in May 2012.

NAMA STRUCTURE

In a decision issued in July 2009, Eurostat (the statistical office of the European Union) ruled that special purpose vehicles ('SPVs') which were majority owned by private companies would be regarded as being outside of the government sector if they met a number of conditions. Among the conditions were that the SPVs were of temporary duration and were established for the sole purpose of addressing the financial crisis. In order to ensure that debt issued by NAMA to purchase bank assets would not be treated as part of the General Government Debt, NAMA established a number of SPVs.

The SPVs and their interrelationships are outlined in the table below and illustrated in Note 1 to the Financial Statements.