SERVICE PROVIDERS TO NAMA

NTMA

Under Section 41 of the Act, the NTMA provides NAMA with business and support services, including HR, IT, Market Risk analysis and the execution and processing of hedging transactions. NAMA reimburses to NTMA the cost of these services which was €37m (including staff costs) in 2012.

By the end of 2012, NAMA had, through the NTMA, recruited over 200 staff with extensive experience and expertise in the areas of lending, property, accountancy, law, banking and credit. For any potential employee to be assigned to NAMA, the NTMA must ensure that the person meets the character standards set out in Section 42 of the Act, has no material conflict of interest and provides to the NTMA a statement of interests, assets and liabilities.

PARTICIPATING INSTITUTIONS – SERVICING OF NAMA LOANS

Five institutions (and their subsidiaries) were designated as PIs by the Minister in February 2010. On 1 July 2011, the business of INBS transferred to Anglo Irish Bank and, on 14 October 2011, the combined entity changed its name to IBRC. EBS was acquired by AIB on 1 July 2011 and now operates as a subsidiary of AIB. The NAMA Units of the former Anglo and INBS were merged into one unit in 2012 as were the NAMA Units of AIB and EBS.

PIs are required to apply best industry practice in their management of NAMA loans. They have established dedicated units to manage NAMA loans and they are required to ensure that these units operate on the basis of a segregation of staff, systems, data and infrastructure from other parts of the institution.

Under Section 131 of the Act, NAMA issued a Direction to each of the PIs setting out their detailed obligations in relation to the services they provide to NAMA. The Direction covers such issues as governance structure and procedures, credit management procedures, customer relationship procedures, procedures for monitoring performance and procedures for reporting to, and working with, NAMA and the Master Servicer.

Monthly Steering Committee meetings are held between NAMA and each PI to oversee service delivery and performance. NAMA has assigned three teams of five staff to each of the PIs: the teams are based in the various PI NAMA units and have oversight of the management of NAMA debtors. In addition, the PIs are monitored by reference to performance indicators and they are required to meet or exceed pre-determined Service Levels (failure to do so will lead to payment of Service Charges, in effect, fines).

PI fees for services to NAMA are calculated based on 10 basis points of loan nominal or actual costs incurred, whichever is the lesser. The aggregate fee payable to the five PIs in respect of 2012 was €56.4m, an average of 8 basis points; this was payment for the work of about 550 staff employed by them to carry out loan administration and to manage NAMA's engagement with 586 debtor connections whose loans are not directly managed by NAMA.

Capita Asset Services acts as Master Servicer. Its function is to collate loan data from the five PIs and to provide NAMA with consolidated financial and management information on its portfolio. A fee of €3.5m was paid to Capita in respect of 2012.

PROCUREMENT

From time to time, NAMA requires the assistance of specialist service providers in order to meet its statutory objective of obtaining the best achievable financial return for the State. A key criterion in the selection of service providers is the extent to which they can provide value for money for the taxpayer.

NAMA as a contracting authority is subject to EU Directive 2004/18/EC as implemented in Ireland by the European Communities (Award of Public Authorities' Contracts) Regulations 2006 (the 'Regulations'), in respect of the procurement of goods, works and services above certain value thresholds set by the EU. The principles underpinning the Regulations are equal treatment, non-discrimination, mutual recognition, proportionality and transparency. Where the Regulations do not apply – either because the value of the procurement is below the EU thresholds or falls outside of the Regulations – NAMA adopts a competitive process designed to obtain the best value for money that can be achieved.

A list of all tenders run by NAMA and the results of the tenders are available on its website www.nama.ie