NAMA publishes fourth quarter report and accounts and Comptroller & Auditor General publishes second special report on NAMA

NAMA has today published two reports.  The first is the Agency’s Fourth Quarter Report and Accounts.  The second is a special report on the Agency, undertaken by the Comptroller and Auditor General.

Fourth Quarter 2011 unaudited Report and Accounts.

NAMA has today published its quarterly report and unaudited accounts for the fourth quarter of 2011. The following are the main points of the unaudited Report for the quarter ending 31 December 2011:

  • NAMA recorded a Q4 operating profit (before net impairment charge) of €484 million.
  • NAMA generated net cash from operating activities of €1.7 billion during the quarter.  From inception (March 2010) to end-December 2011, net cash in excess of €5 billion was generated.   
  • At the end of 2011, NAMA was in a strong cash position with cash and other liquid investment assets of €3.8 billion.
  • The percentage of performing loans in the loan portfolio at end-December 2011 was 20% of par debt compared to 21% at end-September 2011.   
  • To end-December 2011, NAMA had reduced its debts by almost €1.6 billion, comprised of some €1.25 billion of NAMA senior bonds which have been repaid by the Agency and advances repaid to the Minister for Finance. 

The full-year NAMA Accounts for 2011 are currently being audited by the Comptroller & Auditor General and it is expected that the Annual Report and Accounts will be published over the coming months. 

Comment from NAMA CEO

Commenting on the publication of the Q4 2011 Report and Accounts, Mr. Brendan McDonagh, Chief Executive, said that he was pleased with the substantial cashflow performance recorded during the quarter. “This reflected a number of sizeable asset disposals by debtors and of loan sales by NAMA. We expect to make good progress in 2012 towards meeting our target of repaying €7.5 billion of NAMA Senior Bonds to the NAMA banks by the end of 2013. This will supplement the banks’ liquidity and will offer assurance to the Troika that we intend to deliver on our commitments. ”

C&AG publishes second special report on NAMA:

The Comptroller and Auditor General (C&AG) has today published his second Special Report on NAMA (his first Special Report dealing with the acquisition of bank assets was published in October 2010).  This new report deals with NAMA’s management of loans and debtors and is focused on the measures taken by NAMA to manage its relationship with debtors and on the results of its debt management activities. Staff from the C&AG’s Office have a permanent presence in NAMA’s offices and are entitled to seek information on any aspect of NAMA’s activities.

The first part of the report deals with NAMA’s acquisition of €74 billion in loans from the participating institutions and payment to the institutions of €32 billion as consideration for these loans. The report concludes that, based on its audit and on specialist advice commissioned by it, the C&AG is satisfied that he has received a reasonable degree of assurance that NAMA’s valuation processes were robust.

The second part of the report deals with NAMA’s management of debtor relationships, including the range of strategies being adopted by NAMA in managing individual debtors and its identification of additional cash flows which may be available to maximise the security available to the State. This section of the report concludes that preliminary testing indicates that new lending to debtors was duly authorised and its purpose documented and that receivers are being managed so as to achieve a measured service.

The final section of the report covers NAMA’s debt management activity. It points out the challenges facing NAMA in terms of achieving its long-term objective of repaying its debt. These challenges include the need to ensure that cash flow from underlying assets controlled by debtors is captured by NAMA so that it can be offset against debtor liabilities, a practice which was not widespread in the institutions when NAMA acquired the loans from them. On this point, the report notes that NAMA requires that rental income from debtor assets is paid into bank accounts which it monitors.  

NAMA’s strong cashflow position allows it to support investment programmes such as that detailed earlier this week as well as the bond redemption programme. 

Comment from NAMA Chairman

NAMA Chairman, Frank Daly, has commented that the C&AG’s second Special Report on NAMA reflects positively on the Agency’s progress to date. “It is particularly satisfying, given the enormous scale of this financial transaction which entailed the acquisition and valuation of a loan portfolio of €74 billion, that it has been managed in a manner which gives rise to no serious concerns on the part of the C&AG after detailed scrutiny by his staff of all aspects of the process. Overall, I am satisfied, based on the conclusions drawn in this independent and thorough report, that the approach we adopted was largely right, notwithstanding the very difficult circumstances which prevailed during NAMA’s establishment phase and the absence of precedents to guide us.” 

“The Comptroller’s Report also highlights the challenges associated with managing the acquired loan portfolio so as to generate the cash flows that will enable NAMA to meet its debt repayment targets. These challenges are well known to us but we remain very much on course to fulfil the primary commercial objective that has been set for us by the legislature.”