Nama set to begin transferring €2bn to the exchequer

Agency announces it has redeemed the outstanding €1.06bn of subordinated debt

Nama had its planned lifespan extended by the Government last year. File photograph: Cyril Byrne/The Irish Times

Nama had its planned lifespan extended by the Government last year. File photograph: Cyril Byrne/The Irish Times

 

The National Asset Management Agency (Nama) is to begin transferring the first €2 billion of its surplus to the exchequer after the agency announced on Monday it had redeemed the outstanding €1.064 billion of subordinated debt.

Nama was set up in 2009 to buy €74 billion of festering commercial property loans from the country’s banks at a 57 per cent discount.

Some 95 per cent of the consideration was by way of senior bonds, the last of which were redeemed in 2017, with the remaining €1.6 billion made up of junior bonds.

Nama offered holders of junior bonds – including the banks – the opportunity in 2018 to sell back some of their notes, ahead of the agency’s ability to force the redemption. Some €1.06 billion worth were outstanding at the end of 2019.

About half of the original junior bonds were held by Anglo Irish Bank and Irish Nationwide Building Society before the lenders merged in 2011 under a new entity called Irish Bank Resolution Corporation (IBRC).

However, these were sold to a group of investors in 2014, as part of IBRC’s liquidation.

Nama said on Monday that the redemption completes the repayment of all €31.8 billion in debt issued by Nama to acquire loans, which, it added, leaves it debt-free.

This final transaction completes the redemption of the €1.593 billion of subordinated debt originally issued by Nama during 2010 and 2011.

This subordinated debt accounted for 5 per cent of the total amount of €31.8 billion paid for the loan portfolio acquired from each of the participating institutions.

‘Key objective’

Nama said the redemption “marks the achievement of another key objective” for it, and described it is “an important step” which will enable it to begin the transfer of the first €2 billion of its expected €4 billion surplus to the exchequer later this year.

Nama chief executive Brendan McDonagh said the agency is now in a position to begin making payments to the State.

“The full repayment of our subordinated debt represents another significant milestone for Nama, particularly as it paves the way for the agency to commence the transfer of the first €2 billion of its surplus to the exchequer later this year,” he said.

“Nama is now in a position to make a meaningful and tangible return of €4 billion to the State – a return that was not considered feasible a decade ago.”

Government formation

How the State spends the money will depend on the parties that form a government.

Fianna Fáil has said it wants to use the surplus payments to pay down debt, while Sinn Féin wants to use the Nama money as a once-off boost for housing.

Nama had its planned lifespan extended by the Government last year, from 2021 to 2025, in order to allow the so-called bad bank work through its remaining loans and legal cases.

The agency has generated €45.3 billion in 10 years of operations, largely from asset and loan sales as well as rental receipts from properties controlled by debtors and receivers, it said earlier this year. This includes €1.3 billion in 2019.

Minister for Finance Paschal Donohoe selected Nama board member Aidan Williams to succeed Frank Daly as chairman of Nama late last year.

Mr Williams (60), chairman of both Unicredit Bank Ireland and Macquarie Capital Ireland, joined the board of Nama in April with four decades of experience in international capital markets, investment banking, fund management and stockbroking.

Mr Daly, a former chairman of the Revenue Commissioners, retired as chairman of Nama on December 21st after two terms in the seat.