Section 32 of the Act required the Board to establish an Audit Committee. The Audit Committee operates to Board-approved Terms of Reference as required under Section 32(6) of the Act.

The Audit Committee currently comprises two non-executive Board members and one external member.

The Audit Committee is comprised of the following:

• Brian McEnery (Chairperson, Board member)


• Oliver Ellingham (Board member)


• Jim Kelly (External member)

In accordance with Section 32(2) of the Act, the Audit Committee is to comprise six members, two of which are external to NAMA and appointed by the Minister. The remaining four members are appointed by the Board from among the members of the Board. It is expected that the vacancies in the Audit Committee will be filled after new appointments are made to the Board.

Mr. Kelly is a former senior official with the Revenue Commissioners. He has been a Board member of the Irish Auditing and Accounting Supervisory Authority (IAASA) and was Secretary to the Commission on Taxation 2008-2009.

The Board has determined that Brian McEnery is the Committee’s financial expert and that Oliver Ellingham is the Committee’s risk expert.

The Committee met on 13 occasions in 2014.

The Audit Committee assists the Board in fulfilling its oversight responsibilities in the following functions:

• The integrity of the financial reporting process


• The independence and integrity of the external and internal audit processes


• The effectiveness of NAMA’s internal control system


• The processes in place for monitoring the compliance of the loan service providers with their contractual obligations to NAMA


• Compliance with relevant legal, regulatory and taxation requirements by NAMA


• Arrangements for reporting of relevant wrongdoing, for NAMA’s employees to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters and ensuring that these arrangements allow proportionate and independent investigation and follow up action

The principal activities of the Committee in 2014 were as follows:

1. Financial reporting

The Committee reviewed the Annual Report and Financial Statements, as well as all other formal announcements relating to the Financial Statements, before submission to the Board. The review focused in particular on changes in accounting policy and practices, major judgement areas, and compliance with legal (including any requirements under the Act) and regulatory requirements.

2. External audit

The Comptroller and Auditor General ('C&AG') is the designated external auditor under the Act. No non-audit services were provided by him during 2014. The Committee reviewed the external audit plan in advance of the audit and met with the external auditor to review the findings from his audit of the financial statements

3. Internal audit

The Committee received regular reports from the internal auditor. These included summaries of the key findings of each audit in the period and updates on the planned work programme. On an on-going basis, the Committee ensured that these activities are adequately resourced and have appropriate standing within NAMA. This included agreement of the annual internal audit plan. The Committee also ensured coordination between the internal and external auditors.

4. Internal controls

The Committee evaluated the system of internal controls, including procedures adopted by the NTMA in the performance of its compliance and control functions for NAMA. The Committee’s findings were reported to the Board.

5. Monitoring of service providers

The Committee received regular updates from Management and the internal auditor on the performance of these service providers, benchmarked against agreed targets.

The Chief Financial Officer of NAMA, the Head of Audit and Risk, other senior NAMA executives and representatives of the internal and external auditors were invited as appropriate to attend all or part of any meeting. The Committee also met individually with the external auditor, the internal auditor, Chief Financial Officer, Head of Audit and Risk and NTMA Head of Compliance. Each of these has direct access, without restriction, to the Chairperson of the Audit Committee.

Brian McEnery
Chairperson

Section 32 of the Act required the Board, which has ultimate responsibility for the credit risk of NAMA, to establish a Credit Committee operating under its delegated authority. The Credit Committee operates to Board-approved terms of reference as required under Section 32(6) of the Act.

The Credit Committee is comprised of the following members:

• Willie Soffe (Chairman, Board member)


• Brian McEnery (Board member) (stepped down with effect from 1st January 2015)


• Mari Hurley (Board member)


• Brendan McDonagh (Chief Executive, NAMA and Board member)


• Aideen O’Reilly (Head of Legal)


• Ronnie Hanna (Head of Asset Recovery)(resigned with effect from 31st October 2014)


• Michael Moriarty (Head of Asset Recovery)


• Dónal Rooney (Chief Financial Officer)


• Mary Birmingham (Head of Asset Management)


• John Collison (Deputy Head of Asset Recovery)


• Jonathan Milligan (Deputy Head of Asset Recovery)

The Committee, which met on 36 occasions in 2014, normally meets on a weekly basis but meets more or less frequently as required. By its very nature, the Credit Committee has a critical role in advising the Board on the establishment of NAMA credit policy and in ensuring that decision making on debtor management is consistent with overall Board policy.

Commensurate with the credit policy approved by the Board, and subject to agreed portfolio limits, the Credit Committee is the decision-making authority responsible for the approval or rejection of credit applications which are below the level required for Board approval but exceed the credit approval authority delegated to the NAMA Chief Executive and Head of Asset Recovery/Head of Asset Management by the Board. The Committee must operate in a considered and timely manner so as to support efficient credit-related decision making with respect to the acquired debts of close to 663 debtor connections.

A credit application is broadly defined to mean any event that materially changes the underlying risk profile of an exposure or debtor. It includes debtor strategy reviews, applications for additional credit including capital expenditure projects, the restructuring or compromise of loan obligations, approval for asset sales, applications for vendor finance or financing for joint venture projects, decisions with respect to personal guarantees and approval of enforcement action, including receivership, repossession and other such actions.

The Committee’s principal responsibilities include:

1. Assessing credit applications which fall outside the delegated authority of the Chief Executive and the Head of Asset Recovery/Head of Asset Management. These can be approved/declined/amended as appropriate. Where the level of risk exceeds the authority of the Committee, a credit application is referred, with a Credit Committee recommendation, to the Board for decision.


2. Assessing proposed credit and sectoral policies for Board consideration/approval.


3. Determining Key Performance Indicators (KPIs) and monitoring them, establishing policies and strategies upon which the performance of the overall portfolio can be assessed and re-defined as appropriate on a periodic basis, and reporting its findings to the Board.

The principal activities of the Committee in 2014 were as follows:

1. Ensuring that systems in place for processing credit applications presented to the Committee and the Board were effective, efficient and appropriate.


2. Review of NAMA approved debtor strategies and progress made to date. The Committee also conducts a bi-annual review of NAMA’s top debtor strategies (top debtors are defined as debtors whose combined debt represents 50% of total NAMA debt).


3. Assessing, recommending and approving over 250 individual credit requests ranging from asset management decisions to complex matters related to debtor strategy actions such as continued funding of development assets or final resolution of connections. 65 papers were reviewed by the Committee for recommendation to the Board. Additionally, the Committee oversaw more than 1,000 individual credit decisions made within the CEO and Head of Asset Recovery’s level of delegated authority.


4. Making decisions in relation to debtor agreements, impairments, enforcements and exit strategies, including loan sales.


5. Developing and enhancing both credit policies and sectoral policies; and assimilation of associated management information.


6. Review of Asset Management strategy and regular reviews of progress on their selected projects.


7. Regular review of progress on business plans of social and economic importance; in particular, those relating to Residential Delivery and the Docklands SDZ.

It is expected that 2015 will be another active year for the Credit Committee as NAMA endeavours to maximise value from the portfolio while continuing to deleverage in a timely manner. NAMA now operates in an improving economic environment and an improved property market in Ireland. With increased national and international demand for Irish property, NAMA continues to monetise its portfolio through loan sales, property portfolio sales and individual asset sales. Simultaneously, NAMA is selectively financing the development of assets critical to its residential, social housing and office delivery mandates.

As NAMA is required to take a commercial but prudent view while maintaining the highest standards of objectivity and integrity, all proposals are rigorously assessed and the various options fully considered. The Committee recognises that its decisions may have a significant impact on the assets and the debtors concerned, and it is determined to support projects which add value with a view to stimulating activity and employment and to maximising the return for the Irish taxpayer.

Willie Soffe
Chairperson

The Finance and Operating Committee comprises two non-executive Board members and five senior NAMA executives (including the NAMA Chief Executive).

The Finance and Operating Committee is comprised of the following members:

• Mari Hurley (Chairperson, Board member)


• Willie Soffe (Board member)


• Brendan McDonagh (Chief Executive, NAMA and Board member)


• Aisling Synnott (Head of Treasury)


• Dónal Rooney (Chief Financial Officer)


• John Collison (Deputy Head of Asset Recovery)


• Seán Ó Faoláin (Head of Strategy and Communications)

The Committee met on seven occasions in 2014.

The principal responsibility of the Finance and Operating Committee is to monitor the financial and operational management of NAMA and its budgetary and management reporting, including:

• All financial and management reporting whether to the Minister, the Oireachtas or otherwise (except for NAMA’s annual Financial Statements which are the responsibility of the Audit Committee).


• The preparation of management accounts.


• The preparation of annual budgets and other forecasts.


• The review of performance and variance against budget and prior year performance.


• Approving major capital expenditure.


• The management of procurement.


• Oversight of service providers (other than those whose oversight is reserved specifically to other Board committees).

The Finance and Operating Committee oversees the Executive Team’s responsibilities for developing, implementing and managing NAMA’s financial, operational and budgetary policies and reporting in relation thereto. It makes recommendations to the Board concerning NAMA’s expenditure and budgetary requirements. The Chairperson reports formally to the Board on the key aspects of the Committee’s proceedings.

During 2014, NAMA reached certain key operational milestones and made continued progress in terms of developing its underlying Finance, Operations and Systems infrastructure. Examples of some specific achievements / progress areas are set out below:

• The successful migration of the legacy IBRC and Bank of Ireland loans to Capita (as part of the wider project to replace IBRC (in liquidation) and Bank of Ireland as service providers to NAMA with Capita) represented a significant operational milestone for NAMA and a successful conclusion to what were highly complex and large scale projects.


• Ongoing developments were made to the management information provided to the NAMA Executive, Finance and Operating Committee and Board. New management information initiatives were launched in respect of NAMA’s residential development activity and the Dublin Docklands SDZ projects. In addition, NAMA’s forecasting and impairment processes were developed with the roll out of NAMA’s forecasting tool to the NAMA Participating Institutions and Primary and Special Loan Servicer managed connections.


• Further developments were made to NAMA’s systems during the year with a focus on both functionality and data/system security. In addition, NAMA developed and rolled out a new website in 2014.


• There was an ongoing strong focus on minimising costs in 2014. NAMA’s operating costs, at approximately 2.5% of cash generation, compare highly favourably with recognised international benchmarks.

Mari Hurley
Chairperson

The Risk Management Committee is responsible for overseeing the assessment and management of risks that, if they were to occur, would result in financial losses and/or a failure by NAMA to achieve its objectives as set out in its Strategic Plan.

The Risk Management Committee is comprised of the following members:

• Oliver Ellingham (Chairman, Board member)


• Brendan McDonagh (Chief Executive, NAMA and Board member)


• Mari Hurley (Board member)


• Conor O’Kelly (Chief Executive Officer, NTMA and Board member)


• Dónal Rooney (Chief Financial Officer)

John Corrigan (former NTMA Chief Executive Officer and NAMA Board member) stepped down from the Risk Management Committee with effect from 4th January 2015. Mari Hurley (NAMA Board member) and Conor O’Kelly (current NTMA Chief Executive Officer and NAMA Board member) were appointed to the Committee on 10th April 2014 and 15th January 2015 respectively.

The Committee met on six occasions in 2014.

The Committee’s principal responsibilities include:

1. Reviewing and overseeing the Executive Team’s plans for the identification, management, reporting and mitigation of the Principal Risks faced by NAMA.


2. Overseeing the implementation and review of an Enterprise Risk Management framework and satisfying itself that appropriate actions are taken in the event that any significant concerns are identified.


3. Ensuring that NAMA’s risk management, governance and organisational model provide appropriate levels of independence and challenge.

Risk categories identified in the NAMA Enterprise Risk Policy cover a wide spectrum of risks to the achievement of NAMA’s objectives.

The principal activities of the Committee in 2014 were as follows:

1. The NAMA Risk Management Committee identified five Principal Risks which were reviewed and approved by the Board and form the basis for the Principal Risks and Uncertainties disclosure in the Annual Report. A Principal Risk is defined as a risk, or combination of risks, that can seriously affect the performance, future prospects or reputation of NAMA. These Principal Risks should include those risks that would threaten its business model, future performance, solvency or liquidity.
   
   The identification and assessment of Principal Risks is an ongoing process which responds to changes in strategy, business objectives and the external environment. The Principal Risk identified during 2013/14 relating to “day one fair value adjustment of IBRC transferred assets” was removed from the register by a decision of the Risk Committee at the September 2014 meeting as NAMA was not required to acquire any IBRC loans. At that same meeting the Risk Management Committee re-evaluated the Principal Risks and added a new risk. This related to the new mandates given to NAMA following the publication of the Section 227 Report by the Minister namely, to develop sites in the Dublin Docklands SDZ and to deliver 4,500 residential housing units by end-2016. In 2014, the Risk Management Committee was regularly briefed on a particular Principal Risk or specific elements of such risk by a subject matter expert to ensure all aspects of these risks were appropriately considered.


2. The composition of the NAMA balance sheet (and associated risks) was monitored throughout 2014. The Committee regularly reviewed the various components of balance sheet risk, the methods by which those risks are measured and reported and considered alternative strategies to mitigate those risks. The Committee made recommendations to the Board where changes in policy, measurement, risk limits or risk management strategy were required to reduce risk to a tolerable level having regard to the expanded balance sheet and changes in the underlying NAMA loan portfolio, interest rate and foreign exchange markets. The Committee made recommendations to the Board on revisions to hedging strategies due to changes in the NAMA risk profile as a result of new processes, initiatives or as a response to external events, such as the liquidation of IBRC, which impact on NAMA and the achievement of its objectives.


3. Operational risks are inherent to the operation of NAMA and the Risk Management Committee focused on the regular review of the Functional Risk Registers which were continually updated during 2014. Each of the Functional Risk Registers is subject to annual review to identify new and emerging risks and redundancy or changes in existing risks. The Risk Management Committee continued to review on a regular basis the Risk Registers of the Service Providers and Participating Institutions to gain oversight of the impact and likelihood of risks managed by these entities that could influence the achievement of NAMA’s objectives. The Committee requires a quarterly control attestation and risk awareness training for NAMA employees. The Committee was supported in this effort by Audit & Risk (CFO) which ensured that the material and emerging risks were reported and considered by the Committee.

Expectations for 2015:

The focus on the Principal Risks will remain a priority for the Risk Management Committee in 2015, ensuring that they remain under constant review and any updates or changes in those risks are provided to the Board in a timely and thorough manner. Integration of risk related data sources such as incident reporting, risk indicators and audit findings with overarching Risk Appetite statements that will provide a clearer relationship between the organisation’s appetite (or lack thereof) for certain risks in the achievement of its strategic objectives will be explored. This will complement and reinforce the existing well established framework of risk tolerances and limits around key risks which have been delegated by the Board to various levels of NAMA management. A Risk Appetite statement linked to the Principal Risks will be monitored and reported at regular intervals by Audit & Risk (CFO) function.

Integration of risk related data sources such as incident reporting, risk indicators and audit findings with overarching Risk Appetite statements that will provide a clearer relationship between the organisation’s appetite (or lack thereof) for certain risks in the achievement of its strategic objectives will be explored. This will complement and reinforce the existing well established framework of risk tolerances and limits around key risks which have been delegated by the Board to various levels of NAMA management.

A Risk Appetite statement linked to the Principal Risks will be monitored and reported at regular intervals by Audit & Risk (CFO) function.

Oliver Ellingham
Chairman

Section 33 of the Act provides for the establishment of advisory committees and, with the agreement of the Minister, NAMA established a Northern Ireland Advisory Committee on 7 January 2010. The purpose of the Committee was to advise the Board in relation to the strategy for Northern Ireland assets.

Dissolution of Northern Ireland Committee

The Board, having regard to the implications of the sale of the Northern Ireland loan portfolio (“Project Eagle”) for the Committee, and with the agreement of the Minister, resolved to dissolve the Northern Ireland Advisory Committee following its 8th September 2014 Committee meeting.

The Northern Ireland Advisory Committee was comprised of the following members:

• Frank Daly (Chairman)


• Brian McEnery (Board member)


• Willie Soffe (Board member)


• Ronnie Hanna (Head of Asset Recovery)


• Brian Rowntree (External member)

Mr. Rowntree currently holds a number of non-executive appointments in the public and not-for-profit sectors. Mr. Rowntree is Chairman of the Northern Ireland Civil Service Commissioners and an Independent Member of the Northern Ireland Policing Board. He was formerly Chairman of the Northern Ireland Housing Executive (2004-2012), a member of the Advisory Board of the International Centre for Local and Regional Development, and Vice President of the European Social Housing Forum.

He has held further public appointments at Chair and non-executive Director level in the Housing, Criminal Justice, Health and Education sectors and has chaired and participated in a wide variety of forums in Northern Ireland and on a cross-border basis.

The Committee met on two occasions in Belfast during 2014. The Belfast meetings (and separate engagements across Northern Ireland) provided an opportunity to engage with key Northern Ireland stakeholders in all sectors.

The principal responsibilities of the Northern Ireland Advisory Committee included:

Providing advice and making recommendations to the Board on Northern Ireland matters as they pertain to the Purpose and Objectives of the Advisory Committee set out below:

• Making recommendations to the Board on matters pertaining to Northern Ireland in the context of NAMA’s objectives and functions as set down in Sections 10 and 11 of the Act.


• Ensuring these recommendations include the Committee’s view in relation to the impact on Northern Ireland of the implementation of the Board’s strategy.


• Making recommendations to the Board concerning strategy for NAMA in so far as it relates to the Northern Ireland assets.

Northern Ireland Advisory Committee Highlights

Policy Advice

NAMA’s mandate is to recover the maximum amount from all loans irrespective of where the underlying loans happen to be located. Towards this objective, NAMA adopts a commercial approach in each of the jurisdictions in which it operates, while recognising the distinctive market characteristics of these areas. The Committee reviewed all strategic opportunities to bring creative and innovative solutions in respect of NAMA’s portfolio in Northern Ireland. To that end the Committee continued to benefit during 2014 from the contribution of Brian Rowntree, External Committee Member, who provided a unique local knowledge and expertise to guide NAMA’s work in Northern Ireland.

Project Eagle Loan Sale Transaction

The Committee was briefed in general terms on the significant amount of work undertaken in relation to Project Eagle, a complex loan sale transaction due to its scale and multi-debtor profile. Following the completion of the sale, the remaining Northern Ireland Portfolio to be managed by NAMA, is significantly reduced, comprising of less than 40 smaller assets. This residual portfolio will be disposed of in 2015.

Social Housing

The Committee provided advice to the Board in relation to NAMA’s engagement with the Northern Ireland social housing sector with a view to identifying and offering suitable sites for social housing purposes where there was a match between need and assets within the portfolio.

Research

The Committee worked in partnership with the University of Ulster on key and innovative research to support a better understanding of the supply and demand dynamics of land across the region, including housing affordability and barriers to market entry. The final conclusions from the University of Ulster at Jordanstown (UUJ) research project, ‘Residential Development Land: Supply Side Dynamics and Policy Implications’, which had been sponsored by NAMA, were reviewed by the Committee. A final summary UUJ report, taking account of Project Eagle, will be presented to the Board in due course.

The Committee places on record its appreciation to Brian Rowntree, Willie Soffe (Board member), Brian McEnery (Board member), Ronnie Hanna (former Head of Asset Recovery) and Jonathan Milligan, current Deputy Head of Asset Recovery, who served on the Committee since inception in May 2010.

Frank Daly
Chairman

The purpose of the Planning Advisory Committee is to advise the Board on planning, land and related matters that may have an impact on the valuation and realisation of NAMA assets and thereby affect the achievement of NAMA’s purpose and functions as set down in sections 10 and 11 of the Act.

The Committee may make recommendations to the Board concerning NAMA’s objectives with respect to approved strategies, guidelines and statutory plans, including SDZs and Local Area Plans and their impact on NAMA assets.

The Planning Advisory Committee is comprised of the following members:

• Willie Soffe (Chairman, Board Member)


• John Corrigan (Chief Executive Officer, NTMA and Board member) – resigned 10th April 2014Conor O’Kelly (Chief Executive Officer, NTMA and Board member) – appointed 15th January 2015


• Brendan McDonagh (Chief Executive, NAMA and Board member)


• Mary Birmingham (Head of Asset Management, NAMA) – appointed 15th January 2015


• Mari Hurley (Board member) – appointed 10th April 2014


• Michael Wall (External Member)


• Alice Charles (External Member)

Mr Michael Wall is an architect and barrister and a former Board member of An Bord Pleanála.

Ms Alice Charles has considerable planning experience and is a member of the Royal Town Planning Institute and the Irish Planning Institute.

The Committee met on six occasions during 2014. Mari Hurley was appointed to the Committee on 10th April 2014. Conor O’Kelly and Mary Birmingham were appointed to the Committee on 15th January 2015.

The principal activities of the Committee in 2014 were as follows:

1. Assessing planning matters which are of interest to the Agency and advising on such matters where appropriate, in particular focussing on SDZs and housing and infrastructure provision.


2. Engaging in discussions with Government departments, local authorities and other statutory bodies to align the objectives of those parties and NAMA on matters such as the provision of social housing, schools and unfinished estates, and the procurement of property where necessary.


3. Advising and guiding NAMA’s participation in a number of specialist projects and public matters, involving external stakeholders which include new planning legislation, a proposed Vacant Land Levy, and the implementation of the National Planning Information System.

Over the course of 2014, the Committee’s focus was on those areas where NAMA has assets located close to key areas with future development potential including the Dublin Docklands SDZ. The Committee advised on the value adding functions of NAMA in the SDZ, including co-ordination of matters such as road delivery, positioning of certain land uses across blocks and continued direct engagement with the SDZ Development Agency. It is hoped that this contribution will assist in achieving tangible economic and social benefits in this areas and improve NAMA’s ability to recoup its outlay.

The Committee has continued to advise on the Agency’s engagement with State bodies and is committed to aligning their needs with NAMA linked properties. NAMA has worked with the Housing and Sustainable Communities Agency, Local Authorities and Voluntary Housing Agencies to provide residential units for social and affordable purposes. Following the establishment of a NAMA SPV, NARPSL, to expedite this process, the Committee has had oversight of the development of a long-term leasing model which will assist in the provision of units. Since the inception of NAMA over 1,000 units have been delivered for social housing. These were delivered in direct sales or in long-term leasing through NARPSL. Other consultations have been ongoing with various State bodies, to align their requirements with those of the Agency – the Committee continues to appraise and advise on such matters.

The Agency’s participation in the National Coordination Committee tasked with ensuring a solution to problematic unfinished housing estates has continued. The Committee has overseen significant improvements made to those affected assets relating to NAMA’s portfolio over the course of 2014. NAMA is funding the site resolution process being undertaken by debtors/receivers, with emphasis on health and safety compliance. Loan/asset sales have also led to a drop in the number of unfinished housing estates. Consequently NAMA’s exposure to these developments has been reduced by 32%. Progress on those sites with outstanding problems will continue to be reviewed.

The Committee also provided guidance in relation to the delivery of the targeted 4,500 residential units by end-2016. At end-2014, construction had begun on 2,642 units and works were at an advanced stage in relation to 3,147 units where planning permission was achieved. In addition, a further 6,128 units were in the pipeline for planning applications at year end. The intention is to ensure value-add to NAMA charged assets in order to achieve best value for the taxpayer while also ensuring that supply of new homes continues.

In carrying out its functions, the Committee is greatly assisted by the knowledge and support of NAMA’s Planning and Development Unit.

Willie Soffe
Chairman