NTMA

Under Section 41 of the Act, the NTMA provides NAMA with business and support services, including HR, IT, Market Risk analysis and accounts payable services. NAMA reimburses to the NTMA the cost of these services; this was €54m (including staff costs) in 2014.

At end-2014, 369 staff with extensive experience and expertise in the areas of lending, property, accountancy, law, banking and credit, were assigned to NAMA by the NTMA. 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 Participating Institutions by the Minister for Finance in February 2010 (Allied Irish Bank, p.l.c., Bank of Ireland, Anglo Irish Bank, EBS Building Society and Irish Nationwide Building Society). On 1 July 2011, the business of Irish Nationwide Building Society transferred to Anglo Irish Bank and, on 14 October 2011, the combined entity changed its name to IBRC. EBS Building Society 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.

In February 2013, following the appointment of joint Special Liquidators to IBRC, NAMA invoked a clause in its Master Servicer agreement with Capita enabling the appointment of Capita as the back-up service provider to manage the IBRC NAMA loan portfolio. The transition completed in Q3 2014.

During 2014 a project was initiated to transfer the management and administration of commercial NAMA loans from Bank of Ireland to Capita. This project completed in February 2015. A new commercial agreement between NAMA and Bank of Ireland covers the management of a portfolio of mortgage loans which the bank continues to manage.

The two remaining loan service providers, AIB and Capita, are required to apply best industry practice in their management of NAMA loans. They have dedicated units in place 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 business areas.

Under Section 131 of the Act, NAMA issued a Direction to the Participating Institutions setting out their detailed obligations in relation to the services they provide to NAMA. Similarly, in the case of Capita, these obligations are set out in the Capita Operating Model Agreement.

The Direction and the Capita Operating Model Agreement cover 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.

Regular steering committee meetings are held between NAMA and its loan service providers to oversee service delivery and performance. NAMA has assigned teams of its staff to AIB and to Capita. The teams are based in the NAMA units within AIB and Capita and have oversight of the management of NAMA debtors. In addition, AIB and Capita are monitored by reference to performance indicators and they are required to meet or exceed pre-determined service levels.

Fees for services provided by AIB to NAMA are calculated on the basis of the lower of 10 basis points (0.1%) of nominal loan value or actual costs incurred. In the case of Capita, the fee is based on the size of the loan portfolio under management. Aggregate Primary Service fees payable in respect of 2014 were €50m (2013: €55m). This was payment for the costs of all staff employed by AIB and Capita to carry out loan administration and to manage NAMA’s engagement with those debtor connections whose loans are not directly managed by NAMA.

Master Servicer

Capita, in its capacity as Master Servicer, collates loan data gathered from AIB and Capita as Primary Servicer and provides NAMA with consolidated financial and management information on its portfolio. A fee of €2.5m was paid to Capita as Master Servicer, in respect of these services during 2014 (2013: €3.1m).

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 by NAMA 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.

Such tenders as they arise are advertised via the Irish Government and public sector procurement website www.etenders.gov.ie. 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 process designed to obtain the best value for money that can be achieved. NAMA supports small and medium sized businesses in Ireland where that is possible without compromising its value-for-money principles.

A list of the tenders run via the etenders website and the corresponding results can be viewed on the NAMA website, www.nama.ie.