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nama surplus

Explainer: Will Nama really return a €4 billion surplus to the State?

Nama published its year-end review for 2020 yesterday.

YESTERDAY, THE NATIONAL Asset Management Agency (Nama) released its year-end review for 2020.

It gives a rough sketch of the so-called ‘bad bank’s’ performance throughout last year ahead of the release of Nama’s full annual report later in 2021.

And by all accounts, 2020 was a bumper year.

Nama says that it generated €900 million in cash in 2020 through asset disposals and management, “exceeding its target” in the process.

“Notwithstanding the difficulties brought about by Covid-19,” said Nama chairman Aidan Williams in a statement, “we redeemed the last of the remaining subordinated debt and our private equity obligations and were therefore in a position to complete the first payment of €2 billion from our lifetime surplus to the Exchequer.

“This significant payment was made at a critical time for the country and has materially reduced the level of Government borrowing required during the Covid crisis.”

Nama says it remains on track to deliver a lifetime surplus of €4 billion to the Irish exchequer. 

What exactly does that mean?

The surplus

It’s long been signalled that by the end of its lifespan, Nama would return to the State a surplus on its activities, having made a profit each year since 2011.

Initially pegged at around €1 billion, we were in 2019 told that this projected surplus had been upwardly revised to €4 billion.

Some €2 billion of this surplus was returned in 2020.

Now, there’s no reason to believe that this €4 billion target won’t be reached — Nama expects to hand over another €1 billion for the State’s coffers this year, according to its latest forecasts, after another profitable year.

But the €4 billion figure itself deserves some scrutiny.

Moving targets

Nama was created by the Government in 2009 to alleviate the pressure on the Irish banks.

It did this by taking €74 billion of risky property loans off the hands of five Irish lenders — AIB, Bank of Ireland, EBS, Anglo Irish Bank and Irish Nationwide.

For this package of toxic loans worth €74 billion, Nama, backed by the State, paid €32 billion, representing a 57% discount: a reflection of the parlous situation in the Irish property market the time.

The remaining €42 billion (ie what the banks lost on the discount) was written off.

At the time, you may recall Nama’s then-chairman Frank Daly saying that it would pursue developers “to the ends of the Earth” to recover the full amount.

What happened then?

Well, at some point in the intervening period, the goalposts shifted.

Instead of seeking to recover the full €74 billion, it was decided that Nama would target the €32 billion the State paid for the bad loans.

It completed this task last March, as Nama’s year-end review highlights.

Through its activities — mainly offloading property assets to vulture funds and developers over its lifetime — Nama aims to return a €4 billion surplus on this €32 billion figure.

So really, as has been highlighted by TDs like Social Democrats co-leader Catherine Murphy in the Dáil last year, “the public took a hit” on Nama of around €38 billion.

Some economists would say that instead of a €4 billion surplus, Nama lost €38 billion.


For its part, Nama says that there was no real chance of recovering the full amount, despite property markets regaining most if not all of their pre-crash momentum in recent years.

Pressed on this by Sean O’Rourke on RTÉ Radio 1 in 2017, former Nama chairman Daly argued that this money “was gone before Nama was ever set up.”

You can look at that and say ‘why did that happen?’ That happened because of bad lending, bad borrowing, but it was there and disappeared before Nama was set up.

Against this backdrop, Nama and its activities have faced plenty of scrutiny from policymakers.

Just last month, the Dáil Public Accounts Committee took Nama to task in a report into the sale of ‘Project Nantes’ — a batch of property-linked loans related to businessman Derek Quinlan’s boom-era property empire.

Following a report by Comptroller and Auditor General Seamus McCarthy, the PAC concluded that the 2012 sale of Project Nantes “resulted in a potential loss to the taxpayer of approximately €29 million”.

Nama executives are expected to field further questions from the committee over this deal in the coming months. 

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