National Asset Management Agency NAMA BOARD MINUTES First M eeting o f 2 0 1 4 :12.30pm. to 1.00pm., 8th January 2014, Treasury Building BO ARD O N LY Attendance: NAMA Board NAMA Executives Frank Daly, Chairman John Collison Brendan McDonagh, CEO, NAMA Ronnie Hanna John Corrigan, CEO, NTMA Oliver Ellingham1 Secretary John Mulcahy Elaine Hudson William Soffe1 Brian M cEnery1 On opening the meeting the Chairman welcomed the Board members to the first meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues Considered: 1. Disclosures of Interests There were no disclosures made. 2. Board Private Session The Board held a private session without the Executive present. S41, S36, S29, S30 1By telephone in accordance with section 27 of the NAMA Act 2009 1 3. AOB There was no other business. There being no further business the meeting concluded. Frank Daly, Chairman 16th January 2014 National Asset Management Agency NAMA BOARD MINUTES Second M eeting o f 2014: 2.00pm. to 6.00pm., 16th January 2014, Treasury Building Attendance: NAMA Board NAMA Executives (invited) Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA John Collison John Corrigan, Chief Executive, NTMA Ronnie Hanna Oliver Ellingham Dave McEvoy Brian McEnery Michael Moriarty John Mulcahy Sean O Faolain William Soffe Aideen O’Reilly Donal Rooney O th er Invitees: Elaine Hudson, Secretary Suzanne Sweeney, Senior Divisional Manager (AR) - item 7 only David Johnson, Head of Audit & Risk —items 9-11 only Aidan O ’Connell, Senior Asset Recovery Manager - item 12 only Donal Kellegher, Asset Recovery Manager - item 13 only On opening the meeting the Chairman welcomed the Board members to the second meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. N ote: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order o f consideration): 1. Disclosure o f Interests Brian McEnery disclosed a potential conflict o f interest with respect to item 12 and declared that he would take no part in the discussion or decisions related to same. There were no other disclosures made. 2. Board Private Session The Board held a private session without the Executive present. A Board-only note on discussion during the session was prepared by the Secretary. 3. Consent Agenda Items Matter for Board Approval Board Papers: Minutes o f B M 24 — 12th December 2013; Board Only Appendix to Minutes o f B M 24 - 12th December 2013; Board Only Minutes o f B M 25 - 19th December 2013; Board Only Minutes o f B M 1 - 8th January 2014; Minutes o f Executive Meeting - 8th January 2014; Audit Committee Update to Board - period 1st November 2013 - 31st December 2013; Credit Committee Update to Board - period 1st October 2013 - 31st December 2013; Risk Management Committee Update to Board - period 1st September 2013 31st December 2013; CEO DA Compliance Statement - Q4 2013; NAMA Sealing Register Update and Media Evaluation - December 2013. The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 24, as previously circulated by email on 911 January 2014 (and included in the Board pack). The Board noted that an announcement was made in relation to the wind up o f the DPI with effect from 31 May 2014. In relation to North Docks a mini tender was being put in place in relation to seeking a legal advisor for property services and AM were liaising with NAMA Legal re advertising/openly marketing the site. The Chairman advised that a verbal update on S41, S36 would be given under item 5 and that an update on NAMA’s engagement with Certus would be provided under item 7. 5. Board approval of CC Recommendations Board Papers: N/A S41, S36 Matter for Information The Head o f Asset Recovery updated the Board on developments with since the Board’s last meeting. S41, S36, S29, S30 6. Debtor Strategic Credit Reviews 1, S36 6m) Matter for Board Approval S31, S41, S36, S29, S30 7. IBRC Integration Matter for Board Approval Board Paper: IBRC Integration - Progress Report Suzanne Sweeney provided a detailed update presentation on the IBRC Integration Project, with respect to the Capita, Certus and Pepper projects in relation to the IBRC SL Portfolio. It was noted that the SL had confirmed they would retain the remaining 3 lots (par debt €500m) o f the ‘E vergreen’ portfolio to the end o f the liquidation process as it might be possible to market these loans again. The Board noted that the SL expected to sell the majority o f the lots o f the ‘Sand’ portfolio (Residential Mortgages o f €1.8bn - closing date 27th January) with c. €200m o f performing PDH loans likely to transfer to NAMA. An update was provided on the remaining commercial portfolio loan sales and based on the SL’s update it was estimated that c. €4bn to €6bn o f par debt was expected to transfer to NAMA, consisting o f 2,000 connections, the vast majority (c. 90%) with par debt o f €5m or less. The Board noted the high volume, low value nature o f the expected loan transfers. S41, S36, S30 S41, S36 Following discussion, the Board resolved to approve the recommendations as presented in the paper: ■ That the NAMA Project Integration Team continue to progress the open items from the December 2013 Board approved Project Plan (pages 3 to 6). ■ That the project team (in conjunction with NAMA Legal) continue to work on resolving the main issues with the SL that were impacting loan/data transition to NAMA as detailed on pages 10 to 12 ■ Due to changed profile and reduced value o f the IBRC loan book that was now expected to transfer to NAMA that a new tender be opened for the NEW Commercial portfolio as per the details on page 20. The Chairman, on behalf o f the Board, thanked Ms Sweeney for the work to date acknowledging the significant progress that had been made. Treasury Update Matter for Information Board Paper: Treasury Update The Board noted the contents o f the paper as presented including the closing cash & cash equivalent balance o f €3.2 billion. The Chairman advised that cash balances (including cost o f carry considerations) would be discussed at the Strategy Away Day. 8a. NAMA Senior Note - Physical Settlement Matter for Board Approval Board Paper: NAMA Senior Note Physical Settlement The Board noted the contents o f the paper as presented. Following consideration, it resolved to approve the recommendations as presented in the paper as follows: ■ Physically settle the NAMA senior notes issued (original NAMA) o f €22.69 billion (current balance), on their maturity date o f 3rd March 2014, into a new note maturing on the 2nd March 2015. ■ Physically settle the NAMA senior notes issued to Central Bank (IBRC liquidation) o f €11.928 billion (current balance), on their maturity date o f 20th February 2014, into a new note maturing on the 20th February 2015. ■ Authorise the CEO to take all the necessary steps to physically settle both programmes o f senior notes with their respective note-holders. 8b. NAMA Senior Note Redemptions Matter for Board Approval Board Paper: NAMA Senior Note Redemptions The Board noted the contents o f the paper as presented. Following discussion the Board resolved to approve the recommendations as presented in the paper as follows: ■ Approve on-going redemptions o f NAMA “NARL” Senior Notes issued to Central Bank up to an aggregate amount o f €5,000,000,000 by the 31st March 2014 at Par plus Accrued Interest, subject to National Asset Resolution Limited (NARL) having sufficient liquidity to meet its obligations. ■ Notify the Minister o f its decision, under Section 60 (2) (a) o f the NAMA Act, and if there was no objection from the Minister, it was recommended that the Board authorise the CEO to take all the necessary steps to redeem the notes as outlined in (i) above. Risk Management 9a. Risk Management Policy Matter for Board Approval Board Paper: Enterprise Risk Policy - Annual Review The Board noted the contents o f the paper as presented, and the changes proposed including further detail on the various Risk initiatives in place (TopDown Risk Register, Risk Incident reporting and new references to Risk Appetite). Following consideration, and noting the prior review o f the Risk Management Committee on 11th December 2013 and its recommendation for approval, the Board resolved to approve the NAMA Enterprise Risk Policy as presented. 9b. Risk Register - Bi-annual Review Matter for Information Board Paper: Management Update on Risk Register and Full Risk Register The Board noted the contents o f the paper as presented, including that (i) incident reports had been submitted to the Executive team and Risk Management Committee in November and December 2013 respectively, (ii) key risk indicators had been identified for each function and (iii) the IBRC liquidation project team had updated the RMC on the main projects risks in December 2013. S29, S30 The Board noted that one o f the most important aspects o f reviewing the Risk Register was to review the controls and mitigants in place and to ascertain whether further controls were required. The Chairman o f the Risk Management Committee noted that the RMC would compile a list o f the top risks facing NAMA using both the Top Down and Bottom Up risk registers. He noted that while it might not be possible to mitigate some of these risks further, it was proposed to explore, where possible, the extent to which further mitigants/controls could be put in place to manage the risks. The RMC would revert to the Board with the Top risks in due course. The Chairman acknowledged the significant progress in relation to the Risk Register and thanked David Johnson for his contribution to same. 10. Status of Audit Recommendations Matter for Information Board Paper: Status o f Audit Recommendations The Board noted the contents o f the paper as presented, including the closing out o f 71 audit points since the previous update to the Board on 11th October 2013 and that just 1 o f the 2011 C&AG Management Letter’s 76 audit points and 25 o f the 2012 C&AG Management Letter’s 75 audit points remained open with four high items in relation to the latter due to be closed by June 2014. The Board noted further that five audits had been signed off since the last update and requested that the 2011 Audit point be dealt with by end Ql/2014. 11. Quality Assurance Summary Report 2013 Matter for Information Board Paper; NAMA Quality Assurance Summary Report The Board noted the contents o f the paper as presented and the value and scope of the particular work o f QA. The Board noted that, in addition to the Credit Quality Reviews, the QA team had conducted an additional compliance review on BOI, a number o f reviews o f key processes (Multi Banked Debtor Connections, Asset Sales and Rent Tracker and Insolvency) and contributed to the IBRC Integration Project. On behalf o f the Board, the Chairman commended David Johnson for the progress achieved and thanked him for the significant work involved. 12. Insolvency Team Update Matter for Information Board Paper: NAMA Insolvency Team Update The Board noted the contents o f the paper as presented, including the statistics relating to the level o f enforcement in NAMA and PI/SP Managed cases and that performance issues in relation to the IPs were relatively low in the context o f 361 appointments to date. The Board noted further that the insolvency team had reviewed its structures and resources, had issued guidance on various matters including examinership and had actively engaged with five separate audit processes in 2013 with no material issues found. It was noted further that the fees across the IP sector as a whole had fallen substantially, with current fee levels at a fraction o f historic levels. The Board noted that the number o f issues relating to IPs being referred to NAMA had fallen substantially, with the isolated cases being resolved satisfactorily with the relevant IPs. On behalf o f the Board, the Chairman thanked Aidan O ’Connell for his time and the progress achieved to date. In accordance with his earlier disclosure, Brian McEnery absented him self from the meeting for this item. 13, Unfinished Housing Estates Matter for Information Board Paper: Unfinished Housing Estates The Board noted the contents o f the paper as presented, including the positive progress indicated by the results o f the 2013 National Housing Survey and NAMA’s exposure to unfinished estates standing at approximately 21% o f all unfinished estates which the Board requested would be resolved by end 2014. The Board noted that details o f expenditure to date on remedial works would be included in the next update in April 2014. 14. Legal Divisional Update Matter for Information Board Paper: Quarterly Legal Division Briefing The Head o f Legal provided a detailed presentation to the Board on the Division’s outlook for 2014 and an overview o f the Division’s role in relation to management and control o f documentation. The Board noted that NAMA Legal had developed an extensive library o f legal precedents for Ireland and Northern Ireland which helped ensure consistency o f approach. The Board noted further that, with no in-house securities management facility, title documents were held to NAMA’s order in (PI) bank vaults and external solicitor’s vaults. The Board commended the Head o f Legal on the excellent track record on litigation. 14a. Quarterly Litigation Report Matter for Information Board Paper: Litigation Update In relation to the litigation update presented as a rolling register, the Board noted its contents and its further reflection o f the achievements and contribution o f the NAM A Legal team. 15. C&AG S226 Draft Report Matter for Information Board Paper: Draft C&AG Section 226 Progress Report (Proposed NAMA response) & Draft C&AG National Asset Management Agency Progress Report 2010 - 2012 S29, S30 Following considerable discussion, the Board resolved to approve the response proposed by the Executive to key points raised by the C&AG in his draft Section 226 Progress Report on NAMA. 16. MI Report Matter for Information Board Paper: Abbreviated Monthly Management Information Report - 31st December 2013 The Board noted the contents o f the paper as presented, including the positive 2013 cash performance o f €5.9 billion which, adjusted for the SL cash transfer o f €1.4 billion, amounted to €4.5 billion in 2013 which exceeded the 2013 year end cash generation target by over 25%. AOB Strategy Away Day The Board noted the Away Day on 5th February as an opportunity to focus on strategic issues on an Agenda that was not overly burdened. Committee Membership On the recommendation o f the Chairman, the Board resolved to reconstitute the Risk Management Committee with Oliver Ellingham continuing as Chairman and John Corrigan, Brendan McDonagh and Donal Rooney as members o f same - the Chairman would assign new Board members shortly. Revised Terms o f Reference reflecting the change o f membership would be brought back to Board in March 2014 when it was expected that new Board members could be appointed to the Committee. John Mulcahy and Eilish Finan Retirements On the occasion o f John Mulcahy’s final Board meeting, the Chairman, on behalf o f the Board, expressed his appreciation for the hugely significant contribution made by Mr Mulcahy as part o f the Executive and the Board and wished him well in his retirement. The Chairman also noted that Eilish Finan had completed her term o f office on 21 December and on behalf o f the Board he thanked her for her very significant contribution since the Board was established and in particular her work as Chair o f the Finance and Operating Committee and as a member o f the Audit and Northern Ireland Committees. There being no further business the meeting eeneluded. Frank Daly, Chairman 13'h February 2014 14 Page S I National Asset Management Agency NAMA BOARD MINUTES Second M eeting o f 2014: 2.00pm. to 5.00pm., 16th January 2014, Treasury Buildine Board-Only Appendix to Minutes Items Considered: Finance & Operating Committee (FOC) Chairmanship Matter for Board Approval Board Paper: N/A The Chairman opened the session noting that a vacancy existed for the Chairmanship o f the Finance and Operating Committee (FOC) following the conclusion o f Eilish Finan’s term on the Board on 21 December 2013. The Board noted that the next scheduled meeting of the FOC was due to take place on 4th February 2014. The Board noted further that it was not anticipated that any replacement Board Members1 would be appointed within six to eight weeks. Rather than appoint an interim Chairman to the FOC, the Chairman proposed that a joint Audit and Finance and Operating Committee be held, which would be chaired by the Chairman o f the Audit Committee. The Board agreed to this approach and the Chairman of the Audit Committee undertook to chair the committees jointly. Board Evaluation Summary Report to PAC Matter for Approval Board Paper: N/A The Chairman informed the Board that, at the Public Accounts Committee (PAC) meeting on 20th December 2013, Deputy Ross had requested a summary report o f the Board’s 2013 Evaluation Report be circulated to PAC members. The Chairman said that he had undertaken to consider circulation o f same and noted that the PAC had 1 Three vacancies would exist on the NAMA Board following John Mulcahy’s resignation from the Board on 17th January 2014. subsequently written to him formally requesting sight o f a summary o f the Board’s 2013 Evaluation report. The Board noted that under Freedom o f Information, it would be difficult to restrict access to a summary Board Evaluation Report. The Board noted further that the summary Evaluation Report requested was exclusively in respect o f the Board itself and not the Committees. After careful consideration, the Board agreed that a summary report (i) outlining the Board Evaluation process in broad terms, (ii) providing a very high level summary o f the relevant outcomes (without any detail or individual Board Member comments) and (iii) noting that the outcome had been satisfactory should be provided to the PAC. The Board commended the Chairman and the Chief Executive on their robust defence o f NAMA at their PAC appearance in December 2013. Directors’ & Officers’ Liability Insurance2 Matter for Board Approval Board Paper: Directors ’ and Officers ’ Liability Insurance S29, S30, S31 S36, S31 Project Eagle3 Matter for Board Approval Board Paner: AVA There being no further business the private session concluded. ?46m Frank Daly, Chairman 13th February 2014 National Asset Management Agency NAMA BOARD MINUTES Third M eeting o f 2 0 1 4 :1 7.40pm. to 18.10pm., 3rd February 2014, Treasury Building Board Only M inutes Attendance: NAMA Board Invited: Frank Daly1 Ronnie Hanna Brendan McDonagh Aideen O'Reilly John Corrigan1 Grellan Kelly Oliver Ellingham1 Alan Stewart Brian M cEnery1 Willie Soffe1 Secretary: Elaine Hudson On opening the meeting the Chairman welcomed the Board members to the third meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues Considered: 1. Disclosures of Interests There were no disclosures made. S36 Board Papers: N/A S36, S41 1By telephone in accordance with section 27 o f the NAMA Act 2009. 1 3. A03 There was no other business. There being no further business the meeting concluded. CL^e Frank Daly, Chairman 13th February 2014 , National Asset Management Agency NAMA BOARD STRATEGY AWAY DAY Fourth Board m eeting o f 2014: 8.00am. to 4.30pm., 5th February 2014, Herbert Park Hotel, Dublin 4 Attendance: NAMA Board NAMA Executives (invited) Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA John Colli son John Corrigan, Chief Executive, NTMA Ronnie Hanna Oliver Ellingham Dave MeEvoy Brian MeEnery Michael Moriarty Willie Soffe Sean O Faolain Aideen O’Reilly Donal Rooney Other Invitees: * Michael Noonan, Minister for Finance (Opening Item) a Alice Charles, External Member, Planning Advisory Committee (Items l&2)~ * Jim Kelly, External Member, Audit Committee (Items 1&2)* ■ Brian Rowntree, External Member, NI Advisory Committee (Items 1&2 j* ■ * ■ ■ ■ Michael Wall, External Member, Planning Advisory Committee (Items 1&2)‘ John Fitzgerald, Research Professor, ESRI (Item 2 only) David Duffy, Senior Research Officer, ESRI (Item 2 only) Killian O ’Flynn (Item 2 to 9 inclusive) Elaine Hudson, Secretary Board Private Session The Board held a private session with the Minister for Finance without the Executive or Secretary present. Opening Session with Minister for Finance The Executive joined the meeting for the Chief Executive’s opening presentation. The Minister thanked the Chairman and the Board for the invitation to attend the Board’s Strategy Away Day and expressed his appreciation for the significant progress achieved by NAMA to date. In the context o f the Board reviewing its strategy, the Minister raised the following considerations: (i) NAMA to consider how it could address the supply side problem in relation to 3 and 4 bedroom houses in Dublin Citing increasing residential prices in Dublin arising from a supply side problem in relation to three bedroom family homes, the Minister requested NAMA to drive forward delivery o f residential units to avoid the potential development o f a property bubble. The Minister noted NAMA’s plans to deliver 4,500 residential units. (ii) NAMA to consider how it could address the supply side problem in relation to premium Office Accommodation (in Dublin between Canals) Noting the significant interest in Ireland in terms o f FDI and the impetus for growth and job creation, the Minister requested NAMA to consider how it could best address the supply side problem o f premium office accommodation in Dublin city. (iii) NAMA to provide advice on regional disparities The Minister noted the disparity in market recovery between Dublin and regional areas and requested NAMA to advise whether in its view the disparity was merely a ‘time lag’ effect, with the regions expected to follow Dublin on an 18 month to 24 month horizon or whether in fact the disparity reflected the emergence o f two distinct economies. S41, S30 S41, S30 (v) NAMA to consider and advise Minister on disposal strategy from 2016 Noting that NAMA was on target to redeem cumulatively €15 billion of Senior Bond Debt by end 2016, the Minister requested NAMA to consider its disposal strategy and advise him whether the remaining €15 billion should be placed on market as a single transaction in 2016 or to proceed with existing ‘tranched’ approach. The Minister requested NAMA to examine the issue and advise him in relation to same. (vi) NAMA to provide inventory of Green and Brown field sites & advise on a mechanism to control supply/demand of land Referring to the boom/bust nature o f the Irish property market the Minister requested NAMA to consider (i) a strategic solution to this historic problem and; (ii) whether NAMA or an alternate State Development Agency could be charged with holding land and releasing/withdrawing it as appropriate to regulate the market (the Minister cited a precedent in Hong Kong), The Minister also requested an inventory o f NAMA’s green and brown field sites in Dublin. The Minister recorded his appreciation to Board and Executive and outlined his personal and the Government’s strong support for NAMA. The Minister then left the meeting. 1. General CEO Presentation The Board noted that the development o f Dublin Docklands (SDZ1) was o f key national importance for the State and a priority for Government. The Board agreed that Government (Department o f Public Expenditure and Reform (DPER), Department o f Finance (DFIN) and Department o f the Environment (DoE)) needed to drive development o f the site and prioritise the removal o f infrastructural impediments to development. The Board noted that as NAMA had significant assets 1 Strategic Development Zone (c. 12 hectares out o f total 22 hectare site) in the SDZ, expediting development o f the site was a key priority for the Board. It was noted that the Oral hearing for Dublin th Docklands SDZ was scheduled for 25 February 2014. S29, S30, S41, S36 S29, S30, S41, S36 The Board and External Committee members discussed infrastructural capacity issues at length including the key question as to who would ultimately (i) drive and (ii) fund the building o f key infrastructure, including water and sewerage, without which development was not possible. S29, S30, S41, S36 The NIAC External Committee member provided a succinct overview o f the key challenges with implications for NAM A’s portfolio in Northern Ireland (NI). It was noted that there were some signs o f economic recovery, albeit slow and painful. The Board noted that NI was a low wage economy with 73% o f the population dependent on the public sector, the latter o f which was a key player in the office space market. Analogous to Rol, there was (i) a significant demand for Grade A office space, however, unlike Rol, without evidence o f upward price pressure (tenants were wanting more for less) and (ii) an oversupply o f apartments. It was noted that NI was seeking to attract inward investment (via tax breaks) to Research and Development organisations and that progress was somewhat slow in this regard. There was also a drive to attract retailers back to towns and city centres. 2. Presentation from ESRI on research results David Duffy and John Fitzgerald o f ESRI presented an update to the Board and External Committee members on the individual research projects related to the residential housing market in Ireland focusing on (i) demographic and household formation trends with a view to exploring and refining the housing demand forecasts (ii) housing supply in local markets (based on census data) and (iii) the role o f credit in the future housing market. The Board noted that Ireland’s population was projected to reach 5.2 million by 2030 (average 20,000 increase per annum) with a concomitant increase in the number households from 1,65m in 2011 to 1.86m in 2020 underpinned by an expected growth o f 25,000 new households per annum over the medium-term (decreasing to 19,000 per annum if higher than expected emigration and increasing to 31,900 if emigration is lower than expected). In terms o f forecasting housing demand, the Board noted recent census data had indicated a change in tenure choice within the 25yr old - 40yr old cohort, who had moved out o f home earlier (due to lower cost of renting) and were renting rather than purchasing their own homes. With an estimated ‘p e n t up dem and’ o f 60,000 new homeowners, there were implications for NAMA in terms o f scale and type o f housing need. In response to a question from the Board, the ESRI noted that it was difficult to gauge whether the ostensible change in tenure choice from purchasing to renting homes reflected a cultural change or financial factors (such as weak credit availability and/or falling house prices in the years immediately preceding the Census); or whether it represented a temporary or permanent change in market characteristics. The Board noted that ESRI would endeavour to introduce further granularity in terms o f supply and demand in particular core urban areas, notwithstanding that the research was based primarily on Census data at county level. It was noted that spatial migration patterns indicated that the population would increase in the core urban areas and decrease in peripheral areas, mainly due to differing income and employment opportunities - with higher educational attainment in the 25 yr old to 40 yr cohort (35% educated to third level), employment opportunities would be in core urban areas. It was noted further that the prospect o f the 25yr - 40yr old cohort maintaining a rural lifestyle and urban job was unsustainable. In relation to ascertaining demand for housing in the 60+ age cohort (step down accommodation), the ESRI undertook to incorporate questions o f preference in accommodation into the ‘Tilda ’ longitudinal study. The Board noted that ESRI would seek to ascertain whether there was any evidence o f demand from purchasers o f properties in counties immediately neighbouring Dublin and the wider Leinster region during the boom, seeking to return to Dublin. The Board noted that following the introduction o f REITs to the Irish market and the emergence of professional landlords with economies o f scale and well positioned branding, the younger, better educated cohort might choose to be long term renters if the product was right (as might the older ‘empty nest’ cohort, if the location was rig h t). 3. Presentations: NAMA capex plans S41, S36, S29, S30 4. Presentation Cash generation versus pro?t 6. Section 172 Update S41, S36, S29, S30 7. Presentation - N ew Products, including R E IT s The Senior Divisional Manager (Strategy) made a presentation. The Board noted the various New Products initiatives arising from the ‘New Products Group ’ formed in Q4 2013 as circulated in the paper for the meeting. Following considerable discussion the Board agreed that initiatives 1 to 8 should be explored further with a view to reverting to Board with a full business proposal at a later Board meeting. 8. S36 IBRC discussion 10. Closing Discussion & AOB Over the course o f the day, other aspects o f NAMA strategy and its context were discussed, a summary o f which follows below: S41, S30, S29, S36 There being no further business the meeting concluded. National Asset Management Agency NAMA BOARD MINUTES F ifth M eeting o f 2014: 2.00pm. to 6.30pm., 13th February 2014, Treasury Building Attendance: NAMA Board NAMA Executives (invited) Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA John Collison John Corrigan, Chief Executive, N TM A1 Ronnie Hanna Oliver Ellingham Dave McEvoy Brian McEnery Michael Moriarty William Soffe Sean O Faolain Aideen O ’Reilly Donal Rooney Other Invitees: * ■ ■ ■ ■ ■ Elaine Hudson, Secretary Rossa White, NTMA Chief Economist - item 5 only Eddie Casey, Economist - item 5 only Killian 0 ’Flynn, Senior Divisional Manager (Strategy) - items 10 & 11 Suzanne Sweeney, Senior Divisional Manager (AR) - item 12 only Martin W Whelan, Senior Divisional Manager (Communications), items 14 & 18 only On opening the meeting the Chairman welcomed the Board members to the fifth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Note: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. 1 In attendance from Item 6b onwards, having previously advised the Chairman of his need to attend to urgent business as Chief Executive of the NTMA. Issues considered (in order of consideration): 1. Disclosure of Interests Brian McEnery disclosed a potential conflict o f interest with respect to item 12(b) and declared that he would take no part in the discussion or decisions related to same. There were no other disclosures made. 2. Board Private Session The Board held a private session without the Executive present”. A Boardonly note on discussion during the session was prepared by the Secretary. 3. Consent Agenda Items Matter for Board Approval Board Papers: Minutes o f B M 2 - 16th January>2014; Board Only Appendix to Minutes o f B M 2 - 16th January 2014; Board Only Minutes o f BM 3 - 3rd February 2014; Minutes o f BM 4 - 5th Februaiy 2014 (Board Strategy Away Day); Minutes o f Executive Meeting - 31st January 2014; Northern Ireland Advisory Committee Update to Board — period 1st November 2013 — 29th January 2014; Planning Advisory Committee Update to Board — period November 2014 —January 2014; Media Evaluation - January 2014. The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 2 and BM 4, as previously circulated by email on 9th January 2014 (included in the Board pack) and 11th February 2014 respectively. The Chairman advised that a detailed paper on the Mortgage Book operating model and in particular the role o f the Credit Committee was tabled under Item 12a and that a verbal update on NAM A’s meeting with the C&AG in relation to S226 report would be provided under AOB. The Chairman thanked the Executive for the presentations at the Strategy Away Day and the excellent quality o f the papers circulated in advance o f the 2 Some members of Executive attended for specific items. day, noting that the day had been very constructive with a significant number o f action items arising. Presentation on the Irish Housing Market Board Papers: Housing Supply in Ireland Matter for Information The NTMA Chief Economist and NTMA Economist gave a presentation to the Board which noted the key findings including that: (i) D ublin county vacancy rates looked set to continue to decline while other regions remained broadly unchanged (other regions were in “stagnation” with supply meeting or exceeding demand). (ii) Underlying vacancy rates (i.e. excluding holiday homes) in Dublin had fa llen as low as 3% by Q3 2013 with vacant stock expected to be fu lly eroded by Q1 2015 unless more vacant stock unexpectedly became available, (iii) There were indications that numbers o f households were increasing at a faster pace than expected in Dublin (due to significant internal migration and greater than expected headship rates with rising divorce numbers and greater preferences for smaller households), with Dublin housing completions expected to fall short o f anticipated demand (if household formation continued to rise at the same pace as recorded in the past two years). (iv) Any potential surge (latent supply) in repossessions and completions of unfinished legacy housing stocks (unrelated to the most recent housing starts) would serve to slow, but not halt, the erosion o f vacant stock in Dublin. (v) Wider analysis o f price impacts suggested that price pressures would be largely weighted to the upside fo r the D ublin m arket, with a slower pace o f recovery still expected outside o f Dublin. (vi) A significant percentage o f mortgage arrears (c. 25%) appeared to be in “strategic default” as 75 per cent o f cases included households where the head was currently employed: 40% were employed on a temporary contract with their current employer for less than two years or were recently unemployed (with 25% o f non-arrears households in similar situations) and 65% had suffered income shocks (i.e. fall in nominal wages/overtime or hours o f work within current job) (vs 54% o f households with no arrears). The Board noted that notwithstanding the dysfunctional mortgage credit market, the primary blockage was on the supply side. Noting the consistent message o f a critical residential unit supply shortage in Dublin from the ERSI’s presentation to the Board’s Strategy Away Day, the Board requested that the Head o f Strategy and Communications and Head o f Asset Recovery extract the key impacts for NAMA from the research and revert to the Board in March 2014 with recommendations as to NA M A 's role in addressing the supply shortage on a strategic basis. The Chairman, on behalf o f the Board, thanked Rossa White and Eddie Casey for their time and excellent presentation. 6. Board Approval of CC Recommendations S41, S36, S29, S30 Debtor Strategic Credit Reviews 8. Asset Recovery Policy Framework Review Matter for Board Approval Board Paper: Asset Recovery Policy Framework Review The Board noted the contents o f the paper as presented, including the summary o f the Asset Recovery Policies amended and approved since the last formal review in February 2013. The Board noted further that, in the context o f providing a comprehensive suite o f reference documents to Capita, as incoming Service Provider o f 1BRC assets, a full review o f items issued since NA M A ’s inception had taken place, with each item reviewed, amended and approved internally by CEO and HoAR. It was noted that as part o f Phase 2 o f 8 P ii f the IBRC project (New Loan book being sold by SL) a panel o f Asset Recovery Senior Divisional Managers (based on a process o f dual sign off) had been sanctioned by CEO and Head o f Asset Recovery to review each item of the suite o f Asset Recovery Policies, Procedures and supporting documentation to the incoming Service Provider. The Board noted that two thirds o f the PI full suite o f policies and procedures had been reviewed to date and that in November 2013 formal procedures had been put in place to document ‘variations3’ to implementation o f the NAMA Governance Framework within the Pis which would be presented to the relevant PI Steering committees in Q1 2014. Following consideration, the Board resolved to approve the revised Asset Recovery Policy Framework as presented. 9. Asset Management: Joint Ventures - Expressions of Interest Matter for Board Approval Board Paper: Joint Ventures —Expressions o f Interest The Board noted the contents o f the paper as presented including the form of the proposed invitation to be published, the envisaged minimum potential investment o f €20m in terms o f completed value, the requirement for interested parties to demonstrate a net asset value of at. least tS 36 x^.c provide relevant background information (including potential for equity participation). S41, S36 Following considerable discussion the Board resolved to approve the recommendation to publicly seek expressions o f interest from the market to co-invest with NAMA in joint venture opportunities which NAMA may identify, with the objective o f investing in NAMA secured assets. 3 Variations are defined as an instance where the PI is unable to implement certain aspect/s of the policy, procedure or guidance note for valid operational reasons and/or where an alternative arrangement is agreed between NAMA and the PI. 10. Sectoral Policies 10(a) Hotels (ROI) Matter for Board Approval Board Paper: Sector Policy fo r RO I Hotels & Sector Policy fo r GB Hotels S41, S36 The Board noted that hotels in ROI and, to a lesser extent, in GB would be marketed in complementary groups to stimulate wider investor interest and maximise the potential sales price. Following consideration, the Board resolved to approve the Policy fo r Hotels in Ireland and the Policy fo r Hotels in Great Britain as the frameworks within which individual asset strategies should be assessed. 11. New Product Development Procedure Matter for Board Approval Board Paper: Procedure fo r New Product Development The Board noted the contents o f the paper as presented and that the procedure had been developed in response to a recent review of product development by the internal audit function. The Board advised that the New Products Group might consider meeting more regularly than the quarterly meetings proposed and should consider external engagement with a view to keeping up with best available information. The Board resolved to approve the procedure for New Product Development, incorporating the terms o f reference for a New Product Group. 12. IBRC Integration - Progress Report Matter for Board Approval Board Paper: IBRC Integration - Progress Report The Board received an update on the IBRC Integration Project, noting the progress with respect to Capita and the IBRC commercial and residential books respectively. S41, S36, S29, S30 4 5 >36 336 12(a) Mortgage Book Operating Model Matter for Board Approval Board Paper: IBRC Residential Mortgage Book Operating Model The Board received an update on the Operating Model that NAMA would implement on the residential mortgage book acquired from IBRC SL. The Board noted that during the TSA period, it was expected that all credit decisions would have to be made by NAMA (sole discretion) using IBRC’s existing committee structures to capitalise on case knowledge and expertise. Following consideration, and noting the prior review o f the Credit Committee on 11th February 2014 and its recommendation of approval, the Board resolved to approve the proposed Residential Portfolio Operating Model and Delegated Authority Matrix as outlined in the paper. 12(b) NAMA Tender for panel of IBR service providers Matter for Board Approval Board Paper: NAMA Tender fo r Panels o f IBR Service Providers The Board noted the contents o f the paper as presented, including the establishment of three panels o f firms to provide NAMA with IBR and related services relating to the new IBRC exposures. Following further discussion the Board resolved to approve the recommendation o f the Evaluation Group to proceed with the appointment of the proposed firms for the provision o f IBR and related services to NAMA. In accordance with his earlier disclosure, Brian McEnery absented him self from the meeting for this item. 12(c) SME Code of Practice IBRC Matter for Board Approval Board Paper: The Code o f Conduct fo r Business Lending to Small and Medium Enterprises and its application to the Commercial Loan Book acquired from IBRC SL The Board received an update on the proposed approach to the application of the Code o f Conduct o f Business Lending to Small & Medium Enterprises (the “Code”) to the Commercial property loan book acquired from IBRC SL. Taking in to consideration the key reasons outlined in the paper, including, inter alia, the need for NAMA to ensure consistency in debtor treatment through the application o f the same policies and procedures as to its existing portfolio and the robust policies and procedures regarding debtor engagement that meet the majority o f the Code’s requirements, the Board resolved to approve the recommendation that NAMA would not apply the Code of Conduct o f Business Lending to Small & Medium Enterprises to the Commercial Portfolio acquired from IBRC SL as outlined in the paper. 13. Treasury (CFO): 13(a) Subordinated Bond Coupon Matter for Board Approval Board Paper: NAMA Subordinated Bond —Coupon Payment The Board noted the contents o f the paper as presented including that the previous three coupons due on the Subordinated bonds (March 2011, 2012 & 2013) had not been paid and discussed the criteria required for such a coupon payment to be made: namely that NAMA ‘'was achieving its o b j e c t i v e s In this regard the Board noted that NAMA was expected to be in a profitable position for 2013, with an anticipated profit before tax for 2013 o f €400m and profit after tax o f approx. €300m, notwithstanding a significant impairment charge o f approx. €800m (subject to Board approval and audit). Following consideration, and subject to all NAMA senior noteholders agreeing 36 in writing to rollover NAMA senior debt in March 2014 the Board resolved to approve the recommendations as presented in the paper as follows: (i) pay the subordinated bond coupon o f € 83,855,520 due on the 1st March 2014 and notify the holders accordingly. (ii) pre-advise the decision to the Department o f Finance. 13(b) Senior Bond Redemption Matter for Board Approval Board Paper: NAMA Senior Note Redemption S41, S36, S29 Following consideration, and taking into account the strong current Cash and Qualifying liquid Asset (QLA) position o f €3.3 billion at 31sl January 2014, the imminent closing of substantial debtor transactions (c. 0.5 billion) and cost of carry considerations in holding excess cash balances in the current low interest rate environment, the Board resolved to approve the recommendations as presented in the paper as follows: (iii) Redeem up to €3,000,000,000 of “Existing” NAMA Senior Notes (€22.69 bn o\s) by the 31st March 2014, subject to all note-holders agreeing to physically settle their holding on the upcoming 3ld March 2014 senior note maturity. (iv) Notify the Minister o f its decision, under Section 60 (2) (a) o f the NAMA Act, and if there is no objection from the Minster, it was recommended that the Board authorise the CEO to take all the necessary steps to redeem the bonds as outlined in (i) above. Records Management Policy Matter for Board Approval Board Paper: Records Management Policy The Board noted the contents o f the paper as presented and that due to delays at Oireachtas Committee Stage, the Freedom o f Information Act, was unlikely to apply to NAMA until October/November 2014 (six months after Act was passed). It was noted that two FOI Managers, due to commence work in late February/early March 2014, would in the interim (i) undertake simulations of FOI searches in order to test the impact on systems and (ii) facilitate staff in terms o f compliance with the Records Management Policy. The Board noted further that the period o f retrospection that would apply to NTMA/NAMA would not be decided until after enactment o f the Bill in April 2014 as advised by DPER. The Board agreed that the NAMA and NTMA Records Management Policies should be aligned and that any anomalies should be brought back to the Board to resolve. Following consideration, the Board resolved to approve the Records Management Policy incorporating the Records Retention Policy subject to any minor amendments arising from the alignment of the NTMA and NAMA Records Management Policies. The Chairman, on behalf o f the Board, thanked the Senior Divisional Manager (Communications) and the Head o f Strategy and Communications for the significant progress made in relation to the Policy. Annual Report to the EU Commission & Competition Authority Matter for Board Approval Board Paper: Competition Report for E U Commission and Competition Authority o f Ireland The Board noted the contents o f the paper as presented including that (i) the report was in the same format as the previous year, (ii) none o f NAM A’s six potentially distortive’ or ‘super’/ ‘extraordinary' powers had been exercised (iii) 13 o f the 28 other powers identified by the Commission had been exercised and (iv) no new powers had been exercised as set out in detail in the report. Following consideration the Board resolved to approve the content o f the 2013 report for submission to the EU Commission and the Competition Authority. 16. NTMA SLA - Annual review Matter for Information Board Paper: NTMA Service Level Agreement - Annual Review; NTMA Sendee Provision to NAMA (clean and marked up versions) The Board noted the changes to the NTMA Service Level Agreement following its first annual review including, inter alia, (i) the new governance arrangement for the governance o f NTMA corporate projects which might impact NAMA and (ii) the removal o f the requirement for an annual review o f the SLA by NAM A’s Finance and Operating Committee (FOC) and Board on the basis that no material changes were expected going forward and that in the event that there were material changes these would be presented to the FOC and Board as a matter o f course. 17. MI Report Matter for Information Board Paper: Monthly Management Information Report — 3 1 ’ December 2013 The Board noted the contents o f the paper as presented, including the positive 2013 cash performance o f €5.9 billion which, adjusted for the SL cash transfer of €1.4 billion, amounted to €4.5 billion in 2013 which significantly exceeded the 2013 year end cash generation target o f €3.5 billion. The Board noted further the continued strong performance in January 2014 with cash generation in excess o f €450 million for the month. The Board commended the excellent quality of the paper circulated for the meeting. 18. Divisional Updates: Strategy and Communications Matter for Information Board Paper: Strategy and Communications Divisional Update The Head of Strategy and Communications provided a detailed presentation to the Board on the division’s work and responsibilities, including the level of communications/engagement and initiatives. S29, S30 presented to Board at its March meeting. In addition to the significant volume o f communications activity (in tenns of press releases, press statements, responses to phone calls and emails from the public/politicians/joumalists and parliamentary questions etc) the Board commended the excellent quality o f the communications function which had served to create a significantly more positive attitude to NAMA in the last 12 months. A review o f Communications Strategy, as requested by the Board at its away day in response to recent coverage o f NAMA issues, would be presented at the March meeting o f the Board. S30, S29 19. AOB The Head o f Strategy and Communications briefed the Board on the meeting held on 20 January 2014 with senior C&AG staff in relation to the draft S226 Report. It was noted that the C&AG indicated that they would incorporate the 2013 impairment figures in the report and that this would provide a more comprehensive and up-to-date view o f NAMA’s progress. There being no further business the meeting concluded. National Asset Management Agency NAMA BOARD MINUTES Fifth Meeting o f 2014: 2.00pm. to 6.30pm., 13th February 2014 , Treasury Buildins Board-Only Appendix to Minutes Items Considered: External Committee members (Brian Rowntree and Michael Wall) end of Terms of Appointment Matter for Board Approval Board Paper: N/A The Chairman opened the session noting that the second Terms o f Appointment for Mr. Rowntree, External Committee Member on the Northern Ireland Advisory Committee and Mr, Wall, External Committee Member on the Planning Advisory Committee were due to expire on 15th April 2014, The Board noted that there were no restrictions under s33(3) on the number o f terms o f Advisory Committee reappointments unlike Board Members under s20(4). On the recommendation o f the Chairman, the Board resolved to approve the re-appointment o f Mr. Wall as a member o f the Planning Advisory Committee for a further two years from 16th April 2014 subject to confirmation o f his willingness to commit to a further term. The Board agreed to defer a decision in relation to Mr. Rowntree in the context o f ______ S31, S41, S29, S30 CEO 2013 Performance review Matter for Information Board Paper: N/A The Board held a private session on this matter at the end of the meeting without the Executive or Secretary present There being no further business the private session concluded. Frank 13 March 2014 “T i National Asset Management Agency NAMA BOARD MINUTES Sixth Meeting o f 2014: 4pm, to 4.20pm., 28th February 2014, Treasury Building Board Only Attendance: NAMA Board Invited: Frank Daly1 Suzanne Sweeney Brendan McDonagh John Corrigan1 Oliver Ellingham1 Brian McEnery* Secretary: Elaine Hudson Willie Soffe1 On opening the meeting the Chairman welcomed the Board members to the sixth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues Considered: 1. Disclosures of Interests There were no disclosures made. S41, S29, S30, S36 3. AOB There was no other business. There being no further business the meeting concluded. Frank Daly. Chairman 13?? March 2014 National Asset Management Agency NAMA BOARD MINUTES Seventh M eeting o f 2 0 1 4 :10am. to 10.20am., 11th March 2014 , Treasury Buildins Board Only Attendance: NAMA Board Invited: Frank Daly1 Ronnie Hanna Brendan McDonagh Aideen O ’Reilly John Corrigan1 Alan Stewart Oliver Ellingham1 Brian McEnery1 Secretary: Willie Soffe Elaine Hudson On opening the meeting the Chairman welcomed the Board members to the seventh meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues Considered: 1. Disclosures of Interests There were no disclosures made. 2. Project Eagle Matter for Board Approval Board Paper: N/A 3. AOB There was no other business. There being no further business the meeting concluded. Frank Daly, Chairman 13?" March 2014 National Asset Management Agency NAMA BOARD MINUTES Eighth Meeting o f 20 1 4 :1.30pm. to 5.30pm., 13th March 2014 , Treasury Building A ttendance: NAMA Board NAMA Executives (invited) Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA John Collison John Corrigan, C hief Executive, NTMA Dave McEvoy Oliver Ellingham Michael Moriarty Brian M cEnery1 Sean O Faolain William Soffe Aideen O’Reilly Donal Rooney Other Invitees: ■ ■ ■ ■ ■ Elaine Hudson, Secretary Killian O’Flynn, Senior Divisional Manager (Strategy) - items 8 & 9 Jamie Bourke, Senior Divisional Manager (AR) —item 15 only Martin W Whelan, Senior Divisional Manager (Communications), item 19 only Ray Gordon, Gordon MRM Consultants, Item 19 only Apologies: ■ Ronnie Hanna (Executive) On opening the meeting the Chairman welcomed the Board members to the eighth meeting of 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. N ote: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order o f consideration): 1. Dis closure o f Interests John Corrigan disclosed a potential conflict o f interest with respect to item 13 and declared that he would take no part in the discussion or decisions related to same. Brian McEnery disclosed a potential conflict o f interest in respect o f Items 11(b), 12(a) and 12(b) and noted that he would not be taking part in the discussion or decisions related to same2. There were no other disclosures made. 7. Strategic Options Matter for Board Approval Board Paper: Strategic Options S29, S30, S36, S41 Brian McEnery participated for items 7, 10, 14(a), Board only session in relation to a specific aspect o f Item 19 only which were expedited to the start of the meeting to facilitate his participation in same. 14(b). Dublin Development Land Inventory Matter for Information Board Paper: D ublin Development Land Inventory The Chairman, on behalf o f the Board commended HoAM and NAMA staff on the quality o f the report and requested that NAMA extend the analysis to include other Major cities (Cork, Limerick, Galway) and the greater Dublin area (Wicklow, Kildare and Meath) with the report to be tabled at the April Board meeting. 10. Section 172 Update Matter for Board Approval Board Paper: Section 172(3) Policy Update S41, S29, S30, S36 17. Impairment - Bi-annual review (to end 2013) Matter for Board Approval Board Paper: Im pairm ent B i-A nnual Review (to end 2013) S41, S36, S29, S30 The Chairman, on behalf of the Board, commended the very significant work undertaken by the CFO and his team and AM and AR teams respectively and congratulated them on the excellent quality o f the report submitted. 3. Consent Agenda Items Matter for Board Approval Board Papers: Minutes o f BM 5 - 13th February 2014; Board Only Appendix to Minutes o fB M 5 - 13'h February 2014; Board Only Minutes o fB M 6 —28th February 2014; Board Only Minutes o f BM 7 - 11th March 2014; Minutes o f Executive Meeting - 28th February 2014; Audit Committee Update to Board period 1st January 2014 — 28th February 2014; Finance & Operating Committee Update to Board - period 1st December 2013 - 28th February 2014; Media Evaluation - February 2014. The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 5, as previously circulated by email on 6lh March (included in the Board pack). The Chairman adv’sed'd'.:-;.: update c:: loe to S 36 wek dd^.ivr 19 and that a verbal update in relation to would be given under Item 11. Committee Terms of Reference - Annual Review Matter for Board Approval Board Papers: Committee Terms o f Reference - Annual Review including Terms o f Reference — Audit Committee; Credit Committee; Finance & Operating Committee; Risk Management Committee; and Planning Advisory Committee. The Board noted the contents o f the paper as presented including the proposed changes in respect o f the Audit, Credit, Planning Advisory and Risk Management Committees’ Terms o f Reference (ToR). The Board noted that the agreed change to the Credit Committee Terms o f Reference in respect o f the addition of the second Deputy Head o f Asset Recovery to the Committee was not a minor, non-material change as outlined in the cover paper circulated. Following consideration, the Board resolved to approve the Committees’ Terms o f Reference as presented. The Board noted that it would conduct its annual review o f the NI Advisory Committee ToR in May following Committee review. Disposal & Granting of Access to On Balancc Sheet Fixed Assets (Report) Matter for Information Board Paper; Disposal and Granting o f Access to On Balance Sheet Assets Annual Report The Board noted the contents o f the report as presented which had been prepared in accordance with the Policy on the Disposal of, and Granting o f Access to, NAMA on Balance Sheet Fixed Assets approved by the Board in June 2013. The Board noted the listing o f on Balance Sheet fixed asset disposals which had been completed in 2013. It was noted that that there were no transactions involving members o f the NAMA Board, Committees, NAMA officers, NTMA staff or connected persons within the meaning o f s i 72(3) o f the NAMA Act and no exceptions to the policy. 7(a). Department of Finance information request re s227 Matter for Board Approval Board Paper: Department o f Finance Information Request re Section 227 S41, S30, S29, S40 8. Q uarterly Strategy U pdate M atter for Inform ation B oard P a p e r: Strategy Monitoring Programme - Quarterly Update !29, S30, S41 exceptionally strong performance o f the Irish commercial market during the latter half o f 2013 had increased the scale o f what was currently achievable in terms of Irish asset disposals. In this context it was noted that the asset disposal and Senior Bond redemption targets set in the 2012 Strategic Plan were being reviewed by the Board and that future versions o f the paper would be based on any revised strategy that might be agreed by the Board. 3 As o f 28th February, NAMA is awaiting the 2nd draft version of the C&AG s226 report Sectoral Policies 9(a) Offices (ROI) Matter for Board Approval Board Paper; Sector Policy fo r R O I Offices The Board noted the contents o f the paper as presented, that no material changes were proposed at this time, and that disposal rates were broadly in line with strategy. S29, S30, S41 S29, S30, S41 Following consideration, the Board resolved to approve the Policy fo r Offices in Ireland as the framework within which individual asset strategies should be assessed. 9(b) Offices (GB) Matter for Board Approval Board Paper: Sector Policy fo r GB Offices The Board noted the contents o f the paper as presented, that no material changes were proposed at this time, and that disposal rates were ahead o f the Strategic Plan. 529, S30, S41 Following consideration, the Board resolved to approve the Policy fo r Offices in Great Britain as the framework within which individual asset strategies should be assessed. 11. Board approval of CC recommendations 10 Pagc 12 Pagc 14 Pagc 15 Pzige In accordance with his earlier disclosure, John Corrigan absented himself from the meeting for this item. 14. Asset Management Quarterly Progress Update Matter for Information Board Paper: Quarterly Projects Update - A sset Management The Head o f Asset Management presented the AM projects paper to the '-c :': -;, u..';- - ; ' 'f:o - f J.he S36, S 4 1 ^ ^ ^ ^ ^ J ;—r:: AR. A.'M and that four AM projects were linked to the outcome o f Dublin Docklands SDZ. The Board noted the contents o f the paper as presented. 14(a). Social Housing update (NARPS) Matter for Board Approval Board Paper: Social Housing - NARPS Rental M odel S41, S36, S29, S30 14(c). Dublin Docklands SDZ Update Matter for Information Board Paper; D ublin Docklands S D Z Update The Board noted the contents o f the paper as presented including the update in relation to the SDZ Oral Hearing and the direct evidence o f NAMA’s Head of Planning presented to the Oral Hearing on Friday 28th February. The Board noted that the Oral Hearing had brought a more positive understanding o f the water supply and drainage capacity situation within the SDZ lands with Irish Water having effectively assumed control o f same and stated in evidence that there were no immediate water supply/drainage impediments to future development in the SDZ area subject to ongoing investment planned taking place. It was noted that while Irish Water had confirmed that it would manage (and continue to improve) water and drainage supply and infrastructure in the SDZ in the immediate term, the issue in relation to the source o f funding for this development had not been discussed at the Hearing. The Chairman, on behalf o f the Board, commended the quality o f the paper and the work undertaken to date and congratulated NAMA’s Planning team on an excellent job in relation the SDZ process in particular. 15. IBRC Integration Update Matter for Board Approval Board Paper: IB R C Integration - Progress Report The Board noted the contents o f the paper as presented including that there had been strong bidder interest in the ‘S a n d ’ Portfolio4 (particularly in relation to non-performing assets) and the ‘Stone’ Portfolio5 which were due to close on the 14th March and 2 i st March 2014 respectively and following which the Board would have a more definitive indication o f the likely size o f the residual IBRC asset transfer to NAMA. 4 IBRC Irish Residential Portfolio o f Par Debt €1 .Sbn 5 IBRC Irish Commercial portfolio of Par Debt €9.3bn 15(a). IBRC Portfolio V aluation A pproach M atter for Board A pproval B oard P a p e r: IB R C Integration - Portfolio Valuation Approach The Board noted the contents o f the paper as presented including the requirement, under International Financial Reporting Standards (IFRS), to account for the NEW Portfolio at fa ir value on acquisition from the legal transfer date. The Board noted that, having regard to the fair value requirements under IFRS 13, the profde o f the NEW portfolio likely to be acquired and the time required to complete connection due diligence which could not commence until post loan sale closing date (Q4 o f 2014), it was considered that a portfolio valuation approach was the best approach available to assess the fair value of the portfolio for the year end 31 December 2014. It was noted that NAMA’s existing cashflow based analysis approach would apply thereafter for subsequent impairment assessment purposes i.e. 30 June 2015 onwards. Following considerable discussion the Board resolved to: (i) Apply a total portfolio valuation approach for the purpose o f arriving at a fair valuation o f IBRC SL portfolio acquired for the NAMA Group 31 December 2014 Financial Statements. (ii) Approve the procurement o f the necessary financial and technical accounting expertise to undertake the project noting that the NAMA IBRC project integration team in conjunction with the CFO would commence engagement with parties with sufficient expertise and experience to undertake this project. The Board noted that the recommended approach and costs proposal would brought back to the Board’s May meeting following engagement with the relevant parties. 16. Treasury (CFO): 16(a). Update Matter for Information B oard P a p e r: Treasury (CFO) Update The Board noted the contents o f the paper as presented. 16(b). NAMA Senior Note Redemptions Matter for Board Approval Board Paper: N AM A Senior Note Redemptions Following discussion the Board resolved to approve the recommendations as presented in the paper as follows: (i) Approve on-going redemptions o f NAMA “New” Senior Notes issued to Central Bank as payment for IBRC Floating charge up to an aggregate amount o f €7 billion by the 30th June 2014 at Par plus Accrued Interest, subject to National Asset Resolution Limited (NARL) having sufficient liquidity to meet its obligations. This would result in cumulative redemptions o f €10.3 billion o f €12.9 billion issued in March 2013. (ii) Notify the Minister o f its decision, under Section 60 (2) (a) o f the NAMA Act, and if there was no objection from the Minster, it was recommended that the Board authorise the CEO to take all the necessary steps to redeem the notes as outlined in (i) above. 16(c). NAMAIL Private Investor Dividend Matter for Board Approval Board Paper: The Board noted the contents o f the paper and that if a dividend was to be declared, NAMA would have to provide its consent under the terms o f the Shareholders’ Agreement. Following consideration and noting that a payment at 31st March 2013 would be in the region o f 62.0m if coupon was 4% but now the coupon would likely be closer to 3%. The Board resolved to approve the recommendation as presented in the paper as follows: 18. (i) Consent to the declaration and payment by National Asset Management Agency Investment Limited (“NAMAIL”) to the Private Investors only o f a dividend equal to the amount arrived at by applying the Ten Year Irish Government Bond Yield6 as at 3.00 pm on Monday 31st March 2014, capped at 4% (equivalent to €2.04m). (ii) Authorises the CEO to provide written consent from NAMA to NAMAIL to declare and pay such a dividend, in accordance with section 3.1.2(c) o f the Shareholders Agreement made between NAMA, NAMAIL and the Private Investors. Section 55 Report and Accounts - Q4/2013 Matter for Board Approval Board Paper: Section 55 Quarterly Report Q4 2013 The Board noted the contents o f the report and accounts, the operating profit before impairment o f €1.2 billion and profit after impairment and tax o f €211 million for 2013. The Board agreed that publication o f Section 55 Quarterly 6 10-year Interpolated Yield between Irish 18* March 2024 & Irish 18th March 2025 bonds - 3 18% as at 25th Feb 2014. Report should coincide with the publication o f NAMA’s Annual Report as both contained first indication o f NAMA’s results for 2013. Following consideration, and subject to some minor enhancements to the cover letter following review by the Finance & Operating Committee at its meeting on 12th March 2014, which otherwise recommended the report and accounts for approval, and subject to the material completion o f the C&AG’s audit o f the impairment figure, the Board resolved to approve the submission o f the Section 55 Report and Accounts for Q4 2013 to the Minister for Finance. The Chairman thanked the CFO and his team for their considerable time and effort in relation to the report. 19, Communications Strategy Review7 Matter for Board Approval S31, S29, S30 M I R eport M atter for Inform ation B oard P a p e r: Monthly Management Information Report - 31stJanuary 2013 The Board noted the contents o f the paper as presented, including the positive year to date 2014 cash performance o f €1.1 billion. The Board noted that cash generation since inception was c. €20 billion. 20a. O perating E xpenditure - Q u arterly O u ttu rn R eport M atter for Inform ation B oard P a p e r: Operating Expenditure —Quarterly Outturn Report The Board noted the contents o f the paper as presented, including the total operating costs incurred o f €116m for year ended 31 December 2013 which compared favourably to budgeted costs o f €140m and re-forecasted budget costs (September 2013) o f €125rn. It was noted that the most significant positive variances achieved to budget were in primary servicer fees, legal, and IT costs, which accounted for €26m o f a positive variance. This was offset by a negative variance to budget o f €7m for IBRC integration costs as a result of the IBRC liquidation earlier this year which was not a known event when setting the 2013 cost budget. Progress on Strategy Away Day Action items M atter for Inform ation B oard P a p e r: NAMA 2014 Strategy Away Day Tracker The Board noted the contents o f the paper as presented, including that nine of the 21 items actions arising -from the Strategy Away Day were tabled for the present meeting, with the remaining 12 being tabled (grouped into three or four broad themes) for the April Board meeting. 22. 2. AOB Board Private Session The Board held a private session without the Executive present. A Board-only note on discussion during the session was prepared by the Secretary, There being no further business the meeting concluded. Frank Daly, Chairman 10?? April 2014 25 Pagc National Asset Management Agency NAMA BOARD MINUTES Eighth Meeting o f 2014: 1.30pm. to 6.30pm., 13th March 2014 , Treasury Building B oard-O niv A ppendix to M inutes Items Considered: Project Eagle Matter for Board Approval Board Paper: N/A S41, S36, S29, S30 FOC Chairmanship Matter for Information Board Paper: N/A The Chairman advised that the existing vacancy for the Chairmanship o f the Finance and Operating Committee (FOC) was not anticipated to be filled within the next number of weeks as it was unlikely that any replacement Board Members1 would be appointed within that timeframe. It was noted that the next scheduled meeting o f the FOC was due to take place on 2nd April 2014. The Chairman proposed that Willie Soffe act as interim chairman o f the Finance and Operating Committee until a new Board member was appointed. The Board agreed to this approach and Willie Soffe undertook to chair the committee. CEO 2014 Performance Objectives Matter for Information Board Paper: N/A The Board noted that approval discussion of the Chief Executive’s 2014 objectives would be tabled at the Board’s April meeting. NAMA Ministerial Advisory Group Matter for Information Board Paper: N/A The Chairman advised that Michael Geoghegan had tendered his resignation from the NAMA Ministerial Advisory Group (MAG) but that confirmation o f the acceptance o f same by the Minister was as yet unforthcoming. 1 Three vacancies would exist on the NAMA Board following John Mulcahy’s resignation from the Board on 17th January 2014. There being no further business the private session concluded. Frank Daly, Chairman 10?? April 2014 National Asset Management Agency NAMA BOARD MINUTES Ninth Meeting o f 2014: 6.05pm. to 6 .1 5 p m 1 9 th March 2014, Treasury Building Board Only Attendance: NAMA Board Invited: Frank D aly1 Maurice Fitzgerald Brendan McDonagh Oliver Ellingham1 Secretary: Brian M cEnery1 Elaine Hudson Apologies: Willie Soffe John Corrigan On opening the meeting the Chairman welcomed the Board members to the ninth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues Considered: 1. Disclosures of Interests There were no disclosures made. A S36 Matter for Board Approval S36 3. AOB There was no other business. There being no further business the meeting concluded. Frank Daly, Chairman I 10?h April 2014 National Asset Management Agency NAMA BOARD MINUTES Tenth Meeting o f 2014: 4pm. to 4.30pm., 3rdApril 2014, Treasury Building Board Only Attendance: NAMA Board Invited: Frank D aly1 John Collison Brendan MeDonagh Aideen O ’Reilly Oliver Ellingham1 Secretary: Brian McEnery1 Elaine Fludson Willie Soffe1 Apologies: John Corrigan On opening the meeting the Chairman welcomed the Board members to the tenth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues Considered: 1. Disclosures of Interests There were no disclosures made. 2. Project Eagle Matter for Board Approval S36 3. AOB In relation to the draft response to S226 circulated to the Board on 31st March 2014, the Board confirmed that they were satisfied with the draft comments and in particular with the three comments from Board in relation to rate o f return. There being no further business the meeting concluded. National Asset Management Agency NAMA BOARD MINUTES Eleventh M eeting o f 2014: 2.00pm. to 5.30pm., l ( f h A pril 2014, Treasury Building Attendance: NAMA Board NAMA Executives (invited) Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA John Collison John Corrigan, Chief Executive, NTMA Ronnie Hanna Oliver Ellingham Dave McEvoy Mari Hurley Michael Moriarty Brian McEnery Sean O Faolain William Soffe Aideen O’Reilly Donal Rooney O th er Invitees: * " ■ ■ Elaine Hudson, Secretary Killian O ’Flynn. Senior Divisional Manager (Strategy) - items 6d,6e,6f & 7 Suzanne Sweeney, Senior Divisional Manager (AR) - item 12 only Martin W Whelan, Senior Divisional Manager (Communications), items 14 & 15 only ■ David Johnson, Head of Audit & Risk, item 16 only ■ Aidan O’Connell, Senior Asset Recovery Manager, item 17 only On opening the meeting the Chairman welcomed the Board members to the eleventh meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Note: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order o f consideration): 1. Disclosure of Interests Brian McEnery disclosed a potential conflict o f interest with respect to item 17 and declared that he would take no part in the discussion or decisions related to same. There were no other disclosures made. 2. Board Private Session The Board held a private session without the Executive present. A Board-only note on discussion during the session was prepared by the Secretary. 3. Consent Agenda Items Matter for Board Approval Board Papers: Minutes o f B M 8 - 13th March 2014; Board Only Appendix to Minutes o f BM 8 - 13th March 2014; Board Only Minutes o f BM 9 - 19th March 2014; Minutes o f BM 10 - 3rd April 2014; Minutes o f Executive Meeting - 28th March 2014; Credit Committee Update to Board - period 1st January 2014 - 31st March 2014; Risk Management Committee Update to Board - period January 2014 - March 2014; Media Evaluation — March 2014, CEO Compliance Statement Quarter 1 2014. The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 8, as previously circulated by email on 3,d April 2014 (included in the Board pack). The Board noted that further correspondence had been received in respect o f S41, S36 and agreed that, in accordance with Policy, while the Board would acknowledge correspondence, it would not engage in any further debate or correspondence with S41, S36 B oard P a p e rs: Board & Committee Travel & Expenses Policy M atter for A pproval The Board noted the contents o f the paper as presented including the proposed changes in respect o f the Policy which were procedural in nature. Following consideration, the Board resolved to approve the Board & Committee Member Travel & Expenses Policy as circulated. 6. Strategy Away Day R esidual Items S41, S36, S29, S30 6(a) D ublin R esidential U pdate M atter for B oard A pproval B oard P a p e r; Dublin Residential Update The Head o f Asset Management presented the paper to Board which noted the establishment o f the Residential Delivery Team (‘RDT’), the update on identified residential sites and the various options outlined to deliver development o f 4,500 residential units in the Dublin area over the next three years. The Board also noted the procedural matters to assist delivery including contractual documentation and proposal to appoint project monitors. In response to a question from the Board, it was noted that ‘residential unit ’ referred to both houses and apartments. In response to a further question from the Board it was noted that ‘less commercially viable areas ’ reflected the fact that, notwithstanding the fact that build costs were by and large similar irrespective o f build location, sales prices were highly dependent on location. It was noted that the quantum o f residential units in less commercially viable areas was difficult to gauge but that a proportion o f Tier 2 sites would fall into this category. In the context of the Board’s consideration o f land bank control mechanisms, as set out in the paper on Supply Control Mechanisms (Agenda item 6(f)), it was noted that there was no inconsistency between the commitment to deliver 4,500 residential units and the land bank control mechanism as Tier 1 sites would proceed as planned and the Tier 2 and Tier 3 sites were longer term initiatives. In the context o f limited building capacity (i.e. not many proven house builders were left), infrastructural deficits and unavoidable planning delays, the Board noted that NAMA faced a very serious challenge to deliver 4,500 residential units in three years. S41, S36, S40, S30 W ith a view to achieving delivery o f 4,500 residential units and having considered sites available in the four Dublin local authorities, the Board requested that the analysis be extended to include the greater Dublin area and Mid-East Counties o f Kildare, Meath, Wicklow and Louth. The Board agreed that the RDT brief should be extended to include sites with potential to deliver residential units to ‘service Dublin’ that have good transport links and to reinforce that delivery should be expedited to the greatest extent possible, without compromising on build quality. S41, S36, S29, S30 6(b) Dublin Office Supply Overview Matter for Board Approval Board Paper: How best to address the supply side problem o f premium, office accommodation in Dublin City The Board noted the contents o f the paper as presented including that NAMA’s existing portfolio o f prime commercial space had contributed to a number o f high profile lettings in 2013 and that NAMA continued to meet the demand for FDI with c. 340,000 sq.ft. o f Grade A prime space available to rent in two key locations in Dublin’s Central Business District. S41, S36 c.'''.d K':'.-cS41, S 3 6 ^ ^ J : 0 'r;; The Head o f Asset Recovery advised that, based on AR analysis, there were a very limited number o f ‘ready to go’ sites and /or refurbishment opportunities which NAMA could consider funding directly. In this context, the Board noted that: 41, S36 , and sites were considered the most attractive for new development in the short term and; uh S41, ; S36 ':V j refurbishment opportunity, as it was a centrally located, large scale refurbishment project. It was noted that NA M A ’s managed development sites in the Docklands were considered longer term opportunities and were likely to be developed by way o f Joint Venture agreements with a view to NAMA participating in the upside on completion. Following discussion, the Board agreed that development appraisal papers including design review should be brought forward by NAMA AR /AM in v; : ; could S41, S 3 6 ^ ^ ^ ^ J be prioritised for S41, S 3 6 J development 7— - j ::7 at June ; Board v - meeting. 6(c) M ajor City & G re ater D ublin Development L and Inventory M atter for Inform ation B oard P a p e r: Supplementary’ Development Land Inventory The Board noted the contents o f the paper as presented including the extension of the Dublin Development Land Inventory analysis presented at the March Board to include development land in the other counties within the Greater Dublin Area i.e. Wicklow, Kildare and Meath and the cities o f Cork, Limerick and Galway. S41, S36, S29, S30 6(d) ESRI U pdate M atter for Inform ation B oard P a p e r: ESRI Residential Research Programme The Board noted the contents o f the paper as presented including that the ESRI Residential Research Programme was progressing as expected, with three working papers due for publication by the end o f June and a descriptive paper on household composition to be published over the next few days in the ESRI Quarterly Economic Summary. It was noted that the research was expected to generate usable conclusions around the number of new households to be formed over the next five years, the nature o f this demand in terms o f property type and tenure, the level o f new construction necessary to satisfy this demand and the expected influence o f mortgage lending on the housing market. The Board noted that there was no change from the conclusions presented by the ESRI at the Board’s Strategy Away Day in terms o f an on-going need for at least 25,000 new dwellings a year over the medium term. 41, S29, S30 6(e) New Products Initiatives U pdate M atter for Inform ation B oard P a p e r: New Product Development The Board noted the contents o f the paper as presented including the progress in relation to packaged sales, which were already being offered and were working effectively, and the announcement o f NAMA’s intention to deliver a regular flow o f transactions. It was noted that the development platform concept had been advanced through expressions of interest for JVs (noting that 122 such expressions had been received and that the competition was being kept open for the time being) and the creation o f a residential development team. The Board requested that consideration by the New Products Group o f a NAMA sponsored REIT, deferred at the Strategy Away Day, be re-assessed in light o f future market developments and the outcome o f Board assessment of Strategic Options.. 6(f) Supply C ontrol M echanisms M atter for Inform ation B oard P a p e r: Supply Control Mechanisms S41, S36, S29, S30 6(g) D isparity in P roperty M ark et Recovery between D ublin & Regional Areas M atter for B oard A pproval Board Paper: Disparity in Property Market Recovery between Dublin & Regional Areas The Head o f Strategy and Communications presented the paper to Board which noted that, in NAM A’s view, following analysis o f a range o f indicators, it was likely that economic and property market disparity would continue to widen over the next two/three years between the D ublin' and Regional areas with the possible exception o f Cork and Galway cities. The Board noted that the ESRI’s preliminary analysis (as part o f research commissioned by NAMA and the Irish Bankers Federation) supported this view, projecting household growth o f 500,000 households by 2030, with a substantial proportion o f this growth likely to be in Dublin and the Mid-East region. The Board requested that the paper be amended to include an analysis o f the UK experience (for instance, as outlined in a Bank of England report) o f economic and property market divergence between major cities and regional areas. Following further discussion, the Board agreed to approve the conclusions reached in the paper and that it be forwarded to the Minister for Finance, subject to the aforementioned amendment. The Board noted that, in the context o f developments in the property market being heavily influenced by broader economic activity and trends (including regional employment patterns and internal migration trends), taking any view in relation to likely trends for economic activity in the various regions would require a broader and more detailed economic analysis to be undertaken by a body such as the ESRI. Accordingly, the Board agreed that NAMA would include in its cover letter to the Minister for Finance an offer to commission such analysis if so required. 2 And to a lesser extend the Mid East (Kildare, Wicklow and Meath) Matter for Information Board Paper: Action Tracker Update on other Residual Strategy Away Day Actions & The Board noted the contents o f the paper as presented, including that 5 of the 22 items actions arising from the Strategy Away Day were closed and 14 were tabled for the present meeting, with the remaining 3 items tabled for the Special Board meeting on 1st May. In response to a question from the Board in relation to Strategy Away Day Action no. 11, it was noted that while the Housing Supply Coordination Task Force for Dublin would oversee infrastructural capacity issues on the residential side, it was envisaged that commercial infrastructural capacity issues would be resolved as part of progress in relation to the SDZ. 7. Sectoral Policies The Board noted the contents o f the paper as presented including that progress to date had generally been consistent with the assumptions o f the sector plans3 and noting that seven o f the fourteen sectors scheduled for review in 2014 had already been reviewed. The Board welcomed the snap shot summary (appendix) o f the policies for all other sectors covered by the programme. 7(a) Residential (ROI) 7(b) Residential (GB) Matter for Board Approval Board Papers: Asset Strategy Programme; Sector Policy fo r Residential Property in Ireland & Sector Policy fo r Residential Property in Great Britain and The Board noted the contents o f the papers as presented, and that no material changes to policy were proposed. In the context o f improved market conditions (with potential interest from S36 etc), the Board noted that NAMA should consider a packaged loan sale of significant residential blocks in the UK. Following consideration, and noting the prior review by the Credit Committee on 1st April and its recommendation for approval, the Board resolved to 3 And where it had not, the current strategy remained appropriate and barriers to implementation were being overcome. approve the Policy fo r Residential Property in Ireland and Policy fo r Residential Property in Great Britain as the frameworks within which individual asset strategies should be assessed. 7(c) Rest of World Matter for Board Approval Board Paper: Sector Policy fo r Property outside Ireland and the UK ( ‘Rest o f World’). The Board noted the contents o f the paper as presented and that no material changes were proposed. 541, S36, S29, S30 Following consideration, and noting the prior review by the Credit Committee on 1st April and its recommendation for approval, the Board resolved to approve the Policy fo r Property outside Ireland and the UK ( Rest o f World’) as the framework within which individual asset strategies should be assessed. The Board commended the excellent work undertaken by the Senior Divisional Manager (Strategy) and thanked him and his team for all the hard work and, in the context o f his resignation, wished him well in his future endeavours. 8. Principal Risks Overview Matter for Board Approval Board Paper: NAMA Principal Risks The C hief Financial Officer presented the paper to Board which noted that the aim of the Principal Risks paper was to provide an overview o f key risks facing NAMA and the control actions and mitigants to manage those risks. It was noted that, while there was significant work undertaken in relation to detailed, functional level risk registers, the principal risks paper, was an initiative to correct a potential ‘gap’. In response to a question from the Board it was noted that five key risks had emerged consensually following discussions rather than a premeditated effort to arrive at five key risks. S41, S36, S29, S30 The Board resolved to approve the five ‘principal risks’ as presented in the paper, subject to the amendments noted above, and commended the excellent work undertaken by the Risk Management Committee in this regard. 9. B oard A pproval of CC recom m endations S41, S36, S29, S30 1 1. In te rn a l A u d it T e n d e r R e co m m e n d a tio n M a tte r f o r B o a rd A p p ro v a l B o a rd P a p e r: Internal Audit Tender Recommendation The Board noted the contents o f the paper as presented. The Chairman o f the Audit Committee advised that following interview PwC had emerged, based on a combination o f factors, ahead of S36 Following consideration, and noting the Audit Committee’s recommendation in favour o f approval, the Board resolved to approve the appointment o f PwC A c,,v S36^ p - y:. a ".r-;:. May 2014 for a term o f three years up to 30th April 20176, subject to annual review and possible extension, at NAMA’s sole discretion, until the time that NAMA ceases its operations. 6 Covering year ends 31 December 2014/15/16 12. IB R C Integration - Progress R eport M a tte r for B oard A pproval B oard P a p e r: IBRC Integration - Progress Report S41, S36, S29, S30 The Chairman, on behalf o f the Board, commended Suzanne Sweeney and Jamie Bourke and the IBRC Integration Project Team on the huge effort over a sustained period of time and noted that notwithstanding the outcome, Ms Sweeney and her team should be very proud o f the excellent work undertaken and the huge effort involved. 13. T rea su ry (CFO): Q ualifying Liquid Assets U pdate M atter for B oard A pproval B oard P a p e r: Qualifying Liquid Assets Update. Following consideration, and noting the prior review by the Risk Management Committee on 12th March 2014 and its recommendation for approval, the Board resolved to approve the recommendations as presented in the paper (as follows): S41, S36, S29, S30 The Board was advised that the Minister had consented under s60 to redeem the NARL Bonds but for the full amount outstanding, removing the €7bn cap due to success of SL sales process. 14. C IF C ontracts Submission M atter for B oard A pproval B oard P a p e r: CIF Contracts Submission The Board noted the contents o f the paper as presented including that the RIAI standard form o f contact was the most appropriate base form o f contract for the majority o f residential and commercial building projects typically funded by NAMA, acknowledgement that some projects (such as large scale infill projects) would require alternative contract forms, and that there was significant scope to eliminate unnecessary costs and reduce contract lead in time by making certain amendments and additions to the standard RIAI form (which were in line with industry norms). Following consideration, the Board resolved to approve the policy outlined in this paper as it related to the proposed establishment o f a greater level of standardisation in respect o f construction contract documentation used for projects funded by NAMA and procured and delivered by NAMA debtors and receivers. 7 Head of Treasury (CFO) is a member of the NTMA CCRC. 16. Q u arterly U pdate on A udit Recom m endations M atter for Inform ation B oard P a p e r: Status o f Audit Recommendations The Head o f Audit & Risk presented the paper to the Board which noted that all issues related to the C&AG Management Letter 2011 were now closed following the closure o f the final outstanding audit finding in March 2014 S29, S30 The Chairman o f the Audit Committee advised that the Audit Committee should have a line of sight on the C&AG’s interim Management Letter 2013 by 1st May 2014, including any matters o f significance. S29, S30 17. Insolvency Q uarterly U pdate M atter for Inform ation B oard P a p e r: NAMA Insolvency Team Update S41, S36, S29, S30 In accordance with his earlier disclosure, Brian McEnery absented him self from the meeting for this item, 18. U nfinished Housing Estates - Q u arterly U pdate M atter for Inform ation B oard P a p e r: Unfinished Housing Estates The Board received a progress update on -unfinished estates within the NAMA portfolio, noting the reduction in the number o f NAMA’s unfinished housing estates (in terms o f the 2013 DOE Housing Survey published at end November 2013) from 335 to 222, progress in relation to remedial works (involving capex approvals o f c. €3 million to date), and the engagement with the National Co-Ordination Committee and Local Authorities and usage o f units for DPI/social housing purposes. The Board noted that NAMA planned to avail o f a Government targeted €10m Special Resolution Fund (SRF) to further assist in addressing the legacy of unfinished housing developments. 19. B i-annual R eport on Top D ebtor Exposure M atter for Inform ation B oard P a p e r: Bi-annual Top Debtor Exposure Report The Board received a progress update on debtor management and debt reduction performance in relation to the top 27 connections (by NAMA debt). It noted the progress in terms o f portfolio deleveraging with €1.7 billion reduction in NAMA debt to €23 billion as at 28lh February, The Board noted that five debtor connections had been removed from the report since October 2013 following material debt reduction while three new connections were included and captured as a result o f the drop in minimum debt level for inclusion in the report (c. €187 million). 20. Litigation R eport M atter for Inform ation B oard P a p e r: Litigation Update The Board noted the litigation report as presented. The Board commended the Head o f Legal and her team on the impressive track record achieved to date. S31, S41, S29, S30 8 Strategic Credit Review Matter for Information Board Paper: Monthly Management Information Report - 28th Februaiy 2014 The Board noted the contents o f the paper as presented, including the strong cash generation performance to date o f €1.9 billion on the existing book. The Board noted significant transactions which had closed year to date including Project Club and Project Platinum and that the disposal trend by location year to date highlighted that, for the first time, the majority o f disposals were based in Ireland. 41, S36, S29, S30 22. Divisional Updates: Asset Recovery Matter for Information Board Paper: Asset Recovery>Division - Interim Progress Update - O I 2014 The Head o f Asset Recovery presented his divisional update to the Board, highlighting that A R ’s achievements should be viewed in the context o f significant input from NAMA Legal, Asset Management, Strategy & Communications and CFO respectively. The Board noted the significant cash generation since inception and year to date, significant sales completed (Project Holly and Project Club), major sales underway (Projects Tower, Eagle, Drive and Spring) and the strong pipeline of sales in relation to office, residential, retail and hotel categories scheduled to launch in Q2 2014. The Board noted the challenges ahead, including the changing nature o f the residual portfolio (high volume, low value) and the increasingly significant challenge o f staff motivation and retention in an improving market. In the context o f the high volume, low value nature o f the residual portfolio, the Board noted that bundling and loan sales would be increasingly important. The Board requested that a discussion on challenges in relation to NA M A ’s human capital should be tabled for the Board meeting on 1st May. The Chairman, on behalf o f the Board, commended the Head o f Asset Recovery for the presentation and all involved for the outstanding performance and achievements year to date. 23. AOB The Chairman o f the Audit Committee invited Board members to attend an Audit Committee briefing (to be given by the Chairman o f the Audit Committee Institute) which was being scheduled for an upcoming meeting (May/June) in order to address a 2013 Evaluation Action recommendation. The Board noted that the Chairman, NAMA CEO and Senior Divisional Manager (Communications) had provided an update briefing to the Fine Gael Parliamentary Party earlier that week. The Board noted that the PAC visit scheduled for Tuesday 15th April had been postponed by them. There being no further business the meeting concluded. NAMA BOARD MINUTES Eleventh M eeting o f 2014: 2pm. to 5 .3 0 p m 1 0 th April 2014, Treasury Building B oard-O nly A ppendix to M inutes Items C onsidered: B oard M em bership The Chairman, on behalf o f the Board, welcomed Mari Hurley to her first meeting o f the Board of NAMA, having been appointed by the Minister on 8th April 2014 for a five year term. The Board noted that, in accordance with clause 3.5 o f the Induction Policy, Willie Soffe had been nominated to act as a mentor to the new Board member and that induction training for Ms Hurley had been arranged for Tuesday 15th April 2014. Com m ittee M em berships On the recommendation of the Chairman, the Board resolved to approve the following Committee appointments and/or amendments to Committee memberships: ■ Willie Soffe to step down as interim Chairperson o f the Finance & Operating Committee ■ Mari Hurley appointed as Chairperson o f the Finance & Operating Committee ■ Mari Hurley appointed as a member o f the Planning Advisory Committee ■ Mari Hurley appointed as a member o f the Risk Management Committee ■ John Corrigan would step down as a member o f the Planning Advisory Committee The Board noted that a vacancy remained on the Northern Ireland Advisory Committee. The Chairman advised that the second Term o f Appointment for Mr. Rowntree, External Committee Member on the Committee was due to expire on 15th April 2014. On the recommendation o f the Chairman, and having regard to implications of Project Eagle for the Committee, the Board resolved to approve the re-appointment o f Mr. Rowntree as a member o f the Northern Ireland Advisory Committee until the end o f July 2014. The Board agreed to review Mr. Rowntree’s appointment at that stage. The Chairman undertook to advise the Minister o f this re­ appointment. S29, S30, S41 6 0 F ra n k Daly, C hairm an 14th M ay 2014 s< 2 S o m g NAMA BOARD MINUTES Twelfth M eeting o f 2 0 1 4 :12ym. to 12.20ym., 23rd A pril 2014, Treasury Building Board Only A ttendance: NAMA B oard Invited: Frank Daly1 Michael Moriarty Brendan McDonagh Aideen O ’Reilly John Corrigan Maurice Fitzgerald Oliver Ellingham1 Secretary: Brian McEnery1 Elaine Hudson Willie Soffe1 Apologies Mari Hurley2 On opening the meeting the Chairman welcomed the Board members to the twelfth meeting of 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues C onsidered: 1. Disclosures of Interests Mari Hurley recused herself from the meeting due to a potential conflict o f interest and declared that she would take no part in the meeting or decisions related to same. There were no other disclosures made. 1By telephone in accordance with section 27 of the NAMA Act 2009. 2 Mari Hurley recused herself (in advance) from the meeting due to a potential conflict of interest (see item 1 below). M atter for B oard A pproval P R IVILEG ED - LE G A L A D VICE GENERA TED I N CONTEM PLA T IO N O F L IT IG A T IO N B oard P a p e r: S36 S31, S29, S30, S41, S36 The Chairman, on behalf o f the Board, commended the Deputy Head o f Asset Recovery, Senior Divisional Manager, Head o f Legal and all NAMA personnel involved in the work undertaken to date and the excellent bids achieved. 3. AOB There being no further business the meeting concluded. NAMA BOARD MINUTES Thirteenth M eeting o f 2014: 2.00pm. to 4.30ym„ 1st M ay 2014, Treasury Building A ttendance: NAMA B oard NAMA Executives (invited') Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA John Collison John Corrigan, Chief Executive, NTMA Ronnie Hanna Oliver Ellingham Dave McEvoy Mari Hurley Michael Mori arty Brian McEnery Sean O Faolain William Soffe Aideen O’Reilly Donal Rooney O th er Invitees: Elaine Hudson, Secretary , part of item 2(a) only S36, S37 S36, S37 part o f item 2(a) only S36, S37 , part o f item 2(a) only Sinead Brennan, Head o f HR, item 4 only (Board Private Session - refer to Board Only minutes) On opening the meeting the Chairman welcomed the Board members to the thirteenth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. N ote: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order of consideration): 1. Disclosure of Interests Mari Hurley disclosed a potential conflict o f interest with respect to item 5 and declared that she would take no part in the discussion or decisions related to same. There were no other disclosures made. 2. Strategic O ptions Reviews S41, S36, S29, S30 2(b) Review of Social Benefits o f NAMA Matter for Board Approval Board Paper: NAMA Social and Economic Contribution The Head o f Strategy & Communications presented a paper to Board which noted that NAMA’s Social and Economic Contribution could be distilled into three distinct categories namely: (i) NAM A’s primary contribution through its fulfilment of its purposes as set out in Section 10 o f the Act; (ii) The various collateral (social and economic) benefits that derived from NAM A’s commercial activity e.g. the economic benefit o f its development funding (to address resi and commercial office supply shortages) and the economic and social benefits o f the jobs that its (iii) funding created or preserved; NAMA’s role as a public entity and the specific activities that it has pursued in that capacity e.g. co-operating with the IDA to identify suitable properties fo r FD I and working with Government bodies to significantly contribute to social housing requirements. Following discussion the Board agreed that the following should be included as part o f NAM A’s Social and Economic contribution, ensuring that the opportunity cost savings to the State in relation to same were articulated. (iv) NAM A’s remediation role in terms o f addressing pre-existing fire safety, pyrite and asbestos issues (if NAMA didn’t address these issues, the Government would be called on to); (v) N A M A ’s operating platform itself,\ as a key State owned Asset Management platform. The Chairman commended the comprehensive and high quality nature o f the paper. Strategic Options Reviews - Conclusion S41, S36, S29, S30 3. Annual Report & Financial Statements 2013 3(a) Annual Report 2013 - Draft Text Matter for Board Approval Board Paper: NAMA Annual Report 2013 (Draft) The Head o f Strategy & Communications presented the draft text o f the NAMA Annual Report 2013 to the Board, which commended the quality o f the document. The Board reviewed the report and agreed some textual changes.8 Following consideration, and noting the prior review o f the text by the Audit Committee on 1st May 2014 and its recommendation for approval, and subject to the changes as agreed (the final form o f which was delegated to the Chairman, CEO and Head o f Strategy & Communications), the Board resolved to approve the text o f the NAMA Annual Report 2013. 3(b) Financial Statements 2013 Matter for Board Approval Board Paper: Financial Statements 2013 (cover sheet); and NAMA Board Report and Consolidated Financial Statements fo r the year ended 31 December 2013. 8 The Chairman asked members to submit any residual minor textual suggestions directly to the Head of Strategy & Communications via email. The CFO presented the draft Financial Statements 2013 to the Board and advised that the C&AG had reviewed the financial statements, proposed no adjustments and had provided clearance to the Audit Committee; and the audit certificate would be made available upon physical signing of the financial statements by the Board. Following its consideration and noting the Audit Committee’s prior review and recommendation for approval, and subject to immaterial changes as agreed (the final form o f which was delegated to the CEO and CFO), the Board resolved to approve NAM A’s Financial Statements 2013. The Chairman, on behalf of the Board, thanked the CFO and his team, and the Audit Committee, in bringing the task to a successful conclusion. 3(c). Statement of Internal Financial Control Matter for Board Approval Board Paper: Statement o f Internal Financial Control and Review o f Effectiveness o f the System o f Internal Financial Control ( “S IF C ”) The Board reviewed the effectiveness o f the system o f internal financial control based upon the contents o f the paper as presented and assurances contained therein. Following consideration, and noting the prior review o f same by the Audit Committee and its recommendation to Board to approve the SIFC, the Board resolved to approve the SIFC and to authorise the Chairman o f the Board and Chairman o f the Audit Committee to sign the SIFC 2013 on the Board’s behalf. 2(d). Chairman’s sl3.1 Report to the Minister Matter for Board Approval Board Paper: C hairm an’s Section 13.1 Report to the Minister The Board noted the Chairman’s obligation to submit a separate report to the Minister with the Annual Report, as required under section 13.1 o f the Code of Practice for the Governance o f State Bodies (2009). Following consideration the Board resolved to approve the section 13.1 Chairman’s report as presented in the paper. In accordance with her earlier disclosure, Mari Hurley absented herself from the meeting for this item. F ran k Daly, C hairm an 14th M ay 2014 NAMA BOARD MINUTES Thirteenth M eeting o f 2014: 2pm. to 4.30pm., 1st May 2014, Treasury Building B oard-O nly A ppendix to M inutes Issues Considered: S29, S30, S41 There being no further business the meeting concluded. Frank Daly. Chairman 14'? May 2014 NAMA BOARD MINUTES Fourteenth M eeting o f 2014: 2.00pm. to 5.30pm.. 14th M ay 2014, Treasury Building A ttendance: NAMA B oard NAMA Executives (invited) Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA John Collison John Corrigan, Chief Executive, NTMA Ronnie Hanna Oliver Ellingham Dave McEvoy Mari Hurley Michael Moriarty Brian McEnery Sean O Faolain William Soffe Aideen O’Reilly Dona! Rooney O ther Invitees: Elaine Hudson, Secretary Sinead Brennan, NTMA Head o f HR, item 2 only (Board private session) Breda Macnamara, NTMA Head o f Compliance, item 5(h) only John Coleman, Senior Divisional Manager (Strategy) - items 8 & 9 Jamie Bourke, Senior Divisional Manager (AR) - item 13 only Martin W Whelan, Senior Divisional Manager (Communications), item only 17 On opening the meeting the Chairman welcomed the Board members to the fourteenth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. N ote: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order of consideration): 1. Disclosure of Interests There were no disclosures made. 2. Board Private Session The Board held a private session without the Executive present1. A Boardonly note on discussion during the session was prepared by the Secretary. 3. Consent Agenda Items Matter for Board Approval B oard P a p e rs: Minutes o f B M 11 - 10th April 2014; Board Only Appendix to Minutes o f B M 11 - 10th April 2014; Board Only Minutes o f BM 12 - 23rd April 2014; Minutes o f BM 13 — 1st May 2014; Board Only Appendix to Minutes o f BM 13 - 1 st May 2014; Minutes o f Executive Meeting - 30th April 2014; Audit Committee Update to Board —period 1st March 2014 —30th April 2014 & Media Evaluation —April 2014. The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 11, as previously circulated by email on 8th May 2014 (included in the Board pack). 5. Section 35 Codes of Practice - Annual Review 5(a) Section 35 Codes of Conduct (excluding NAMA Officers) Matter for Board Approval B oard P a p e rs: Section 35 Codes o f Practice - Annual Review (Cover Paper); Code o f Practice - Servicing Standards fo r Acquired Bank Assets; Code o f Practice - Risk Management Including With Regard to Debtors; Code ! NTMA Head o f HR attended for a specific item. o f Practice - Disposal o f Bank Assets; and Code o f Practice on the Commercial Interests o f Non-Participating Institutions. The Board noted the contents o f the papers as presented. The Board commented that the wording in the Codes in relation to the expected run off period o f NAMA from the ‘present time’ should be amended to make clear that any estimated timelines in the Codes run from the date o f original publication of the Codes in 2 0 102. Following consideration, and noting the prior review by the Finance & Operating Committee at its meeting on 7th May 2014 and its approval o f same, the Board resolved to approve the four s35 Codes o f Practice as presented subject to the aforementioned cosmetic change. 5(b) Section 35 Codes of Conduct of NAMA Officers Matter for Board Approval Board Paper: Review o f Code o f Practice - Conduct o f Officers o f NAMA The Board noted the contents o f the paper as presented, including the changes and rationale for same. Following consideration, and noting the prior review by the Finance & Operating Committee at its meeting on 7lh May 2014 and its recommendation of approval, the Board resolved to approve the NAMA Officers’ Code as presented in the paper. The Board noted that the amended Code would be submitted to the Minister for Finance by the Secretary 6. eBoard Matter for Board Approval Board Paper: eBoard The Board noted the contents o f the paper as presented including the update on the Executive’s pilot o f Boardpad at its forma! monthly meetings and at Committee meetings. The Board noted that the primary rationale for migrating to an electronic paper solution was information security. The Board 2 NAMA Contacted DOF who confirmed this was a non-material amendment that did not require Ministerial approval and insertion of a clarification footnote in the code was sensible. discussed some practical implications o f a move to electronic Board papers including the legibility o f detailed (spreadsheet-type) papers. A reservation was expressed in relation to (i) the haste with which the proposed solution was being implemented (ii) practical considerations relating to same. It was noted that Committee papers in hardcopy form would be available upon request. Following discussion, the Board resolved to approve the roll out o f the eBoard solution3 to the NAMA Board Committee meetings from June 2014, including provision o f an iPad4by NTMA IT where necessary. The Board noted that the roll-out o f eBoard would be subject to review in November 2014 with a view to considering the full roll-out to Board meetings from January 2015. 7. Review of NAMA Strategy M atter for B oard A pproval/Inform ation S41, S36 The Board noted the letter that had been sent, from the Chairman, on behalf of the Board, to the Minister setting out the Board’s position in relation to NAM A’s future strategic direction. It was noted that the Minister was reviewing the content o f the letter and that it was hoped that an agreed position would be reached before the launch o f the Annual Report 2013 on 27 May. The Board noted that that the Department o f Finance had advised the Minister would publish the Section 227 Review o f NAMA by end June 2014. 8. L and Supply C ontrol M echanism s (expanded paper) M atter for B oard A pproval B oard P a p e r; Supply Control Mechanisms The Board noted the contents o f the paper as presented, principally the feasibility and effectiveness o f the State using a land bank to regulate supply with the ultimate objective o f reducing price volatility and noting also the other key issues affecting housing supply. The Board noted that the paper 3 electronic solution via a Boardpad app and iPads referred to as “eBoard” 4 Corporate iPads will be "locked down" and considerably more restrictive than personally owned iPad devices. implied that options that might be feasible might not necessarily be effective and options that could be effective might not be feasible, either financially or legally. As regards a possible land bank, the Board noted that, notwithstanding the degree o f control that the Hong Kong Government (via the Hong Kong State Land Bank) exerted on land supply, they had not succeeded in dampening significant property market price volatility. The Board requested; (i) (ii) further elaboration on the Kenny Report to include reference to the minority report and; inclusion o f a reference to the impact o f Certificates o f Reasonable Value in suppressing residential prices in Ireland in the 1970s and 1980s. The Board requested confirmation that the analysis o f lands under control o f public authorities, which could be ceded to a State Land Agency, did not include designated open space, noting that in the case o f Fingal County Council (cited in the paper as owning 50% o f land owned by Local Authorities), S41, S36 collectively comprised over 1000 acres o f land which would never be zoned for development use. Following lengthy discussion the Board resolved to approve the conclusions and recommendations outlined in the paper as follows: i. The Department o f Finance and/or the Department for the Environment, Community and Local Government to carry out a standardised inventory of local authority and other public authority (e.g. OPW, HSE, etc) land holdings with a view to establishing the potential scale o f any strategic land bank which would be comprised o f such holdings. ii. If further consideration was to be given to the principle o f a strategic land bank and if it was contemplated that the agency managing it should have CPO powers, the legal implications o f granting CPO powers to such an agency and the precise extent o f any such CPO powers should be assessed by the Attorney General’s Office. Following consideration, the Board agreed that i. the Development Land Inventory paper (updated to include Louth as per Agenda Item 10) should be included as part o f the present paper (shown as acres) and ii. the paper should be completed in a timely fashion, including the aforementioned suggested amendments, with a view to being submitted to the Minister at the earliest opportunity. Sectoral Policies 9(a) Retail (ROI) 9(b) Retail (GB) Matter for Board Approval Board Papers: Sector Policies fo r ROI Retail & GB Retail (Cover paper); Sector Policy fo r Retail Property in Ireland and Sector Policy fo r Retail Property in Great Britain The Board noted the contents o f the papers as presented, and that, while no material changes to policy were proposed, the policies would be kept under review in light o f the Board’s assessment o f strategic options. S41, S36, S29, S30 Following consideration, and noting the prior review by the Credit Committee at its meeting on 6th May 2014 and its recommendation o f approval, the Board resolved to approve the Policy fo r Retail Property in Ireland and the Policy for Retail Property in Great Britain as the respective frameworks within which individual asset strategies should be assessed. 10. U pdated Developm ent L and Inventory including L outh M atter for Inform ation B oard P a p e r: Supplementary Development Land Inventoiy The Board noted the contents o f the paper as presented including the extension o f the Dublin Development Land Inventory analysis (presented at the March & April Board meetings) to include development land in Louth. The Board requested that the analysis be presented in acres rather than hectares and, as agreed earlier in the meeting, the paper to be included as part o f the Land Supply Control Mechanisms paper being submitted to the Minister, 11. N orth W all Q uay U pdate M atter for B oard A pproval S31, S41, S36, S29, S30 12. Debtor Strategic Credit Reviews 13. Bank of Ireland Portfoliu Integration Matter for Board Approval 14. Debtor Credit Grading Review Matter for Information Board Paper: Debtor Credit Grading Review The Board noted the contents o f the paper as presented, including that the distribution of the credit grading o f NAMA managed debtor connections (based on their respective Debtor behaviour and debt recovery matrices) was deteriorating, reflecting the gradual pay down o f the portfolio and continuing enforcement action against debtor connections. A similar deterioration in the distribution o f the credit grading o f the PI managed book was evident, reflecting a trend towards enforcement, both in terms o f number of connections and debt value. The grading profile confirmed that PI/SP book was lower quality than the NAMA managed book. 15. Procurement Policy Review Matter for Board Approval Board Paper: Procurement Policy Review The Board noted the contents o f the paper as presented, including the changes highlighted and the rationale for same. Following consideration, and noting the prior review by the Finance & Operating Committee on 7th May 2014 and its recommendation o f approval, the Board resolved to approve the revised NAMA Procurement Policy. 16. Treasury (CFO) Update 16(a) Treasury (CFO) Update Matter for Information Board Paper: Treasury (CFO) Update The Board noted the contents o f the paper as presented, including the underpinning liquidity profile. 16(b) NARL Balance Sheet Policies Matter for Board Approval Board Paper: NARL Balance Sheet Policies S41, S36, S29, S30 16(c) NAMA Senior Note Redemption Matter for Board Approval Board Paper: NAMA Senior Note Redemption The Board noted the contents o f the paper as presented, including the recommendation that, in view o f NAM A’s strong current cash position and the imminent closing o f two substantial debtor transactions (Project Tower and Project Eagle) the Board consider a senior note redemption o f up to €2.5 billion by 30th June 2014, which if approved would bring the cumulative redemption o f NAMA senior notes since inception to €13.0 billion (43% o f original issuance) and €5.5 billion year to date (73% o f the €7.5 billion 2014 Senior Note redemption target). Following discussion, the Board resolved to: (i) Redeem up to €2,500,000,000 o f “Existing” NAMA Senior Notes (€19.69 bn o\s) by the 30lh June 2014, subject to NAMA having sufficient liquidity to meet its obligations. (ii) Notify the Minister o f its decision, under Section 60 (2) (a) o f the NAMA Act, and if there was no objection from the Minster, it was recommended that the Board authorised the CEO to take all the necessary steps to redeem the bonds as outlined in (i) above. The Board noted that NAMA should be in position to announce this on the day o f Annual Report launch. 18. Asset Disposal Policy Matter for Board Approval Board Paper: Asset Disposal Policy Revision The Board noted the contents o f the paper as presented including the changes highlighted and the rationale for same. The Board noted further that the Policy had originally been approved by Board as a Guidance Note on the Disposal o f Real Estate Assets by NAMA Debtors and Insolvency Advisors in July 2011, and following a number o f iterations12 was now being presented as a policy. Following consideration, the Board resolved to approve the Asset Disposal Policy as presented. 12 Including a decision by Board in November 2012 to include a new requirement that all purchasers must provide a declaration that they were not NAMA Officers Matter for Information Board Paper: Monthly Management Information Report - 31st March 2014 The B oard noted the contents o f the paper as presented, in c lu d in g the strong cash generation perform ance to date o f €2.1 b illio n on the e x is tin g book. The B oard noted fu rth e r the s ig n ific a n t cash generation a nticipa ted on fo o t o f headline transactions due to com plete in Q2 2014 in c lu d in g S36 In response to a question fro m B oard, it was noted that was lik e ly to close on F rid a y 16th o r M onday 19th M a y 2014. In re la tio n to Head o f A R advised that it was anticipated tha t the sale w o u ld close in June 2014. The Board noted the s ig n ific a n t increase in R O l disposal transactions since in ce p tio n (as per graph on page 16 o f paper) and the in cre a sin g ly h ig h volum e, lo w value nature o f transactions w h ic h required co nsiderably m ore tim e and e ffo rt to achieve the same le ve l o f results. Divisional Updates: Asset Management Matter for Information Board Paper: Asset Management Progress Update - 14th May 2014 The Head o f Asset M anagem ent d elivered a com prehensive presentation to M was on target to excess o f S36 targets fo r 2014 (s ig n ific a n t sales (c developm ent program m e was on S36 schedule) fo r 2014), ( ii) the ) were and ( iii) challenges ahead (c o m p le x ity and tim in g in v o lv e d in p la n n in g process, in fra s tru c tu ra l issues in D u b lin D ocklands, developm ent d e liv e ry fo r re sid en tia l units and R eceiver/D ebtor in v o lv e m e n t etc). The Board noted that sales ris k in London was la rg e ly m itig a te d through pre sales and that s ig n ific a n t co nstru ctio n was underw ay on D u b lin sites, w ith p la n n in g strategy adding s ig n ific a n t value. In response to a request from Board for a regular progress report in relation to delivery o f 4,500 residential units, it was noted that the new Senior Divisional Manager for the Asset Recovery residential delivery team would be formulating a business plan which would provide visibility on construction progress. The Chairman, on behalf o f the Board, commended the Head o f Asset Management for the presentation and all involved for the excellent performance and achievements year to date. 21. AQB Property Industry Ireland meeting The NAMA CEO advised that NAMA had held a constructive meeting with Property Industry Ireland. Irish Water The NAMA CEO advised that NA M A 13had a constructive meeting with the CEO o f Irish W ater to discuss key infrastructural deficit issues in the context of the immediate requirement in the Docklands SDZ and NAM A’s commitment to deliver 4,500 residential units. The Board noted that it had been indicated that NAMA and/or ISIF would be called upon to contribute financially to the costs o f the infrastructure. It was noted that NAM A’s funding o f the N2/N3 link road was analogous in so far as the infrastructure was a key prerequisite for ‘unlocking’ value (and providing necessary access) to the surrounding land. Irish W ater are to revert with a proposal. ESRI The Board noted that the ESRI research, commissioned jointly by NAMA and the Irish Banking Federation, was expected to be completed by end June 2014. The NAMA CEO advised that he had discussed (with Mark Fitzgerald of Sherry Fitzgerald/David Dutfy o f ESRI) the possibility o f hosting a seminar, aimed at key decision makers (Local Authority County Managers and Heads o f Planning, Irish Water, Department o f the Environment etc) to launch the study. There being no further business the meeting concluded. Frar 12th June 2014 NAMA BOARD MINUTES Fourteenth Meeting o f 2014: 2pm. to 4 .4 5 p m 1 4 th May 2014, Treasury Building Board-O nly A ppendix to M inutes Items Considered: Board & Committee Evaluation 2013 - Update on Action Plan Board Paper: Board & Committee Evaluation 2013 - Action Plan Matter for Information The Board noted the contents o f the paper as presented and progress achieved since its meeting on 10th October 2013 including that all agreed actions (for Board and Committees) had been closed out with the exception o f the Board agreed action to discuss succession planning in Q4 2013. The Board noted that succession planning would be tabled for a Q4 2014 Board meeting, following prior consideration o f the matter by the NTMA Remuneration Committee. Board Evaluation 2014 Board Paper: N/A Matter for Information The Board provisionally discussed the 2014 evaluation noting that a decision had to be made in relation to whether the evaluation proccss would be overseen internally (by the Secretary in conjunction with the Chairman) or utilising an external evaluator. The Chairman advised that details of the evaluation process for 2014 would be tabled for the Board’s June meeting. Board Paper: N/A Matter for Information The Chairperson o f the Finance & Operating Committee advised that the Committee had agreed at its 7th May meeting to reduce the frequency of meetings from monthly to five core meetings per year scheduled primarily around s55 reporting obligations and annual audit requirements. The Board noted that a revised work programme for the Committee would be reviewed at its June meeting. It was noted that the Terms o f Reference, which provided that the Committee would meet monthly or Siat such other times as the Chairperson considers necessary or appropriate”, would be amended in due course. Ministerial Advisory Group (MAG) update Board Paper: N/A Matter for Information The Chairman in Conned the Board that Mr Michael Geoghegan, who had previously tendered his resignation from the MAG to the Minister for Finance, met with the Minister ten days ago to discuss same. The Chairman advised S29, S30, S36, S41 Review of NAMA Strategy Board Paper: N/A Matter for Information The Chairman advised that the letter in relation to NAMA’s Strategy Review had been sent to the Minister for Finance on behalf o f the Board. The Chairman noted that, notwithstanding the anticipated publication of the Department of Finance’s S227 report at end June 2014, having regard to the C&AG publication o f their S226 Review on 22nd May, the publication o f the NAMA Annual Report on 27u' May and NAMA’s appearance before the Public Accounts Committee on 29th May, it had been indicated that the Minister would endeavour to provide a substantive view in relation to NAM A’s future role at the launch o f NAM A’s Annual Report. It was noted that the Government’s Construction Strategy report, published earlier that day, had indicated a role for NAMA over the next three to four years. S36, S29, S30, S31, S41 Board Paper: N/A Matter for Decision S31, S36, S41, S29, S30 S29, S30, S41 . Frank Daly, Chairman 12th June 2014 f: S . National Asset Management Agency NAMA BOARD MINUTES +tk Attendance: NAMA Board NAMA E xe cu tive s (invited) Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA John Collison John Corrigan, C hief Executive, NTMA Ronnie Hanna Oliver Ellingham Dave McEvoy Mari Hurley Michael Moriarty Brian McEnery1 Se&n O Faolain William Soffe Aideen O’Reilly Dona! Rooney O th er Invitees: ■ Elaine Hudson, Secretary ■ Sinead Brennan, NTMA Head o f HR, item 2 only (Board private session) On opening the meeting the Chairman welcomed the Board members to the fifteenth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present Note: All Board t>at>ers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order o f consideration): 1. Disclosure o f Interests Mari Hurley disclosed a potential conflict o f interest with respect to items 9(a) and 13(a) and declared that she would take no part in the discussion or 1 By telephone in accordance with section 27 o f the NAMA Act 2009 decisions related to same. Brian McEnery disclosed a potential conflict o f interest in respect o f Item 6(a) and noted that he would not be taking part in the discussion or decisions related to same. 2. Board P rivate Session The Board held a private session without the Executive present. A Board-only note on discussion during the session was prepared by the Secretary. 3. C onsent A genda Items M a tte r for B oard A pproval B oard P ap ers: Minutes o f B M 14 - 14th May 2014; Board Only Appendix to Minutes o fB M 14 —14in M ay 2014; M ark Up Extract Board Only Appendix to Minutes o fB M 14 —14th May 2014; Minutes o f Executive Meeting —30th May 2014; Finance & Operating Committee Update to Board —period 1st March 2014 - 31st May 2014; Planning Advisory Committee Update to Board February 2014 to April 2014; Media Evaluation ~ May 2014 and Board Work Programme 2014 —Progress Update, The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. M atters A rising from B oard M inutes The Board noted the matters arising from the minutes o fB M 14, as previously circulated by email on 5th June 2014 (included in the Board pack). 5. Sectoral Policies 5(a) D evelopm ent (RO I) M a tte r fo r B oard A pproval B oard P ap ers: Sector Policies fo r R O I Development Land & GB Development Land (Cover paper); Sector Policy fo r Development Land in Ireland S41, S36, S29, S30 Following consideration, and noting the prior review by the Credit Committee at its meeting on 3rd June 2014 and its recommendation o f approval, the Board resolved to approve the Policy fo r Development Land in Ireland as the framework within which individual asset strategies should be assessed. 5(b). Developm ent (GB) Matter for B oard A pproval B oard P ap ers: Sector Policies fo r RO I Development Land & GB Development Land (Cover paper); Sector Policy fo r Development Land in Great Britain The Board noted the contents o f the papers as presented, and that no material changes were proposed. 541, S36, S29, S30 Following consideration, and noting the prior review by the Credit Committee at its meeting on 3rd June 2014 and its recommendation o f approval, the Board resolved to approve the Policy fo r Development Land in Great Britain as the framework within which individual asset strategies should be assessed. Credit Request In accordance with his earlier disclosure, Brian McEnery absented him self from the meeting for this item. 7. Debtor Strategic Credit Reviews S41, S36, S29, S30 8(a) Quarterly Projects Updates M a tte r for Inform ation B oard P a p e r: Quarterly Projects Update - Asset Management The Board noted the contents o f the paper as presented by the Head o f Asset Management (HoAM). The Board noted the significance for NAMA o f An Bord Pleanala’s approval o f the SDZ Planning Scheme on 16th May 2014 as a framework within which a number o f significant Irish projects would progress. HoAM briefed the Board on progress in relation some specific projects such as the North Docks tender process (Project Wave) where the tender for leasehold was issued on Wednesday, 4th June 2014, with first round bids due on 1st August. The Board noted the updates in relation to planning strategy on other sites, progress in relation to NAM A’s QIF partners & NAMA’s UK development sites. D ublin Office Supply O verview S36, S41 M atter for B oard A pproval B oard P a p e r: How best to address the supply side problem o f premium office accommodation in Dublin City S41, S36, S29, S30 Following discussion and noting the prior review by the Credit Committee on 3rd June and its recommendation for approval o f same, the Board resolved to approve the requests set out in the paper (as set out below): In accordance with her earlier disclosure, Mari Hurley absented herself from the meeting for this item. 10. R esidential Delivery T eam P rogress U pdate M a tte r for Inform ation Board Paper: Residential Delivery Update The Board noted the contents o f the paper as presented, including that the new internal cross-functional Residential Delivery Team (RDT) had been established and resourced to drive the delivery o f Dublin residential units and also the top 25 House Building connections from both the NAMA managed & PI/SP portfolio had been re-assigned to a single focused team within Asset Recovery. The Board noted that this approach would facilitate a consistent approach to dealing with the issues in delivering residential units in Dublin. S41, S36, S29, S30 H o A M advised the B oard th a t the tie re d categorisation o f sites was subject to change and rem ained flu id , due to sites p o te n tia lly b e in g in clu d e d in futu re lo a n p o rtfo lio sales4, n o t b eing via b le , in fra stru ctu re constraints o r p la nn in g im pedim ents. T he B oard noted th a t the Business P lan fo r the R D T was tabled fo r the J u ly B oard m eeting. The B oard requested th a t a com posite one page docum ent be b ro ug h t back to B oard (on a re g ula r basis) o u tlin in g N A M A ’ s resid en tia l d e liv e ry capacity (in term s o f num ber o f re sid e n tia l u n its ) across the R esid en tia l D e liv e ry Team , the S D Z and S ocial H ousing. S41, S36, S29, S30 11. T reasury (CFO) 11(a) Balance Sheet Policies - A nnual Review M atter for B oard A pproval Board Paper: Balance Sheet Policies - Annual Review T he B oard noted the contents o f the paper as presented, in c lu d in g the proposed m in o r change to the L iq u id ity P o lic y and the ra tio n a le fo r same. The B oard noted fu rth e r th a t no am endm ents w ere proposed to the F oreign Exchange o r Inte re st Rate P olicie s. F o llo w in g consideration, the B oard resolved to approve the reference to ‘N A M A operating accounts’ under the C ounterparty L im its section o f the Liquidity Policy as a c o lle c tiv e te rm to in clu d e S36^ ^ and S36 operating accounts. S41, S36 11(b) NAMA Senior N ote R e-Profiling U pdate M atter for B oard A pproval Board Papere NAMA Senior Note Re-Profiling Update S41, S36, S29, S30 12, Section 55 Report - Q1 2014 M atter for B oard A pproval Board Paper: Section 55 Quarterly Report Q1 2014 The Board noted the contents o f the paper as presented, including the profit for the period o f €190 million, the reference to the coupon payment on NAMA subordinated debt and the update in relation to NARL cash movements. Following consideration, and noting the prior review by the Finance & Operating Committee at its meeting on 4ta June 2014 and its recommendation of approval, and subject to one minor change6, the Board resolved to approve the Section 55 Quarterly Report for Q1 2014. The Board noted that the letter should be withheld until the additional Senior Bond redemption o f €2.5 billion (as outlined in the letter) had occurred (scheduled for 25ta June 2014). In light of the payment o f the coupon on NAMA subordinated debt on 1 March (for first time), it was recommended to include some further context o f the significance o f the payment 13(a) F unding O ptions fo r SDZ M a tte r for B oard A pproval S41, S36, S29, S30 In accordance with her earlier disclosure, Mari Hurley absented herself from the meeting for this item. 13(b) DDDA Proposal M a tte r for B oard A pproval Board Paper: Dublin Docklands Development Authority Proposal S41, S36, S29, S30 14, M I R eport M atter for Inform ation fh B oard P a p e r: Monthly Management Information Report - 30mApril 2014 The Board noted the contents o f the paper as presented, including the strong cash generation year to date o f €2.2 billion to end April. €3.5 billion to end M ay and, billion by end June 2014 and the H2 2014 pipeline remained strong with a further €0.5 billion projected loan portfolio sales. The CFO highlighted the acceleration in cash generation year to date (displayed graphically on page 15 o f the MI Report) with each month creating a new record for cash generation versus prior year comparators since inception. The Board noted the increasing trend in ROI disposals since inception. The Board noted the summary description o f the Projected Loan/Portfolio Sales as outlined on page 27 o f the report. M atter for Inform ation Board Paper: Operating Expenditure - Quarterly Outturn Report The Board noted the paper as presented including that actual costs for Q1 2014 (of €34m) were in line with budget, with surpluses against budget for primary services fees and legal costs being offset by costs arising from loan sales. 15. AOB 15(a) E SR I U pdate Matter for Information B oard Paper: E SR I Residential Research Programme The Head o f Strategy and Communications (HoS&C) provided a brief overview o f the ESRI draft reports to Board. The Board noted that ERSI projections o f housing demand across Ireland estimated that 54,000 units were required in Dublin and an additional 23,000 units were required in the surrounding counties in the period to 2021. The Board noted further that NAMA-controlled Tier 1 and Tier 2 sites could provide 40% o f the estimated residential requirement in Dublin. HoS&C advised that the projections indicated a clear divergence between Dublin/contiguous counties and the rest o f the country, with estimated demand heavily concentrated in the former. The Board noted that the housing demand projections for Limerick, Cork and Galway cities respectively were significantly less than anticipated. It was noted that the ESRI reports were due to be finalised by end June 2014 and that NAM A planned to host an event to launch the reports with key stakeholders (local authority county/city managers, heads o f planning etc.) in September 2014. In response to a question from the Board it was noted that the Department o f Finance was represented on the ESRI Research Programme Consultation Group along with NAMA, IBF and Department o f the Environment representatives. 15(c) Project Eagle Matter for Information Board Paper: 15(e) IBRC IT & Data Migration Matter for Information Board Papers N/A The Board noted that significant progress had been made over the weekend of th th • ■ 7 /8 June involving extensive IT and data migration as part o f the final migration o f NA M A ’s existing IBRC portfolio to Capita (€41 bn par debt). The Chairman, on behalf o f the Board, commended the significant achi evement and expressed his gratitude to all the staff involved. There being no further business the meeting concluded. Frank Daly, Chairman 17?? July 2014 21 l? NAMA BOARD MINUTES Fifteenth Meeting of 2014:2pm. to 5pm.. 12thJune 2014. Treasury Building Board-Only Appendix to Minutes Items Considered: Quarterly HR Update Board Paper: HR Quarterly Update Matter for Information The Chairman advised that the Quarterly HR Update was the first o f such updates to be provided in response to a request from Board in late 2013. The Chairman commented that the Board should be cognisant o f the background to the briefing: namely that there was as yet no clarity in relation to NAMA’s future strategic direction pending the conclusion o f the Minister’s review and S29, S30, S41 S29, S30, S40 The Board agreed that the outcome o f the Minister’s S227 Review o f NAMA, which would provide clarity/certainty in relation to the future strategic direction o f NAMA, was needed urgently. Sinead Brennan entered the meeting S29, S30, S41 Board Evaluation 2014 Board Paper: N/A Matter for Board Approval The Board discussed the 2014 evaluation process and the merits and demerits o f an in house evaluation (by the Secretary in conjunction with the Chairman) versus an externally facilitated evaluation. Following due consideration the Board agreed that the Secretary (in conjunction with the Chairman) would oversee the 2014 Board and Committee evaluation process, and that draft evaluation forms would be circulated to members for comment with a view to issuing forms in early July 2014 and reviewing reports in September/October 2014. Board Paper: N/A Matter for Information The Board noted the successful launch o f the NAMA Annual Report 2013 on 27th May 2014 and the Chairman and CEO’s appearance at the Public Accounts Committee on 29th May 2014 and commended all staff involved for their hard work and effort in relation to same. S37 Board Paper: N/A Matter for Information S37 There being no further business the private session concluded. NAMA BOARD MINUTES Sixteenth Meeting of2014:2.00pm. to 6.30pm.. 17th July 2014, Treasury Building Attendance: NAMA Board NAMA Executives (invited) Frank Daly, Chairman John Collison Brendan McDonagh, CEO, NAMA Ronnie Hanna John Corrigan, Chief Executive, NTMA Dave McEvoy Oliver Ellingham Michael Moriarty Mari Hurley Sean O Faolain Brian McEnery Aideen O’Reilly William Soffe Donal Rooney Other Invitees: ■ ■ ■ ■ Elaine Hudson, Secretary Marie Hunt, CBRE, item 5(a) only John Coleman, Senior Divisional Manager, items 5(a) to 6(b) only Chris McGarry, Head o f Planning, item 7(b) only Jonathan Milligan, Senior Divisional Manager, item 13 only * Ray Mangan, Senior Manager Asset Recovery, item 13 only ■ Michael Phelan, Senior Manager Asset Recovery, item 16 only Apologies: ■ Mary Birmingham (Executive) On opening the meeting the Chairman welcomed the Board members to the sixteenth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Note: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. j Issues considered (in order o f consideration): 1. Disclosure of Interests Brian McEnery disclosed a potential conflict o f interest in respect o f Items 7(a) and 16 and noted that he would not be taking part in the discussion or decisions related to same. 2. Board Private Session The Board held a private session without the Executive present, A Board-only note on discussion during the session was prepared by the Secretary. 3. Consent Agenda Items Matter for Board Approval Board Papers: Minutes o f B M 15 12 June 2014; Board Only Appendix to Minutes o f BM 15 - 12th June 2014; Mark Up Extract Board Minutes o f BM 15 - 12th June 2014; Minutes o f Executive Meeting —26th June 2014; Audit Committee Update to Board - period 1st May 2014 - 30th June 2014; Credit Committee Update to Board — 1st April 2014 to 30th June 2014; Risk Management Committee Update to Board —April 2014 to June 2014; Media Evaluation — June 2014; NAMA Sealing Register Update and CEO DA Compliance Statement - Q2 2014. S41, S36, S29, S30 The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 15, as previously circulated by email on 10th July 2014 (included in the Board pack). 5. Quarterly Strategy Update 5(a) Irish Property Market Presentation Matter for Information Board Paper; Presentation slides - CBRE The Board received a detailed presentation from Marie Hunt o f CBRE on the performance and outlook for the constituent sectors o f the Irish property market. The presentation was followed by Q&A which focused on Grade A office supply, sustainability o f international investor interest in the Irish market and trends in funding/financing arrangements. The Chairman, on behalf o f the Board, thanked Ms. Hunt for the comprehensive presentation. 5(b). Quarterly Strategy Monitoring Report Matter for Information Board Paper: Strategy Monitoring Programme - Quarterly Update The Head o f Strategy & Communications (HoS&C) presented the paper to Board, which noted that the strategy monitoring report had transitioned to referencing the revised Strategy adopted by the Board at its 1 May 2014 meeting. HoS&C highlighted the significant level o f sales activity required to meet the challenging debt redemption targets. The Board noted that all Great Britain and Rest o f World assets ware scheduled to be sold by the end of 20161. The Board noted further that sales activity projections were highly contingent on the continuation o f international investor demand for Irish assets and a benign macroeconomic environment. 5(c). Review of NAMA Strategy Matter for Board Approval Board Paper: Review o f NAMA Strategy S41, S36, S29, S30 5(d). Credit Availability in the Irish Property/Loan Sale Market Matter for Information Board Paper: Credit Availability in the Irish Property/Loan Sale Market The Board noted the contents o f the paper as presented including the heavy reliance by NAMA on US investors for big ticket deals in the year to date (a trend that was mirrored across Europe) and the concomitant risk o f same. The Board discussed the importance o f NAMA’s sales pipeline visibility (commitment to bring €250 million o f sales transactions to market each quarter) as key in attracting investors. The Board noted that prior concerns in relation to the ‘tail’ o f the Portfolio were mitigated somewhat as, subject to the continuation o f current market conditions, the tail might be capable o f being bundled for disposal and securing finance. The Board welcomed Bank of Ireland’s emerging participation in the larger transaction market. The Chairman, on behalf o f the Board, commended the quality o f the paper. 6(a). R O I In d u stria l M a tte r for B oard A pproval B oard P a p e rs: Policies fo r Industrial Property in Ireland and Great Britain ( cover paper); and Policy fo r Industrial Property in Ireland The Board noted the contents o f the papers as presented, and that no material change to policy was proposed. The Board noted the recommendation to explore potential sales to existing tenants and to expedite sales o f Grade A properties in prime locations given current demand. It was noted that while the sector did not lend itself to larger portfolio sales (due to relatively limited investor interest), market appetite for bundled industrial packages could be tested. Following consideration, and noting the prior review by the Credit Committee at its meeting on 8t0 July 2014 and its recommendation o f approval, the Board resolved to approve the Policy fo r Industrial Property in Ireland as the framework within which individual asset strategies should be assessed. 6(b). GB In d u strial M a tte r fo r B oard A pproval B oard P a p e rs: Policies fo r Industrial Property in Ireland and Great Britain (cover paper); and Policy fo r Industrial Property in Great Britain The Board noted the contents o f the papers as presented, and that no material change to policy was proposed. The Board noted that the GB industrial sector was outperforming its Irish counterpart on the basis o f strong investor demand being fuelled by a shortage o f supply in prime sectors and markets, resulting in yield compression and increased capital values. S41, S36, S29, S30 Following consideration, and noting the prior review by the Credit Committee at its meeting on 8’“ July 2014 and its recommendation o f approval, the Board resolved to approve the Policy fo r Investment Property in Great Britain as the framework within which individual asset strategies should be assessed. Credit Request In accordance with his earlier disclosure, Brian McEnery absented himself from the meeting for this item. 7(a) Docklands SDZ - Liffey Bridge Proposal Matter for Board Approval Board Paper: Docklands SDZ - Liffey Bridge Proposal S41, S36, S29, S30 S41, S36, S29, S30 Debtor Strategic Credit Reviews 9. Portfolio Sales U pdate Matter for Information Board Paper: Loan & Asset Portfolio Sales Update The Board noted the contents o f the paper as presented including that details o f Asset Portfolio and Loan Sales ‘completed’, ‘on the market’ and ‘under preparation and planned to be sold’ respectively provided visibility on the enormous amount o f work being undertaken across NAMA and the significant progress being made. Furthermore, NAM A’s commitment to bring €250m o f assets to market each quarter was evident in the pipeline o f sales (which exceeded this commitment). S41, S36, S29, S30 8 Most recently approved by the Board at its 14th M a y 2014 meeting HoAR undertook to provide a quarterly Loan & Asset Portfolio Sales update report to Board. 10. R e s id e n tia l D e liv e ry T earn Business s P la n M a tte r fo r B o a rd A p p ro v a l Board Paper: Residential Delivery Team Business Plan The HoAR presented the Residential Delivery Business Plan to Board which noted the targets, proposed delivery mechanism, organisation structure and funding requirements to achieve the delivery o f 4,500 new residential units to service the Greater Dublin area by end 2016. The Board noted that, in the context o f the significant erosion o f construction expertise and delivery platform capacity post the boom, delivery o f NAM A’s residential commitment would be extremely challenging and should not be underestimated (achievement o f the target required construction o f c.500 units per quarter). The Board noted that the challenge was exacerbated by significant external risks/issues including inevitable planning delays, infrastructural impediments, developer fatigue in addition to uncertainty in relation to Part V o f the Planning Acts and inconsistencies in the application o f levies9across Local Authorities. In light o f the significant reputational risk involved for NAMA, the Board agreed that it was imperative that NAMA ensure the highest quality and most stringent construction standards (including minimum apartment size requirements10) were adhered to and that intense monitoring in this regard across the entire project, while acknowledging the significance o f the undertaking, would be critical. S41, S36, S29, S30 9 In this context the Board noted that levies had the potential to undermine the viability of construction projects in certain locations citing the €60k levy per unit in DunLaoghaire Rathdown County Council as a case in point 10Noting that a limited number of Tier 1 properties had been permissioned prior to revised minimum size requirements. ll tl’ i: Following discussion and noting the prior review by the Credit Committee on th » , 8 M y and its recommendation for approval o f same, the Board resolved to approve the requests set out in the paper (as set out below): 1. Approval o f the Residential Delivery Business Plan; 2. Approval o f the proposed targets and reporting structure as outlined pages 26 & 27 o f the Business Plan; 3. Approval to commence Action Steps as outlined on pages 32 & 33 o f the Business Plan, The Board commended the excellent quality o f the paper. S41, S36, S29, S30 13. P articip atin g Institutio n (PI) - Service P rovider (SP) Portfolio U pdate M a tte r for Inform ation Board Paper; PI & Service Provider Managed Portfolio Update S41, S36, S29, S30 The Chairman, on behalf o f the Board, commended the significant progress being made across the PI-SP portfolio. 14. T rea su ry (C FO ): 14(a) T rea su ry U pdate M a tte r fo r Inform ation Board Paper: Treasury Update The Board noted the contents o f the paper as presented including the requirement to terminate some existing interest rate hedges in the context o f the Board’s revised strategy and accelerated rate o f bond redemptions. The Board noted further that €2.5 billion o f ‘NALML’ Senior Notes and €7.6 billion o f ‘N A RL’ Senior Notes were redeemed over the course o f May and June 2014. 14(b) NAMA Senior Note Redemption Matter for Board Approval Board Paper: NAMA Senior Note Redemption The Board noted the contents o f the paper as presented. Following consideration, the Board resolved to approve the recomm endation as set out in the paper (as follows), subject to an undertaking from the Executive to notify the Board (by email) as redemptions occurred. (i) Approve on-going redemptions o f NAM A “Existing” Senior Notes (€17.19 bn o\s) up to an aggregate amount o f €2,100,000,000 by th e 31“ D ecem ber 2014 at Par plus Accrued Interest, subject to NAMA having sufficient liquidity to meet its obligations. (ii) Notify the Minister o f its decision, under Section 60 (2) (a) o f the NAMA Act, and if there is no objection from the Minster, it is recom m ended that the Board authorise the CEO to take all the necessary steps to redeem the bonds as outlined in (i) above. 15. UUJ Research Update Matter for Board Approval Board Paper: Revised University o f Ulster Research Proposal - Phase 11 The HoAR presented the paper to Board which noted that arising from the Project Eagle loan sale, on a recommendation from the Northern Ireland Advisory Committee, it was proposed to revise the scope o f the Phase II research project (commissioned from the University o f Ulster) away from micro analysis o f the NAMA NI land development portfolio to focus on the strategic messages and policy implications pertaining to the residential land development model within Northern Ireland. The Board noted that it was proposed that the final report be presented to the Office o f the First and Deputy First Minister for Northern Ireland respectively. Following consideration and noting the prior review by the Northern Ireland Advisory C o m m i t t e e a n d its recommendation for approval o f same, the Board resolved to approve the revised scope for the Stage II deliverable o f the research commissioned from the University o f Ulster into Northern Ireland Residential Development Landholdings arising from the Project Eagle portfolio disposal as presented in the paper. 16. Insolvency T eam U pdate M atter for Inform ation B oard P a p e r: NAMA Insolvency Team Update The Board noted the contents o f the paper as presented. In accordance with his earlier disclosure, Brian McEnery absented him self from the meeting for this item. 17. Q u arterly U pdate on U nfinished H ousing M atter for Inform ation Board Paper: Unfinished Housing Estates The Board noted the contents o f the paper as presented, including the continued progress resolving NAMA’s Unfinished Housing Estates14, which had reduced considerably from 335 in November 2013 to 235 at present. In the context of 105 estates earmarked for disposal ‘as is’, the Board noted that the Planning Advisory Committee had requested that; (i) (ii) (iii) Site Resolution Plans be put in place for estates if they were not sold by a specific target date (to be agreed) and; a geographical breakdown o f residual estates (235 estates) by county and numbers. In addition a Red/ Amber/ Green rating system o f residual estates, denoting the relative complexity o f assets, would also be presented as part o f the report to Board (and Planning Advisory Committee) as a matter o f course going forward. A Attributable to N A M A Debtors 18. Divisional Briefings 18(a) Legal Divisional U pdate Board Paper: Legal Divisional Update & Litigation Report The Head o f Legal (HoL) provided a detailed presentation to Board on the current workload o f her Division, specifically the role o f NAMA legal in the sales process for asset and loan sales. HoL provided an overview o f the pre and post market launch process and lessons learned from recent sales o f problematic assets. The Board noted that advance preparation was key to realising maximum value and that there was reputational risk to NAMA from conducting poorly managed or protracted sales processes. In response to a question from the Board, HoL said that attracting additional suitably qualified senior legal resources was a very significant challenge as NAMA could not offer security o f tenure and was currently targeting solicitors who would be interested in short term projects. In relation to the litigation update and register, the Board noted its contents and its further reflection o f the achievements and contribution o f the NAMA Legal team which were commended. 18(b) CFO Divisional Update B oard P a p e rs: CFO Divisional Update & M I Report - 31st M ay 2014 The CFO provided a comprehensive presentation to the Board on the work of his Division, including its significant and increasingly important role in providing transaction support services (providing three distinct case examples o f the Division added value). The Board noted that the CFO Division was comprised o f a large and diverse range o f functions including 25 individual specialist niche areas and skillsets. The CFO advised that maintaining an adequate staffing capability across a large number o f specialist niche areas was a significant challenge. S41, S36, S30, S29 The Board noted the latest M I Report, which illustrated that NAMA was on target to achieve its forecast cash generation target o f €6.8 billion. 19. ACE There being no further business the meeting concluded. Frank Daly, Chairman I 11til September 2014 18 NAMA BOARD MINUTES Sixteenth Meeting of 2014:2pm. to 6.30pm., 17thJuly 2014. Treasury Buildine Board-Only Appendix to Minntes Items Considered: Section 227 Review Board Paper: N/A Matter for Board Approval/Information The Chairman advised that the publication by the Minister for Finance o f the Section 227 Review o f NAMA on 16th July 2014 had brought much needed clarity in relation NAM A’s further strategic direction and had eliminated much o f the uncertainty surrounding the Agency. The Review reaffirmed the Board’s primary strategic objective to redeem a minimum o f 80% o f NAMA senior debt by end 2016, with the expectation that NAMA would redeem the balance (including NAMA subordinated debt) by end-2017 or mid-2018. The Board noted that the S227 review prioritised two ancillary strategic objectives namely the delivery o f Grade A office accommodation in the Dublin Docklands SDZ and provision o f residential housing for Dublin and surrounding counties. The Board noted further that the cdticality o f NAMA retaining its staff expertise and operational capability to the achievement o f its objectives had been publically recognised. S29, S30, S41 Board Evaluation 2014 Board Paper: N/A Matter for Information The Chairman reminded Board members that the deadline for submission o f Board and Committee Evaluation questionnaires to Board Secretary was close o f business today Thursday 17th July 2014. Northern Ireland Committee membership Board Paper: N/A Matter for Board Approval The Chairman advised that following the Board’s approval (at its April 2014 meeting) to extend Mr Rowntree’s appointment as a member o f the Northern Ireland Advisory Committee until the end o f July 2014 and agreement to review his appointment at that stage, and having regard to the next scheduled meeting o f the Committee on 8th September 2014, it was proposed to extend his appointment further to end September 2014. Accordingly the Board resolved to approve the extension o f Mr Rowntree as a member o f the Committee until the end o f September 2014. The Secretary undertook to prepare the necessary correspondence. Following further discussion, and on the recommendation o f the Chairman by agreement with the Minister, and having regard to implications o f Project Eagle for the Committee, the Board resolved to dissolve the Northern Ireland Advisory Committee following its 8th September 2014 Committee meeting. Board Strategy meeting Board Paper: N/A Matter for Board Approval In light of NAM A’s key ancillary strategic objectives to ensure the timely delivery o f (i) Grade A office space within the Dublin Docklands SDZ and (ii) residential housing in Dublin and surrounding counties, the Chairman proposed a special half day Board Strategy meeting to focus on strategic issues (following consideration by the Board o f Dublin Residential Business Plan at July Board meeting, Docklands SDZ Strategy paper at the September Board meeting and attendance by the Board (optional) at the National Housing Conference on 11th September (see below)). Following brief discussion, the Board agreed to convene a special Strategy meeting after the September Board meeting at a date to be agreed. The Secretary would liaise with Board members to find a suitable date for the diary. National Housing Conference Board Paper: N/A Matter for Information The Chairman advised that Board members were welcome to attend a National Housing Conference for key State Stakeholders which was being hosted by NAMA and scheduled for the morning o f 11th September 2014 at the National Conference Centre (same date as September Board meeting) to launch the ESRI study (which was co-funded by NAMA Mid the Irish Banking Federation). Board Paper: N/A Matter for Board Approval The Board discussed and agreed the CEO’s objectives for 2014. The Chairman and NTMA Chief Executive would convey the outcome o f the discussion to the CEO. There being no further business the private session concluded. NAMA BOARD MINUTES Seventeenth M eeting o f 2014; 1.45vnu to 5.00pm,, 11th Septem ber 2614, Treasury Buildins Attendance: NAMA Board NAMA Executives (invited) Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA John Collison John Corrigan, Chief Executive, NTMA Ronnie Hanna Oliver Ellingham Dave McEvoy Brian McEnery Michael Moriarty William Soffe Sean O Faolain Donal Rooney Other Invitees: ■ ■ ■ ■ ■ Elaine Hudson, Secretary Sinead Brennan, Head o f HR, item 2 only Jeanette Crowley, Procurement Solicitor, item. 6 only Brendan Smyth, Solicitor, item 6 only Jamie Bourke, Senior Manager, item 11 only John Coleman, Senior Divisional Manager, items 12 & 13 only David Johnson, Head o f Audit & Risk, items 18 & 19 only Alan Stewart, Solicitor, item 20 only Deirdre McCabe, Solicitor, item 20 only A p o lo g ie s : ■ Mari Hurley ■ Aideen O ’Reilly (Executive) On opening the meeting the Chairman welcomed the Board members to the seventeenth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. N ote: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order of consideration): 1. Disclosure of Interests There were no disclosures made. 2. Board Private Session The Board held a private session without the Executive present. A Board-only note on discussion during the session was prepared by the Secretary. 3. C onsent A genda Item s M atter for B oard A pproval Board Papers: Minutes o f B M 16 - 1 7lh July 2014; Board Only Appendix to Minutes o f B M 16 - 17th July 2014; Minutes o f Executive Meeting - 2 9 n August 2014; A udit Committee Update to Board - period 1st July 2014 - 31st August 2014; Finance & Operating Committee Update to Board - 1st June 2014 to 31st August 2014; Media Evaluation - July & August 2014. The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 16, as previously circulated in the Board pack. 5. Asset M anagem ent - Q u arterly Projects U pdate M atter fo r Inform ation B oard P a p e r: Quarterly Projects Update —Asset Management The Head o f Asset Management (HoAM) presented the paper to Board, which noted the progress in relation to key Dublin projects including S41, S36 The B oard noted th a t A sset M anagem ent had undertaken site v is its to a ll a ctive developm ents in the U K and th a t despite extensive co nstru ctio n w o rks, there w ere no s ig n ific a n t program m e or budgetary issues. A q ue ry was raised on ca p tu rin g the surplus on the S41, S36 re ve rt separately to B oa rd w ith an update. 6. D ublin D ockland SDZ Strategy/Business Plan M atter fo r B o ard A pproval B oard P a p e rs: Dockands Business Plan (cover sheet); North Lotts and Grand Canal D ock Strategic Development Zone September 2014 Business Plan. The H o A M presented the D ocklands S D Z Business P lan to B oard w h ic h noted proposed d e liv e ry o p tio n s, in fra s tru c tu ra l issues, fu n d in g requirem ents and in d iv id u a l strategies fo r the 13 N A M A c o n tro lle d sites w ith in the S D Z (in c lu d in g targe t co n stru ctio n com m encem ent dates fo r same). F o ur sites w ere already in Q IFs w here N A M A had a m in o rity interest. E ig h t o f the n in e o th e r sites w ere und e r c o n tro l o f receivers w ith n in th site h eld on B alance Sheet b y N A M A (p a rt o f D D D A settlem ent). The B oard noted three k e y issues rela ted to p la n n in g , p ro curem e n t and in fra s tru ctu re and th a t achievem ent o f targe t “ shovel ready” c o n stru ctio n start dates fro m e a rly 2016 w o u ld re q u ire no s ig n ific a n t setbacks in re la tio n to any o f these issues. S31, S41, S36, S30, S29 Following discussion and noting the prior review by the Credit Committee on 2nd September 2014 and its recomm endation for approval o f same, the Board resolved to approve the requests set out in the paper (as set out below): 1. 2. Approval o f the Docklands Business Plan as presented. Approval o f the Next Steps outlined on Page 36 o f the Business Plan S41, S36 The Board commended the excellent quality o f the paper, noting the coherence o f the plan and the appropriate pace o f the proposed implementation o f same. 7. C re d it R e q ue st S41, S36, S29, S30 M a tte r for Inform ation B oard P a p e r: Residential Delivery Update The Head o f Asset Recovery (HoAR) presented the firs t monthly progress update to Board, which noted the continued good progress in relation to 90 day and 180 day action plans with all milestones ahead o f target. S29 S41, S36, S29, S30 S41, S36, S29, S30 10. Semi Annual Impairment Report Matter for Board Approval Board Paper: Semi Annual Impairment Report The CFO presented the Semi Animal Impairment Report to Board which noted the positive impairment trajectory arising from a considerable improvement in NAMA managed cashflows. The Board noted that the impairment exercise formed a critical part o f NAMA’s comprehensive forecasting analysis with the expected cash flows for all debtors being assessed on an asset by asset basis across NA M A ’s entire loan portfolio (including individual cashflows o f PI/SP managed debtors). S41, S36, S29, S30 Following discussion and noting the prior review by the Credit Committee on 2nd September and Finance and Operating Committee on 3rd September and their recommendation for approval o f same, the Board resolved to approve the paper including: (i) (ii) the half year impairment charge o f €57m for inclusion in the 30th June 2014 Section 55 Quarterly Accounts, bringing the cumulative impairment provision to €3,571m as at 30th June 2014 and the impairment provisions for the four specific debtor cases under Board DA as set out on page 44 o f the paper. B O I Prim ary & Special Servicing Integration Update M atter for Board Approval Board Paper: Bank o f Ireland Portfolio Integration Jamie Bourke provided a detailed update presentation on the Bol Integration Project to Board which noted the good progress in relation to Phase I ‘ Interim Operating M odel’ which was on track for completion on 22nd September 2014. In relation to Phase II ‘Target Operating M odel’, the Board noted that following recent escalation within Bank o f Ireland, further dedicated specialist resources (relevant subject matter experts) had been assigned to the project at Bol and that in view o f delays experienced to date, a revised project deadline for full migration o f 20th February 2015 had been agreed by all parties concerned (NAMA, Bol, Capita) as it permitted all organisations to avoid a 31/12/2014 year end implementation risk. S36, S29, S30 The Board noted that a detailed Project budget would be brought to the Board’s October meeting. Following consideration the Board resolved to approve the recommendations as presented in the paper as follows: (i) Approval for the NAMA Project Integration Team to continue to progress the open items o f the May 2014 Board approved Project Plan (ii) Delegated Authority to agree the servicing contract with Capita and Exit Plan with BOI jointly to the NAMA CEO and NAMA CFO (iii) 12. Approval to formally engage with BOI on retaining the residential mortgage portfolio (180 cases) on BOI MAS system under a new commercial agreement as it was not efficient to set-up a new mortgage system in Capita. Major Loan and Asset Portfolio Sales Matter for Information Board Paper: Review o f Major Loan and Asset Portfolio Sales S41, S36, S29, S30 The Chairman, on behalf o f the Board, commended the excellent quality o f the paper and expressed his appreciation to all involved for the effort and analysis involved. 13. New Products Initiatives U pdate M a tte r for B oard A pproval Board Paper; New Products Initiatives Update The Board noted the contents o f the paper as presented including the update on the eight key initiatives presented to the Board in April 2014, the bulk of which were currently being implemented or were no longer required given NAM A’s accelerated disposal scheduled and improved investor interest in Irish assets. The B oa rd agreed that, in the context o f a significantly improved market environment, NAM A’s accelerated disposal schedule and the emergence o f a number o f REITs into the market over the last year, that the case for a NAMA sponsored REIT was weakened but would be kept under review. The SDM (Strategy) advised that the New Products Group was exploring the feasibility o f NAMA providing infrastructure finance, on a commercial basis, to unlock otherwise viable land and development assets (NAMA sites) by resolving infrastructural issues, currently unresolved due to lack o f funding. The Board noted that a proposal m ay revert to Board in due course in this regard, depending on the outcome o f this exercise which was ongoing. 13(b) Allsop A uction U pdate M a tte r for Inform ation Board Paper: N/A The HoAR advised that a trial auction process with KPMG (NAMA appointed Receiver) using the Allsop auction platform was scheduled to take place in October 2014. The Board noted that the auction would be monitored by NAMA to ensure that the release o f properties to the market was controlled and to inform NAMA’s approach to auctions (in light o f experience from the pilot). 14(a) Treasury Update Matter for Information B oard P a p e r; Treasury (CFO) Update The Board noted the contents o f the paper as presented including that, in the context o f revised redemption targets o f 80% o f senior bonds by end 2016 (s227 review), balance sheet hedges maturing in 2019/2020 were terminated to ensure that no hedges matured beyond 2018 in line with Board strategy. S36, S29, S30 15, Section 55 Quarterly Report & Accounts - Q2 2014 Matter for Board Approval B oard P a p e r: Section 55 Quarterly Report Q2 2014 The CFO presented the paper to Board which noted that the profit o f €102 million for H I 2014. Following consideration and noting the prior review by the Finance and Operating Committee on 3rd September and its recommendation for approval o f same, the Board resolved to approve the Section 55 Quarterly Report for Q2 2014. The Board noted that the Report would be submitted to the Minister for Finance towards the end o f September. M a tte r for B oard A pproval Board Paper: Section 53 Annual Statement 2015 The Board noted the contents o f the paper as presented. T he B oard agreed a number o f revisions, including that the reference to delivery o f 1,100 resi units in 2014 be amended to refer to the target resi delivery o f 1,000 units. The Board requested that the language in relation to the Docklands SDZ be further reviewed. The Board noted that NAM A’s five key objectives would be reviewed at a later Board meeting, most likely at the Board’s scheduled Strategy meeting in March 2015. Following consideration, and noting the prior review by the Finance & Operating Committee on 3rd September 2014 and its recommendation o f approval, and subject to the aforementioned changes, the Board resolved to approve the text o f the Section 53 Annual Statement 2015 subject to the wording about residential and SDZ delivery being checked with NAMA Legal in the context o f its procurement legal advi ce to Board. The Board noted that the Statement would be submitted to the Minister for Finance towards the end o f September. 17. Disposal of Assets on Balance Sheet Report (exceptions only) Matter for Information Board Paper: Disposal o f Assets on Balance Sheet Report (exceptions only) The Board noted the contents o f the paper as presented, including one onbalance sheet fixed asset disposal involving the sale o f a painting by public auction in New York for $80k in March 2014. The Board noted that there were no exceptions to the Policy during the period4 Risk Register - Bi-Annual Review Matter for Information B oard P a p e r: Management Update on R isk Register; NAMA R isk and Control S e lf Assessment (Risk Register); S41, S36, S29, S30 Status of Audit Recommendations Matter for Information B oard P a p e r: Status o f Audit Recommendations The Head o f Audit & Risk presented the paper to Board, which noted that following an interregnum period during which PwC had consulted extensively across NAMA, the revised audit plan had been approved by the Audit Committee (July 2014) and PwC had commenced their audit fieldwork with a number o f audits progressing. The HoA&R advised that the transition o f Internal Auditors had been very smooth. The Board noted that good progress had been made in closing out previously open audit points over the summer months, with only two overdue ‘m edium ’ priority audit points. The Board noted that the Audit Committee had reviewed the C&AG’s 2013 Management Letter, which contained no high findings. It was noted that, o f the four open audit points from the 2012 Management Letter, three ‘medium’ rated audit points were scheduled to be closed by end September and one low rated audit point would be closed in due course. S31, S41, S36, S29, S30 21. MI Report Matter for Information Board Paper: Monthly Management Information Report - 31st July 2014 The Board noted the contents o f the paper as presented, including the exceptionally strong cash generation year to date o f €6.3 billion which was likely to exceed the budgeted 2014 target o f €6.8 billion by mid October 2014. S36, S41 Matter for Information B oard P a p e r: Operating Expenditure - Quarterly Outturn Report The Board noted the contents o f the paper as presented, including the positive H I outturn o f €63 million against €69 million budgeted6*and forecast year end outturn o f €133 million against €137 million budgeted. 22. Recruitment Update Matter for Board Approval B oard P a p e r: NAMA Recruitment Update and Recommendation fo r Approval o f Revised Total Headcount The Board noted the contents o f the paper as presented, including the rationale for the revised headcount. Following consideration, and noting the prior review by the Finance & Operating Committee on 3rd September 2014 and its recommendation of approval, the Board resolved to approve revised total headcount o f 382 with an ongoing 6 monthly review by Board. 23. Divisional Briefing - Strategy & Communications Matter for Information B oard P a p e r: Strategy and Communications Divisional Update presentation The Head o f Strategy and Communications provided a detailed presentation to the Board on the division’s work and responsibilities. In relation to the Strategy function, the Board noted that considerable work had been undertaken in the year to date pertaining to the Section 226 and Section 227 reviews, in addition to the Board’s own review o f its strategic options in May 2014. The Strategy function circulated to Board a significant amount o f strategic analysis including quarterly updates, sectoral policy reviews and other market and investor review papers as required. e driven by savings in Primary Servicer fees, legal and asset recovery costs which were offset by I B R C integration project costs In relation to FOI preparation, it was noted that two senior FOI managers, with extensive prior experience, were undertaking data search simulations and had undertaken re-briefings o f all staff in recent months. The Board noted that the FOI Bill was expected to be enacted over the coming weeks. The Board commended the excellent quality o f both the Strategy and Communications functions. 24. AOB 24(a) NARPS P art V Proposal M atter for Board Approval Board P ap er: National Asset Residential Services (NARPS) deal with Part V Provision Proposal to The Board noted the contents o f the paper as presented, including the rationale for using NARPS as a mechanism to meet future Part V requirements on NAMA-funded developments, which would confer significant cashflow benefit for the State and provide N AM A debtors and Receivers with planning certainty in respect o f compliance with Part V. The Board noted that the proposal represented an extension o f a funding mechanism currently in place with Approved Housing Bodies and Local Authorities. The Board agreed that the proposal would be strictly limited to NAMA sites. Following consideration, and noting its prior review by the Credit Committee and recommendation o f same7 at its meeting on 9th September 2014 the Board resolved to approve the acquisition o f new Part V units on NAMA-related developments through the mechanism o f NARPS at a consideration in line with relevant Part V legislation and to lease the units back to the relevant Local Authority/Approved Housing Body. Subject to amending wording of recommendation to ensure only non-material variations were delegated to CEO & HoAM. Matter for Information Board Paper: Monthly Meeting Schedule 2015 The Board noted the proposed monthly meeting schedule for 2015. 24(c) Northern Ireland Advisory Committee Matter for Information Board Paper: N/A The Chairman noted that following the final meeting o f the Northern Ireland Advisory Committee on 8th September 2014, that he wished to formally record, on behalf o f the Board, his appreciation to all involved (but particularly to the Head o f Asset Recovery and Senior Divisional Manager) for the significant work involved over the last five years. 24(d) Labour Party Parliamentary Conference Matter for Information Board Paper: N/A The Chairman advised that he was scheduled to present at the Labour Party Parliamentary Conference on NAMA and resi delivery on M onday 15th September 2014 in Wexford. 24(e) National Housing Conference Matter for Information Board Paper: N/A The Chairman commended the National Housing Conference earlier in the day and, on behalf o f the Board, formally recorded his appreciation to all involved (the NAMA Communications Function in particular) for the significant work involved. 24(g) Board Special Strategy Session Matter for Information B oard P a p e r: N/A The Board agreed that the proposed half day Strategy Session on 19th September be cancelled with an elongated Strategy session at the Board’s scheduled 16th October meeting instead. There being no further business the meeting concluded. Frank Daly, Chairman 16th O ctober 2014 NAMA BOARD MINUTES Seventeenth Meeting of2014:1.45pm. to Snm.. 11thSeptember 2014. Treasury Buildine Board-Only Appendix to Minutes Items Considered: S37 Board Paper: N/A Matter for Information S37 Sinead Brennan entered the meeting Quarterly HR Update Board Paper: HR Quarterly Update Matter for Information The Board noted that the continued upward trend in staff turnover (at c. 9% turnover year to date - 35 leavers) underscored the criticality o f implementing a retention scheme as a matter o f urgency. The Board noted further that 2014 mid-year reviews were substantially complete and the significant participation by NAMA employees in learning and development courses (both internally and externally hosted). In response to a question from the Board, it was noted that most o f the confirmed new starters were graduates on short term contracts which facilitated internal promotion opportunities following the departure o f more senior staff. In response to a further question from the Board it was noted that some relatively senior specialist positions were proving difficult to fill (e.g. commercial property solicitors, property specialists) and highlighted the tighter and much improved employment market conditions in which NAMA was operating. S29, S30, S31, S41 Sinead Brennan left the meeting Planning Advisory Committee External Member Re-appointment Board Paper: N/A Matter for Board Approval The Chairman advised that the second Terms o f Appointment for Ms. Alice Charles, External Committee Member on the Planning Advisory Committee was due to expire on 27th October 2014. The Board noted that there were no restrictions under s33(3) on the number o f terms o f Advisory Committee reappointments unlike Board Members under s20(4). On the recommendation o f the Chairman o f the Planning Advisory Committee, the Board resolved to approve the re-appointment o f Mr. Charles as a member o f the Planning Advisory Committee for a further two years from 27th October 2014 subject to confirmation o f her willingness to commit to a further term anH on the 37 There being no further business the private session concluded. Frank Daly, Chairman 1 16th October 2014 NAMA BOARD MINUTES Eighteenth Meetine o f2014:12.45pm. to 1.05pm.. 1st October 2014. Treasury Buildins BOARD ONLY Attendance: NAMA Board Frank Daly, Chairman1 Brendan McDonagh, CEO, NAMA John Corrigan, CEO, NTMA Oliver Ellingham1 Mari Hurley1 William Soffe1 Brian McEnery1 On opening the meeting the Chairman welcomed the Board members to the eighteenth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues Considered: 1. Disclosures of Interests There were no disclosures made. 2. Board Private Session Board Paper: N/A The Board held a private session without the Executive or Secretary present. The Chairman advised the Board that the Head o f Asset Recovery, Mr Ronnie Hanna, had tendered his resignation on the evening o f 30th September 2014. The Board noted the enormous contribution that Mr Hanna had made to the success o f NAMA since his appointment in March 2010, initially as Head o f Credit and Risk and more recently as Head o f Asset Recovery. The Board expressed their gratitude to Mr Hanna for the great dynamism, commitment, professionalism and integrity he had brought to the role. Following considerable discussion, the Board resolved to approve the Deputy Head o f Asset Recovery, Mr Michael Moriarty as the new Head o f Asset Recovery. 3. AOB There was no other business. There being no further business the meeting concluded. FT B i i n i / t i i j ■ v > u u u 16th October 2014 iim u NAMA BOARD MINUTES N ineteenth M eeting o f 2014: LOOvnu to S.30vm.. 1 0 October 2014. Treasury Building Attendance: HAMA Board NAMA Executives {'invited) Frank Daly, Chairman Mary Birmingham Brendan McDonagh, CEO, NAMA Ronnie Hanna John Corrigan, Chief Executive, NTMA Michael Moriarty Oliver Ellingham Sean O Faolain Mari Hurley Aideen O’Reilly Brian M cEnery1 Donal Rooney W illiam Soffe O th e r Invitees: ■ Elaine Hudson, Secretary Sinead Brennan, Head o f HR, item 2 only Breda Macnamara, NTMA Head o f Compliance, item 5(b) only ■ Aishling Synnott, Head o f Treasury, item 6 only ■ John Coleman, Senior Divisional Manager (Strategy), item 7 only ■ Suzanne Sweeney, Senior Divisional Manager (AR), item 9 only ■ Jamie Bourke, Senior Manager, item 13 only ■ Aidan O ’Connell, Senior Asset Recovery Manager, item 15 only Apologies: ■ John Collison (Executive) On opening the meeting the Chairman welcomed the Board members to the nineteenth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. N ote: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order o f consideration): 1. D isclosure o f Interests Brian McEnery disclosed a potential conflict o f interest with respect to item 15 and declared that he would take no part in the discussion related to same. Mari Hurley disclosed a potential conflict o f interest with respect to item 2(c) and declared that she would take no part in the discussion related to same. There were no other disclosures made. 2. B oard P rivate Session The Board held a private session without the Executive present. A Board-only note on discussion during the session was prepared by the Secretary. 3. C onsent A genda Item s M atter for B oard A pproval B oard P ap ers: Minutes o f B M 17 ** 11th September 2014; Board Only Appendix to Minutes o f B M 17 — 11^ September 2014; M ark Up Extract Minutes o f B M 17 - i f ' September 2014; Minutes o f B M 18 (Board Only) 1st October 2014; Minutes o f Executive Meeting - 3rd October 2014; Credit Committee Update to Board - period 1st July 2014 - 30th September 2014; Risk Management Committee Update to Board - 1st July 2014 to 30th September 2014; CEO DA Compliance Statement —Q3 2014 and Media Evaluation - September 2014. The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 17, as previously circulated in the Board pack. S. Governance 5(a) NAMA Internal Audit Charter Matter for Board Approval Board Paper: NAMA Internal Audit Charter The Board noted the contents o f the paper as presented, including the minor update changes proposed. Following discussion, the Board requested that the NAMA CEO be reinstated (i.e. rejection o f proposed deletion) as a recipient o f final audit reports. Following consideration and noting the prior review by the Audit Committee at its meeting on 10“ September 2014 and its recommendation o f approval, the Board resolved to approve the amended Internal Audit Charter as presented, subject to the aforementioned change. 5(b) Personal Account Transactions Policy Matter for Board Approval Board Papers: Review o f NAMA Board & Committees Personal Account Transaction Policy The Board noted the contents o f the paper as presented, including the proposed update to the prohibited securities list2, the aggregate market weight o f same and addition o f a specific reference to the obligation under section 202 o f the NAMA Act not to use confidential information for personal gain. Following consideration, the Board resolved to approve the NAMA Board & Committees Personal Account Transaction Policy as presented (including the changes indicated in the paper). . 6 Derivatives Presentation Matter for Information Board Pager: Treasury (CFO) Derivatives Presentation The Board recei ved a detailed presentation from Ms Aisling Synnott, recently appointed Head o f Treasury, outlining how derivatives affected NAMA’s P&L and Balance Sheet. The Chairman, on behalf o f the Board, thanked Ms. Synnott for the comprehensive presentation and wished her every success in her new role. 7. NAMA Portfolio After 2014 —Consideration of Options Matter for Board Approval S41, S36, S29, S30 On behalf o f the Board, the Chairman thanked the HoS&C, SDM (Strategy) and the Executive for the paper which contained strong views and was evidently useful in provoking a discussion o f the risks surrounding the current strategy. 9. Bi A nnual Report on Top D ebtor Exposure M atter for Inform ation Board Paper; Bi Annual Top Debtor Exposure Report The Board received a progress update on debtor management and debt reduction performance in relation to the top 28 connections (by NAMA debt) report representing 50% o f NAMA debt. The Board noted that the main changes included the removal o f five debtor connections (predominantly arising from the Project Eagle transaction) and inclusion o f three new connections. It was noted that the threshold level for inclusion in the report was c. €140 million. The Board noted that eight o f the Top Connections would disappear from the report in 2015 following the expected completion o f various proposed loan and portfolio sales. S29, S30 Matter for Information Board Paper: Residential Delivery Update The Board noted the contents o f the paper as presented including significant progress with c. 886 units delivered to date and the RDT8 on target to achieve its 180 day action plan with anticipated delivery o f c. 1,200 units by end 2014 (versus target o f 1,000). It was noted that the 270 acid 360 day business plans were being devised and would be brought to the December Board meeting. S41, S3Q, S29, S30 11. Quarterly Loan & Portfolio Sales Update Matter for Information Board Paper: Loan & Asset Portfolio Sales Update The Deputy Head o f Asset Recovery (DHoAR) presented the paper to Board which noted the enormous amount o f work being undertaken across NAMA, the significant progress being made and the strong loan and asset portfolio pipeline. S41, S3Q, S29, S30 Residential Delivery Team S3Q In relation to planned portfolio sales, the Board noted that Project Plum (residential portfolio and successor to Project Orange initial residential portfolio) would involve significant due diligence and preparatory work, 12. CEO Delegated Authority Policy —A nnual Review M atter for Board Approval B oard P a p e r: Delegation and Reservation o f Functions Annual Review The Head o f Legal presented the paper to Board, which noted the contents and the changes proposed by w ay o f updates to the referenced policies and rationale for same. Following discussion the Board resolved to approve the Delegation and Reservation o f Functions and Powers o f the Board o f NAMA as presented. 13. Project B ank Update M atter for Board Approval B oard P a p e r: Bank o f Ireland Portfolio Integration Jamie Bourke provided a detailed update presentation on the B ol Integration Project to Board which noted the good progress achieved to date and that the project was on target to meet 22nd February 2015 migration deadline. Following consideration the Board resolved to approve the recommendations as presented in the paper as follows: (i) To Approve continuation to progress the open items o f the September 2014 Board approved Project Plan as detailed in Appendix 1 o f paper, 14. A nnual P ro cu rem en t Flan M atter fo r B oard A pproval Board Paper: 2015 NAMA Procurement Plan The Board noted the contents o f the paper as presented, including the planned procurement tor 2015 and the update on 2014 procurement. Following consideration, and noting the prior review by the Finance & Operating Committee on 3rd September 2014 and its recommendation of approval, the Board resolved to approve the recommendation as presented in the paper (as follows): to approve the NAMA Procurement Plan for 2015, the primary objectives o f which are to procure services that facilitate effective and efficient business operations, to select service providers in accordance with the NAMA Procurement Policy (previously approved by Board) and to avoid any conflicts o f interest in procurement activities. 16. Quarterly Update on Unfinished Housing Matter for Information Board Paper: Quarterly Update on Unfinished Housing The Board noted the contents o f the paper as presented, including the positive progress made on estates within the NAMA managed book, many o f which were in Receivership. The Deputy Head o f Asset Recovery (DHoAR) advised that Site Resolution Plans were key and would be the basis by which progress would be tracked on a monthly basis to completion. Referring to the distribution o f Unfinished Housing Estates, the Board noted that AR would be focussing on remediating works in Cork (c. 20% o f total), Kerry and Galway. In response to a question from the Board it was noted that the total expenditure on remediation works was c. €6 million to €7 million, a proportion o f which would be allocated to the NAMA Social Housing budget. S31, S41, S29, S30 M atter for Inform ation Board Paper: NAMA Insolvency Team Update The Board noted the contents o f the paper as presented, including progress in relation to the on-going IP performance review meetings and the escalation o f IP underperformance issues, with two o f three such cases having been resolved and the final case (relating to S 3 6 ^ ^ ^ ^ H ) under active resolution. It was noted further that the Insolvency Team were actively increasing the level o f discharges which would result in reduction in IP fees in due course. In accordance with his earlier disclosure, Brian McEnery absented him self from the meeting for this item. 18. M I Report M atter for Inform ation Board Paper: Monthly Management Information Report —31st August 2014 The Board noted the contents o f the paper as presented, including exceptionally strong cash generation performance to date which was ahead o f the full year targ et In response to a question from the Board it was noted that as part o f incremental Senior Bond redemptions previously approved by Board, it was proposed to utilise the existing cash balance to undertake further redemptions bringing cumulative Senior Bond redemptions to 50% on 22nd October 2014. A further proposal in this regard would be brought to the November Board meeting. Matter for Information B oard P a p e r: A sset Recovery Division Board Update The Head o f Asset Recovery presented his divisional update to the Board, highlighting that A R ’s achievements should be viewed in the context of significant input from NAMA Legal, Asset Management, Strategy & Communications and CFO respectively. The Board noted the significant cash generation year to date (€7.1 billion, which had already exceeded the original cash generation target for 2014) and since inception (c. €22 billion), significant asset sales S41 and loan sales completed, major sales under preparation S41 to office, residential, retail and hotel categories scheduled to launch in HI 2015. 41, S36, S29, S30 HoAR advised that A R had always been flexible to changing demands within NAMA (as evidenced by evolving team structures such as establishment o f RDT team) and noted that progress achieved was down to the hard work and dedication o f all o f the AR team. The Board noted significant progress in terms o f the Residential Delivery team and the Insolvency Teams participation in the Allsops auction as evidence o f this flexible approach. The Chairman, on behalf o f the Board, commended the Head o f Asset Recovery for the presentation and all involved for the outstanding performance and achievements year to date. 20(a) Head of Asset Recovery Resignation & New Appointment On the occasion o f the final Board meeting attendance for M r Hanna, the Chairman, on behalf o f the Board, expressed his personal appreciation for the enormous contribution made by Mr Hanna since the inception o f NAMA to the significant progress achieved to date. The Board commended Mr Hanna for his pivotal role in the successful conclusion o f key transactions and his commitment and support o f the Northern Ireland Advisory Committee. The Chairman advised that M r Hanna was a huge loss to NAMA, not only for his hard work and determination but for his integrity and ability to galvanise the team around him to the achievement o f extremely challenging targets. Mr Hanna complimented the NAMA team, wished Michael Moriarty every success in his new role as Head o f asset Recovery and thanked the Chairman and the Board for the kind words and expressed his appreciation for the opportunity to be part o f NAM A’s achievements to date, which had attained international recognition in certain quarters. The Chairman, on behalf o f the Board, wished M r Moriarty, current Deputy Head o f Asset Recovery, success in his new role as Head o f Asset Recovery and also conveyed his appreciation to Mr McEvoy, former Head o f Treasury, for his contribution to NAM A’s achievements to date and congratulations on his new role. 20(b) Joint O ireachtas Finance Committee The Chairman advised that both he and the NAM A CEO were scheduled to appear before the Joint Oireachtas Finance Committee on Wednesday 22nd October 2014. 20(d) Chairman Re-appointment The Chairman advised that his initial Term o f Appointment was due to expire on 21st December 2014 and that the Minister for Finance had requested that he accept re-appointment for a second Term o f Appointment as a Director and Chairman. The Board noted the Chairman’s re-appointment for a period o f five years to 21st December 2019 and congratulated him on same. S41, S36, S29, S30 There being no further business the meeting concluded. NAMA BOARD MINUTES Ninteenth Meeting of2014:1.00pm. to 5.30pm., 16th October 2014. Treasury Building BOARD ONLY Issues Considered: 2(a) !29, S30 Board & Committee Evaluation 2014 2(d) NAMA Consideration of Options Matter for Information Board Paper: NAMA Portfolio after 2014 S36, S41, S29, S30 Consideration o f Options In accordance with her earlier disclosure, Mari Hurley absented herself from the meeting for this item. 20. AOB The Board held a private session at the end o f the Board meeting without the Executive, Secretary or NAMA Chief Executive present. There was no other business. There being no further business the meeting concluded. Frank D: 13th November 2014 Appendix 1 Evaluation Actions 2014 NAMA BOARD MINUTES Twentieth Meeting of2014:11.30am, to 11.50am., 29th October 2014. Treasury Buildine BOARD ONLY Attendance: NAMA Board Invited; Frank Daly, Chairman1 Michael Moriarty (item 3 only) Brendan McDonagh, CEO, NAMA Sinead Brennan (item 2 only) John Corrigan, CEO, NTMA Oliver Ellingham1 Mari Hurley1 Secretary: William Soffe1 Elaine Hudson Apologies: Brian McEnery On opening the meeting the Chairman welcomed the Board members to the twentieth meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues Considered: (Presented in order of consideration) 1. Disclosures of Interests There were no disclosures made. 4. AOB There was no other business. There being no further business the meeting concluded. Frank Daly, Chairman 13thNovember 2014 NAMA BOARD MINUTES Twenty first M eeting o f 2014: 2.00pm. to 5.30pm., 13th November 2014. Treasury Building Attendance: NAM A B oard NAMA Executives (invited) Frank Daly, Chairman M ary Birmingham Brendan McDonagh, CEO, NAMA Michael Moriarty John Corrigan, C hief Executive, NTMA Se&n 6 Faolain Oliver Eilingham Aideen O ’Reilly Mari Hurley Donal Rooney Brian M cEnery1 W illiam Soffe O th er Invitees: ■ Elaine Hudson, Secretary Sinead Brennan, Head o f HR, item 2(a) only Breda Macnamara, NTM A Head o f Compliance, items 5(a) & 5(b) only ■ Philip Bowler, Compliance Officer, items 5(a) & 5(b) only ■ John Coleman, Senior Divisional M anager (Strategy), item 6 only ■ Aishling Synnott, Head o f Treasury, item 11 only Apologies: ■ John Collison (Executive) ■ Jonathan Milligan (Executive) On opening the meeting the Chairman welcomed the Board members to the twenty first meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. 1 By telephone in accordance with section 27 o f the NAMA Act 2009 The Chairman advised that Jonathan Milligan, recently appointed Deputy Head o f Asset Recovery, was unable to attend his first Board meeting as a member o f the Executive due to a conflicting engagement Note: All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order o f consideration): 1. Disclosure of Interests Mari Hurley disclosed a potential conflict o f interest with respect to item 2(b) and declared that she would take no part in the discussion related to same. M ary Birmingham disclosed a potential conflict o f interest with respect to item 7(c) and declared that she would take no part in the discussion related to same. Brian M cEnery disclosed a potential conflict o f interest with respect to items 8(a) and 8(b) and declared that he would take no part in die discussion related to same. There were no other disclosures made. 2. Board Private Session The Board held a private session w ithout the Executive present. A Board-only note on discussion during the session was prepared by the Secretary. 3. Consent Agenda Items Matter for Board Approval B oard P a p e rs: Minutes o f B M 1 9 - 16th October 2014; Board Only Appendix to Minutes o fB M 19 - 16th October 2014; M ark Up Extract Minutes o f B M 19 - 16tn October 2014; Board Only Minutes B M 20 - 29th October 2014; Minutes o f Executive Meeting - 3rd November 2014; Audit Committee Update to Board —period l yt September 2014 —31si October 2014; Planning Advisory Committee Update to Board - period M ay 2014 - October 2014; Northern Ireland Advisory Committee Update to Board - period 29th January 2014 - 8 th September 2014 and Media Evaluation - October 2014. The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 4. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 19, as previously circulated in the Board pack. S41, S36 5, Corporate Governance 5(a) Protected Disclosures Policy Matter for Board Approval B oard P a p e r: Reporting o f ‘relevant wrong doing’ and Protected Disclosures Policy (formerly Good Faith Reporting Policy) The Board noted the contents o f the paper as presented, including the significant changes proposed in order to bring the Policy in line with the Protected Disclosures Act 2014. The NTM A Head o f Compliance (HoC) advised that the Policy as presented was essentially an interim Policy which would be brought back to the Board (Q1 2015) with further changes to reflect; (i) (ii) Guidance notes from the Department o f Public Expenditure and Reform (DPER) in relation to implementation o f the legislation and, changes to the governance structure in NTMA. The Board noted that the Policy was approved by the NTMA Senior Management Group at its 3rd November meeting. Following consideration the Board resolved to approve the Protected Disclosures Policy as presented, noting that the queries raised in respect o f former employees, Board members and expansion o f the list o f relevant wrongdoings would be considered b y the NTM A Compliance unit in the light o f the DPER guidance notes and these would be addressed in the next iteration o f the Policy when presented. 2 O f 16th October Board minutes ( B M 19) 5(b) AML & Counter Terrorist Financing Policy Matter for Board Approval Board Papers: Review o f NAMA Anti-Money Laundering/Counter Terrorist Financing ( “AML/CTF”) Policy and Risk Assessment Approach The Board noted the contents o f the paper as presented. Following consideration, and noting the prior review by the Executive at their 30th April 2014 meeting and recommendation o f same, the Board resolved to approve the NAMA Anti-Money Laundering/Counter Terrorist Financing (“AML/CTF”) Policy and Risk Assessment Approach. 5(c) Code of Conduct —Board & Committee Members Matter for Board Approval Board Papers; Code o f Conduct fo r members o f the NAMA Board and its Committees; The Board noted the contents o f the paper as presented, including the relatively minor, non-material changes proposed (primarily updating o f reference dates (e.g. date o f latest annual review)). Following discussion the Board resolved to approve the Code o f Conduct for Board & Committee Members as presented (including the changes proposed and indicated therein). 5(d) Board Standing Orders Matter for Board Approval Board Papers: Standing Orders - Board o f NAMA; The Board noted the contents o f the paper as presented, including the relatively minor changes proposed relating to amendments to the formal Committee reporting rota and inclusion o f references to eBoard3. electronic Board and Committee paper distribution solution via a ‘ Boardpad app’and iPads collectively referred to as “ eBoard” Following discussion the Board resolved to approve the Standing Orders for the Board o f NAMA. 5(e) Section 2.6 Post Resignation/Retirement Policy M atter for Board Approval B oard P a p e rs: Policy fo r post-retirement/resignation employment, appointments or consultancy by form er members o f the Board o f NAMA and Board Committees o f NAMA; The Board noted the contents o f the paper as presented, including the proposal to extend the Policy to apply to external (non Board) Committee members in a modified form (c 3 months). The Board noted that all external members had confirmed that the proposed changes were sensible and had no objections to same. Following discussion the Board re s o lve d to approve the Policy for post­ retirement/resignation employment, appointments or consultancy by former members o f the Board o f NAMA and Board Committees ofN A M A . 5(f) Board Travel & Expenses Policy M atter for Board Approval B oard P a p e rs: Travel & Expenses Policy fo r Members o f the Board and Committees ofNAM A; The Board noted the contents o f the paper as presented, including the relatively minor changes proposed relating to the inclusion o f a reference to taxation and some clarification in relation to the authorisation o f expenses for ex officio Board members. Following discussion the Board resolved to approve the Travel & Expenses Policy for Members o f the Board and Committees ofNAM A. 5(g) Confidentiality & Legal Privilege Policy Matters for Board Approval B oard P ap ers: Confidentiality & Legal Privilege Policy The Board noted the contents o f the paper as presented, including the relatively minor, non-material changes proposed (primarily updating o f reference dates (e.g. date o f latest annual review)). Following discussion the Board resolved to approve the Confidentiality & Legal Privilege Policy. 6. Consideration of Strategic Options - expanded Matter for Board Approval Board P a p e r: Consideration o f Strategic Options - Expanded S41, S36, S29, S30 Credit Requests 9 3? age In accordance with her earlier disclosure, Mary Birmingham, Head o f Asset Management absented herself from the meeting for this item. S41, S36, S29, S30 S41, S36, S29, S30 In accordance with his earlier disclosure, Brian McEnery absented him self from the meeting for this item. S41, S36 9. Docklands SDZ Update Matter for Information Board Paper: Docklands Delivery Update The Head o f Asset Management (HoAM) provided an update to Board on progress in relation to the Docklands SDZ Business Plan as approved by the Board in September 2014, noting that the report was the first m onthly update 14 P a g e o f same, th a t a specialist D ocklands Team had been established w ith in A sset M anagem ent (A M ) and that a ll rele van t sites had tra nsfe rre d fro m A sset R ecovery (A R ) to A M . The B oard noted th a t the m a jo rity o f the 14 sites were at the pre p la n n in g stage and w ere on ta rg e t to be ‘ shovel re a d y’ b y the b e g in n in g o f 2016. H o A M h ig h lig h te d progress on tw o T ie r 1 sites: ( i) the S36, S41^ ^ ^ ^ ^ J w here a p la n n in g a p p lica tio n was due fo r subm ission b y end N o ve m be r 2014 and the R eceiver was undertaking a tender process fo r p re lim in a ry e nabling w o rks and, S41, S36 _________________________________________ w here a tender process in re la tio n to B lo c k 8 was underw ay and it was planned to re ve rt to the B oa rd ’ s Decem ber m eeting w ith a recom m endation fo llo w in g the evaluation o f phase 2 o f the process. The B oard noted that the s ig n ific a n t in p u t b y the N A M A team in re la tio n to th^S41, S36^ ^ ^ p la n n in g a p p lica tio n process and tha t the P la nn in g Team and w id e r A M Team had w orked clo se ly w ith the R eceiver throughout the detailed pre- p la n n in g co nsu lta tion w ith D u b lin C ity C o u n cil (D C C ) both as D evelopm ent A g e n cy and P lanning A u th o rity and had developed a strong w o rk in g re la tio n sh ip w ith D C C a ccordin g ly. The C hairm an, on b e h a lf o f the B oard, com m ended the e xcellen t q u a lity o f the report, in c lu d in g the m a rket analysis and requested that, g o in g fo rw a rd , a map o f the D ocklands, cross re feren cin g to the N A M A D ocklands sites be included as a m a tter o f course. 10. Residential Delivery Update Matter for Information Board Paper: Residential Delivery Update T he B oard noted the contents o f the paper as presented in c lu d in g s ig n ific a n t progress w ith c. 1,077 u n its d elivered to date and the R D T 9 su b sta n tia lly on target to achieve its 180 day a ction p la n. The B oard noted the va ria tio n s in the num bers o f sites and re sid e n tia l u n its since la st update across the various T ie re d categories and the reasons fo r same w h ich dem onstrated good chum and in te rro g a tio n o f data in re la tio n to the sites. 9 Residential Delivery T e a m HoAR advised o f significant progress in relation to social housing with 942 units delivered to date and a strong pipeline o f pending transactions versus a target delivery o f 1,000 units by end 2014. 11. Treasury (CFO) 11(a) Treasury (CFO) Update Matter for Information Board Paper: Treasury (CFO) Update The Board noted the contents o f the paper as presented including that €2.5 billion o f balance sheet hedges maturing in 2017/2018 were terminated at a cost o f €77 million in Quarter 3 to take account o f s227 outcome. It was noted that this cost would be reflected in the Q3 2014 Income Statement. Head o f Treasury (HoT) advised that €600 million o f NALML senior bonds were redeemed on 22M October 2014, bringing total redemptions to date o f €15.1 billion or 50% o f total Senior Note redemption target. The Board noted that the final €134 million o f €12.9 billion senior notes issued in relation to the NARL portfolio were also redeemed on 22nd October 2014. S41, S36, S29, S30 11(b) Senior Note Redemption Matter for Board Approval Board Paper: NAMA Senior Note Redemption The Board noted the contents o f the paper as presented and noted that in the context o f significant cash balances (c. €2.4 billion) and a significant cost o f carry it made sense to redeem as much as possible, preferably prior to year end. HoT advised that a €2 billion redemption would bring the cumulative redemption o f NAMA senior notes to €17.1 billion, representing 57% o f the original €30.2 billion senior note issuance. Following consideration, the Board resolved to approve the recommendation as presented in the paper as follows: (i) Approve on-going redemptions o f NAM A “Existing” Senior Notes (€15.09bn outstanding) up to an aggregate amount o f €2,000,000,000 by th _ 30 J a n u a ry 2015 at par plus accrued interest, subject to NAMA having sufficient liquidity to meet its obligations. (ii) Notify the Minister o f its decision, under Section 60 (2) (a) o f the NAMA Act, and if there is no objection from the Minster, it is recommended that the Board authorise the CEO to take all the necessary steps to redeem the bonds as outlined in (i) above. 11(c) Liquidity and FX Strategy Review Matter for Board Approval Board Paper: Liquidity and F X Strategy Update The Board noted the contents o f the paper as presented and that the RMC had requested an updated liquidity Policy be presented to the M arch 2015 meeting reviewing the minimum liquidity buffer (when further clarity would be available in relation to the likely drawdowns regarding the Docklands SDZ projects). Following consideration, and noting the prior review by the Risk Management Committee on 12’QNovember 2014 and its recommendation o f approval, the Board resolved to approve the recommendations as presented in the paper (as follows): S41, S36, S29, S30 11(d) Balance Sheet Hedging Strategy Review Matter for Board Approval Board Paper: Balance Sheet Hedging Strategy Update S41, S36, S29, S30 The Board requested HoT to revert with a revised paper to the Board’s December meeting with updated scenarios to reflect the earlier decision that the 80% redemption level should be viewed as a minimum target, not a limit, and that every effort should be made to accelerate sales in a managed and orderly way to take advantage o f the current strong demand for Irish property and loan assets. 12. Quality Assurance Policy Matter for Board Approval Board Pager. NAMA. Quality Assurance Policy The CFO presented the paper to Board, which noted the contents and that no changes were proposed by way o f updates to the Policy. Following consideration, the Board resolved to approve the NAMA Quality Assurance Policy as presented in the paper. Matter for Information Board Paper: Monthly Management Information Report 2014 30th September The Board noted the contents o f the paper as presented, including exceptionally strong cash generation performance year to date (€7.5 billion) which was ahead o f the full year target. The CFO advised that key individual Debtor Performance year to date (pgs 21 to 24 o f the report) demonstrated that substantially all targets were achieved across all debtor connections. This demonstrated that the initial projections were sensible, underscoring the robustness o f the forecasting process. The Board noted that the disposal trend by location (pg 36) highlighted the strong performance o f the Irish portfolio generating c. 43% o f disposal proceeds year to date (versus c. €9GQm in 2013). 14. Divisional Briefing Asset Management Matter for Information Board Paper: Asset Management Presentation to NAMA Board The Head o f Asset Management presented her divisional update to the Board, highlighting that AM ’s achievements including strong progress in relation to the Irish (non Docklands) and UK Sites and that AM was on target to deliver significant results in terms o f gross cash generated o f cjS36^ ^ ^ ^ ^ ^ antj contracted sales in excess o f c. S36^ ^ H for 2014. HoAM advised that there was significant preparation underway to deliver 2015 targets. HoAM advised that the AM Team had been expanded and restructured to take on the Dublin Dockands SDZ initiative. The Board noted NAMA Planning Team’s leading role throughout the SDZ approval process and their monitoring o f all planning aspects o f individual site strategies. The Board noted that the single biggest challenge facing Asset Management was the retention o f its skilled and specialist team. The Board commented on the S41, S36 was nearing c o m p le tio n and was a v e ry u se fu l case study n o tin g S36 received, fu ll repayment o f PAR debt and instigation o f profit share arrangement. The Board noted that it was a very successful project which had been substantially de-risked. The Chairman, on behalf o f the Board, commended the Head o f Asset Management for the presentation and all involved for the excellent performance and achievements year to date. AOB 15(a) Freedom of Information Update Matter for Information Board Papers N/A The Head o f Strategy and Communications (HoS&C) provided a verbal update in relation to the status o f the application o f the Freedom o f Information (Fol) Act 2014 to NAMA. HoS&C advised that the Act was enacted on 14th October 2014 and on that basis would be effective from 14th April 2015 from which time NAMA would be obliged to process Fol requests. The Board noted that as application fees for submitting FOI requests had been abolished and in the absence o f any other deterrents, the volume o f FOI requests to NAM A was expected to be very high. HoS&C advised that HR was in the process o f hiring two more FOI specialists to assist with the ongoing volume o f requests. In addition, others would have to be recruited on a part-time basis to deal with the expected initial surge o f requests. Following further discussion, the Board requested a briefing in relation to Fol at its January Board meeting. Matter for Information Board Paper: N/A The NAMA CEO advised that all stakeholders were co-operating at present and the project remained on target to complete on 22nd February 2015. 15(c) December Dinner Matter for Information Board Paper: N/A The Chairman advised the Board that he wished to have a Board/Executive dinner in December, on the evening o f the Board’s meeting o f 11th December 2014 with final arrangements to be confirmed in due course. S41, S36, S29, S30 15(e) Principal Risks Update Matter for Information Board Paper; N/A The Chairman o f the Risk Management Committee (RMC) presented an updated Principal Risks paper to Board following a review by the RMC at its 12th November meeting. The Board noted the key changes included (i) an increase in the impact and probability ratings to 5 (maximum) in relation to the NAMA Staff Retention issue and the addition o f a new risk relating to failure to deliver on its Residential Delivery or Dublin Docklands SDZ initiatives. The Board agreed with the changes as outlined, 15(f) John Corrigan Retirement & Resignation from Board of NAMA Matter for Information Board Paper: N/A On the occasion o f John Corrigan’s final Board meeting, the Chairman, on behalf o f the Board, expressed his appreciation for the hugely significant contribution made by Mr Corrigan as NTM A CEO and an ex officio member o f the Board. The Chairman thanked M r Corrigan for his insight, good sense and balance as a Board member and for his support in terms o f resources and facilities as NTMA CEO and noting that he would be greatly missed, wished him well in his retirement. Mr Corrigan thanked the Chairman for his kind words and advised that he had greatly enjoyed his time on the Board on an ex officio basis. He wished the Board every success in its future endeavours. 15(g) SL Update Matter for Information Board P aper: N/A S31, S41, S36, S29, S30 M atter for Inform ation Board Paper: N/A The Chairman advised that, on request from the Minister for Finance, NAMA had invited and colleague in addition to Junior Minister Harris to a guided tour o f Dublin Docklands on Tuesday 18th November. This would be preceded by a presentation by the Head o f Asset Management at NAM A’s offices50. There being no farther business the meeting concluded. i=A Frank Daly, Chairman 11th December 2014 S36, S40 NAMA BOARD MINUTES Twenty First Meetine of2014:2ym. to 5,30pm on 13th November 2014. Treasury Building Board-Only Appendix to Minnies Issues Considered: S31, S41, S29, S30, S36 2(d) Consideration of Strategic Options - expanded Matter for Board Approval Board Paper: Consideration o f Strategic Options - expanded The Board noted that consideration o f the expanded Strategic Options paper, as part o f ordinary business, should be on the basis that clarity in relation to addressing NAM A’s significant staffing issue was still outstanding and that the foregoing deliberations under Agenda item 2(a) were highly confidential. 4. AOB There was no other business. There being no further business the meeting concluded. Fran! 11th December 2014 NAMA BOARD MINUTES Twenty Second Meetine of 2014: 5 pm. to 5.15 pm.. 20th November 2014, Treasury Building BOARD ONLY Attendance: Invited Frank Daly, Chairman1 Sinead Brennan (item 2 only) Brendan McDonagh, CEO NAMA John Corrigan, CEO NTMA1 Oliver Ellingham1 Mari Hurley1 Brian McEnery1 Secretary: William Soffe1 Elaine Hudson On opening the meeting the Chairman welcomed the Board members to the twenty second meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. Issues Considered: (Presented in order of consideration) 1. Disclosures of Interests There were no disclosures made. In concluding the meeting, the Chairman acknowledged the short notice o f the meeting and expressed his appreciation for the full participation by all Board members at such short notice. 3. AOB There was no other business. There being no further business the meeting concluded. F r a n k u m y , v,im n m an 11th December 2014 NAMA BOARD MINUTES Twenty third Meeting o f2014: 230pm . to 6.45pm., 11thDecember 2014. Treasury Building Attendance: NAMA Board NAMA Executives (invited) Frank Daly, Chairman Mary Birmingham Brendan Me Donagh, CEO NAMA John Collison Oliver Ellingham Jonathan Milligan Mari Hurley Michael Mori arty Brian McEnery Se£n 6 Faolain William Soffe Aideen O’Reilly Donal Rooney O th er Invitees: ■ ■ ■ ■ ■ ■ 1 ■ * Elaine Hudson, Secretary Andy Harkness, Director o f Audit, C&AG item 5 only Tom Malone, Senior Audit Manager, C&AG item 5 only Jeanette Crowley, Procurement Solicitor, NAMA Legal, item 7(b) only Jam ie Bourke, Senior Divisional Manager, item 13 only Aisling Synnott, Head o f Treasury, item 15 only David Johnson, Head o f Audit & Risk, item 17 only Alan Stewart, Senior Divisional Solicitor, item 20(a) only Sinead Brennan, Head o f HR, item 21 (a) and 21 (b) only Apologies: John Corrigan (Board member) On opening the meeting the Chairman welcomed the Board members to the twenty third meeting o f 2014 and the agenda was noted. It was noted that the meeting had been duly convened and that a quorum was present. The Chairman welcomed John Collison, Deputy Head o f Asset Recovery, back from the Eisenhower Fellowship in USA and on the occasion o f his first attendance at Board as a member o f the Executive Committee, welcomed recently appointed Deputy Head o f Asset Recovery Jonathan Milligan to the meeting and congratulated him on his new role. Note; All Board papers referred to in the minutes were circulated prior to the meeting and presented to the Board as the basis for discussion and decision, where applicable. Issues considered (in order o f consideration): 1. Disclosure o f Interests There were no disclosures made. 2, Consent Agenda Items Matter for Board Approval Board Papers: Minutes o f B M 21 - 13th November 2014; Board Only Appendix to Minutes o f B M 2 1 - 13th November 2014; M ark Up Extract Minutes o f 'B M 2 1 - 13th November 2014; Board Only Minutes B M 22 - 20th November 2014; Minutes o f Executive Meeting - 28th November 2014; Finance and Operating Committee update to Board - 1st September 2014 to 30 November 2014 and Media Evaluation —November 2014. The Board approved the consent agenda as presented and on the basis that there was no prior objection by members to the items listed for inclusion. 3. Matters Arising from Board Minutes The Board noted the matters arising from the minutes o f BM 21, as previously circulated in the Board pack. S29, S30 4(a) Corporate Governance File Matter for Board Approval B oard P a p e r: Corporate Governance Cover paper, NAMA Board Governance File; Appendix 4: Conflicts o f Interest & Disclosure o f Interests; Appendix 5; Inside Information & M arket Abuse Regulations The Board noted the contents o f the paper as presented and the non-material (update-type) changes proposed. The Board noted further the updates to Appendices 4 and 5 o f the Governance file, as amended by NTMA Compliance as part o f their biennial review, which were included for information (in marked up form) in the papers. Following consideration, the Board resolved to approve the Board Governance File as presented, including the changes indicated therein. The Board noted that the Governance File would be uploaded to Reading Room on Boardpad with hardcopies available on request from Board Secretary. 4(b) Training & Development Policy Matter for Board Approval B oard P a p e rs: Corporate Governance cover paper & Training & Development Policy fo r Members o f the Board and Committees ofN AM A The Board noted the contents o f the paper, the de minimus change1 proposed and the rationale for same. Following consideration, it resolved to approve the Training & Development Policy fo r Members o f the Board and Committees as presented. Following further discussion, the Board resolved to approve bi-annual presentations to Board from external guest speakers to ensure the Board was kept abreast ofbest practice in Corporate Governance. 5 Removal of reference to Northern Ireland Advisory C o m m ittee from section 2.3 following dissolution of that Committee on 8th September 2014. Matter for Board Approval Board P a p e rs: Corporate Governance cover paper ; NAMA Board Workplan 2015; and NAMA Board Workplan 2014 (outturn) The Board noted the outturn for the Board’s workplan 2014 which would be fully completed following the meeting. The Board noted the proposed workplan for 2015 and the changes versus the workplan for 2014 and the rationale for same. Following consideration, the Board resolved to approve the NAMA Board Workplan 2015 as presented. 5. C&AG Management Letter 2013 Matter for Information Board Paper: C&AG Management Letter 2013 This item was taken in private session. 6. Strategy Monitoring Programme - Quarterly Report Matter for Information Board Paper: Quarterly Strategy Update The Head o f Strategy & Communications (HoS&C) presented the paper to the Board, which noted its contents, including the observation that 2014 had been a remarkable year for assets sales and debt redemptions, and which, for reasons which were well rehearsed (including, inter alia, increasing granularity o f asset profile, and continuing loss o f staff expertise), would be extremely difficult to replicate in 2015, S41, S36, S29, S30 The Board noted that data from the end-2014 impairment exercise would feed into a comprehensive review o f the Board’ s Strategic Plan in March 2015 and would be presented at the Board’s Strategy Away Day on 13th March 2015. The Board noted the schedule for sectoral asset strategies which would be submitted to Board during the first half o f 2015. On behalf o f the Board, the Chairman thanked the HoS&C, SDM (Strategy) and the Executive for the significant work undertaken in relation to the paper. 7. Asset M anagem ent 7(a) Q u arterly Projects U pdate Matter for Information Board Paper: Quarterly Projects Update - Asset Management The Head o f Asset Management (HoAM) presented the paper to Board which noted good progress in relation to key Irish and UK projects. S41, S36, S29, S30 Referring to progress on Social Housing, HoAM advised that 1,024 units had been delivered year to date and, following the anticipated completion o f further transactions, was expected to reach 1,078 (exceeding the 1,000 target for 2014) by year end. S41, S36, S29, S30 Board Approval of Credit Committee Recommendation Debtor Strategic Reviews 13 Page 16 Page Matter for Information Board Paper: Docklands Delivery Update The Head o f Asset Management (HoAM) provided an update to Board on progress in relation to the Docklands SDZ Business Plan which noted good momentum including; (i) the lodgement o f the S36, S41^ ^ ^ ^ ^ J planning application to Dublin City Council (DCC) and the near completion o f a tender process l0(by the Receiver) for preliminary enabling works on the site; (ii) Planning applications for two j536, S41 S36, S41^ ^ ^ ^ ^ ^ were in preparation for subm ission o f planning permission (to DCC) prior to year end; (iii) Terms had been agreed for a lease to S36, S41 in respect o 541, S36 (iv) documentation completed in relation to the S41, S36 (v) submission to Board o f preferred bidder in relation to Phase 2 bids o f 541, S36 ITender process. and; The Board commended the progress to date and commented that the map, as requested by the Board at its 13a November update, was very useful for providing context in relation to sites. 11. Residential Delivery Update Matter for Information Board Paper: Residential Delivery Update The Deputy Head o f Asset Recovery (DHoAR)11 provided an update to Board on progress in relation to the Residential Business Plan12 which noted significant progress with c. 1,192 units delivered to date. The Board noted the Tiered Categorisation o f sites (particularly between Tier 1 and Tier 2) remained very fluid, S36 S36 “ Mr John Collison 12 Approved by Board 17thJuly 2014 The Board noted that while good progress had been made in relation to obtaining requisite planning permissions, there were several Tier 1 sites with viable planning permission where construction had not yet commenced. In response to a question from the Board, it was noted that the new Planning Bill was unlikely to provide an impetus for Debtors to increase development capacity at pace (i.e. it was not envisaged that it could be used as a ‘stick’ to encourage Debtor co-operation) and that proposed changes indicated by the Central Bank in relation to mortgage application rules were likely to create a further challenge. DHoAR advised o f significant progress in relation to private housing with 1,192 units delivered to date and a pipeline o f pending transactions to achieve a projected year end delivery o f 1,250 versus a target delivery o f 1,000 units for 2014. Significant progress has also been made in relation to social housing with 1,024 units now delivered against a 2014 target o f 1,000 units. 11(a) NAMA Facilities to assist with Homelessness Matter for Board Approval Board Paper: N/A The Deputy Head o f Asset Recovery13 provided an update to Board in relation to recent discussions (initiated by NAMA) with the Department o f the Environment, Community and Local Government (DOECLG) for NAMA to provide potential facilities to assist with the homelessness crisis in Dublin. In this regard, and following a review o f potential suitable facilities, NAMA offered four Dublin based office buildings and a hotel in Tallaght as facilities which could provide necessary emergency short term accommodation. It was noted that all buildings would require modification for this purpose with some necessary fire and safety remediation likely to be required. DHoAR advised that Dublin City Council (DCC) and DOECLG had rejected the offer o f office accommodation but were interested in exploring use o f the hotel in Tallaght, which was in Receivership with Deloitte with a sales price o f S 3 6 S 3 6 an estimatedS36^ ^ ^ J o f remediation and modification funding required. S36, S29, S30 12. NAMA Rate of Return Benchmark M atter for B oard Approval Board Paper: NAMA Rate ofReturn Benchmark S29, S30, S36, S41 13. Project Bank Update Matter for Information Board Paper: Bank o f Ireland Portfolio Integration The Board noted the paper as presented, including that the project was on track with no major concerns to the timelines (22nd February 2015), scope or cost to note. The Senior Divisional Manager (SDM) advised against complacency noting that (i) the project was immensely complex, involving significant personnel resources from Bank o f Ireland and Capita and (ii) significant challenges could emerge during the complex data migration phase, with the potential to highlight issues not seen to date. The Board noted that the commercial agreement with BOI regarding servicing o f the NAMA acquired BOI mortgage book was almost finalised. S36, S29, S30 The Chairman, on behalf o f the Board com m ended SDM and his team for the significant progress achieved to date. 14. NAMA 2015 Budget Matter for Board Approval Board Paper: NAMA 2015 Budget S41, S36, S29, S30 Following consideration, and noting the prior review by the Finance & Operating Committee on 3 rd December 2014 and its recommendation o f approval, the Board resolved to approve the NAMA 2015 operating budget as presented. 15. Treasury (CFO) 15(a) Balance Sheet Hedging Strategy Review Matter for Board Approval Board Paper: Balance Sheet Hedging Strategy Update S41, S36, S29, S30 Matter for Board Approval B oa rd Paper: Section 55 Quarterly Report - Q3 2014 & Mark-Up Cover Letter to the M inister fo r Finance (post FOC Review) The CFO presented the paper to the Board, noting that it was a benign period in terms o f accounting results. The CFO highlighted a new disclosure note (note 6) on page 25 o f the Accounts, which provided an analysis o f N A M A ’s overall property and loan sale profit/loss components to date o f report in one table for ease o f reference, and which referenced utilisation o f impairment provisions. The Board noted that the information provided in this note was fully aligned with NA M A ’s accounting policies. The Board discussed the mark-up cover letter, following Finance & Operating Committee review on 3rd December 2014, noting the request by the Committee to change the wording in relation to termination o f swaps and agreed further enhancements to the S55 Report including providing more prominence to the footnote on page 46 o f the Accounts and replacing the table title (in bold) with same. Following consideration, and noting the prior review by the Finance & Operating Committee on 3rd December 2014 and its recommendation o f approval, and subject to the above changes to the cover letter, the Board resolved to approve the Section 55 Quarterly Report and Accounts for Q3 2014 as presented. 17. Status of Audit Recommendations M a tte r for Inform ation B oard P a p e r: Status o f Audit Recommendations The Head o f Audit & Risk (HoA&R) presented the paper to Board, which noted that one low and one medium audit point had been closed since circulation o f the paper. HoA&R advised that the Internal Auditor, PwC, had hit the ground running with an intense programme o f Audit activity across NAMA and reported solid progress in closing out audit items on a timely basis. S29, S30, S36 The Board noted that engagement with the C&AG was positive, with meetings taking place every fortnight to assess progress in meeting data requests. HoA&R advised that there was generally good co-operation across NAMA with the heavy audit programme, notwithstanding strains arising in certain quarters from staff turnover. The Chairman, on behalf o f the Board, commended the HoA&R and his team on the significant progress and the continuous improvement year on year. 18. MI Report Matter for Information Board Paper: Monthly Management Information Report - 31st October 2014 The Board noted the contents o f the paper as presented, including exceptionally strong cash generation performance year to date17 (€8.1 billion) which had almost reached the full year (reforecast) target o f €8.2 billion. The CFO advised that trends in New Lending year on year (pg 46 o f the report) indicated that in 2014, every month was ahead o f its prior year comparators since the inception ofN A M A . 18(a) Operating Expenditure - Quarterly outturn report Matter for Information Board Paper: Operating Expenditure - Quarterly outturn report The Board noted the contents o f the paper as presented, including the positive year to date (to end September 2014) outturn o f €97 million against €103 million budgeted , and forecast year end outturn o f €132 million against €137 million budgeted. 17 To 5* December 2014 Driven by savings in Primary Servicer fees, legal and asset recovery costs which were offset by IBRC and Project Bank integration project costs and occupancy costs (extra space on 1st floor). Matter for Information Board Paper: CFO Divisional Update The CFO provided a comprehensive presentation to the Board on the work o f his Division, including its dual role o f providing (i) stewardship and financial control support and (ii) acting as a specialist business partner which added value and supported loan and portfolio sale transactions (providing a number of specific case examples o f the Division added value including balance sheet transactions S41, S36 comprised o f a large and diverse range o f functions including approx. 25 individual specialist niche areas and skillsets. In response to a question from the Board, the CFO advised that the relatively recent reorganisation o f the unit had provided some insulation from the staff turnover experienced in other business units across NAMA but that increased staff turnover in the CFO Division was anticipated in 2015. The Board noted that there was significant ‘key m an’ risk in the areas o f tax, finance, systems and operations. The Chairman, on behalf o f the Board, commended the CFO for the presentation and all involved for the excellent performance and achievements year to date. 20. AOB S31, S36, S29, S30, S41 Matter for Information Board Paper: N/A On the occasion o f the last Board meeting o f the year, the Chairman, on behalf o f the Board, expressed his appreciation to the NAMA CEO and Executive team and all staff on the enormous effort involved in 2014 and commended all involved for the remarkable achievements over the period. 20(c) eBoard Matter for Information Board Paper: N/A In the context o f Board papers being circulated via eBoard and in hardcopy, the Chairman requested Board members and the Executive to actively consider whether the Board should migrate to eBoard exclusively (with the exception o f A3 appendices which would continue to be circulated in hardcopy). The Board agreed to discuss at the Strategy meeting in March 2015. 21. Board Private Session The Board held a private session without the Executive present. A Board-only note on discussion during the session was prepared by the Secretary. There being no further business the meeting concluded. Frank Daly. 15th Januar; NAMA BOARD MINUTES Twenty ThirdMeetins o f2014: 2.30pm. to 6.45pm on 11th December 2014. Treasury Buildine Board-Only Appendix to Minutes Issues Considered: 5. C&AG Management Letter 2013 Matter for Information Board Paper: C&AG Management Letter 2013 Mr. Harkness and Mr Malone o f the Office o f the C&AG briefed the Board on the progress o f the external auditor’s work, with the Board noting the following: ■ The Management Letter 2013 had raised no ‘high’ audit points and that a significant number o f the ‘medium5 and ‘low’ rated audit points were recurring items, many o f which were now deemed complete or were in the process o f being resolved by NAMA management. ■ The 2014 audit was progressing satisfactorily. In response to a question from the Board Mr. Harkness advised that no material issues had emerged from testing to date in the current audit1 and assured the Board that he and his team would raise any such issues with the Executives (in the first instance) and the Audit Committee and/or Board if deemed appropriate at the earliest opportunity. Mr Harkness advised that, notwithstanding the challenges o f a very tight timeline, there had been a constant and consistent improvement year on year and a good working relationship with the Audit Committee. He confirmed to the Board that a good working relationship existed between the C&AG team and the internal auditor, PwC and NAMA management. The Chairman o f the Audit Committee advised that the interaction between the C&AG team and the Audit Committee was very positive. He advised that a top priority for the Audit Committee was to address audit points denoted as ‘medium immediate action required’. He echoed the challenges involved in meeting the very tight timetable, noting that the C&AG team had advised the Audit Committee (at its 10th December 2014 meeting) that they had experienced delays in ‘walk through’ testing o f Asset Recovery as a direct result o f significant staff turnover. S29, S30 The Chairman, on behalf o f the Board, thanked Mr Harkness and his team for their co-operation and commended the continuous improvement despite challenging timelines. Sinead Brennan entered the meeting 21 (a) Quarterly HR Update Matter for Information Board Paper: Quarterly HR Update - 11th December 2014 The Board noted the continued upward trend in staff turnover from 9% at the last update to 16%3 to date. NTMA Head o f HR (HoHR) advised that cumulative staff departures would reach 119 by early January 2015 and would likely increase significantly in the first half o f 2015, noting that exit interviews indicated that employees were leaving for attractive market opportunities and permanent roles. The Board noted that 2014 mid-year reviews were complete and the significant participation by NAMA employees in learning and development courses (both internally and externally hosted) was to be encouraged. 2 advising that a proposal in this regard was tabled under Agenda item 12 o f Board’s Ordinary business session at 11* December 2014 meeting 3 Projected turnover based on resignations, internal transfers, retirees received ytd/headcount including resignations, internal transfers, retirees received ytd and starters confirmed to year end. 2 21 (c) NTMA Chief Executive Appointment and Ex Officio Director Matter for Board Approval Board Paper: N/A The Chairman advised that Conor O’Kelly, recently appointed as NTMA Chief Executive with effect from 5th January 2015, would attend the 15th January 2015 Board meeting in his capacity as ex officio Board member. The Board noted that, in accordance with clause 3.5 o f the Induction Policy, Brian McEnery had been nominated to act as a mentor to the new Board member and that induction training for Mr O’Kelly would be arranged in early January 2015. Matter for Information Board Paper: N/A On the recommendation o f the Chairman, the Board resolved to approve the following Committee appointments and/or amendments to Committee memberships: Brian McEnery to step down as a member o f the Credit Committee; Mari Hurley appointed as a member o f the Credit Committee 20. AOB In the context of an exceptionally strong performance in 2014, the NAMA CEO expressed his appreciation to the Board for their support throughout the year, and for making themselves available, often at very short notice, for Board meetings as required. The Chairman expressed his appreciation for the NAMA CEO and his team and Board Secretary for the excellent achievements in 2014 and for the strong leadership to achieve same. There was no other business. There being no further business the meeting concluded.