The NTMA was reconstituted as an Agency (Board) with over-arching responsibility for all of the NTMA’s functions (excluding NAMA and the SBCI which have their own separate boards) under the National Treasury Management Agency (Amendment) Act, 2014. The Agency is accountable to the Minister for Finance. In the performance of its duties, the Agency focuses on providing strategic direction and oversight to the organisation and ensuring there are appropriate controls in place, while delegating operational matters to management. It seeks to support and challenge management in the achievement of the NTMA’s goals and in fostering a corporate culture that will contribute to the delivery of these goals. The regular day-to-day management, control and direction of the NTMA are the responsibility of the Chief Executive and the senior management team. The Chief Executive and the senior management team must follow the broad strategic direction set by the Agency, and must ensure that all Agency members have a clear understanding of the key activities and decisions related to the NTMA and of any significant risks likely to arise. The Chief Executive acts as a direct liaison between the Agency and management of the NTMA.

AGENCY RESPONSIBILITIES

The NTMA’s functions are vested in the Agency, which may delegate functions to the Chief Executive. There is a formal schedule of matters reserved for decision by the Agency. This schedule includes:

• Annual Report and Financial Statements;
• Risk Management Policy and Framework;
• Risk Appetite Framework;
• Corporate strategy and business unit and corporate function goals;
• Operating budget;
• Remuneration of Chief Executive (after consultation with the Minister);
• Overall remuneration policy;
• Exchequer Funding Plan;
• ISIF Investment Strategy; and
• ISIF Irish Portfolio investments (investment decisions of up to €150m are delegated to the Investment Committee).

The Agency is required by the National Treasury Management Agency Acts 1990 to 2014 to prepare financial statements in respect of its operations for each financial year. In preparing these financial statements, the Agency:

• selects suitable accounting policies and applies them consistently;
• makes judgements and estimates that are reasonable and prudent;
• prepares the financial statements on the going concern basis unless it is inappropriate to do so; and
• discloses and explains any material departure from applicable accounting standards.

The Agency is responsible for keeping in such form as may be approved by the Minister all proper and usual accounts of all moneys received or expended by it and for maintaining accounting records which disclose, with reasonable accuracy at any time, the financial position of the Agency, its funds and the National Debt.

The Agency is responsible for approving the NTMA expenditure budget and corporate strategy, including Business Unit and Corporate Function goals. Emerging out-turns against budget and goals are reviewed by the Agency during the year and at year-end.

The Agency is also responsible for safeguarding assets under its control and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Agency considers that the financial statements of the NTMA give a true and fair view of the financial performance and the financial position of the NTMA at 31 December 2017.

AGENCY STRUCTURE

The Agency consists of nine members. Six members, including the Chairperson, are appointed by the Minister for Finance. The Chief Executive of the NTMA and the Secretary Generals of the Departments of Finance and Public Expenditure and Reform are ex officio members of the Agency.

The term of office of an appointed member is five years, other than the initial appointed members – of whom two members were appointed for three years and two members were appointed for four years. Details of the current members and their appointment periods are set out on pages 48 to 49.

The Agency has established four committees to assist in discharging its responsibilities, each with formal terms of reference:

• Audit and Risk Committee;
• Investment Committee;
• Remuneration Committee; and
• State Claims Agency Strategy Committee.

Arising from the Agency’s first annual review of its effectiveness during 2016, the Agency agreed that it would be more efficient and lead to greater synergies if the then separate Audit and Risk Committees were combined. It also agreed that establishment of a State Claims Agency Strategy Committee, containing relevant external expertise, would be of use given the specialist nature of the SCA’s business and the particular challenges faced by it. The Audit Committee and Risk Committee were merged with effect from 1 February 2017. The State Claims Agency Strategy Committee was established on 1 August 2017.

For further information on the Agency’s committees, see Committee Reports, pages 55 to 57.

The Agency carried out the second annual review of its effectiveness during 2017. This review took the form of a structured self-assessment evaluation by the Agency.

The Agency is supported in its functions by the Agency Secretary who also co-ordinates the operation of the various Agency committees: each of the committees is supported by the Agency Secretary or the Assistant Agency Secretary.

KEY PERSONNEL CHANGES

Gerardine Jones was appointed to the Agency on 8 March 2017 to fill the vacancy arising from the resignation of Brendan McDonagh with effect from 24 October 2016.

Maeve Carton was reappointed to the Agency with effect from 22 December 2017.

The Chief Risk Officer, Deirdre Hannigan, resigned from her position with effect from 21 April 2017. The Chief Financial and Operating Officer, Ian Black, managed the function on an interim basis until May 2018. Ciara Lehane was appointed Head of Risk (Financial, Investment and Enterprise) with effect from 21 May 2018.

The Director, National Development Finance Agency, Brian Murphy, retired with effect from 5 February 2018. The recruitment process to fill this position has been concluded and Cathy Bryce will take up the role with effect from 13 August 2018.

SCHEDULE OF ATTENDANCE, FEES AND EXPENSES 2017

A schedule of attendance at Agency and Committee meetings is set out below including the fees and expenses received by each member in their capacity as an Agency or Committee member.

The Minister for Finance determines the level of remuneration of appointed members of the Agency. The remuneration attached to the position of Chairperson is €45,000 per annum and the remuneration of other appointed members is €30,000 per annum. The Chairperson (Willie Walsh) has waived his remuneration for 2017. The ex officio members (Conor O’Kelly, Robert Watt and Derek Moran) do not receive any remuneration in respect of their membership of the Agency.

Remuneration of external members of the Investment Committee and State Claims Agency Strategy Committee is determined by the Agency with the consent of the Minister for Finance. External members of the Investment Committee receive remuneration of €20,000 per annum and external members of the State Claims Agency Strategy Committee receive remuneration of €12,500 per annum. Julie Sinnamon and David Moloney, appointed to the Investment Committee and State Claims Agency Strategy Committee respectively, in their capacity as public servants do not receive any remuneration in respect of their membership. Agency members and members of staff of the NTMA do not receive any additional remuneration in respect of membership of these committees.

STAFFING AND REMUNERATION

The NTMA executes its mandates through five business units: the Funding and Debt Management Unit, the Ireland Strategic Investment Fund Unit, the National Development Finance Agency, NewERA and the State Claims Agency. The NTMA’s business units are supported by its corporate functions which provide services across Finance, Operations, Information Technology, Risk, HR, Legal, Compliance, Communications and Internal Audit.

A number of NTMA staff are on secondment to the Department of Finance following the revocation of the delegation of banking system functions of the Minister for Finance to the NTMA from August 2011.

The NTMA assigns staff to the National Asset Management Agency (NAMA) and the Strategic Banking Corporation of Ireland (SBCI) and also provides them with business and support services and systems. NAMA and the SBCI reimburse the NTMA the costs of these services (including staff costs). Both NAMA and the SBCI are independent entities and have their own separate boards.

Other than staff assigned to NAMA and the SBCI, the NTMA had 503 employees at end-2017. 263 employees were assigned to NAMA and 18 employees were assigned to the SBCI³.

The NTMA’s remuneration model is based on confidential, individually-negotiated employment contracts, with competitive, market-aligned remuneration. The typical remuneration package comprises a fixed base salary, pension entitlement and provision for discretionary performance-related pay. In a limited number of cases other allowances or benefits are paid.

The NTMA’s objective is to ensure that its remuneration arrangements facilitate it in attracting, developing and retaining high performing and motivated employees, with appropriate skills and experience, so as to ensure that the NTMA can discharge fully its statutory functions in an effective and efficient manner, while complying with applicable law. It aims to operate a remuneration system which:

• allows the NTMA to compete effectively in the labour market and to recruit and retain high calibre employees;
• reflects the NTMA’s objectives for good corporate governance;
• manages remuneration in an appropriate manner and encourages a high level of performance; and
• is consistent with and promotes sound and effective risk management.

Discretionary performance-related payments are intended to reward exceptional performance having regard to the employee’s own performance, the performance of the employee’s area of responsibility, and the overall performance of the NTMA. Performance-related payments are made in accordance with parameters approved by the Agency’s non-executive Remuneration Committee. The overall amount of performance related payments made in respect of any year is also subject to the approval of the Remuneration Committee.

The NTMA made performance-related payments to 142 staff in 2018 in respect of 2017. These payments, in aggregate, totalled €1,544,042.

Employee Short-Term Benefits Breakdown

Employees’ short-term benefits in excess of €50,000 in relation to services rendered during 2017 are categorised into the following bands:

1.    Note: For the purposes of this disclosure, short-term employee benefits in relation to services rendered during 2017 include salary, other taxable benefits paid to employees (including performance-related payments) and other payments made on behalf of employees, but exclude employer’s PRSI.

DISCLOSURES REQUIRED BY CODE OF PRACTICE FOR THE GOVERNANCE OF STATE BODIES (2016)

The Agency is responsible for ensuring that the NTMA has complied with the requirements of the Code of Practice for the Governance of State Bodies (“the Code”), as published by the Department of Public Expenditure and Reform in August 2016. The following disclosures are required by the Code:

Employee Short-Term Benefits Breakdown

See Staffing and Remuneration section on previous page.

Consultancy Costs

Consultancy costs incurred by the NTMA in the performance of its mandates are set out in the Financial Statements: NTMA Administration Account, SCA Financial Statements and ISIF Financial Statements.

Legal Costs and Settlements

No expenditure was incurred in 2017 in relation to legal costs and settlements. This does not include expenditure incurred in relation to general legal advice which is included in consultancy, nor does it include legal costs and settlements incurred and made by the State Claims Agency in the performance of its functions in managing claims against the State, which are charged to the relevant State authority.

Travel and Subsistence Expenditure

Travel and subsistence expenditure is categorised as follows:

Hospitality Expenditure

The Statement of Income and Expenditure and Other Comprehensive Income includes €65,239 in respect of staff hospitality expenditure in 2017.

STATEMENT OF COMPLIANCE

The NTMA has complied with the Code of Practice for the Governance of State Bodies, as published by the Department of Public Expenditure and Reform with a number of adaptions/variations/non-applications which have been agreed with the Minister for Finance as summarised below. These adaptations primarily reflect the fact that the NTMA, the expenses of which are a charge on the Central Fund⁴, performs a range of market facing functions and was deliberately structured to have the operational flexibility to act commercially in performing these functions.

Approval of Contracts

The Code recommends that the Schedule of Matters Reserved for Decision by the Board should specify clear quantitative thresholds for contracts above which Board approval is required. It also recommends that “approval of terms of major contracts” be a reserved matter.

Given the range of the NTMA’s business mandates and the fact that entry into financial contracts of significant value constitutes a core part of the NTMA’s business activities, the NTMA has established separate criteria for approval of investments and entry into contracts depending on the business area as follows:

• The acquisition or disposal of ISIF investments in Ireland is reserved to the Board/Investment Committee. Investment decisions up to €150m are made by the statutory non-executive Investment Committee. Where a proposed investment is in excess of €150m, the decision is made by the Board on the recommendation of the Investment Committee. Investments within the terms of the Global Portfolio Transition Strategy are delegated to management. Actions involving the acquisition or disposal of ISIF assets that are subject to Ministerial direction are delegated to management.
• Debt contracts are delegated to management – within the parameters of the Annual Exchequer Funding Plan which is a Reserved Matter.
• Approval to enter into new PPP contracts and approval to enter into any new contract to procure as agent for the Minister for Education and Skills any public investment project in relation to an educational facility are delegated to management. A Management Infrastructure Committee has been formed for the purposes of approving infrastructure projects. Projects reviewed by the Management Infrastructure Committee, and the outcome, are included as matters for noting by the Board.
• Contracts for professional and operating services and NTMA capital expenditure are delegated to management. It should be noted that NTMA capital expenditure is limited. Board oversight of these matters is provided for through its approval of the annual budget and management may also bring specific items to the Agency for approval.

Delegated Authority Levels

The Code recommends that “Delegated Authority Levels” be a reserved matter. In view of the wide range of mandates carried out by the NTMA and the need to preserve flexibility with regard to the various delegated authorities in respect of these mandates, the setting of Delegated Authority Levels has been delegated to the Chief Executive. To ensure Board oversight of delegated authorities, the NTMA’s Consolidated Delegated Authorities are reviewed by the Audit and Risk Committee on an annual basis.

Strategy

The Code sets out different requirements with regard to the preparation and adoption of a strategic plan for commercial and non-commercial State bodies. Commercial bodies should approve annual rolling five-year business plans while non-commercial bodies should adopt statements of strategy for a period of three to five years ahead.

The NTMA Corporate Strategy covers a three-year horizon and comprises two parts:

1.   Part 1: The NTMA Corporate Strategy (including four strategic goals); and
2.   Part 2: Business Unit and Corporate Function Goals (including annual targets).

The NTMA Corporate Strategy is reviewed annually and updated on a rolling three-year basis. Part 1 will be submitted to the Minister if there are any changes to the four strategic goals set out therein. Part 2 will be updated annually and submitted to the Minister for his/her views prior to finalisation.

The procedure for Ministerial consultation in determining and reviewing the ISIF Investment Strategy is set out in Section 40(3) of the National Treasury Management Agency (Amendment) Act 2014.

Non-Compliance with Statutory Obligations

In view of the wide range of relevant statutory obligations to which the NTMA is subject, it is proposed to address the requirement that the Chairperson bring incidences of non-compliance with any statutory obligations to the attention of the Minister by applying it to material instances of non-compliance only.

Acquisition or Disposal of Assets etc.

Those provisions of Section 8 of the Code dealing with the acquisition or disposal of assets, capital investment appraisal, establishment or acquisition of subsidiaries, participation in joint ventures and the acquisition of shares do not apply to the investment activities of the Ireland Strategic Investment Fund. Such investment is managed within the context of the statutory framework for the making of ISIF investments as set out in the National Treasury Management Agency (Amendment) Act 2014, the ISIF investment strategy and the ISIF investment process.

Trading of Government bonds or other assets in the normal course of NTMA business operations is not regarded as falling within Section 8 of the Code.

ICT Circular

As provided for under Section 3 of Department of Public Expenditure and Reform’s Circular 02/16 on Arrangements for Digital and ICT-related Expenditure in the Civil and Public Service, it has been agreed by the Department of Finance that the NTMA has been exempted from the approval framework for digital and ICT-related expenditure.

Public Spending Code

The Public Spending Code is not applicable to the NTMA as the NTMA is not engaged in capital projects (other than in respect of its ISIF and NDFA roles) or new current expenditure programmes. The NTMA’s functions are set out in statute – either in primary legislation or are delegated to the NTMA by Ministerial Order. The NTMA’s operational budget relates to the staffing, systems, facilities and other costs associated with the performance of these functions. With regard to significant new expenditure items within its operational budget, the NTMA utilises the standard appraisal process set out in section B.01 of the Public Spending Code in its project appraisal process.

Remuneration

In complying with the Code’s provisions in respect of remuneration, the NTMA has adopted the provisions applying to commercial State bodies, adapted in light of its particular governance and reporting structures and remuneration model. Consistent with this approach, the NTMA publishes details of employee short-term benefits in bands of €25,000.

Travel Circulars

The NTMA’s travel policy is based on the Framework for a Travel Policy for State Bodies contained in the Code. Revenue approved civil service mileage rates (reflecting Circular 07/2017) are applied. The NTMA does not pay subsistence rates in respect of travel, but operates a vouched expense process for the reimbursement of travel expenses and Department of Public Expenditure and Reform circulars and office notices regarding subsistence are, therefore, not applied.

Customer Charter

The NTMA does not generally provide services directly to the public. State Savings products are offered to personal savers by the NTMA through its agents, An Post. An Post has a customer charter which covers the services it provides to the public, including those services it provides on behalf of the NTMA. A separate customer charter has not been put in place for the NTMA.

1. ³On a whole time equivalent basis (rounded to nearest whole number).


2. ⁴Other than in respect of its ISIF functions which are funded from the ISIF.