Pearse Doherty (Donegal South West, Sinn Fein)
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Question 44: To ask the Minister for Finance further to Parliamentary Question No. 215 of 12 June 2012, wherein he stated that the said National Asset Management Agency's provisional impairment charge of €810,000,000 was based on estimated future cash flows on individual loans including cash flow from the future disposal of assets, if he will set out the basis on which NAMA calculates the value of the future disposal of assets and in particular if NAMA makes any assumptions on the recovery of property values. [30226/12]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by NAMA that its 2011 impairment assessment is based on a combination of a detailed cash flow forecasting exercise for all borrower connections which are considered individually significant (corresponding to debtors managed directly by NAMA) and a collective assessment for the rest of the loan portfolio. For all individually significant debtors, in accordance with International Financial Reporting Standards, an assessment is made in respect of all future cash flows expected from each individual debtor. This assessment represents a best estimate of the future cash flows reflecting the performance of the individual debtor and other known developments which could impact future cash flows including local economic conditions, the trading performance of the debtor and the value of the property collateral.

In assessing the cash flows for individual debtors, NAMA does not make general assumptions in respect of the recovery of property values. The value of the property collateral that will be recovered by NAMA is assessed individually by debtor and by asset. The value of the property collateral takes into consideration the November 2009 valuation carried out by an independent valuer as part of NAMA's due diligence process as well as subsequent developments in respect of the property which may have an impact on the value that expects to recover. To the extent that expected disposal proceeds are less than those indicated by the November 2009 valuation, the resultant shortfall is reflected within the overall impairment charge.