Mr. Brendan McDonagh:

We have been tracking the 19% performance figure.

I do not believe that is a real measure of what NAMA is about because it is effectively based on a par debt which is continually increasing when it should be based on what we paid for the loans. We are obliged to report it in this way because that is what is required under section 55 of the Act.

I will provide an example for the first six months of the year. We realised EIR income in our accounts of approximately €609 million. We actually took in cash amounts of €596 million. The 19% performance rate only generates €345 million of that. However, we also took in cash - an additional €290 million - in respect of loans which are partially performing or which were advanced to debtors who are not being enforced against. The real performance rate of the loan book of NAMA would be approximately 35% as opposed to 19%. The chairman, Mr. Daly, and I felt it was important to make the point to the Minister - and also to the wider public domain in view of the fact that section 55 is easily accessible - that if NAMA continued to sell its income-producing assets willy-nilly, it would end up in a situation where it would have no income coming in but where it would still have liabilities to service. How do we address that? First, we try to ensure all the vacant properties in our portfolio are income producing pending sale. Second and more important - this was not the position when we acquired the loans - is that the debtors give us the rental income that is coming in. We have, therefore, captured over 90% of the rental income relating to the loans.

When we inherited the loans there was a phenomenon whereby debtors were collecting rental incomes but were not using these to pay their banks.