Mr. Seamus McCarthy:

One thing worth bearing in mind is the background to the loan acquisition process. When NAMA was set up, one of the key problems and one of the key objectives was to remove uncertainty about the value of loans in the banks, so that was in the background. There was a sense that banks were overvaluing the loans they had on their books. One of the objectives was to take them out of the banks, bring them into NAMA, clean up the thing and remove that uncertainty about the value in the banks.

Mr. McDonagh has described the property valuation process exactly the way it was when we examined it. When we came to this, we recognised that we would need independent assistance with the valuation and legal aspects of it - the due diligence process around title and so on in regard to properties. We sought the assistance of the Valuation Office and a former Commissioner of Valuation for Northern Ireland. That is why there is a reference to Northern Ireland in the report. The former commissioner was acting on our behalf and was not acting in Northern Ireland or carrying out a separate exercise. It was part of the process we undertook.

We also brought in legal expertise to examine the legal process. We approached it from the point of view of looking at the system of valuation and understanding the system in place. As Mr. McDonagh has described, there was a long audit trial and several stages of assessment in that. KPMG was there as a form of process auditor to confirm that all the steps set down in the process had been implemented in each valuation. We examined that process to see if the control was working, and we found it was.

Separately, and to provide further assurance in that regard, we examined samples of the valuations to see whether the process expected was actually carried out. Our legal people looked at the due diligence in sample loans and were satisfied the processes followed the system described.

Yesterday, I described the uplift that was added to the market valuation of individual properties. Ultimately, as Mr. McDonagh said, it had to satisfy the European Commission that the process was appropriate and that there was not an undue element of state aid being paid to the banks as a result of the process. As I understand it, the Commission has approved three tranches. We examined the methodology it used and estimated that the element of state aid was about one fifth extra on top of the market value of the properties. That is the basis upon which I concluded that it is difficult to see how there could be any kind of systemic undervaluation of properties in the prices paid by NAMA.