Mr. Brendan McDonagh:

Absolutely; I fully accept that.

The Deputy raised the question of the losses suffered by the banks on the transfer of loans at a discount to NAMA. The average discount across the five banks that transferred loans to NAMA was 57%. The losses ranged across the banks from 44% up to 61%. The Deputy is correct that there were losses of €42 billion. The reality is that NAMA did not create these losses. They were created as a result of decisions on lending that were not sensible. The banks overlent on assets as part of an asset bubble in the mid-2000s. The markets had already decided that the banks had made losses and that it was just a question of quantifying them. We were charged with taking certain loans from the banks and the evaluation process agreed with the European Commission ensured the banks had to apply a certain valuation standard to the assets. That is the reason 88% of the valuations were accepted because they had met that standard. Some 12% did not. That proves there were checks and balances in the system.

On long-term economic value, in a previous report the Comptroller and Auditor General estimated that if NAMA had not bought the assets from the banks - it paid €32 billion for €74 billion worth of loans - a market participant would only have paid €26 billion. The log-term economic value is the difference between €32 billion and €26 billion. If the banks had sold on the loans to third party private equity firms, they would probably have only received €26 billion at most. That is the quantification of the long-term economic value. Again, an EU process determined this for state aid purposes and it is subject to rigorous audit.

On the question of a debtor being able to buy back his or her loans from NAMA, there is a specific provision in the NAMA legislation, section 172, which prevents NAMA from selling an asset back to a defaulting debtor. If a debtor is not servicing the principal and interest on his or her loans in full, he cannot buy them back. We are legally prohibited from selling to him or her.