Mr. Seamus McCarthy:

Deputy Connolly raised a couple of items from Mr. McDonagh's statement, specifically the second last paragraph on the first page. My position is that different discount rates would be appropriate for estimating what a purchaser of a portfolio of non-performing loans might be willing or able to pay for them and what the loans might yield to NAMA if it worked them out, as planned, over the medium to long term. I have not changed my position in that regard. That is my response to that point.

An issue was also raised with regard to a reference on page 8 of the same statement. The reference is to the Comptroller and Auditor General's qualification of the report around probable loss and so on. The report refers to NAMA's projected cash flows yielding net receipts of £1.675 billion through working out the loans over the medium to long term. Obviously, any future cash flow is subject to a certain amount of uncertainty and the eventual net receipts might have been above or below that. That is really why I put the qualification of "probable" on the reference to the loss of value. We will never know what the outcome would have been. I do not think I mentioned figures of plus or minus £200 million and I certainly do not recall the detail of that. It is worthwhile for the committee to bear in mind that the cash flows that were prepared by NAMA for use in the financial statements would have been conservative. There was a possibility, certainly, that the values achieved could have been higher. The other element in that uncertainty was that PIMCO's indicative bid offered more for the top 55 assets than the cash flows were actually indicating they might yield two to three years into the future. That is an indication of the variance there.

I was also reflecting on the suggestion around the term "probable" and so on. I think I have explained previously that I changed from the use of the phrase "potential loss of value" on reflection in the last round up of the report. The key reason for that change was that if one was talking about an investment possibility where one was comparing two potential lines of activity or two potential investment options, comparing one with the other and projecting forward that one would yield a value of "X" and one would yield a value of "Y", then one is talking hypothetically in that situation but here we were actually talking about assets that were owned.

If one were not disposing of them in a way that yielded what they were worth at the time or they might yield in the future and disposed of them at a lower price, it would result in a probable loss of value.