Brian Lenihan Jnr (Dublin West, Fianna Fail)

I do not confirm and it is not the case that NAMA will simply select bad loans from 20 to 50 developers to deal with in the first instance. That is not envisaged. It has always been envisaged that both performing and non-performing loans will be taken over. On the Deputy's question about loans under €5 million, there is a question of degree in terms of the management of the loans. We are anxious to ensure we have as tight a staff and personnel as possible. Therefore, it is the case that some of the larger loans will be directly managed by NAMA, but some of the smaller loans will not.

On the question of the valuation methodology to be used, as I pointed out, the valuation methodology has not been finalised. However, the development of thinking on the valuation methodology to date is along the lines mentioned by the Deputy and by Mr. Bo Lundgren yesterday. I met him yesterday after his presentation to the Joint Committee on Finance and the Public Service and would like to thank him for the constructive contribution he made to our banking debate there.

With regard to the valuation methodology, as I indicated in my reply, we must value the assets on both a market and individual basis, but under the European directive there is the option of taking into account a longer-term economic value. There is no question of starting off with the book value and devising an appropriate discount. That is not the way to do the valuations. The valuations must be done on a mark to market basis, but scope is given in the EU rules for some element of additionality based on medium-term economic value. The precise scope of that must be determined by the Commissioner and it is a rule that will apply in all member states.

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