Brian Lenihan Jnr (Dublin West, Fianna Fail)

The valuation formula has regard to EU guidance taking into account both current market conditions and long-term economic returns. This strikes a balance between reflecting the long-term potential of these assets while minimising any potential risk that NAMA will make a loss.

The legislation sets out a comprehensive methodology on how assets will be valued and I am publishing today draft valuation regulations which provide further detail on the valuation process. This valuation framework must accord with EU state aid guidance and is subject to EU approval. Application of the valuation methodology is a complicated and extensive process and it must be remembered that each loan must be valued individually in accordance with the methodology. In that context, any estimate of the price to be paid for the assets is provisional in nature. From our estimates, it is expected that NAMA would pay approximately €54 billion in relation to the €77 billion in loans. This is an estimated aggregate discount of 30% and the final figure will depend on the detailed evaluation of each individual loan. Nevertheless, it is essential for this House and the Irish people that an estimate be provided at this stage.

The final figure will only arise if the Oireachtas enacts this legislation and the individual valuations are completed. Loan quality, geographic distribution and type of loan will all vary from institution to institution. These figures cannot be applied to extrapolate to individual portfolios or loans. It is essential to the NAMA process that final decisions on these kinds of numbers will be made only after an exhaustive bottom-up valuation process. The valuation process will be designed to meet the standard that will be expected by the EU Commission.

The estimated current market value of these assets is €47 billion.

See this speech in context