Kieran O'Donnell (Limerick East, Fine Gael)

My amendment to amendment No. 9 proposes that the Minister will appoint the valuation panel in consultation with an Oireachtas committee. As such, the committee will function as a back-up for the Minister and will ensure the appointment process is above reproach. That is precisely what the public is seeking and it is necessary to restore trust in banking institutions.

The Minister of State reassures us that NAMA's valuations will be cautious but the reality is that we are looking at valuations of 15% above market value. Moreover, there must be significant doubt regarding the reliability of assigned market values. Deputy Morgan noted the irony that the success of NAMA will depend on valuations increasing significantly into the future, but we got into the current mess partly because the valuation of property was out of control. It is difficult to accept that valuations of 15% above imputed market value can be described as "cautious". We have a business plan that was put out on the basis that NAMA will make a profit of €5.48 billion, and we are given cash flow statements for ten years and profit and loss statements for only three years. We have no idea of the write-off of interest.

In the same breath, the Minister tells us that the €47 billion market value is only an estimate and that we do not know the value at which the assets will be acquired. The bottom line is that the valuation of assets is key to the entire enterprise. If we get the valuations wrong, the horse will have bolted. If the assets were going in at market value, NAMA might have some hope of making a return for the taxpayer. Instead they are being valued at €7 billion above market value, thus burdening NAMA with assets that are significantly overvalued. Moreover, this is being done, as I understand it, in order to ensure the banks do not have to be recapitalised. The irony is that they will have to be recapitalised in any case.

The structure the Minister has come up with will do nothing for their core tier 1 capital ratio. Instead of overvaluing the loans by €7 billion, putting this amount into the banks by way of ordinary share capital would enhance their core tier 1 capital ratio and it would probably increase their capacity to lend because they would not be burdened with capital ratios that do not meet market requirements. The minimum core tier 1 capital ratio requirement of 4% is long gone with the markets dictating ratios of between 8% and 10%. Banks such as Barclays that have weathered the storm have high core tier 1 capital ratios

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