Written answers

Wednesday, 13 May 2009

Department of Finance

National Asset Management Agency

9:00 pm

Photo of Caoimhghín Ó CaoláinCaoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 72: To ask the Minister for Finance if the estimated value of the toxic assets of the banking institutions which was declared to be in the region of €90 billion has been revised; and if he will make a statement on the matter. [19101/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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When I announced the Government's proposal to establish a National Asset Management Agency (NAMA) in early April, I indicated that the potential maximum book value of loans to be transferred to NAMA was estimated to be in the region of €80 to €90 billion. This remains the case. Of course, the amount to be paid by NAMA will be significantly less than this to reflect the loss in value of the underlying collateral.

Pending the establishment of NAMA on a statutory basis an interim Managing Director has been appointed and I will announce an Advisory Committee in the coming days This Committee which will include experts in valuation, legal affairs, corporate finance and public administration will provide valuable expert advice to both the interim Managing Director and to me as Minister. The establishment of NAMA and interim preparations will also be overseen by the NAMA Steering Group recently established by me and including representatives of my Department, the NTMA and the Office of the Attorney General.

The valuation of the loans, as suggested by the Deputy, will be a very important variable. Preparatory work for the establishment of NAMA which has commenced will include an extensive due diligence on the loans books of the banks to ensure that the appropriate categories or portfolios of loans are transferred to NAMA and that the banks are cleared of their identified riskiest loan portfolios. Loans will be transferred from the banks to NAMA at an appropriate written down value. The development of a valuation methodology by the interim NAMA will take account of the advice of the Advisory Committee and will be consistent with European Commission guidance and subject to EU State aid approval. This will take into account the risk being transferred to the State and an appropriate adjustment for the value of the State support being provided.

The Government has received expert financial, economic, legal and valuation advice at every step of its measured response to the turbulence in the banking sector. Likewise, specialist expertise, including valuation expertise, will be procured by the NTMA to ensure that the work to be done by NAMA when it is established is accomplished in the most efficient manner so as to safeguard taxpayers' interests.

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