Richard Bruton (Dublin North Central, Fine Gael)
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Question 3: To ask the Minister for Finance if he will explain the valuation methodology that will be used for the purchase of assets by the National Asset Management Agency from the banks; and if he will provide assurances that concepts such as underlying longer term economic value will not result in payment in excess of the market price for any of the assets purchased. [23182/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Loans will be transferred to NAMA at an appropriate written down value in order to ensure value for money for the taxpayer. The NTMA is in the process of engaging experts to assist the interim Managing Director of NAMA and, on their appointment, those experts will contribute to the development of an appropriate valuation methodology, which will ensure fairness and the independence of the valuation process.

The valuation methodology to be adopted by NAMA will have to be agreed with the European Commission, which published guidance on the treatment of impaired assets last February. The Commission has indicated that in the absence of a market value, a transfer value reflecting the underlying longer-term economic value of the assets would be an acceptable benchmark as a basis of valuation methodology. Furthermore, the Commission intends to establish a panel of international experts to advise it on its approach to valuation methodology, which will have to be applied consistently across institutions. At this stage, it is not possible to determine what discount will be applied to the impaired loans of the relevant financial institutions. This is dependent on a wide range of factors.

Paul Gogarty (Dublin Mid West, Green Party)
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Question 4: To ask the Minister for Finance his views in relation to the rationale behind the establishment of the National Asset Management Agency as opposed to nationalising the Irish banks; the way he will ensure that the valuations carried out by NAMA will be independent and accurate in a falling market and will not benefit developers in any way; and if he will make a statement on the matter. [23198/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Government examined all of the potential approaches available to it in dealing with risky assets on the balance sheets of Irish banks, which were preventing banks from lending into the economy and thereby supporting economic recovery. Taking account of Dr Peter Bacon's report on options for resolving property loan impairments, and the consensus amongst the Government's advisors including the Central Bank, the Financial Regulator and the NTMA, the Government concluded that the establishment of an asset management agency was the best means of ensuring that the banks were freed up to lend to the real economy.

The Government believes that it is important, where possible, that the banking sector has a market presence and that it operates within market disciplines and constraints and this is facilitated by adopting the asset management approach. A commercially focused banking system is best equipped to ensure that the lending needs of the real economy are met. The Deputy will be aware that no country is currently adopting a policy of wholesale bank nationalisation; there is no immediate reason for Ireland to adopt such a policy. If Ireland was to uniquely proceed down that route it could, from an international perspective, be very damaging to Ireland's reputation and to our attractiveness to international investors. Moreover, a policy of nationalisation does not in itself deal with the risky assets on the balance sheets of relevant institutions, or funding issues for banks.

The valuation methodology to be adopted by NAMA will have to be agreed with the European Commission, which published guidance on the treatment of impaired assets last February. The NTMA is in the process of engaging experts to assist the interim Managing Director of NAMA and, on their appointment, those experts will contribute to the development of an appropriate valuation methodology, which will ensure fairness and the independence of the valuation process. Legislation on NAMA is being prepared and will be published as soon as possible.