Arthur Morgan (Louth, Sinn Fein)
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Question 39: To ask the Minister for Finance his views on whether the recent estimation by the International Monetary Fund that losses faced by Irish banks could reach €35 billion by the end of 2010 is correct; and the implications it will it have on the economy here. [27276/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The IMF has said that losses could be about €35 billion, or about 20 percent of GDP. It is, however, important to point out that the IMF figure was not based on a very detailed analysis of individual bank data. Also, this figure does not take into account the countervailing effect of bank earnings – in that sense it is a gross rather than a net figure.

The Deputy will be aware from my previous reports to the House that PWC has carried out detailed reviews of the loan books and the capital position of six of the covered institutions. Since then, additional due diligence reviews of Anglo Irish Bank, Allied Irish Banks and Bank of Ireland have been carried out, building on the assessments carried out by PWC.

As I have previously stated, I am not in a position to release information contained in these reviews, other than what has been released to date, because of the commercially sensitive nature of the information.

As regards the economy, the banking system is unique and its proper functioning is critical to the smooth running of the overall economy. Therefore, it must be protected by the Government. I have already said that the objective behind NAMA is to ensure that the financial institutions are freed up to allow them to lend to the real economy and the IMF has said that we are right to focus on the restructuring of property development loans as our priority in the area of bank stress. Our approach will facilitate a sustained flow of credit on a commercial basis to individuals, households and businesses in the real economy.