I propose to take Questions Nos. 163 and 164 together.
It was originally envisaged that NAMA would transfer loans with a nominal value of almost €81 billion from the five participating credit institutions. This was subsequently reduced by the introduction of a threshold excluding loans below €20 million at AIB and Bank of Ireland. As a consequence, and in conjunction with a number of other adjustments, some €73 billion in loan assets will now transfer to the agency and this is to happen by the end of the year. NAMA estimates that it will pay consideration of about €31 billion for these loans; the final figure will be determined after completion of full due diligence on the loans.
It is important to realise that the assets transferred to NAMA are the actual loans. The underlying property serves as security for the loan but it is not the property which initially transfers to NAMA. A debtor whose loans are transferred to NAMA continues to be liable for the full loan balance. I am informed by NAMA that it expects that the property underlying the loans it acquires will be worth about half of the amount advanced by banks. That is the most that NAMA could notionally recover today if it foreclosed on all debtors.
As stated in the business plan which it produced on 30 June 2010, the transfer price which NAMA pays for assets will be no greater than the long-term economic value of the bank asset and the underlying property and other collateral is valued by professional valuers. NAMA projected in that plan a net present value gain of €1 billion over its expected lifespan with two variations to this central case: one in which it recovers the long-term economic value plus 10% leading to a net present value gain of €3.9 billion and one in which it recovers the long-term economic value minus 10% resulting in a net present value loss of €0.8 billion.