Banks will need extra capital - Honohan

The Governor of the Central Bank, Patrick Honohan has said the Irish banks will require additional capital after the banks transfer loans to Nama.

Speaking at an Oireachtas Committee, Professor Honohan expressed strong support for Nama.

He said there was "considerable advantages" in going the Nama route.

"I believe that NAMA [and] the recapitalisation of the banks which will follow very soon now that NAMA is up and running in relation to purchases, I think that this will deliver on what has been expected...which is to de-risk the bank's balance sheets, give them liquidity build their capital and that will set the scene and create the foundations for the recovery of banking."

He said that while there will be recapitalisation, the recapitalisation that will be undertaken will "take account of the additional loan losses that can be predicted in the banks' books that are non-NAMA loan losses.

There won't be a question of dipping back in year in, year out."

He said that the issue of valuation was not as important as initially estimated.

"I was concerned earlier that NAMA would overpay...but as the numbers involved emerge that actually becomes a less relevant issue."