TAOISEACH BRIAN Cowen predicted that the National Management Agency (Nama) would make a profit of “somewhere in the order of €1 billion”.

During sharp exchanges with the Opposition leaders, Mr Cowen said that over a 10-year period issues would arise in terms of values and the recovery of the economy and so on.

Loans would all be dealt with in a case-by-case basis, proving the wisdom of the Nama project.

Mr Cowen said that Nama would enable the State obtain a viable banking system.

There were three scenarios set out in the Nama plan, he said. Under the central scenario, which was based on current expected asset-recovery value, Nama was projected to make a profit.

The other two scenarios were variations of the central projection: one in which it made a larger profit and one in which it made a loss.

The important thing for taxpayers to know was that any losses to emerge after the 10-year process would lead to a surcharge on the banks. “That would go back on the banks’ liabilities as far as we are concerned,” said Mr Cowen.

The Taoiseach was responding to Labour leader Eamon Gilmore who said the Government had claimed Nama would make a profit of €4.8 billion.

However, if reports were accurate, that could turn out to be a loss, he added.

He asked if it was the case that the original business plan presented for Nama had turned out to be “a financial fairytale”.

Earlier, Mr Cowen told Fine Gael leader Enda Kenny that there were no “sweetheart deals” relating to Nama. Loans had been aggressively valued, he said.

“Portraying the Nama report as loss-making is not correct,” he added.

Mr Kenny said the Government was wrong when it had said Nama would provide “a wall of cash”. More than 800 businesses had gone to the wall since the start of the year, with 452,000 people out of work and thousands more facing an uncertain future.

He asked if it was true that Nama had already made particular conditions for one large developer who was not able to comply with loan conditions.

Mr Kenny challenged the Taoiseach, “as the leader of the worst Government in the history of the State”, to take his courage in his hands and call an election.

Describing Mr Kenny’s remarks as “a stream of consciousness”, the Taoiseach accused him of attacking the integrity of the Nama board.

The draft plan outlining a scenario of €4.8 billion was based, as outlined in its first sentence, on information provided by the banks at the time, said Mr Cowen.

“It has now produced its quarterly report, as required under the Acts, and is setting out its central projection based on current asset valuations, projecting forward for the next 10 years . . . making the point that they should emerge in a profit as they see it,” he added.

Other risk scenarios were where it would make a higher profit or some losses, which would be levied on the financial institutions concerned.

He said Mr Kenny was bringing forward the idea there was a default mechanism in the Republic.

“Clearly, if we were to do that, we would not have a banking system at all,” Mr Cowen added.

He advised the Fine Gael leader to “go off for the summer and try, with your new finance spokesman, to come up with a policy we could come in and debate”.