And, speaking to the Joint Oireachtas Finance Committee, he said that the sums involved would involve a "well-calculated, manageable sum" for the Exchequer.

 

Patrick Honohan said that the recapitalisation would take account of additional loan losses that could be predicted in the banks' books on loans other than those being transferred to NAMA.

 

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

 

Mr Honohan said while there had been some initial reservations that NAMA would over-pay for loans, he now believed it "will deliver on what has been expected, which is to de-risk the banks' balance sheets, give them liquidity, build their capital and . create the foundations for the recovery of banking".

 

The governor avoided saying, however, that NAMA would lead directly to an increase in the flow of credit.

 

"The flow of credit will depend on the recovery of confidence of the bankers, and the confidence of the borrowers," he added.

 

Mr Honohan revealed that he will interview both former financial regulator Patrick Neary and former Central Bank governor John Hurley as part of his preliminary inquiry into the banking crisis. Both had agreed to this, he said. He said that it might seem surprising for him to be investigating his own organisation, and that would not be "the easiest of balancing acts".

He added that a huge number of changes had already taken place at the Central Bank, including a big increase in staff working on bank regulation for covered institutions, plus a new head of financial regulation who had brought in new methods and procedures. Mr Honohan also confirmed that his investigation would cover Anglo Irish Bank and Irish Nationwide.

 

He would also examine issues such as parliamentary accountability, and the events at IFSC-headquartered German bank Depfa, which had to be bailed out by the government in Berlin.