Chief Executive of the National Treasury Management Agency Dr Michael Somers has told a Dáil committee Ireland would be lucky to hang on to its last triple-A rating in international borrowing.
To date two of out three international rating agencies have taken Ireland off the top level of creditworthiness, leaving Moody's the sole agency to assign the Government a triple-A rating.
Dr Somers described the state of bank loans as an appalling dilemma and said he had been aghast when he saw the amounts that had been loaned.
He also warned that lawyers were lining up for a bonanza because NAMA was going to be extremely controversial.
Dr Somers said NAMA is not adequately staffed to deal with the banking crisis.
Earlier, the Minister for Finance, Brian Lenihan, said the Government does not have a policy to nationalise the banks, although this could happen in theory.
'It is our policy that nationalisation should be the last resort and not the first resort,' he told reporters during a visit to France.
However, asked whether the State could see its stake in Allied Irish Bank and Bank of Ireland rise to a majority level, the minister said the possibility existed in theory.
Mr Lenihan said: 'We have indicated that we intend to acquire impaired assets from all these banks.
'Should that occasion further losses, any further state investment will be investment by way of ordinary shares.
'That might have the result of increasing the proportion of state ownership ... to a majority level, yes.
'We think it is important that some element of market surveillance remains for these institutions,' he added.
