The former head of the National Treasury Management Agency Dr Michael Somers has criticised the National Asset Management Agency, saying it had been too draconian in the prices it had paid the banks for their loans.

Speaking on RTE's Today with Pat Kenny programme, he said allegations made recently at the Public Accounts Committee that banks had misled the agency about the value of their assets were 'outrageous', saying they had damaged 'an already sick patient'.

Dr Somers, who is a public interest director at AIB, said he did not think the losses imposed on banks by NAMA were justified. He added that he had been sceptical about NAMA 'from day one'.

Dr Somers said problems with the banks had been going on for the past three years, and there had been plenty of time to sort them out.

Mr Somers said he was 'bemused' by the Government's decision to protect bondholders in banks, as investors who bought bonds in banks and companies knew they were taking a risk.