Annual Report & Accounts 2009 - Anglo Irish Bank

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Notes to the financial statements continued 22. Loans and advances to banks 82 31 December 30 September 31 December 30 September 2009 2008 2009 2008 €m €m €m €m Placements with banks 3,696 11,181 9,488 9,538 Securities purchased with agreements to resell 3,664 2,821 3,664 2,821 7,360 14,002 13,152 12,359 Amounts include: Due from Group undertakings 6,848 - A credit ratings profile of loans and advances to banks is as follows: The Group The Bank The Group The Bank 31 December 30 September 31 December 30 September 2009 2008 2009 2008 €m €m €m €m AAA / AA 1,586 3,404 5,732 3,171 A 3,447 9,867 2,565 8,618 BBB+ / BBB / BBB- 2,309 583 2,309 570 Unrated - due from Group undertakings - - 2,546 - Total held on own account 7,342 13,854 13,152 12,359 Policyholders' assets (note 40) 18 148 - - 7,360 14,002 13,152 12,359 The ratings above are counterparty ratings and do not reflect the existence of government guarantees, where applicable, or the credit risk mitigation provided by collateral received under reverse repurchase agreements. Loans and advances to banks include short term placements of €2.8bn with entities covered under the Irish Government guarantee scheme (30 September 2008: €7.6bn, including short term placements of €7.5bn with Irish Life & Permanent plc (note 38)). €2.8bn (30 September 2008: €0.2bn) of these placements are secured and included within securities purchased with agreements to resell. Placements with banks include €1.5bn (30 September 2008: €0.1bn) of cash collateral placed with counterparties to offset credit risk arising from derivative contracts and €0.1bn (30 September 2008: €0.1bn) held with central banks which cannot be withdrawn on demand. The fair value of securities accepted under reverse repurchase agreements, which can be sold or repledged, is €3,676m (30 September 2008: €2,756m). The fair value of such collateral sold or repledged is €3,573m (30 September 2008: €2,543m).
23. Assets classified as held for sale 31 December 30 September 31 December 30 September 2009 2008 2009 2008 €m €m €m €m Loans classified as held for sale 35,602 - 30,552 - Less: provision for impairment (note 27) (10,120) - (9,134) - 25,482 - 21,418 - Derivative financial instruments 410 - 410 - NAMA assets held for sale 25,892 - 21,828 - Other assets classified as held for sale Total assets classified as held for sale 24. National Asset Management Agency ('NAMA') The Group The Bank - 12 - 12 25,892 12 21,828 12 Loans classified as held for sale represent those loans which have been identified for transfer to NAMA (note 24). In total, €25,482m of customer loans, net of associated provisions of €10,120m, are anticipated to transfer to NAMA. Derivatives linked to loans which are eligible for transfer to NAMA are also included in NAMA assets held for sale. The €410m represents the fair value of interest rate contracts linked to NAMA eligible assets at 31 December 2009. The total notional amount of these contracts is €11,195m and the transactions consist primarily of interest rate swap agreements. Certain provisions for obligations under financial guarantees (note 41) relate to loans eligible for transfer to NAMA. Other assets classified as held for sale at 30 September 2008 included assets that had been acquired by the Group with a view to sale to clients of the Group's Private Banking business. During the period assets totalling €12m (30 September 2008: €135m) ceased to be classified as held for sale. This has had no impact on the results of the Group. On 7 April 2009 the Irish Government announced its intention to establish the National Asset Management Agency (‘NAMA’) and, on 22 November 2009, the National Asset Management Agency Act, 2009 ('the Act') provided for its establishment. Under the Act, NAMA will acquire certain assets from Irish banks, hold, manage and realise these assets, and facilitate the restructuring of credit institutions of systemic importance to the Irish economy. On 9 February 2010 the Bank applied to be designated as a participating institution in NAMA. This application was accepted by the Minister for Finance on 12 February 2010. The Bank is now legally bound to participate in NAMA and is subject to NAMA’s statutory powers. The transfer of assets to NAMA is a fundamental aspect of the Bank’s restructuring process. The Bank estimates that NAMA will acquire land and development loans and certain associated loans with a gross value of approximately €35.6bn (before taking account of €10.1bn of loan loss provisions), together with related derivatives which have a fair value of €0.4bn (notional principal of €11.2bn). The Bank has no control over the quantity of eligible assets that NAMA will acquire or over the valuation NAMA will place on those assets. NAMA has not confirmed to the Bank the total value of eligible assets it expects to purchase or the consideration it will pay in respect of those assets. The consideration for assets acquired by NAMA will comprise the issuance to the Bank of NAMA bonds and subordinated NAMA bonds. Subordinated bonds will represent not more than 5% of the total consideration paid. Payments on the subordinated bonds will be determined by the overall long term financial performance of NAMA and this may result in these bonds being carried in the financial statements at an amount less than their nominal value. Details in respect of the first tranche of eligible assets scheduled to transfer to NAMA are provided in note 58. Anglo Irish Bank Annual Report & Accounts 2009 83
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Annual Report & Accounts 2009
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Contents Page Chairman’s statemen
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Legacy matters The Bank is continui
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Jim Brydie was appointed Head of Gr
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Business review This business revie
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Divisional lending balances by sect
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holdings, reduced investment cash f
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30 September 2008. Average total cu
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Income statement - treasury impairm
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to acquire these assets they are in
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Board of Directors Donal O’Connor
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In keeping with our environmental p
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Principal risks and uncertainties T
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Credit risk Credit risk is the risk
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Report of the Directors The Directo
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Corporate governance statement On 1
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Page 38 and 39: Consolidated income statement For t
Page 40 and 41: Consolidated statement of financial
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Page 44 and 45: Statement of cash flows For the 15
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Page 48 and 49: Notes to the financial statements c
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Notes to the financial statements c
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Supplementary information Consolida
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www.angloirishbank.com Anglo Irish
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