IBRC annual report for 2011 - Irish Bank Resolution Corporation ...

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Notes to the financial statements continued56. Asset management activitiesIn the past the Group provided custody, investment management and advisory services to third parties which involved theGroup making allocation, purchase and sale decisions in relation to a wide range of assets. Those assets that are held in afiduciary capacity are not included in these financial statements. At the end of the reporting period the Group still holds thefollowing assets under management:2011 2010€m €mEquities and investment properties 129 179Managed cash and other assets 21 28150 20757. Events after the reporting periodWealth Management businessOn 30 January 2012 the Bank announced that the Board had approved a strategy and direction put forward by management towind down its Wealth Management business in an orderly fashion. This process is currently underway and may include a cosourcingarrangement. Any final arrangement reached between the parties will be subject to the approval of the Boards of theBank and IBRC Assurance Company Limited and the consent of the Central Bank of Ireland with final ratification by the Ministerfor Finance. The Wealth Management business will continue to operate as normal during this period.IBRC Mortgage Bank ('IBRCMB')Subsequent to 31 December 2011 IBRCMB, a wholly owned subsidiary of the Bank, redeemed the remaining €1.8bn of itscommercial mortgage asset covered securities in issue, all of which were held by the Bank. These redemptions were completedfollowing consultation with the Central Bank of Ireland and in accordance with the requirements of the independent Cover-Assets Monitor. In addition, the beneficial interests in the portfolio of commercial mortgage loans acquired by IBRCMB weretransferred back to the Bank, significantly reducing the level of assets in IBRCMB. All derivative hedging contracts entered intobetween IBRCMB and the Bank have been terminated.Promissory notesFollowing an outline request, made on behalf of the Minister for Finance, the Bank is in discussions with the Department ofFinance and the NTMA regarding a settlement proposal to utilise the funds due from the next instalment under the promissorynotes on 2 April 2012 to acquire an Irish Government bond with an equivalent value. In the context of the ongoing financialsupport provided by the State to the Group, the Directors’ statutory public interest obligations and on the basis that thesettlement proposal takes account of commercial market based considerations including valuation, liquidity and fundingfactors, the Board has agreed in principle to the outline request from the Minister.The settlement proposal relates to the €3.06bn instalment due on 2 April 2012 only and does not impact on the remainingannual instalments under the promissory notes. Detailed discussions on the technical aspects of the proposal continue.58. Approval of financial statementsThe Group financial statements were authorised for issue by the Board of Directors on 28 March 2012.168
Supplementary information (unaudited)Irish Bank Resolution Corporation LimitedAnnual Report & Accounts 2011Additional residential mortgage informationThe following unaudited supplementary information provides more granular detail in relation to the asset quality profile of the Bank'sresidential mortgage portfolio. The information provided is consistent with the Central Bank of Ireland Impairment Provisioning andDisclosure Guidelines issued on 20 December 2011.The residential mortgage portfolio, which totals €1.9bn and represents 7% of the Bank's total loans and advances to customers, wastransferred to the Bank under the INBS Transfer Order on 1 July 2011. The portfolio is divided between owner occupier and buy to letmortgages, with approximately 77% being owner occupier and the remainder buy to let. The loans are almost exclusively secured onproperties located in the Republic of Ireland, with the exception of balances totalling €6m secured on properties in the UK.Variable rate loans total €1.3bn, of which less than 0.1% are tracker mortgages linked to the ECB base rate. The balance of theportfolio comprises fixed rate loans. €260m of the fixed rate loan portfolio reverted to a higher standard variable rate at the end ofFebruary 2012.The information shown reflects balances as at 31 December 2011. Information in respect of charges to the income statement andcollateral disposals cover the period for the six months ended 31 December 2011.Asset quality - profile of residential mortgagesThe table below details the overall asset quality of the portfolio at 31 December 2011. The Bank monitors the asset quality of theresidential mortgage portfolio on an ongoing basis. An explanation of each asset quality category is contained in note 50.31 December 2011Owner Buy toOccupier Let Total€m €m €mGood qualitySatisfactory qualityLower quality but not past due or impairedTotal neither past due or impairedPast due but not impairedImpaired loansTotal gross loansSpecific provisions for impairmentCollective provisions for impairmentTotal loans net of provisions577 60 637136 14 15035 3 38748 77 825215 30 245477 326 8031,440 433 1,873(206) (155) (361)(120) (15) (135)1,114 263 1,377Total provision % 23% 39% 26%Specific coverage ratio *43% 48% 45%* The specific coverage ratio measures specific provisions as a percentage of impaired loans.169
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ContentsIrish Bank Resolution Corpo
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Chairman’s statementIrish Bank Re
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Group Chief Executive’s reviewIri
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Business review continuedIrish Bank
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Board of DirectorsIrish Bank Resolu
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Corporate Responsibility continuedI
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Principal risks and uncertainties c
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Report of the DirectorsIrish Bank R
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Corporate governance statementIrish
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OpinionIn our opinion:• the Group
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IBRC annual report for 2011 - Irish Bank Resolution Corporation ...

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