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

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Notes to the financial statements continued23. Assets classified as held for sale continuedSpecific provisions for impairment onloans classified as held for saleThe Group2011 2010The Bank2011 2010€m €m €m €mAt beginning of yearAcquired under the INBS Transfer OrderCharge against profits - specific (note 16)Write-offsUnwind of discountExchange movementsNet transfers from/(to) loans and advancesto customers (note 27)Net release on disposal of assets to NAMA (note 14)Release on loan asset sales (note 15)At end of year565 10,120 519 9,134336 - 336 -34 2,683 23 2,627(56) (19) (56) (17)(16) (245) (16) (210)21 69 22 64938 (185) 932 (97)(387) (11,858) (375) (10,982)(1,332) - (1,282) -103 565 103 519Impaired loans classified as held for sale276 979 276 905An analysis of lending assets by internal credit quality category, geographical location and industry sector concentration isprovided for the Group in note 50 and for the Bank in note 55.24. Available-for-sale financial assetsListedGovernment bondsFinancial institutionsUnlistedFinancial institutionsAsset backed securitiesNAMA subordinated bondsThe GroupThe Bank2011 2010 2011 2010€m €m €m €m354 397 303 351849 1,648 849 1,6481,203 2,045 1,152 1,999- 2 - 25 5 - -124 167 124 167129 174 124 169Total 1,332 2,219 1,276 2,168The movement in available-for-sale ('AFS') financialassets is summarised below:At beginning of yearAdditionsDisposals (sales and maturities)Fair value movementsDecrease in interest accrualsExchange and other movementsAt end of year2,219 7,890 2,168 7,857261 993 249 989(1,105) (6,571) (1,098) (6,571)(43) (107) (44) (121)(4) (70) (4) (70)4 84 5 841,332 2,219 1,276 2,168The AFS portfolio decreased by €0.9bn during the year, primarily driven by disposals and maturities which include €0.8bn offinancial institution bonds and €0.3bn of sovereign bonds. Additions in the current year primarily comprise sovereign bondswith a carrying value of €0.2bn and NAMA subordinated bonds with a nominal value of €154m and a carrying value of €47macquired under the INBS Transfer Order. In addition, the Bank received subordinated bonds from NAMA with a nominal valueof €49m and an initial fair value of €10m.76
Irish Bank Resolution Corporation LimitedAnnual Report & Accounts 2011The AFS portfolio principally comprises sovereign investments, debt issued by financial institutions and NAMA subordinatedbonds. AFS bonds are marked to market using independent prices obtained from external pricing sources. NAMA subordinatedbonds are valued using standard discounted cash flow techniques. The Bank does not use models to value other AFS securitiesand does not adjust any external prices obtained.The NAMA subordinated bonds will be redeemed in full at par without undeclared interest subject to the financial performanceof NAMA in totality. NAMA may call the bonds on any interest payment date. On each interest payment date commencing on1 March 2011, and annually thereafter, NAMA may declare the interest payable if it deems it appropriate to do so if it isachieving its objectives. Interest not declared in any year will not accumulate. No interest was declared by NAMA on1 March 2011. At 31 December 2011 the Bank held NAMA subordinated bonds with a total nominal value of €843m (2010:€645m).The Group's exposure to government and senior bank bonds issued by eurozone countries is detailed in note 50.The amount removed from equity and recognised as a loss in profit or loss in respect of the disposal of AFS financial assetsamounted to €2m (2010: €110m) for the Group (note 9).In 2010 €11m was recycled from the AFS reserve and recognised as an impairment charge in the income statement (note 16).The carrying value of AFS financial assets classified as impaired is €nil (2010: less than €1m). There are no items in the AFScategory that are past due but not impaired.At 31 December 2011 AFS financial assets of €1,046m (2010: €1,757m) were used in sale and repurchase agreements withthird parties for periods not exceeding six months for both the Group and the Bank.The external ratings profile of the Group's AFS financial assets is as follows:The Group2011Asset NAMAFinancial Backed SubordinatedSovereign Institutions Securities Bonds Total€m €m €m €m €mAAA / AA 51 43 - - 94A - 214 - - 214BBB+ / BBB / BBB- 303 496 - - 799Sub investment grade - 96 - - 96Unrated - - 5 124 129354 849 5 124 1,332The Group2010AssetNAMAFinancial Backed SubordinatedSovereign Institutions Securities Bonds Total€m €m €m €m €mAAA / AA 119 418 - - 537A - 683 - - 683BBB+ / BBB / BBB- 278 549 - - 827Sub investment grade - - - - -Unrated - - 5 167 172397 1,650 5 167 2,219Sub investment grade holdings consist primarily of debt issued by Irish financial institutions, of which €15m is covered by theELG Scheme. The majority of these holdings are due to mature during 2012.77
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Irish Bank Resolution Corporation L
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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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Group Chief Executive’s review co
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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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Principal risks and uncertainties c
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Report of the DirectorsIrish Bank R
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Page 33 and 34: OpinionIn our opinion:• the Group
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Supplementary information (unaudite
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IBRC annual report for 2011 - Irish Bank Resolution Corporation ...

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