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

Notes to the financial statements continued42. Subordinated liabilities and other capital instrumentsDated Loan CapitalUS$165m Subordinated Notes Series A 2015 (a)US$35m Subordinated Notes Series B 2017 (b)The GroupThe Bank2011 2010 2011 2010€m €m €m €m128 124 128 12428 28 28 28Undated Loan CapitalStg£300m Non-Cumulative Preference Shares (c)Stg£200m Step-up Callable Perpetual Capital Securities (d)Stg£250m Tier One Non-Innovative Capital Securities (d)Other subordinated liabilities (e)361 351 361 351- 3 - -- 3 - -- - - -517 509 517 503All subordinated liabilities and other capital instruments issued by the Group are unsecured and subordinated in the right ofrepayment to the ordinary creditors, including depositors of the Bank. The prior approval of the Central Bank of Ireland isrequired to redeem these issues prior to their final maturity date.The carrying value of subordinated liabilities and other capital instruments includes the impact of fair value hedge adjustments.During the prior year the Group repurchased or restructured certain subordinated liabilities as part of a liability managementexercise. €270m nominal of Tier 1, €45m of Upper Tier 2 and €1,575m of Lower Tier 2 securities were repurchased, exchangedor restructured, resulting in a net gain of €1,589m (note 8).(a)(b)(c)(d)(e)The US$165m Subordinated Notes Series A 2015 bear interest at 4.71% per annum to 28 September 2010 andthereafter reset at three month LIBOR plus 0.92% per annum. See note 48 for details of legal claims.The US$35m Subordinated Notes Series B 2017 bear interest at 4.80% per annum to 28 September 2012 and thereafterreset at three month LIBOR plus 0.93% per annum. See note 48 for details of legal claims.On 21 January 2009, under the terms of the Anglo Irish Bank Corporation Act, 2009, ownership of the 300,000 Non-Cumulative Preference Shares in issue was transferred to the Minister for Finance. The holder of the shares is entitled to anon-cumulative preference dividend of 6.25% per annum based on a principal amount of Stg£1,000 per share payableannually in arrears on 15 June in each year to 15 June 2015. Thereafter dividends are due to be paid quarterly in arrearson 15 March, 15 June, 15 September and 15 December in each year based on a principal amount of Stg£1,000 per shareand on the three month LIBOR rate plus 1.66% per annum. No preference dividends can be paid if the issuer is not incompliance with applicable regulatory capital requirements. In May 2009 the Bank received correspondence from theMinister stating that dividend payments on these preference shares, including the dividend otherwise payable on15 June 2009, would be waived until such time as the Minister informs the Bank that dividend payments are to resume.Interest on the Stg£200m Step-up Callable Perpetual Capital Securities and the Stg£250m Tier One Non-InnovativeCapital Securities of €6m which was accrued to 31 December 2010 was released to the income statement as a gain inMarch 2011 when the call right on these securities was exercised by the Bank with no accrued interest being paid.Other subordinated liabilities includes €100,000 A Preference Shares issued by IBRC Asset Finance plc. The Group isprecluded from declaring and paying any distribution on these shares.96