Dáil Éireann Debate, Tuesday - 12 June 2012
214 Deputy Pearse Doherty asked the Minister for Finance further to the publication by the National Asset Management Agency of its 2011 management accounts and its report for the fourth quarter of 2012, if he will provide an explanation for the €15.9 million of income in the quarter booked in the accounts of National Asset Management Limited classified as hedge ineffectiveness adjustment. [27944/12]
Amharc ar fhreagraI have been informed by NAMA that the ‘hedge ineffectiveness' adjustment of €15.9 million relates to interest rate swap contracts which were entered by the National Asset Management Limited Group (‘the Group') to hedge its exposure to cash flow variability arising from interest rate risk in its portfolio of debt securities. These interest rate swap contracts were formally designated into hedge relationships during 2010 when the fair value of these derivatives was an unrealised loss of €30.4m. This unrealised loss was recognised as a fair value loss in the income statement in 2010. In accordance with the Group's accounting policy for derivative financial instruments and hedge accounting (as per note 2.10 of its Q4 2011 accounts), this loss is being amortised from the Income Statement to the cash flow hedge reserve as ‘hedge ineffectiveness' over the remaining life of the derivatives.
