(a) Comparison of carrying value to fair value

The table below summarises the carrying amounts and fair values of financial assets and liabilities presented on the Group and Agency's statement of financial position.

Group	2012 Carrying value €'000	2012 Fair value €'000	2011 Carrying value €'000	2011 Fair value €'000
Financial assets
Cash and cash equivalents	2,235,822	2,235,822	3,346,986	3,346,986
Cash placed as collateral with the NTMA	1,150,000	1,150,000	-	-
Available for sale financial assets	257,932	257,932	499,747	499,747
Amounts due from Participating Institutions	78,953	78,953	409,143	409,143
Derivative financial instruments	350,706	350,706	448,539	448,539
Loans and receivables	22,776,262	21,794,746	25,607,389	25,045,497
Other assets	33,490	33,490	43,438	43,438
Inventories	6,758	6,758	6,850	6,850
Deferred tax asset	337,288	337,288	305,654	305,654
Total assets	27,227,211	26,245,695	30,667,746	30,105,854
Financial liabilities
Amounts due to Participating Institutions	36,423	36,423	60,224	60,224
Derivative financial instruments	1,168,688	1,168,688	728,725	728,725
Senior debt securities in issue	25,440,000	25,389,120	29,106,000	28,972,112
Other liabilities	169,557	169,557	250,232	250,232
Tax payable	1,627	1,627	2,147	2,147
Total liabilities	26,816,295	26,765,415	30,147,328	30,013,440

Agency	2012 Carrying value €'000	2012 Fair value €'000	2011 Carrying value €'000	2011 Fair value €'000
Financial assets
Cash and cash equivalents	1,268	1,268	1,623	1,623
Other assets	9,306	9,306	3,381	3,381
Investment in subsidiaries	49,000	49,000	49,000	49,000
Total assets	59,574	59,574	54,004	54,004
Financial liabilities
Interest bearing loans and borrowings	53,320	53,320	52,720	52,720
Other liabilities	10,027	10,027	4,040	4,040
Total liabilities	63,347	63,347	56,760	56,760

Financial assets not subsequently measured at fair value

For financial assets and liabilities which are not subsequently measured at fair value in the statement of financial position, the methods and assumptions used to calculate the fair value of these assets and liabilities are set out below.

(i) Cash and balances with banks

The fair value of floating rate placements and term deposits is their carrying amount. The estimated fair value of fixed interest bearing deposits is equal to their carrying value at the period end as deposits are short term and the effect of discounting is minimal.

(ii) Loans and receivables

Loans and receivables are shown net of charges for impairment. The fair value of loans and receivables has been estimated using the expected future cash flows in the portfolio. Expected future cash flows for individually significant debtors were reviewed as part of the impairment cash flow assessment at the reporting date. These cash flows were then discounted at a market rate of interest considered appropriate by management, taking into consideration the time value of money and the risks involved. This estimation is subject to judgement by management in relation to the discount rate used and the timing and amount of future cash flows.

(iii) Debt securities in issue

The aggregate fair values are calculated based on a valuation model using similar quoted instruments and applying a current yield curve appropriate for the remaining term to maturity.

(b) Fair value hierarchy

IFRS 7 specifies a three level hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Group's market assumptions. The fair value hierarchy comprises:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities and debt instruments on recognised exchanges.
• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). This level includes OTC derivative contracts. The sources of input parameters use the standard LIBOR yield curve.
• Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level includes equity investments and debt instruments with significant unobservable components.

This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market prices in its valuations where possible.

Fair value hierarchy for assets and liabilities measured at fair value

Group 31 December 2012	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Assets
Derivative financial instruments	-	338,956	-	338,956
Foreign currency derivatives	-	11,750	-	11,750
Available for sale financial assets	-	257,932	-	257,932
Total assets	-	608,638	-	608,638
Liabilities
Derivative financial instruments	-	862,732	-	862,732
Foreign currency derivatives	-	305,956	-	305,956
Total liabilities	-	1,168,688	-	1,168,688

Group 31 December 2011	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Assets
Derivative financial instruments	-	391,207	-	391,207
Foreign currency derivatives	-	57,332	-	57,332
Available for sale financial assets	-	499,747	-	499,747
Total assets	-	948,286	-	948,286
Liabilities
Derivative financial instruments	-	438,895	-	438,895
Foreign currency derivatives	-	289,830	-	289,830
Total liabilities	-	728,725	-	728,725

None of the assets and liabilities of the Agency are carried at fair value.

Categories of financial assets and financial liabilities

Financial assets and liabilities are categorised in accordance with IAS 39 as follows;

• Loans and receivables
• Financial assets or liabilities at fair value through profit or loss – held for trading (FVTPL)
• Financial assets or liabilities at fair value through profit or loss – held for trading (FVTPL)
• Available for sale financial assets (AFS)
• Financial liabilities measured at amortised cost.

Financial Assets 2012 Group	Loans and receivables €'000	FVTPL €'000	AFS €'000
Cash and cash equivalents	2,235,822	-	-
Cash placed as collateral with the NTMA	1,150,000	-	-
Financial assets available for sale	-	-	257,932
Amounts due from Participating Institutions	78,953	-	-
Derivative financial instruments	-	350,706	-
Loans and receivables	22,776,262	-	-
Other assets	33,490	-	-

Financial Liabilities 2012 Group	Financial liabilities measured at amortised cost €'000	FVTPL €'000
Amounts due to Participating Institutions	36,423	-
Derivative financial instruments	-	1,168,688
Senior debt securities in issue	25,440,000	-
Other liabilities	169,557	-

No held to maturity investments were held by the Group at the reporting date.