(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	2013 Carrying value €'000	2013 Fair value €'000	2012 Carrying value €'000	2012 Fair value €'000
Financial assets
Cash and cash equivalents	3,453,236	3,453,236	2,235,822	2,235,822
Cash placed as collateral with the NTMA	802,000	802,000	1,150,000	1,150,000
Available for sale financial assets	145,138	145,138	257,932	257,932
Amounts due from Participating Institutions	78,447	78,447	78,953	78,953
Derivative financial instruments	160,369	160,369	350,706	350,706
Loans and receivables - NAMA	19,598,110	20,459,016	22,776,262	21,794,746
Loans and receivables - NARL	11,715,589	11,715,589	-	-
Other assets	23,755	23,755	33,490	33,490
Investments in equity instruments	6,373	6,373	-	-
Total assets	35,983,017	36,843,923	26,883,165	25,901,649
Financial liabilities
Amounts due to Participating Institutions	24,676	24,676	36,423	36,423
Derivative financial instruments – NAMA	591,581	591,581	1,168,688	1,168,688
Derivative financial instruments – NARL	8,203	8,203	-	-
Senior debt securities in issue	34,618,000	34,579,669	25,440,000	25,389,120
Other liabilities	172,594	172,594	169,557	169,557
Tax payable	407	407	1,627	1,627
Total liabilities	35,415,461	35,377,130	26,816,295	26,765,415

Agency	2013 Carrying value €'000	2013 Fair value €'000	2012 Carrying value €'000	2012 Fair value €'000
Financial assets
Cash and cash equivalents	1,152	1,152	1,268	1,268
Other assets	5,961	5,961	9,306	9,306
Investment in subsidiaries	49,000	49,000	49,000	49,000
Total assets	56,113	56,113	59,574	59,574
Financial liabilities
Interest bearing loans and borrowings	53,513	53,513	53,320	53,320
Other liabilities	7,178	7,178	10,027	10,027
Total liabilities	60,691	60,691	63,347	63,347

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) Amounts due from Participating Institutions

The estimated fair value of amounts due from Participating Institutions is equal to their carrying value at the period end as receivables are current and will be settled in cash.

(iii) 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. Cash flows between 2014 and 2016 were discounted at a rate of 5.5% and cash flows between 2017 and 2020 were discounted at a higher rate of 10% due to greater uncertainty in predicting cash flows beyond 2016. This estimation is subject to judgement by management in relation to the discount rate used and the timing and amount of future cash flows.

(iv) 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 13 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 2013	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Assets
Derivative financial instruments	-	142,207	-	142,207
Foreign currency derivatives	-	18,162	-	18,162
Available for sale financial assets	-	145,138	-	145,138
Investments in equity instruments	-	6,373	-	6,373
Total assets	-	311,880	-	311,880
Liabilities
Derivative financial instruments	-	495,622	-	495,622
Foreign currency derivatives	-	104,162	-	104,162
Total liabilities	-	599,784	-	599,784

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

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)
• Available for sale financial assets (AFS)
• Financial liabilities measured at amortised cost
  
  

Financial assets Group 31 December 2013	Loans and receivables €'000	FVTPL €'000	AFS €'000
Cash and cash equivalents	3,453,236	-	-
Cash placed as collateral with the NTMA	802,000	-	-
Financial assets available for sale	-	-	145,138
Amounts due from Participating Institutions	78,447	-	-
Derivative financial instruments	-	160,369	-
Loans and receivables	31,313,699	-	-
Investments in equity instruments	-	6,373	-
Other assets	23,755	-	-

Financial liabilities Group 31 December 2013	Financial liabilities measured at amortised cost €'000	AFS €'000
Amounts due to Participating Institutions	24,676	-
Derivative financial instruments	-	599,784
Senior debt securities in issue	34,618,000	-
Other liabilities	172,594	-

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