Liquidity risk is the risk that the Group is unable to meet all of its financial obligations as and when they fall due. Liquidity risk arises from differences in timing between cash inflows and outflows.

23.1 Liquidity risk management process

The Group’s liquidity risk management process as carried out within the Group and monitored by a separate team in NAMA Treasury includes:

• Management of NAMA’s day-to-day liquidity and funding requirements so as to ensure that it will meet all obligations as they fall due: these include future lending commitments, interest on liabilities, collateral posting, day-to-day operating costs, fees and expenses.


• Asset and Liability management; by monitoring the maturity profile within the Group’s statement of financial position to ensure that sufficient cash resources are retained and or funding established where mismatches are likely to occur, thereby minimising the impact of liquidity outflows.

Monitoring and reporting takes the form of cash flow measurement and projections for periods of one week to one year with the planning process covering periods beyond one year. The NTMA Risk unit independently produces liquidity forecasts that are provided bi-monthly to the Risk Management Committee and Board. All projections include a ‘stressed’ forecast to cater for prolonged periods of uncertainty. The starting point for those projections is an analysis of the contractual maturity of the financial liabilities and the expected repayment date of the financial assets.

The key liquidity risk for the Group is the funding of the senior debt securities (securities) issued by NAMA as consideration for 95% of the value of acquired assets. The securities in issue permit the issuer (where the issuer has not received a Holder Physical Delivery Rejection Notice) to physically settle all, or some only, of the securities at maturity by issuing a new security on the same terms as the existing security (other than as to maturity which may be up to 364 days from the date of issue, notwithstanding that the existing security may have had a shorter maturity).

In May 2011, the Board, on receipt of a direction, issued under Section 14 of the Act, from the Minister, resolved to remove the extendible maturity option from the NAMA senior debt securities (see Note 29).

All of the securities which matured on 2 March 2015 were physically settled by issuing new securities with a maturity of 1 March 2016.

23.2 Non-derivative cash flows

The following table presents the cash flows payable by the Group and the Agency on foot of its non-derivative financial liabilities by remaining contractual maturities at the reporting date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative cash flows Group 31 December 2014	0-6 months €’000	6-12 months €’000	Total €’000
Liabilities
Amounts due to Participating Institutions	20,428	-	20,428
Senior debt securities in issue (including interest)	13,602,196	-	13,602,196
Other liabilities	30,851	-	30,851
Total liabilities	13,653,475	-	13,653,475
Assets held for managing liquidity risk	1,848,692	-	1,848,692

Non-derivative cash flows Group 31 December 2013	0-6 months €’000	6-12 months €’000	Total €’000
Liabilities
Amounts due to Participating Institutions	24,676	-	24,676
Senior debt securities in issue (including interest)	34,659,277	-	34,659,277
Other liabilities	44,047	-	44,047
Total liabilities	34,728,000	-	34,728,000
Assets held for managing liquidity risk	4,400,374	-	4,400,374

Non-derivative cash flows Agency 31 December 2014	0-6 months €’000	6-12 months €’000	Total €’000
Liabilities
Interest bearing loans and borrowings	53,699	-	53,699
Other liabilities	3,892	-	3,892
Total liabilities	57,591	-	57,591

Non-derivative cash flows Agency 31 December 2013	0-6 months €’000	6-12 months €’000	Total €’000
Liabilities
Interest bearing loans and borrowings	53,513	-	53,513
Other liabilities	7,178	-	7,178
Total liabilities	60,691	-	60,691

Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash and cash equivalents, collateral and term deposits.

23.3 Derivative cash flows

(a) Derivatives settled on a net basis

The Group’s derivatives that will be settled on a net basis include interest rate derivatives:

• interest rate swaps,


• forward rate agreements,


• over the counter (OTC) interest rate options,


• other interest rate contracts.

The following table analyses the Group’s derivative financial liabilities that will be settled on a net basis into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Group 31 December 2014	0-6 months €’000	6-12 months €’000	1-5 years €’000	Over 5 years €’000	Total €’000
Interest rate derivatives – where hedge accounting does not apply	958	2,687	8,256	7,103	19,004
Interest rate derivatives – where hedge accounting is applied	3,013	(234,623)	(230,735)	-	(462,345)
Total	3,971	(231,936)	(222,479)	7,103	(443,341)

Group 31 December 2013	0-6 months €’000	6-12 months €’000	1-5 years €’000	Over 5 years €’000	Total €’000
Interest rate derivatives – where hedge accounting does not apply	8,695	9,096	33,080	11,899	62,770
Interest rate derivatives – where hedge accounting is applied	3,909	(218,980)	(327,725)	10,305	(532,491)
Total	12,604	(209,884)	(294,645)	22,204	(469,721)

(b) Derivatives settled on a gross basis

The Group’s derivatives that will be settled on a gross basis include:

• Foreign exchange derivatives: currency forwards, currency swaps; and


• Cross currency interest rate swaps.

The following table analyses the Group’s derivative financial instruments that will be settled on a gross basis into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Group 31 December 2014	0-6 months €’000	6-12 months €’000	1-5 years €’000	Total €’000
Foreign exchange derivatives:
− Outflow	(448,070)	-	-	(448,070)
− Inflow	440,743	-	-	440,743
Cross-currency interest rate derivatives:
− Outflow	(1,013,566)	(792,298)	(796,175)	(2,602,039)
− Inflow	936,276	730,587	732,788	2,399,651
Total outflow	(84,617)	(61,711)	(63,387)	(209,715)

Group 31 December 2013	0-6 months €’000	6-12 months €’000	1-5 years €’000	Total €’000
Foreign exchange derivatives:
− Outflow	(660,538)	-	-	(660,538)
− Inflow	659,407	-	-	659,407
Cross-currency interest rate derivatives:
− Outflow	(786,546)	(505,571)	(3,896,306)	(5,188,423)
− Inflow	733,723	497,477	3,812,325	5,043,525
Total outflow	(53,954)	(8,094)	(83,981)	(146,029)

23.4 Loan commitments

The dates of the contractual amounts of the Group’s financial instruments that commit it to extend credit to customers and other credit facilities, are summarised in the following table. This amount includes commitments already in existence at acquisition of the loans and further commitments given since transfer of loan assets to the Group.

Group 31 December 2014	No later than 1 year €’000	1-5 years €’000	Over 5 years €’000	Total €’000
Commitments to lend	152,044	490,529	16,862	659,435
Overdrafts	868	-	-	868
Total	152,912	490,529	16,862	660,303

Group 31 December 2013	No later than 1 year €’000	1-5 years €’000	Over 5 years €’000	Total €’000
Commitments to lend	262,616	476,611	17,424	756,651
Overdrafts	8,669	-	-	8,669
Total	271,285	476,611	17,424	765,320

The Agency has no loan commitments.