Anglo Irish Asset Finance 2009 Accounts

I
I Company No. 3091082 i
ANNUAL REPORT AND FINANCIAL STATEMENTS
ANGLO IRISH ASSET FINANCE PLC
PERIOD ENDED 31 DECEMBER 2009
LQCJAIYW*
LD2 07/04/20tO 132
COMPANIES HOUSE
Contents
Pages
Corporate information 1
Directors' report 2-5
Statement of directors' responsibilities 6
Management report 7-17
Independent auditors' report 18-19
Statement of Comprehensive Income 20
Statement of Financial position 21
Statement of changes in equity 22
Statement of Cash flows 23
Notes to the financial statements 24 - 80

Directors
B Lmehan (resigned 23 March 2010)

D Quiliigan (resigned 15 March 2010)
F G Parker
J Brydie
T P Walsh
Secretary
F G Parker
Auditors
Deloitte LLP
London
Bankers
Anglo Insh Bank Corporation Limited

10 Old Jewry
London
EC2R8DN
Barclays Bank pic

London Corporate Banking
PO Box 544
Lombard Street
London, EC3V 1EX
Registered office
10 Old Jewry
London
EC2R 8DN
Registered number
3091082
DIRECTORS' REPORT
The directors present their report and the audited financial statements for Anglo Irish Asset Finance p!c {'the Company')
for the penod ended 31 December 2009
1 PRINCIPAL ACTIVITIES
The Company continues to provide commercial finance to businesses and individuals supported by real estate and
other assets
2. PRINCIPAL RISKS AND UNCERTAINTIES

The pnncipal nsks and uncertainties facing the Company relate to the credit, liquidity, market, operational and
compliance nsks associated with its lending activities and capita! markets funding instruments Further details on
these nsks are set out in the Management Report, while manangement of these nsks is set out in Note 28 of the
audited financial statements
3 PARENT COMPANY AND ULTIMATE PARENT COMPANY

The Company is a wholly owned subsidiary of CDB (U K ) Limited, a company incorporated in England, which in turn
is a wholly owned subsidiary of Anglo Insh Bank Corporation Limited, incorporated in the Republic of Ireland, the ultimate
parent undertaking
4 CHANGE OF YEAR END

In order to align with the financial reporting penod of the ultimate parent undertaking, the Company has changed its
reporting penod end from 30 September to 31 December Accordingly the financial statements include 15 months of
operations and cashflows to 31 December 2009, and are therefore not directly comparable to the amounts disclosed
for the pnor penod
5 RESULTS FOR THE PERIOD AND STATE OF AFFAIRS AS AT 31 DECEMBER 2009

The results for the period and the statement of financial position at 31 December 2009 are set out on pages 20 and 21
The loss after taxation for the penod amounted to £1,178m (year ended 30 September 2008 loss £83m) This loss
reflects higher provisioning levels along with foreign exchange losses incurred on the Yen financing arrangement
(See Note 5) These losses were offset by gains on the repurchase of certain capital instruments issued by the
Company as detailed in Note 6
Total equity amounted to £256m as at 31 December 2009 (30 September 2008 £234m)
On 18 November 2008 the authonsed share capital of the Company was increased to £3 3bn by the creation of
3,000,000,000 ordinary shares of £1 each On the 18th November 2008, 1,000,000,000 ordinary shares were issued
at par and subscnbed by CDB (U K ) Limited, the parent company, giving the Company additional equity of £1 billion
The Management Report contains a full review of the performance of the Company which fulfils the requirement
of the enhanced business review and is incorporated into this Directors' Report by reference
6 NATIONALISATION OF ULTIMATE PARENT COMPANY

On 15 January 2009, the Insh Government announced its intention to take Anglo Insh Bank Corporation pic ("the
Bank"), the ultimate parent undertaking of the Company, into State ownership The Bank's shares were subsequently
suspended from trading on the Insh and London Stock Exchanges on 16 January 2009 The Anglo Insh Bank
Corporation Act 2009 which provided for the transfer of shares of the Bank to the Insh Minister for Finance, was signed
into Insh law on 21 January 2009 On the same date the Bank was re-registered as a pnvate company and its name
was changed from Anglo Insh Bank Corporation pic to Anglo Insh Bank Corporation Limited ("AIBC") The Insh
Government, following receipt of European Union approval, provided €3 billion of capital to AIBC on the 29 June 2009,
€827 7m on the 4 August 2009, and a provided a further €172 3m of capital on the 25 September 2009 to AIBC
On 30 March 2010 the Irish Government provided a further €8 3bn to AIBC in the form of a promissory note, fulfilling a
commitment given to the Board of AIBC by the Insh Minister for Finance on 22 December 2009 to provide additional
capital support to AIBC, effective 31 December 2009 0
DIRECTORS REPORT continued
7 DIVIDEND
| The directors do not propose the payment of a dividend in respect of the penod (year ended 30 September 2008 £ Nil)
i
| 8 GOING CONCERN
The Company's business activities have been severely impacted by the current financial and economic crisis resulting in
a substantial loss for the penod as detailed in the Management Report The directors consider that the outlook remains
difficult due to the current economic climate and the impact on our clients businesses which are pnmarily involved in
the property industry in the UK
Consequently, this has a significant impact on the Company's future performance including the need for continued support
1
by AIBC due to the uncertainty over future trading results as detailed below Details of the nsk management and the
policies, governance and analysis of nsks in the Company are detailed in Note 28 to the financial statements, in particular
details of the nsk management oversight by the AIBC Group of the Company, demonstrating how the Company and |
AIBC are reducing risk in the organisation
The assessment by the directors is underpinned by the fact that the ultimate parent company, AIBC, continues to support
the Company This includes the provision of a Letter of Support from AIBC which confirms assistance in meeting the
Company's liabilities as and when they fall due at least until 31 July 2011 In addition in the past year the Company
' has benefited from a substantial injection of capital from CDB (U K ) Limited ("CDB") of £1 billion Subsequent to this in
December 2009, AIBC agreed to irrevocably waive £200 million of intercompany lending to the Company, resulting in an
additional capital contribution of £200 million to the shareholders funds of the Company This demonstrates the
continued substantial support the Company is receiving from its parent company, CDB, and its ultimate parent company, |
AIBC :
The Company does not maintain any liquid assets itself and places all surplus funds with and draws any required funds
from AIBC Consequently the Company relies totally on AIBC for the ongoing daily supply of liquidity and funds to enable
the Company to function which has operated effectively throughout the penod and continues to do so to the date of
this Directors' Report
The Company is also subject to a range of nsks and uncertainties which are detailed in the Management Report
The directors of the Company have also considered the financial statements of AIBC for the 15 month penod to 31
December 2009 which have been prepared on a going concern basis and the assessment which the directors of AIBC
reached in the preparation of its financial statements
The assessment by the director's of AIBC is underpinned by the Irish Minister for Finance's (Minister) consistent
statements that the Insh Government will ensure the continued viability of all systemic financial institutions,
including AIBC, in a manner which is consistent with EU state aid rules In making this assessment the directors of AIBC
considered the potential impact of the following nsk factors and uncertainties which could affect the future
performance and financial position of AIBC the Insh National Asset Management Agency (NAMA) process on the group
(see Note 29), liquidity nsks, credit quality, regulatory capital, EU state aid considerations and political factors
impacting both the AIBC Group and the industry The timing of the NAMA asset transfers and the discount applied to the '
valuation are an important consideration Liquidity nsk considerations take into account the AIBC Group's ability to
continue to access wholesale and money market lines, the ability to continue to access essential central bank and other
special funding facilities, potential re-finance nsks and the impact of forecast customer funding balances Credit
quality will largely follow trends in the main economic environments in which the AIBC Group operates, which are
uncertain In addition, decisions by regulatory authorities, the EU or the body politic could adversely impact on AlBC's
ability to continue as a going concern
i
8 GOING CONCERN continued

Notwithstanding the existence of such uncertainties, the directors of AIBC in making the determination have taken into
account the following mitigating factors the capital injection of €4bn in 2009 into AIBC by the Minister, the
Minister's letter of 22 December 2009 which restated his previous commitments in relation to ensunng that the Bank has
sufficient capital to continue to meet its regulatory capital requirements, the subsequent receipt of a promissory note
to the value of €8 3bn in fulfilment of the Minister's commitment, the forecast receipt of senior NAMA bonds in 2010
which will be liquidity enhancing, the improving outlook for both the UK and US commercial property markets, and the
introduction of measures by the Irish Government to improve liquidity including the Irish Government guarantee
introduced in September 2008 and the Credit Institutions Eligible Liabilities Guarantee Scheme ('the ELG Scheme')
introduced in December 2009 As a result the directors of AIBC are satisfied that it is appropnate that the AIBC
Group's financial statements continue to be prepared on a going concern basis
On the basts of the above assessment by the directors of AIBC and the preparation of its group financial statements for
the 15 months ended 31 December 2009, which were published on 31 March 2010, the directors of the Company have
a reasonable expectation that the Company has adequate resources, or will be able to obtain adequate resources
from AIBC in terms of additional funding and/or equity, to continue in operational existence for the foreseeable future
Thus, the directors continue to adopt the going concern basis of accounting in preparing the annual financial statements
9 FUTURE DEVELOPMENTS
The directors will continue to closely monitor the performance of the Company, more details of which are set out
in the Management Report In addition, AIBC is a participating institution in the Irish National Asset Management Agency
(NAMA), further details of which are set out in Note 29 It is expected that the Company will transfer loans with a gross
value of £3,166m in the next 12 months to NAMA See Note 35 for further details
10 DIRECTORS AND SECRETARY

Bnan Linehan and Declan Quilligan resigned as directors on 23 March 2010 and 15 March 2010 respectively
Gordon Parker, James Brydie and Thomas Walsh continued to serve as directors throughout the penod
All directors will continue in office in accordance with the articles of association Gordon Parker served as secretary
throughout the penod The directors and secretary had no interests in the shares of the Company dunng the penod
11 FINANCIAL INSTRUMENTS
The directors of the Company utilise vanous financial instruments in the normal conduct of the Company's business,
pnmanly in order to mitigate the interest rate nsk ansing from the Company's operations It is the Company's policy to
hedge all Capital Market instruments which are raised at a fixed rate of interest in order to match the income from
lending assets which is normally linked to 3 month LIBOR /EURIBOR It is also the Company's policy to ensure that
foreign currency assets and liabilities are matched to avoid foreign exchange nsk on an after tax basis Further details
on these nsks and the Company's exposure to financial instruments is given in Note 28 to the financial statements
4
12 DISCLOSURE OF INFORMATION TO THE AUDITORS

Each of the persons who is a director at the date of approval of the report confirms that
• so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
• the director has taken all the steps that he ought to have taken as a director in order to make himself aware of any
relevant audit information and to establish that the company's auditors are aware of that information
The confirmation is given and should be interpreted in accordance with the provisions of S418 of the Companies Act 2006
13 DIRECTORS INDEMNITIES
The ultimate parent company has made qualifying third party indemnity provisions for the benefit of the Company's
directors which were made dunng the penod and remain in force at the date of this report
14 PAYMENTS OF CREDITORS
The Company's policy is to settle terms of payment with suppliers when agreeing the terms of each transaction, ensure
that suppliers are made aware of the terms of payment and abide by the terms of payment
15 INDEPENDENT AUDITOR
Ernst & Young LLP, resigned as auditors on 7 October 2009 Deloitte LLP were appointed as auditors on 13 October
2009
A resolution for the reappointment of Deloitte LLP as auditors of the Company is to be proposed at the
forthcoming Annual General Meeting
ON BEHALF OF THE BOARD
REGISTERED OFFICE
F G Parker
10 Old Jewry Company Secretary
London
EC2R 8DN Date 01 Apnl 2010
5
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE

DIRECTORS' REPORT AND FINANCIAL STATEMENTS
The directors are responsible for prepanng the annual report and the financial statements in accordance with
applicable United Kingdom law and International Financial Reporting Standards as adopted by the European
Union (IFRS)
Company Law requires the directors to prepare financial statements for each financial penod which give a true and fair
view of the state of affairs of the Company and of the profit and loss of the Company for that period In prepanng those
financial statements, International Accounting Standards requires that directors
- select suitable accounting policies and then apply them consistently,
- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information,
- provide additional disclosures when compliance with the specific requirements of IFRS is insufficient to enable users
to understand the impact of particular transactions, other events and conditions on the entity's financial position and
financial performance, and
- state that the Company has complied with IFRS, subject to any matenal departures disclosed and explained in the
financial statements
The directors are required to prepare the financial statements on the going concern basis, unless it is not appropnate
Further details are given in section 8 of the Directors' Report
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any
time the financial position of the Company and which enable them to ensure that the financial statements comply with
the Companies Act 2006 They have general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent and detect fraud and other irregulanties
The directors confirm that, to the best of their knowledge, they have complied with these requirements in prepanng the
financial statements, including preparation of these financial statements in accordance with IFRS Under applicable laws
and regulations, the directors also have responsibility for preparing a Directors' Report, as set out on pages 2 to 5
that complies with that law and those regulations
DTR 4 1 5 and 4 1 8 of the Disclosure Rules and Transparency Rules of the Financial Services Authonty requires the
directors to include a management report in the financial statements which includes a fair review of the issuers' business
as well as a description of the principal risks and uncertainties faced by the Company
As required by DTR 4 1 12 of the Disclosure Rules and Transparency Rules of the Financial Services Authority the
directors (as listed below) confirm that to the best of their knowledge
- the financial statements, prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial
position and loss of the Company, and
- the Management Report, which is incorporated into the Directors' Report, includes a fair review of the development and
performance of the business and the position of the Company, together with a description of the principal nsks and
uncertainties that the Company faces
By Ord
F G P T P Walsh
Director Director Director
6
MANAGEMENT REPORT
1 REVIEW OF BUSINESS PERFORMANCE

This review covers the penod from 1 October 2008 to 31 December 2009 and includes commentary on key areas of
performance of the Company dunng that penod Pnor penod comparatives are for the year ended 30 September 2008
The following includes Key Performance Indicators used by the management of the Company
Key results for the penod include

- Net loss after tax of £1,178m for the penod, up from a loss of £83m in 2008
- Net interest income down 33% from £112m to £75m in 2009
- Trading losses of £613m primarily incurred on a Japanese Yen financing arrangement which were significantly
reduced by related profits in other UK group companies of AIBC
- Gam of £324m on repurchase of certain subordinated liabilities and other capital instruments
- Specific impairment charge of £987m, 20 15% of average loan book
- Collective impairment release of £7m in the current penod
- £3,166m of gross loans and advances to customers reclassified as assets held for sale at 31 December 2009
- Impaired held for sale assets represent 80 16% of closing assets classified as held for sale
- Other loans and receivables of £325m in the penod on the acquisition of AIBC Group subordinated liabilities
- Decline in net customer lending, pnor to transfer to held for sale of £1,047m, a decrease of 21 85%
- Impaired loans represent 28 06% of closing loan and advances to customers
- Increase in other assets of £1,415m, due to loan advanced to parent company as part of ending of Japanese Yen
financing arrangement
- Increase in loans and borrowings of £967m, an increase of 34 22% pnmanly due to loan received from the ultimate
parent as part of the ending of the Japanese Yen financing arrangement
- Increase in authonsed share capital of £3bn by the creation of 3,000,000,000 ordinary shares of £1 each
- Increase in issued share capital of £1bn subscnbed by CDB (U K ) Ltd, the parent company
Lending and asset quality 2009 2008

£m_ £m
Assets classified as held for sale 2,302
Loans and advances to customers 1,444 4,793
3,746 4,793
Net loan decrease of £1,047m brought total customer lending to £3,746 at penod end, a 22% decrease on pnor year
In keeping with the Company's relationship based lending model, lending activity dunng the penod was provided
solely to the Company's longstanding and experienced customer base The Company provides commercial
finance to businesses and individuals supported by real estate and lease finance and hire purchase facilities
The Company is a traditional balance sheet lender, directly originating assets rather than participating in transactional
or bought in loans The risk management function of the ultimate parent company, Anglo Insh Bank Corporation
Limited ("AIBC"), review loans with the Company's lending teams at least twice yearly to monitor asset quality The
responsibility for loan performance rests with the relevant lending director and their team Further details are provided in
Note 28 Credit Risk
Loans and advances of £3,166m along with provisions of £864m were reclassed as assets classified as held for sale
on 31 December 2009 The assets classified as held for sale are those loans and advances designated for transfer to
the Insh National Asset Management Agency (NAMA) This designation happened on 31 December 2009 Further detail;
on the establishment of NAMA are given in Note 29 NAMA has discretion as to which assets will be acquired and has nc
confirmed to the Company the total value of loans that it expects to purchase Therefore not all loans currently shown as
assets classified as held for sale may ultimately transfer to NAMA
7
MANAGEMENT REPORT (Continued)
1 REVIEW OF BUSINESS PERFORMANCE (continued)
Lending and asset quality (continued)
The worsening of the economic environment »n 2009 has led to significantly increased specific impairments However,
there has been a reduction in the collective impairment provision due to the very detailed review and analysis of the
loan portfolio The collective provision is determined in line with the detailed policy set out in Accounting Policy 1 8
Cumulative balance sheet provisions on loans and advances to customers at 31 December 2009, total £217m which
amounts to 13 08% of the closing loan book
Cumulative balance sheet provisions on assets classified as held for sale at 31 December 2009, total £864m which
amounts to 27 3% of the closing loan book
The economic outlook has been very challenging throughout the penod, although there have been signs of economic
improvement in the last three months No significant improvement has been assumed by the directors over the next
number of years
The following are the key highlights regarding asset quality at the penod end date
2009 2008
Income Statement £m £m
Specific provision charge 987 58
Collective provision charge (7) 67
Total lending impairment charge 980 125
% of average loan balances 20 07% 2 78%
Balance Sheet £m £m
Impaired loans and advances to customers 466 202
% of closing loan balances 28 06% 4 09%
Specific provision 146 68
Collective provision 71 77
Total provisions 217 145
Total provisions as a % of impaired loans 46 57% 71 78%
Balance Sheet £m £m
Impaired assets classified as held for sale 2,538 -
% of closing loan balances 80 16% 0 00%

Specific provision 864 -
Total provisions 864 -
Total provisions as a % of impaired assets classified as held for sale 34 04% 0 00%
8
Japanese Yen financing arrangement
Trading losses
Japanese Yen financing arrangement
Details are given in Note 5 of the audited financial statements of a financing arrangement, entered into in
May 2008, whereby the Company exchanged a portion of its funding from a Sterling basis to a Yen basis The
arrangement was structured such that the CDB (U K ) Limited and its UK subsidianes ("UK Group") and therefore the
ultimate parent AIBC would benefit from the differential between Sterling and Yen interest rates and the potential downside
from a foreign exchange nsk perspective was mitigated by an offset on the UK group's taxation line The arrangement had
had a positive impact on the UK group's and therefore the ultimate parent's profit for the year ended
30 September 2008 The arrangement was ended in December 2008 and January 2009, as the strengthening
of Yen against Sterling in the penod has negatively impacted trading income from foreign exchange contracts
by £613m (2008 £101m) for the Company, which is reduced by related foreign exchange gains in other UK group
companies of £457m (2008 £77m), resulting in a net negative impact in profit before tax of the UK group, and
therefore the ultimate parent of £156m (2008 £25m) In the six months to March 2009 the arrangement resulted in a
pre-tax loss of £156m and after tax benefit of £14 9m However, because of the significant operating losses incurred by
the Company and the AIBC Group in the nine months to 31 December 2009, £84m (2008 £Nil) of the taxation benefit has
not been recognised, resulting in a pre-tax loss for the fifteen month penod to 31 December 2009 of £156m (2008 £24m)
and an after tax cost of £69m (2008 gain £4 9m) The potential benefit of these losses carried forward is a component
of unrecognised deferred tax assets in Note 19
Loans and borrowings 2009 2008

£m_ £m
Loans and borrowings 3,794 2,826
Loans and borrowings increased by £968m, due to intercompany lending as part of the ending of the Japanese
Yen financing arrangement, to total £3,794m All loans and borrowings are sourced from either AIBC or other
subsidianes of CDB (U K ) Limited
Other assets 2009 2008

£m_ £m
Other assets 1,431 17
Other assets increased by £1,414m, due to intercompany lending as part of the ending of the Japanese Yen financing
arrangement, to total £1,431m These loans are provided to other CDB group entities This ensures the elimination of
foreign exchange nsk at a pre-taxation level in the Company
9
Repurchase of certain subordinated liabilities and other capital instruments
Gain on repurchase of financial liabilities at amortised cost

The Company recognised gains of £324m (2008 Nil) on the repurchase of £401 m (2008 Nil) nominal value of
undated loan capital recorded in subordinated liabilities and other capital instruments (Note 23) as part of the
overall capital management activities of the AIBC Group These instruments were bought back at 27% of par
The net gain of £324m results from consideration paid of £108m and the carrying value of the secunties
repurchased of £401 m Included in the gain is £31 m pnmanly in relation to the release of hedge accounting
fair value adjustments following termination of the related interest rate swaps
Subordinated liabilities and other capital instruments

2009 2008
£m £m
Subordinated liabilities and other capital instruments 1,536 1,725
On 30 July 2009, the Company completed the purchase of certain of its own capital instruments including the
purchase of £181 million of the £200 million 8 5325% Step-up Callable Perpetual Capital Secunties ('Secunties')
at a purchase pnce of 27% of par
purchase of £221 million of the £250 million 7 625% Tier 1 Non Innovative Capital Secunties (TONICS') at a
purchase pnce of 27% of par
The European Commission, as a condition of its approval of the Government's capitalisation of AIBC in mid 2009,
required that no further coupon payments be made on any of the AIBC Group's Tier 1 Secunties following the
payment due on the Company's TONICS on 23 July 2009 The Company continues to accrue the related interest
cost in the Statement of Comprehensive Income for the Secunties and the TONICs due to the cumulative
nature of the distnbutions from these instruments
In December 2009 the Board resolved that the coupon on the Company's £200 million 8 5325% Step-up Callable
Perpetual Capital Secunties, which has the benefit of a subordinated guarantee from AIBC which would have been
paid on 28 December 2009, would not be paid The effect of this decision was to tngger the "Dividend and Capital
Restnction", the provision of which preclude the Company and/or the Guarantor (AIBC) from declanng, paying or
distnbuting a dividend or making a payment on any of its ordinary share capital, its preference share capital or its
Tier 1 Securities, or make any payment on a Tier 1 Guarantee until such time as the deferred coupon is satisfied
In addition, given the vanous conditions required for the payment of distnbutions on the Undated Loan Capital,
including the requirement for the positive reserves of both the Company and the AIBC Group, and
notwithstanding the conditions prescnbed by the European Commission, it is not expected that distnbutions
will be paid on either the Company's or other AIBC Group's Tier 1 secunties for the foreseeable future
10
Other loans and receivables

On 30 July 2009, the Company purchased the following other Tier 1 Secunties issued by fellow AIBC
Group entities
- €403 million nominal of the €600 million Fixed rate / Vanable rate Guaranteed Non-voting Non-cumulative
Perpetual Preferred Securities issued by Anglo Irish Capital UK LP The Company paid €l09m
- €526 million nominal of the €600 million Fixed rate / Floating rate Guaranteed Non-voting Non-cumulative
Perpetual Preferred Securities issued by Anglo Irish Capital UK (2) LP The Company paid €142m
- £344 million nominal of the £350m Fixed rate / Floating rate Guaranteed Non-voting Non-cumulative
Perpetual Preferred Securities issued by Anglo Irish Capital UK (3) LP The Company paid €93m
These are classified as loans and receivables as they are not traded in an active market and they have fixed and
determined payment dates
Share Capital and Reserves

On 18 November 2008 the authonsed share capital of the Company was increased to £3,300m by the creation
of 3,000,000,000 ordinary shares of £1 each On the 18th November 2008, 1,000,000,000 ordinary shares were
issued at par and subscribed by CDB (U K ) Limited for a consideration of £1bn, thereby increasing ordinary
share capital by £1,000m to £1,220m
During the penod AIBC irrevocably waived £200m of loans due by the Company to AIBC through a deed of waiver
This has resulted in a capital contribution reserve in the Company further increasing the shareholders funds of the
Company
11
2 PRINCIPAL RISKS AND UNCERTAINTIES
The Company is subject to a vanety of nsks and uncertainties in the normal course of its business activities The
Disclosure Rules and Transparency Rules of the Financial Services Authonty require a descnption of the
pnncipal nsks and uncertainties facing the Company
The Board of Directors of the Company has ultimate responsibility for the governance of all nsk taking
activity and as a wholly owned subsidiary of Anglo Irish Bank Corporation Limited (AIBC) relies significantly on the
framework established by AIBC to manage risk throughout the AIBC Group Details of the nsk management policies
and processes that the Company adopts are contained in Note 28 to the financial statements
The pnncipal business risks and uncertainties below are those risks which the Directors currently believe to be
material to the Company The precise nature of all the risks and uncertainties that the Company faces cannot be
predicted and many of these risks are outside the Company's control The principal risk and uncertainties outlined
below should be read in conjunction with the Management Review of Business Performance
General economic conditions
The Company's results are influenced by general economic and other business conditions The economic outlook
remains challenging in the Company's key markets the UK and mainland Europe These markets have experienced
higher unemployment, reduced consumer and business confidence and a contraction tn housing markets, all of which
have contnbuted to a decline in economic growth
Global financial markets deteriorated dramatically after the bankruptcy filing of Lehman Brothers in September 2008
Despite measures taken by governments and the European Central Bank to stabilise the financial markets, the volatility
and disruption of the capital and credit markets continued through the first half of the year Together with the
significant declines in the property markets in Ireland, the United Kingdom and the United States these events have
contributed to significant write-downs of asset values by financial institutions and lending organisations, including the
Company
These write-downs have caused many financial institutions and other lending organisations to seek additional capital,
to merge with larger and stronger institutions, to be nationalised and, in some cases, to fail Reflecting concern about
the stability of the financial markets generally and the strength of counterparties, many lenders and institutional
investors have substantially reduced and, in some cases, stopped their funding to borrowers, including other financial
institutions
The results of the Company and of AIBC have been adversely affected by the deterioration in general economic
conditions in the economies in which they operate, as well as by the decrease in the availability, and increased costs,
of funding While recent economic forecasts are being revised upwards, any such growth is expected to be modest and
slow, which may affect the Company's and AIBC'S future earnings and financial condition
NAMA
In April 2009 the Insh Government announced the establishment of the National Asset Management Agency
('NAMA') for the purposes of acquiring certain assets from Irish banks including their subsidiaries, holding, managing
and realising those assets and facilitating the restructuring of credit institutions of systemic importance to the Insh
economy On 9 February 2010, AIBC applied to be designated as a participating institution in NAMA This application
was accepted by the Insh Minister for Finance on 12 February 2010 Consequently this requires the Company to also
participate in NAMA
12
2 PRINCIPAL RISKS AND UNCERTAINTIES (continued)
The NAMA Act provides for the acquisition by NAMA from participating institutions of eligible bank assets, which
may include performing and non-performing loans made for the purpose, in whole or in part, of purchasing,
exploiting or developing development land, loans associated with those loans and loans the secunty for which
is or includes development land or an interest in a company engaged in the business of purchasing or exploiting
such land
The Company does not have full control over the nature, number, timing and valuation of the assets that are to be
transferred A significant discount on the pnce that NAMA will pay for the portfolio of loans could impact the
Company's ability to meet its financial obligations without further support from AIBC
The Company may be required to indemnify NAMA in respect of various matters, including NAMA's potential
liability ansing from any error, omission or misstatement on the part of the Company of information provided to
NAMA
Notwithstanding the uncertainties outlined above, the transfer of assets to NAMA is a fundamental part of the AIBC
Group's restructunng process upon which the Company relies upon for financial support and will serve as the
pnmary mechanism for de-leveraging the balance sheet, reduce nsk exposure and providing additional liquidity
Clearly, any potential delay in the NAMA process will impact on the timing of such benefits
Restructunng of AIBC Group
Financial support provided by the Irish Government to the AIBC Group is subject to review by the European
Commission ('EC') under EU state aid rules The AIBC Group has submitted a restructunng plan to the EC
and the review of that plan by the EC is ongoing The EC will consider whether the plan demonstrates the AIBC
Group's long-term viability, that the AIBC Group (and its capital holders) make an appropriate contribution to
the restructunng costs from their own resources and that measures are taken to limit distortions of
competition ansing from the financial support provided by the Insh Government to the AIBC Group
No decision in relation to the form of the restructunng has been announced by the EC The EC may require the
AIBC Group to limit its operations or restnct its commercial activities in such a way that could have a material
adverse effect on the results of its operations, financial condition and future prospects and consequently have a
material adverse effect on the result of the Company's operations, financial condition and future prospects
Liquidity nsk
Liquidity nsk is the risk that the Company does not have sufficient funds available at all times to meet its
contractual and contingent cash flow obligations This is a fundamental nsk to the Company as the Company does
not maintain any liquidity itself and is required by AIBC to repay any surplus funds to AIBC each day as part of the
central AIBC Group Treasury management of liquidity Consequently, all funding needs for the Company rely on
the continued ongoing support of AIBC which has been confirmed as available until at least 31 July 2011 Any
changes in the ability of AIBC to raise funding or maintain liquidity could have a matenal adverse effect on the
Company's results, financial conditions and future prospects
13
Liquidity risk - AIBC
This nsk is inherent in all banking operations and can be affected by a range of institution-specific and market-wide
events The AIBC Group's liquidity may be adversely affected by a number of factors, including significant
unforeseen changes in interest rates, ratings downgrades, higher than anticipated losses on investments and
disruptions in the financial markets generally
The cnsis in the global financial system has resulted in a penod of significant turbulence and uncertainty, with
unprecedented levels of illiquidity, resulting in considerable problems at many financial institutions The terms on
which funding is available has also become more onerous and expensive
While liquidity in wholesale markets improved in the second half of the year, the perception of counterparty and
country risk has remained high This negative perception has led to reductions in, and increased costs of,
wholesale funding Accordingly, in common with many other banks, the AIBC Group's access to traditional
sources of liquidity has been constrained In addition, negative sentiment towards the Insh market has created
additional funding challenges for Insh institutions This has resulted in an overall reduction in liquidity and the AIBC
Group has increased its recourse to liquidity schemes provided by central banks as a result
In response to major market instability and illiquidity, governments and central banks around the world have
intervened in order to inject liquidity and capital into, and to stabilise, financial markets, and, in some cases, to
prevent the failure of systemically important financial institutions These vanous initiatives to stabilise financial
markets are subject to revocation or change, which could have an adverse effect on the availability of funding to
the AIBC Group AIBC is a participating institution in both the guarantee scheme pursuant to the Credit Institutions
(Financial Support) Act 2008 and the Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009 The financial
position of the AIBC Group could be impacted by the termination, amendment or cancellation of these schemes or
the removal of the AIBC Group from the schemes, pnor to their termination
Furthermore, the AIBC Group relies on customer deposits to meet a considerable portion of its funding
requirements and those deposits are subject to fluctuation due to certain factors, such as a loss of confidence,
reputational damage or competitive pressures which could result in a significant outflow of deposits within a short
period of time The availability of commercial deposits is often dependent on credit ratings and any further
downgrade could limit the AIBC Group's liquidity and therefore increase liquidity risk
Within the banking industry the default of any institution could lead to defaults by other institutions Concerns
about or a default by, one institution could lead to significant liquidity problems, losses or defaults by other
institutions because the commercial soundness of many financial institutions may be closely related as a result
of their credit, trading, cleanng or other relationships This nsk is sometimes referred to as "systemic nsk" and may
adversely affect financial intermediaries, such as cleanng agencies, clearing houses, banks, securities firms and
exchanges, with which the AIBC Group interacts on a daily basis, which could have an adverse effect on the
AIBC Group's ability to raise funding and on the AIBC Group's results, financial condition and prospects
This in turn is likely to have a significant adverse effect on the Company's results, financial condition
and prospects due to the continuous support the Company requires from AIBC
14
Credit risk
Credit risk is the risk of suffering financial loss, should any of the Company's customers or counterparties fail to
fulfil their contractual obligations to the Company The pnncipal credit nsk that the Company faces anses mainly
from loans and advances to customers
Adverse changes in the credit quality of the Company's borrowers, counterparties and their guarantors, or adverse
changes ansing from the general deterioration in global economic conditions have reduced the recoverability on
certain of the Company's assets and have increased the quantum of impaired loans and impairment charges
during the period
The Company has exposures to a range of customers in different geographies, including exposures to investors in
and developers of commercial and residential property Property pnces have shown significant declines throughout
the last year and developers of commercial and residential property are facing particularly challenging market
conditions, including substantially lower prices and volumes In addition, the Company's exposure to credit risk is
exacerbated when the collateral it holds cannot be realised or is liquidated at prices that are not sufficient to
recover the full amount of the loan that is due to the Company, which is most likely to occur dunng penods of
illiquidity and depressed asset valuations, such as those currently being expenenced
The Company's asset quality deteriorated significantly in the 15 months to 31 December 2009 Property markets
were severely impacted by a lack of confidence and liquidity which has led to a significant reduction in property
values across all of the Company's markets This together with an extremely difficult operating environment in the
Company's markets, and the rapid erosion of the Company's clients' net worth has resulted in a substantial
deterioration in the asset quality of the Company's loan book
There is continuing uncertainty surrounding the depth of the slowdown in the global economy and the direction of
property markets While there are signs that the global economic downturn is bottoming out, any recovery is
expected to be slow
Operational risk
Operational nsk is the nsk of loss arising from inadequate controls and procedures, unauthonsed activities,
outsourcing, human error, systems failure and business continuity Operational nsk is inherent in every business
organisation and covers a wide spectrum of issues The Company's management of its exposure to operational
risk is governed by a policy prepared by the AIBC Group Risk Management and approved by the AIBC Group Risk
and Compliance Committee The Company relies exclusively on the employees, processes, systems and activities
of AIBC in order to manage its loan book and business
Capital risk
Capital risk is the risk that the Company has insufficient capital resources to remain solvent The Company's ability
to maintain its capital level could be affected by a number of factors, including the price NAMA will pay for the
portfolio of loans to be transferred and the credit quality of the Group's loan portfolio following the NAMA
transfer If the Company needs to strengthen its capital position it will necessitate further capital
contnbutions from AIBC which will be dependent on the capital and liquidity position of AIBC
15
Market risk
Market nsk is the risk that the Company's earnings will be adversely affected by changes in the level or volatility of
market rates or pnces such as interest rates, credit spreads, commodity pnces, equity pnces and foreign exchange
rates Changes in interest rates and spreads may affect the interest rate margin realised between lending and
borrowing costs Changes m interest rates are mitigated by the fact that almost all the Company's lending assets
and funding liabilities are priced off market related rates with no asset pricing tied to official central bank rates This
ensures there is no structural interest rate pricing basis risk in the Company's balance sheet
Litigation risk
The Company's business is subject to the risk of litigation by customers, employees, shareholders or other third
parties through private actions, class actions, administrative proceedings, criminal proceedings or other litigation
The outcome of any such litigation, proceedings or actions is difficult to assess or quantify The cost to defend
future proceedings or actions may be significant There may also be adverse publicity associated with any such
litigation, proceedings or actions that could impact the Company and result in a decrease in customer acceptance
of the Company's services, regardless of whether the allegations are valid or whether the Company is ultimately
found liable As a result, such litigation, proceedings or actions may adversely affect the Company's business,
financial condition, results, operations or reputation
Other risks
The Company must at all times comply with all relevant laws and good practice guidelines Non compliance can
give to reputational loss, legal or regulatory sanctions or material financial loss
3 IMPORTANT EVENTS SINCE THE PERIOD END
See Note 35 for further details on important events since the financial reporting date
4 FUTURE DEVELOPMENTS
The directors will continue to closely monitor the performance of the Company
The directors intend that the Company will continue to provide existing committed lending to existing clients
secured upon assets in the United Kingdom and in Europe The Company has future comitments to lend of £ 128m
(2008 £703m), to be funded by further facilities from AIBC - London branch However this will be closely managed
in the current very uncertain environment to ensure that only cntical lending is advanced, in order to mitigate
the Company's and AIBC Group's credit nsk
16
5 FINANCIAL RISK MANAGEMENT

The directors of the Company utilise vanous financial instruments in the normal conduct of the Company's
business, pnmanly to mitigate the interest rate nsk ansing from the Company's operations It is the
Company's policy to hedge all capital market instruments which are raised at a fixed rate of interest in order to
match income from lending assets which is normally linked to 3 month LIBOR /EURIBOR Risk management
oversight for the Company is provided by the Risk Management function of Anglo Insh Bank Corporation
Limited Credit risk decisions are made on behalf of the Company by the Anglo Insh Bank Corporation
Limited Credit Committee function Further details on these nsks and the Company's exposure to financial
instruments are given in Note 28 of the financial statements
17
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
We have audited the Financial Statements of Anglo Insh Asset Finance Pic for the penod ended 31 December 2009
which comprise the Statement of Comprehensive income, Statement of Financial position, Statement of changes
in Equity, the Statement of Cash flow and the related notes 1 to 37 The financial reporting framework
that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS)
as adopted by the European Union
This report is made solely to the company's members, as a body, in accordance with sections 495 and 496 of the
Companies Act 2006 Our audit work has been undertaken so that we might state to the company's members those
matters we are required to state to them in an auditors' report and for no other purpose To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's
members as a body, for our audit work, for this report, or for the opinions we have formed
Respective responsibilities of directors and independent auditors
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view
Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland) Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical
Standards for Auditors
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from matenal misstatement, whether caused by fraud or
error This includes an assessment of whether the accounting policies are appropriate to the company's circumstances
and have been consistently applied and adequately disclosed, the reasonableness of significant accounting estimates
made by the directors, and the overall presentation of the financial statements
Opinion on financial statements
In our opinion the financial statements
• give a true and fair view of the state of the company's affairs as at 31 December 2009 and of its loss
for the penod then ended
• have been property prepared in accordance with IFRSs as adopted by the European Union, and
• have been prepared in accordance with the requirements of the Companies Act 2006
Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report for the financial period for which the financial
statements are prepared is consistent with the financial statements
18
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
ANGLO IRISH ASSET FINANCE PLC (Continued)
Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion
• adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us, or
• the financial statements are not in agreement with the accounting records and returns, or
• certain disclosures of directors' remuneration specified by law are not made, or
• we have not received all the information and explanations we require for our audit
Caroline Bntton (Senior Statutory Auditor)

for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditors

London, United Kingdom
Date 01 April 2010
19
Statement of Comprehensive income
For the period ended 31 December 2009 15 Months 12 Months
31 Dec 2009 30 Sep 2008
Notes £ £
Interest and similar income 3 290,206,216 399,163,421

Interest and similar expenses 4 (215,374,507) (286,960,207)
Net interest income 74,831,709 112,203,214
Fee and commission income 3,675,200 2,954,899

Fee and commission expense (66,869) (6,348)
Trading losses (613,040,875) (99,907,934)
Gam on repurchase of financial liabilities at amortised cost 323,602,801
Other operating income 70,200
Other expense (285,759,543) (96,959,383)
Net non-interest (expense) / income (210,927,834) 15,243,831
Administrative expenses (6,692,803) (7,963,413)

Depreciation of property, plant and equipment (12,599) (12,700)
Total operating expenses (6,705,402) (7,976,113)
Operating (loss) I profit before provisions for impairment (217,633,236) 7,267,718

Provisions for impairment (980,037,746) (124,073,168)
Operating loss before taxation (1,197,670,982) (116,805,450)
Taxation 10 19,444,828 33,948,738

Loss for the period attributable to the equity holders of the
(1,178,226,154) (82,856,712)
Company
The Statement of Comprehensive income includes net exchange losses of £274,568 (2008 losses £1,438,694) arising from
the conversion of non-sterling profits and losses at an average rate for the penod as opposed to the period end rate
The notes on pages 24 - 80 form part of these financial statements
20
Statement of Financial position 31 December 30 September
As at 31 December 2009 2009 2008
Notes £ £
Assets
Denvative financial instruments 12 79,434,315 31,212,066
Loans and advances to banks 13 - 14,332,222
Assets classified as held for sale 14 2,301,732,292 -
Other loans and receivables 15 324,655,751 -
Loans and advances to customers 16 1,443,806,752 4,792,977,845

Property, plant and equipment 18 4,363 16,962
Current taxation 21,466,027 20,523,689
Deferred taxation 19 - 1,892,351
Other assets 20 1,431,239,300 16,529,170
Prepayments and accrued income 16,426 114,263
Total assets 5,602,355,226 4,877,598,568
Liabilities
Loans from banks 21 256,138 -
Loans and borrowings 22 3,793,699,192 2,826,401,806

Derivative financial instruments 12 10,289,764 87,221,306
Other liabilities 5,624,506 9,941
Accruals and deferred income 33,696 53,279
Deferred taxation 19 - 4,515,860
Subordinated liabilities and other capital instruments 23 1,536,439,983 1,725,158,275
Total liabilities 5,346,343,279 4,643,360,467
Share capital 24 1,220,000,000 220,000,000

Other reserve 25 200,000,000 -
Retained (losses) / profits (1,163,988,053) 14,238,101

Shareholders' funds 256,011,947 234,238,101
Total equity and liabilities 5,602,355,226 4,877,598,568
The financial statements were approved by the Board of Directors and authonsed for issue on 01 Apnl 2010
They were signed on its behalf by
F G Parker
Director
Date 01 Apnl 2010
Company number 3091082
21
Statement of h n e ine
For the period ended 31 December 2009
Share Retained Other

Notes Capital Profits Reserves Total
£ £
Balance at 1 October 2007 220,000,000 97,094,813 317,094,813
Loss for the year (82,856,712) (82,856,712)
Balance at 30 September 2008 220,000,000 14,238,101 234,238,101
Share capital issued 24 1,000,000,000 1,000,000,000
Loss for the penod (1,178,226,154) (1,178,226,154)
Change in capital reserve 25 200,000,000 200,000,000
Balance at 31 December 2009 1,220,000,000 (1,163,988,053) 200,000,000 256,011,947
22
Statement of C s o
For the period ended 31 December 2009
15 months 12 months
31 Dec 2009 30 Sep 2008
Notes £ £
Cash flows used in operating activities

Loss before tax (1,197,670,982) (116,805,450)
Financing costs of subordinated liabilities and other capital instruments 98,010,516 123,795,370
Other non-cash items 818,518,853 84,213,187
(281,141,613) 91,203,107
Changes m operating assets and liabilities
Net increase in other loans and receivables (324,655,751) -
Net increase in assets classified as held for sale (3,238,236,588) -
Net decrease / (increase) in loans and advances to customers 3,349,171,093 (890,112,163)

Net decrease in loans and borrowings 976,783,680 575,962,791
Netmcrease in denvative financial instruments 40,682,584 10,192,713
Net increase in other assets (1,414,710,130) (1,612,148)
Net decrease in other liabilities (5,435) (45,605)
Exchange movements 115,737,148 111,979,077
Net cash flows used in operating activities before taxation (776.375,012) (102,432,228)
Tax recovered 15,967,988 13,375,180
Net cash flows used in operating activities (760,407,024) (89,057,048)
Cash flows used in investing activities

Purchases of property, plant and equipment (1,110)
Net cash flows used in investing activities (1.110)
Cash flows from financing activities

Proceeds of ordinary share issues 1,000,000,000
Repurchase of subordinated liabilities and other capital instruments (108,283,764) -
Coupons paid on subordinated liabilities and other capital instruments (136,371,817) (140,163,327)
Net cash flows from financing activities 755,344,419 (140,163,327)
Net decrease in cash and cash equivalents (5,062,605) (229,221,485)

Opening cash and cash equivalents 27 4,845,928 228,001,352
Effects of exchange rate changes on cash and cash equivalents (39,461) 6,066,061
Closing cash and cash equivalents 27 (256,138) 4,845,928
23
Notes to the financial statements
1 Accounting policies
1.1 Compliance with IFRS

The Company is a public limited company incorporated and domiciled in England and Wales
The financial statements have been presented in accordance with International Financial Reporting Standards
as adopted by the European Union ('IFRS') and applied in accordance with the Companies Act 2006, as applicable at
31 December 2009
1.2 Basis of preparation

The financial statements have been prepared under the histoncal cost convention, as modified by the revaluation of
certain assets and liabilities to the extent required or permitted under accounting standards as set out in the relevant
accounting policies They are presented in sterling
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions
that affect the reported amounts of certain assets, liabilities, revenues and expenses, and disclosures of contingent
assets and liabilities Since management's judgement involves making estimates concerning the likelihood of future
events, the actual results could differ from those estimates Some estimation techniques involve significant amounts of
management judgement, often in areas which are inherently uncertain The estimation techniques which are considered
to be most complex are in the areas of impairment of financial assets and the fair value of financial assets and
liabilities Further detail is provided in Note 1 20 of these Accounting Policies
The Company's business activities, together with the factors likely to affect its future development, performance and
position are set out in the Management report on pages 7 - 1 7 In addition, Note 28 to the financial statements includes
the Company's objectives, policies and processes for managing its capital, its financial risk management objectives,
details of its financial instruments and hedging activities, and its exposure to credit nsk and liquidity risk
As descnbed in the Directors' Report on page 2 - 5 , the current economic environment remains difficult and the Company
has reported a substantial loss for the year The directors consider that the outlook presents significant challenges in
terms of borrowers ability to service debt as the majonty of the Company's lending is to borrowers in the commercial
property sector
Further details of the Principal nsks and uncertainties affecting the Company are set out in Note 28 of the Financial
Statements Section 8 of the Directors' Report sets out a detailed assessment of the Company and its ability to
operate as a going concern
Based on this assessment, the financial statements are prepared on a going concern basis
In order to align with the financial reporting penod of the parent undertaking, the Company has changed its reporting
period end from 30 September to 31 December Accordingly the financial statements include 15 months of operations
and cashflows to 31 December 2009, and are therefore not directly comparable to the amounts disclosed for the pnor
penod
1 3 Adoption of new accounting standards

From 1 October 2008 the Company adopted the following standards
- Amendment to IAS 1 - Presentation of Financial Statements
The Company has early adopted Amendments to IAS 1 which resulted in certain changes in the names and presentation of
the financial statements
Notes to the financial statements continued
1 4 Interest income and expense recognition

Interest income and expense are recognised in the Statement of Comprehensive income for all interest-beanng
financial instruments using the effective interest rate method
The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and of
allocating the interest income or interest expense over the relevant penod The effective interest rate is the rate that
exactly discounts the expected future cash payments or receipts throughout the expected life of the financial instrument
or, when appropnate, a shorter penod, to the net carrying amount of the financial asset or financial liability
The calculation includes all fees, transaction costs and other premiums and discounts that are an integral part of the
effective interest rate on the transaction
Once an impairment loss has been recognised on an individual asset, interest income is recognised on the unimpaired
portion of that asset using the rate of interest at which its estimated future cash flows were discounted in measunng
the impairment
1 5 Fee and commission Income

Fees and commissions which are not an integral part of the effective interest rate are generally recognised on an accruals
basis over the period that the service has been provided
Loan commitment fees for loans that are likely to be drawn down are deferred {together with related direct costs) and
recognised as an adjustment to the effective interest rate on the loan once drawn
Commitment fees in relation to facilities where drawdown is not probable are recognised over the term of the commitment
1 6 Financial assets
Financial assets are classified into the following categones financial assets at fair value through profit or loss, loans and
receivables, and available-for-sale financial assets Management determines the classification of its investments at initial
recognition
Financial assets at fair value through profit or loss

This category has two sub-categones, financial assets held for trading, and those designated at fair value through
profit or loss at inception A financial asset is classified in this category if acquired pnncipaliy for the purpose of selling in
the short term or if so designated by management These assets are earned at fair value
A financial asset may be designated at fair value through profit or loss in the following circumstances
a) it eliminates or significantly reduces a measurement or recognises inconsistency that could otherwise anse on them
on different bases, or
b) a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair
value basis, in accordance with a documented nsk management or investment strategy, or
c) a financial instrument contains one or more embedded denvatives that significantly modify the cash flows ansing
from the instrument and would otherwise need to be accounted for separately
Denvatives are classified as held for trading unless they are designated as hedges Interest on financial assets
at fair value through profit and loss held on own account is included in net interest income Other gains and
losses ansing from changes in fair value are included directly in the statement of comprehensive income within trading
losses/profits
25
1 6 Financial assets (continued)

Loans and receivables
Loans and receivables are non-denvative financial assets with fixed or determinable payments that are not quoted in an
active market They arise when the Company provides money to a counterparty with no intention of trading the receivable
Loans and receivables are initially recognised at fair value, including direct and incremental costs, and are subsequently
carried on an amortised cost basis The best evidence of the fair value at initial recognition is the transaction pnce (i e
the fair value of the consideration given or received)
Available-for-sale financial assets

Available-for-sale financial assets are those intended to be held for an indefinite penod of time, which may be sold in
response to needs for liquidity or changes in interest rates, exchange rates, asset pnces or other factors
Available-for-sale financial assets are initially recognised at fair value, plus transaction costs, and are subsequently
earned at fair value with gains and losses recognised as a separate component of shareholders' equity
Financial assets are initially recognised at fair value plus directly attnbutable transaction costs, with the exception of
financial assets earned at fair value through profit or loss whose transaction costs are taken directly to the Statement of
Comprehensive Income Financial assets are derecognised when the nghts to receive cash flows from the financial
assets have expired or where the Company has transferred substantially all the nsks and rewards of ownership
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently earned at
fair value Loans and receivables and held-to-maturity investments are subsequently earned at amortised cost using
the effective interest rate method
The fair values of financial assets quoted in active markets are based on current bid pnces For unquoted financial
assets or where the market for a financial asset is not active, the Company establishes fair value by using valuation
techniques These include the use of prices obtained from independent third party pricing service providers, recent
arm's length transactions, reference to other similar instruments, discounted cash flow analysis, option pneing
models and other valuation techniques commonly used by market participants
In the current penod and previous year, with the exception of derivatives, all financial assets are classified as loans
and receivables
1 7 Financial liabilities
Financial liabilities are initially recognised at fair value, being their issue proceeds (fair value of consideration received)
net of transaction costs incurred Financial liabilities are subsequently measured at either amortised cost or fair value
through profit or loss All liabilities, other than those designated at fair value through profit or loss, are subsequently
earned at amortised cost Any difference between proceeds net of transaction costs and the redemption value is
recognised in the Statement of Comprehensive Income using the effective interest rate method
A liability may be designated at fair value through profit or loss when
a) it eliminates or significantly reduces a measurement or recognition inconsistency, 'an accounting mismatch', that
would otherwise anse from measunng assets and liabilities or recognising the gams and losses on them on
a different basis, or
b) a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance
with a documented nsk management or investment strategy, or
c) it contains one or more embedded denvatives, that significantly modify the cash flows ansmg from the instrument
and would otherwise need to be accounted for separately
26
1 7 Financial liabilities continued

The classification of an instrument as a financial liability or an equity instrument is dependent upon the substance of
the contractual arrangement Instruments which carry a contractual obligation to deliver cash or another financial asset
to another entity are classified as financial liabilities Interest on these instruments are recognised in the Statement of
Comprehensive income as an expense Other gains and losses ansing from changes in fatr value are included directly
in the Statement of Comprehensive Income within trading losses/profits
Preference shares and other subordinated capital instruments are classified as financial liabilities if coupon payments
are not discretionary Distnbutions on these instruments are recognised in the Statement of Comprehensive income as
interest expense using the effective interest rate method Distnbutions on the undated loan capital continue to be
recognised as an interest expense even if they are not paid due to the impact of other similar instruments issued by Anglo
Irish Bank Corporation Limited or its subsidiary entities where their conditions impact on the undated loan capital issued
by the Company The terms of the undated loan capital requires that the distnbutions are cumulative in the event of non
payment in any penod
Where undated loan capital issued by the Company is acquired by the Company, the amount of undated loan capital is
reduced by the amount of such instrument acquired by the Company Similarly, the interest expense is reduced by the
amount of interest income due on the undated loan capital acquired by the Company
1 8 Impairment of financial assets

Provision is made for impairment of financial assets to reflect the losses inherent in those assets at the balance
sheet date
The Company assesses at each financial reporting date whether there is objective evidence that a financial asset or a
portfolio of financial assets is impaired A financial asset or portfolio of financial assets is impaired and impairment
losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more loss events
that occurred after the initial recognition of the asset ('a loss event') and that loss event (or events) has had an
impact such that the estimated present value of future cash flows is less than the current carrying value of the
financial asset, or portfolio of financial assets, and can be reliably measured
Objective evidence that a financial asset, or a portfolio of financial assets, is impaired includes observable data that
comes to the attention of the Company about the following loss events
i significant financial difficulty of the issuer or obligor,

n a breach of contract, such as a default or delinquency in interest or pnncipal payments,
in the granting to the borrower of a concession, for economic or legal reasons relating to the borrower's financial
difficulty that the Company would not otherwise consider,
iv it becomes probable that the borrower will enter bankruptcy or other financial reorganisation,
v the disappearance of an active market for that financial asset because of financial difficulties, or
vi observable data indicating that there is a measurable decrease in the estimated future cash flows from a
portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet
be identified with the individual financial assets in the portfolio, including
- adverse changes in the payment status of borrowers in the portfolio, or
- national or local economic conditions that correlate with defaults on the assets in the portfolio
The Company first assesses whether objective evidence of impairment exists individually for financial assets that are
individually significant, and individually or collectively for financial assets that are not individually significant
An additional incurred but not reported ("IBNR") collective provision is required to cover losses inherent in the loan
book where there is objective evidence to suggest that it contains impaired loans but the individual impaired loans
cannot yet be identified Further detail on the estimation techniques used to calculate IBNR is provided in Note 1 20
of the Accounting Policies
1 8 Impairment of financial assets continued

An IBNR impairment provision represents an intenm step pending the identification of impairment losses on an
individual asset in a group of financial assets As soon as information is available that specifically identifies losses
on individually impaired assets in a group, those assets are removed from the group Assets that are individually
assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included under
the collective assessment of impairment
For loans and receivables, the amount of impairment loss is measured as the difference between the asset's carrying
amount and the present value of estimated future cash flows discounted at the asset's onginal effective interest rate
If a loan has a vanable interest rate, the discount rate for measunng any impairment loss is the current effective
interest rate determined under the contract The amount of the loss is recognised using an allowance account and the
amount of the loss is included in the Statement of Comprehensive income
The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the
cash flows that may result from foreclosure, less costs for obtaining and selling the collateral, whether or not foreclosure
is probable
When a borrower fails to make a contractually due payment of interest or pnncipal but the Company believes that
impairment is not appropnate on the basis of the level of the secunty / collateral available and / or the stage of collections
of amounts owed to the Company, a loan is classified as past due but not impaired In this instance the entire exposure
is reported as past due but not impaired, rather than just the amount in arrears
Renegotiated loans are those loans and receivables outstanding at the reporting date whose terms have been
renegotiated dunng the financial penod, resulting in an upgrade from impaired to performing status This is based on
subsequent good performance and / or an improvement in the profile of the borrower
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occumng after the impairment was recognised, the previously recognised impairment loss is reversed by
adjusting the allowance account The amount of the reversal is recognised m the Statement of Comprehensive income
as a reduction to the heading "Provision for impairment", to the extent that the carrying value of the asset does not
exceed its amortised cost at the reversal date
When a loan is deemed to be uncollectible, it is wntten off against the related allowance for loan impairment Such
loans are wntten off after all the necessary procedures have been completed and the amount of the loss has been
determined Subsequent recovenes of amounts previously wntten off decrease the amount of the allowance for loan
impairment in the Statement of Comprehensive income
28
1 9 Derivative financial instruments and hedge accounting

Derivatives
Denvative instruments, including swaps, futures, forward foreign exchange contracts, forward rate agreements and options,
are used for hedging and trading purposes
Denvatives are initially recognised at fair value on the date on which a denvative contract is entered into and are
subsequently re-measured at fair value Fair values are obtained from quoted market prices in active markets including
recent market transactions, and valuation techniques including discounted cash flow models and options pncmg models,
as appropnate Fair values are adjusted for counterparty credit nsk All denvatives are earned as assets when fair
value is positive and as liabilities when fair value is negative unless there is a legal ability and intention to settle net
Denvatives are classified as held for trading unless they are designated as hedges
The best evidence of the fair value of a denvative at initial recognition is the transaction price (i e the fair value of the
consideration given or received) unless the fair value of that instrument is evidenced by companson with other observable
current market transactions in the same instrument {i e without modification or repackaging) or based on a valuation
technique whose vanables include only data from observable markets
Hedge accounting
The method of recognising the resulting fair value gain or loss depends on whether the denvative is designated as a
hedging instrument, and if so, the nature of the item being hedged When transactions meet the cntena specified in IAS 39,
Financial Instruments Recognition and Measurement, the Company applies fair value hedge accounting
The Company documents, at the inception of each hedging transaction, the relationship between hedging instruments and
hedged items, as well as its nsk management objective and strategy for undertaking vanous hedge transactions The
Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the denvatives that
are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items
Fair value hedge accounting

Changes in the fair value of denvatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the hedged asset or liability that are attnbutable to the
hedged nsk
If the hedge no longer meets the cntena for hedge accounting, the fair value hedge adjustment cumulatively
made to the carrying amount of the hedged item is, for items earned at amortised cost, amortised to the Statement of
Comprehensive income over the penod to matunty of the previously designated hedge relationship using the effective
rate method
Derivatives that do not qualify for hedge accounting

Certain derivative instruments entered into as economic hedges may not qualify for hedge accounting These derivatives
are classified as held for trading Changes in the fair value of any denvative that does not qualify for hedge accounting
are recognised immediately in the Statement of Comprehensive income
Embedded Derivatives
Certain financial instruments contain both denvative and non denvative component In such cases, the denvative
component is termed an embedded denvative When the economic charactensties and nsk of embedded denvatives are not
closely related to those of the host contract and the host contract is not earned at fair value through profit or loss,
the embedded denvatives is treated as a separate denvative Embedded denvatives separates from the host contract are
measured at fair value with changes in fair value recognised in net trading income
29
1.10 Collateral and Netting

Collateral
The Company receives collateral in the form of cash in respect of credit instruments, such as denvatives, in order
to reduce credit nsk Collateral received in the form of cash is recognised on balance sheet in the category "Loans and
Advances to Bank" with a corresponding liability Any interest payable or receivable ansing is recorded as interest
expense or interest income respectively
Netting
The Company enters into master netting agreements with counterparties wherever possible, and when appropriate, obtain
collateral Master netting agreements provide that, if an event of default occurs, all outstanding transactions with the
counterparty will fall due and all amounts outstanding will be settled on a net basis Financial assets and liabilities
are offset and the net amount reported in the Statement of Financial position if, and only if, there is a currently
enforceable legal nght to offset the recognised amounts and there is an intention to settle on a net basis, or to realise
the asset and settle the liability simultaneously
111 Property, plant and equipment

Property, plant and equipment is held for use in the business and is stated at cost less accumulated depreciation and
provisions for impairment, if any Additions and subsequent expenditure are capitalised only to the extent that they
enhance the future economic benefits expected to be denved from the asset Property, plant and equipment are
depreciated on a straight-line basis over their estimated useful economic lives as follows
Fixtures and fittings 12 5% to 25% per annum

Motor vehicles 20% per annum
The useful lives and residual values of property, plant and equipment are reviewed and adjusted, if appropriate, at each
financial reporting date
Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount The recoverable
amount of an asset is the higher of its fair value less costs to sell and its value in use Gains and losses on disposal of
property, plant and equipment are included in the Statement of Comprehensive income in the penod of derecognition
112 Asset classified as held for sale

An asset is classified as held for sale if it is pnmanly acquired for the purpose of selling it in the near term and
where a sale is highly probable and is expected to occur within one year Assets classified as held for sale are stated
at the lower of their carrying amount and fair value less costs to sell Gains and losses arising from changes in fair value
are recognised in the Statement of Comprehensive income
Loans which are due to be transferred from the Company to the National Asset Management Agency ("NAMA") are
classified as held for sale These assets meet the definition of a disposal group under IFRS 5 as their carrying amount
expected to be recovered pnncipally through a sale transaction and the sale is highly probable within one year These
loans continue to be earned at amortised cost less provision for impairment See Note 14
113 Foreign currency translation

Functional and presentational currency
The financial statements are presented in Sterling, which is the Company's functional and presentational currency
Transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the
transaction Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
30
1 13 Foreign currency translation continued

currency rate of exchange ruling at the balance sheet date All differences are recognised in the Statement of
Comprehensive income Foreign exchange gains and losses resulting from the settlement of such transactions and
from the retranslation at period end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the Statement of Comprehensive income Non-monetary items that are measured in terms
of histoncal cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined
1 14 Provisions
Provisions are recognised for present legal or constructive obligations arising from past events where it is
probable that a transfer of economic benefits will be necessary to settle the obligation, and it can be reliably
estimated
When the effect is matenal, provisions are determined by discounting expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and, where appropnate, the nsks specific to the
liability
Payments are deducted from the present value of the provision and interest at a relevant discount rate is charged
annually to interest expense Changes in the present value of the liability as a result of movements in interest rates are
included in other financial income The present value of provisions are included in other liabilities
Legal claims and other contingencies

Provisions are made for legal claims where the Company has a present legal or constructive obligation as a result of
past events and it is more likely than not that an outflow of resources will be required to settle the obligation and the
amount can be reasonably estimated
Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events giving
nse to present obligations where the transfer of economic benefit is uncertain or cannot be reliably measured
Contingent liabilities are not recognised but are disclosed in the notes to the financial statements unless they are remote
115 Taxation (current and deferred)

Current tax is the expected tax payable (shown as a liability) or the expected tax receivable (shown as an asset) on the
taxable income for the penod adjusted for changes to previous years and is calculated based on the applicable tax
law in the United Kingdom Deferred tax is provided using the balance sheet liability method on temporary differences
arising between the tax bases of assets and liabilities for taxation purposes and their carrying amounts in the
financial statements Current and deferred taxes are determined using tax rates based on legislation enacted or
substantively enacted at the financial reporting date and expected to apply when the related tax asset is realised or the
related tax liability is settled
Deferred tax assets are recognised where it is probable that future taxable profits will be available against which
temporary differences will be utilised
Current and deferred taxes are recognised in the Statement of Comprehensive income in the penod in which the profits
or losses anse except to the extent that they relate to items recognised directly in equity, in which case taxes are
also recognised in equity
Deferred and current tax assets and liabilities are only offset where there is both the legal nght and intention to settle on
a net basis, or to realise the asset and settle the liability simultaneously
31
116 Leases
Company as lessor
Leasing and instalment credit agreements with customers are classified as finance leases if the lease agreements
transfer substantially all the nsks and rewards of ownership, with or without ultimate legal title Assets that are held
subject to finance lease, or instalment credit agreements are recorded as receivables based on the present value
of the lease payments, discounted at the rate of interest implicit in the lease, less any provisions for bad and
doubtful rentals The difference between the total payments receivable under the lease and the present value of
the receivable is recognised as unearned finance income, which is allocated to accounting penods under the
pre-tax net investment method to reflect a constant penodic rate of return Impairment reviews on finance leases are
earned out in the same manner as impairment reviews of loans and receivables (Note 1 8 and 1 20 of Accounting
policies)
Assets leased to customers are classified as operating leases if the lease agreements do not transfer substantially all
the nsks and rewards of ownership The leased assets are included within property, plant and equipment on the
Company's Statement of Financial position and depreciation is provided on the depreciable amount of these assets
on a systematic basis over their estimated useful lives Rental income, including the effect of lease incentives,
is recognised on a straight line basis over the non cancellable term of the lease
Company as lessee
Operating lease rentals payable and related lease incentives receivable are recognised as an expense in the Statement
of Comprehensive income on a straight-line basis over the lease term unless another systematic basis is more
appropnate
117 Segmental reporting

Business segments are distinguishable components of the Company that provide products or services that are subject to
risks and rewards that are different to those of other business segments Geographical segments provide products or
services within a particular economic environment that is subject to nsks and rewards that are different to
those of components operating in other economic environments
The Company only has one pnmary business segment being the provision of commercial property finance Geographical
segments are provided based on the underlying location of the assets being funded On this basis the Company is
treating geographical segments as its pnmary segment
1 18 Cash and cash equivalents

For the purposes of the Statement of Cash flows, cash compnses cash on hand and demand deposits Cash equivalents
comprise highly liquid investments that are convertible into cash with an insignificant risk of changes in value and
with onginal matunties of less than three months
1 19 Financial guarantees
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder
for a loss it incurs because the guaranteed party fails to meet a contractual obligation or to make payment when due in
accordance with the onginal or modified terms of a debt instrument
Financial guarantees are given to banks, financial institutions and other bodies on behalf of customers to secure loans,
and other lending facilities and to other parties in connection with the performance of customers under obligations
related to contracts, advance payments made by other parties, tenders, retentions and the payment of import duties and
taxes
Financial guarantees are initially recognised in the financial statements at fair value on the date that the guarantee
was given Subsequent to initial recognition, the Company's liabilities under such guarantees are measured at the higher
of the initial measurement, less amortisation calculated to recognise in the Statement of Comprehensive income,
the fee income earned over the penod, and the best estimate of the expenditure required to settle any financial
obligation ansing as a result of the guarantees at the financial reporting date
32
1 20 Significant accounting estimates and judgements

The reported results of the Company are sensitive to the accounting policies, assumptions and estimates that underlie
the preparation of its financial statements IFRS require the directors, in prepanng the Company's financial statements, to
select suitable accounting policies, apply them consistently and make judgements and estimates that are reasonable and
prudent
The judgements and estimates involved in the Company's accounting policies that are considered by the directors to be
the most important to the portrayal of the Company's financial condition and that have a significant nsk of causing a
matenal adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below
The use of estimates, assumptions or models that differ from those adopted by the Company could affect its reported
results
Loan impairment
The estimation of potential loan losses is inherently uncertain and depends upon many factors On an ongoing basis
potential issues are identified promptly as a result of individual loans being regularly monitored At least every six months
the Company through the auspices of the Group Risk function of AIBC, the ultimate parent of the Company, reviews its
loan portfolios to assess whether there is objective evidence of impairment If there is objective evidence that a loan
is impaired, a provision is recognised equating to the amount by which the book value of the loan exceeds the present
value of its expected future cash flows Provisions are calculated on an individual basis with reference to expected
future cash flows including those arising from the realisation of collateral The determination of these provisions
often requires the exercise of considerable judgement by management involving matters such as future economic
conditions and the resulting trading performance of the customer and the value of collateral, for which there may not be a
readily accessible market As a result these provisions can be subject to significant vanation as time progresses and the
circumstances become clearer The methodology and assumptions used for estimating both the amount and timing of
future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience
An additional incurred but not reported ('IBNR') collective provision is required to cover losses inherent in the loan book
where there is objective evidence to suggest that it contains impaired loans but the individual impaired loans cannot
yet be identified This provision takes account of observable data indicating that there is a measurable decrease in the
estimated future cash flows from a group of loans with similar credit nsk charactenstics, although the decrease cannot
yet be identified within the individual loans in the group
This provision is calculated by applying incurred loss factors to groups of loans sharing common risk characteristics
Loss factors are determined by histoncal loan loss expenence as adjusted for current observable market data
Adjustments reflect the impact of current conditions that did not affect the years on which the histoncal loss expenence
is based and remove the effects of conditions in the histoncal penod that do not exist currently
The future credit quality of loan portfolios against which an IBNR collective provision is applied is subject to
uncertainties that could cause actual credit losses to differ matenally from reported loan impairment provisions These
uncertainties include factors such as local and international economic conditions, borrower specific factors, industry
trends, interest rates, unemployment levels and other external factors
Asset classified as held for sale

Assets that the Company believes will be transferred to NAMA are classified as held for sale in the Statement of Financial
position NAMA has complete discretion as to which assets they may purchase from the Company, and not all assets
classified as held for sale may ultimately transfer to NAMA These assets are measured on the same basis as pnor to
their reclassification as held for sale
Assets will continue to be earned in the Statement of Financial position until they legally transfer to NAMA The amount
of consideration received from NAMA will be measured at fair value and any difference between the carrying value
of the asset on the date of transfer and the consideration received will be recognised in the Statement of Comprehensive
income
33
1 20 Accounting estimates and judgements continued

Fair value of financial instruments
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable and willing
parties in an arm's length transaction Fair values are determined by reference to observable market prices where these
are available and are reliable Where representative market prices are not available or are unreliable, fair values are
determined by using valuation techniques which refer to observable market data These include pnces obtained from
independent third party pncmg service providers, compansons with similar financial instruments for which market
observable pnces exist, discounted cash flow analyses and other valuation techniques commonly used by market
participants
Where non-observable market data is used in valuations, any resulting difference between transaction pnce and
valuation is deferred The deferred day one profit or loss is either amortised over the life of the transaction, deferred
until the instrument's fair value can be determined using market observable inputs, or realised through settlement,
depending on the nature of the instrument and availability of market observable inputs The accuracy of fair value
calculations could be affected by unexpected market movements when compared to actual outcomes
Expected life of lending

IAS 39 requires interest and arrangement fees which form an integral part of the return earned from lending to be
measured using the effective interest rate method The effective interest rate is the rate that exactly discounts estimated
future cash receipts and payments through the expected life of the loan or, when appropnate, a shorter penod to the
net carrying amount of the loan
Management uses judgement to estimate the expected life of each loan and hence the expected cash flows relating
to it The accuracy of the effective interest rate would therefore be affected by unexpected market movements resulting
in altered customer behaviour and differences in the models used when compared to actual outcomes
Taxation
The taxation charge accounts for amounts due to fiscal authonties in the United Kingdom, and includes estimates
based on a judgement of future profits and the application of law and practice in certain cases in order to determine
the quantification of any liabilities arising In arriving at such estimates, management assesses the relative merits
and nsks of tax treatments assumed, taking into account statutory, judicial and regulatory guidance and, where
appropnate, external advice Where the final tax outcome is different from the amounts that are currently recorded,
such differences will impact upon the current and deferred tax amounts in the penod in which such determination
is made
34
1 21 Prospective accounting changes

The Company has not applied the following new standards, amendments to standards and interpretations (IFRICs)
that have been adopted by the International Accounting Standards Board which would be applicable to the
Company with an effective date after the date of these financial statements
Amendments to IFRS 5 - Non- Current Assets Held for Sale and Discontinued Operations,
Amendments to IFRS 7 - Financial Instruments Disclosures,
IFRS 8 - Operating Segments,
Amendments to IAS 7 - Statement of Cash Flow,
Amendments to IAS 16 - Property, Plant and Equipment
Amendments to IAS 17 - Leases,
Amendments to IAS 19 - Employee Benefits
Amendments to IAS 23 - Borrowing Cost,
Amendments to IAS 24 - Related Party Disclosures,
Amendments to IAS 32 - Financial Instruments Presentation,
Amendments to IAS 36 - Impairment of Assets,
IFRIC Interpretation 19 - Extinguishing Financial Liabilities with Equity Instruments
These will be adopted in future years and are not expected to have a matenal impact on the Company's results or
financial statements
The directors are still considering the impact of the following new standard
IFRS 9 - Financial Instruments
35
Segmental reporting
Geographical segments 15 months to 31 December 2009

Mainland Rest of
UK Europe World Total
£ £ £ £
Revenue from external customers 215,300,835 78,273,835 376,946 293,951,616
l o s s Derore lax (a; {D) {c) (1,109,510,018) (87,926,179) (234,785) (1,197,670,982)
External assets* 2,644,625,610 1,420,915,700 105,574,616 4,171,115,926

Intercompany assets (c) 1,413,000,092 18,239,208 1,431,239,300
Total assets 4,057,625,702 1,439,154,908 105,574,616 5,602,355,226
'Including assets held for sale 1,958,318,468 269,876,602 73,537,221 2,301,732,291
External liabilities (c) 451,400,672 1,101,238,377 5,038 1,552,644,087

Intercompany liability (c) 3,261,846,510 413,119,126 118,733,556 3,793,699,192
Total liabilities 3,713,247,182 1,514,357,503 118,738,594 5,346,343,279
Additional information
Impairment losses on loans and 872,273,124 107,748,811 15,811 980,037,746
advances (including IBNR)
12 months to 30 September 2008
Mainland Rest of
UK Europe World Total
£ £ £ £
Revenue from external customers 327,025,356 74,110,399 982,565 402,118,320
lLossj/proTit Derore tax (a; (dj (c) (122,456,342) 5,710,991 (60,099) (116,805,450)
External assets 3,626,141,887 1,227,296,309 7,631,202 4,861,069,398

Intercompany assets (c) 1,064,180 15,464,990 16,529,170
Total assets 3,627,206,067 1,242,761,299 7,631,202 4,877,598,568
External liabilities (c) 868,750,711 948,207,950 1,816,958,661

Intercompany liability (c) 2,510,567,940 195,192,447 120,641,419 2,826,401,806
Total liabilities 3,379,318,651 1,143,400,397 120,641,419 4,643,360,467
Additional information
Impairment losses on loans and 117,774,660 6,298,508 124,073,168
advances (including IBNR)
The Company only has one business segment being the provision of commercial property finance Geographical
segments are provided based on the underlying location of the assets being funded Geographical segments are
the pnmary segments
Revenue includes interest and similar income, fee and commission income and other operating income
The geographical segments are based pnmanly on the currency of the related assets
36
2 Segmental reporting continued
(a) All subordinated liabilities and other capital instruments are included under the relevant currency of issue
Thus Euro based subordinated liabilities and other capital instruments are analysed against mainland Europe,
whereas Sterling based subordinated liabilities and other capital instruments are analysed against the
United Kingdom
(b) Income generated from shareholders funds is allocated against the United Kingdom
(c) All items related to the Japanese Yen financing arrangement have been allocated against the United
Kingdom (See Note 5)
15 months 12 months
3 Interest and similar income 31 Dec 2009 30 Sep 2008
£ £
Interest on loans and advances to banks 580,470 9,380,658

Interest on loans and advances to customers 280,232,132 388,324,607
Amortisation of other loans and receivables 8,932,071
Finance leasing and hire purchase income 461,543 1,458,156
290,206,216 399,163,421
Included in interest on loans and advances to customers is £32,478,564 (2008 £4,795,676) which relates to
interest accrued on impaired loans
15 months 12 months
4 Interest and similar expenses 31 Dec 2009 30 Sep 2008
£ £
Interest on subordinated liabilities and other capital instruments 98,010,516 123,795,370

Interest on loans from banks - 7,563
Interest on intercompany balances 117,363,991 163,157,274
215,374,507 286,960,207
On 26 November 2009, the Company elected to defer the coupon payment on the £200m Guaranteed
Step-Up Callable Perpetual Capital Secunties issued by the Company, which was due on 28 December
2009 The coupon continues to be included in interest expense as the coupon is cumulative
15 months 12 months
5 Trading losses 31 Dec 2009 30 Sep 2008
£ £
Hedge ineffectiveness (382,023) 893,371

Foreign exchange contracts (156,054,027) (24,399,377)
Foreign exchange revaluation on foreign currency liabilities (456,604,825) (76,401,928)
(613,040,875) (99,907,934)
Foreign exchange contracts and revaluation on foreign currency liabilities represent the impact of a Japanese
Yen financing arrangement, entered into in May 2008 to enable the parent company and therefore the ultimate
parent company to avail of low cost financing on an after tax basis at Yen interest rates The arrangement was
ended dunng December 2008 and January 2009 The financing arrangement was intended to reduce the
37
5 Trading losses continued
UK Group's {being AIBC -London Branch, CDB (U K ) Limited and its UK subsidianes) overall net
cost of funding and was structured in a manner which was anticipated to result in no net after tax
loss for the UK Group arising from currency fluctuation In the six months to 31 March 2009 the arrangement
resulted in a pre-tax loss of £156,054,028 and aftertax benefit of £14,912,416 The strengthening
of Yen from foreign exchange contracts by £612,658,852 (30 September 2008 £100,801,305) for the Company
which is reduced by related foreign exchange gains in other UK, group companies of £456,604,825
(30 September 2008 £76,401,928) resulting in a net negative impact on the UK group and therefore the
ultimate parent of £156,054,027 (30 September 2008 £24,399,377) on a pre-tax basis The foreign exchange
translation loss related to this arrangement resulted in a partial offset in the UK group's taxation charge in the current
penod However, because of the significant operating losses of the Company in the nine months to 31 December 2009,
£84,168,480 (2008 £Nil) of the taxation benefit has not been recognised, resulting in a pre-tax loss for the fifteen
month penod to 31 December 2009 of £156,054,028 (12 months to 30 September 2008 £24,399,377) for the UK
Group and an after tax cost of £69,256,064 (2008 gain £4,909,509) The potential benefit of these losses earned
forward is a component of unrecognised deferred tax assets in Note 19
6 Gain on repurchase of financial liabilities at amortised cost 15 months 12 months

31 Dec 2009 30 Sep 2008
£ £
Gams on repurchase of financial liabilities measured at amortised cost 323,602,801

323,602,801
The Company recognised gains of £323,602,801 (2008 Nil) on the repurchase of £401,051,000 (2008 Nil) nominal
value of undated loan capital recorded in subordinated liabilities and instruments (Note 23) as part of the overall capital
management activities of AIBC These instruments were bought back at 27% of par
The net gain of £323,602,801 results from consideration paid of £108,283,770 and the carrying value of the secunties
repurchased of £401,051,000 Included in the gain is £30,835,571 pnmanly in relation to the release of hedge
accounting fair value adjustments following termination of the related interest rate swaps
15 months 12 months
7 Administrative Expenses 31 Dec 2009 30 Sep 2008
£ £
Staff costs
Wages and salanes 4,313,573 4,953,318
Pension costs 650,338 578,873
Social welfare costs 536,533 583,297
Other staff costs 5,205 23,413
5,505,649 6,138,901
Other administrative costs 1,187,154 1,824,512
6,692,803 7,963,413
Key management personnel that are directors of the Company are remunerated by the ultimate parent company, Anglo
Insh Bank Corporation Limited These directors are full time employees of Anglo Insh Bank Corporation Limited and
receive no additional remuneration for their services to the Company The staff costs reflected above are allocated to
the Company based on the Company's share of Anglo Insh Bank Corporation Limited's total loan base in the United
Kingdom The Company does not directly employ any staff
38
8 Auditor's remuneration
Audit fees were borne by the ultimate parent undertaking, Anglo Insh Bank Corporation Limited
The audit fee relating to this Company was £50,000
15 months 12 months
Provision for impairment 31 Dec 2009 30 Sep 2008
r
X. t.
Loans and advances to customers
Specific 981,007,902 57,573,168
Collective (6,590,156) 66,500,000
974,417,746 124,073,168
Financial guarantee provisions 5,620,000

Total provision 980,037,746 124,073,168
15 months 12 months
Taxation 31 Dec 2009 30 Sep 2008
c c
Corporation tax
- current penod (23,405,878) (32,916,543)
- pnor years 6,495,552 1,064,296
(16,910,326) (31,852,247)
Deferred tax
- current penod (2,534,502) (1,149,755)
- pnor years - (946,736)
(19,444,828) (33,948,738)
Effective tax rate 2% 29%
The deferred tax credit ansing from the ongination and reversal of temporary differences was as follows
Leased assets (410,847) (1,149,755)
Deferred tax liability covered by deferred tax assets (2,123,655) -
(2,534,502) (1,149,755)
The reconciliation of tax on losses on ordinary activities at the standard Corporation tax rate to the Company's
actual total tax credit is analysed as follows
Operating loss before taxation (1,197,670,982) (116,805,450)
Loss on ordinary activities before taxation at 28% (2008 29%) (335,347,875) (33,873,581)
Effects of
Non deductible expenses 3,528 (946)
Effect of reduction in tax rate - 39,228
Losses carried back - (241,378)
Deferred tax asset not recognised on losses earned forward 76,982,356 -
Deferred tax liability covered by deferred tax assets (2,123,655) -
Deemed release of creditor following Tier 1 purchase 234,569,708 -
Other (24,442) 10,379

Pnor year adjustments - Current Tax 6,495,552 1,064,296
Pnor year adjustments - Deferred Tax - (946,736)
Total taxation (19,444,828) (33,948,738)
39
11 Reti rement Benefits
The total pension costs allocated to the Company for the penod were £650,338 (2008 £578,873), which relate to the
Company's share of defined contnbution pension costs for notionally allocated employees as descnbed in Note 7
12 Derivative financial instruments
Derivative financial instruments denve their value from the pnce of underlying vanables such as interest rates, exposure
to exchange rates, credit spreads or equity and other indices Denvatives enable users to efficiently reduce or alter
market nsks In the normal course of business, the Company is party to vanous types of financial instruments used to
reduce its own exposure to fluctuations in interest rates
With the exception of designated hedging denvatives, as defined by IAS 39, denvatives are treated as held for trading
The held for trading classification includes economic hedges which do not meet the strict qualifying critena for
hedge accounting
The notional amount of a derivative contract does not necessanly represent the Company's real exposure to credit
nsk, which is limited to the current replacement cost of contracts with a positive fair value to the Company should
the counterparty default To reduce credit nsk the Company uses a vanety of credit enhancement techniques
such as master netting agreements and collateral support agreements, where cash secunty is provided
against the exposure Derivatives are earned at fair value and shown in the balance sheet as separate
totals of assets and liabilities Fair values are obtained from quoted market pnees in active markets and/or using
valuation techniques including discounted cash flows models Derivative assets and liabilities on different transactions
are only netted if a legal right of offset exists and the cash flows are intended to be settled on a net basis
Details of the objectives, policies and strategies ansing from the Company's use of financial instruments, including
denvative financial instruments, are presented in Note 28 on nsk management and control
The following table overleaf presents the notional and fair value amounts of denvative financial instruments, analysed
by product and category
40
Derivative financial instruments continued 31 Dec 2009

Contract
notional Fair values
amount Assets Liabilities
£ £ £
Derivatives held for hedging designated fair value hedges

Interest rate swaps 1,464,669,000 79,434,315 10,289,764
Total denvative financial instruments 1,464,669,000 79,434,315 10,289,764
30 Sep 2008
Contract
notional Fair values
amount Assets Liabilities
£ £ £
Derivatives held for trading
Cross currency swaps 400,000,000 - 24,399,377
Derivatives held for hedging designated fair value hedges

Interest rate swaps 1,748,360,000 31,212,066 62,821,929
Total derivative financial instruments 2,148,360,000 31,212,066 87,221,306
The above interest rate swaps have been entered into in order to convert the interest rate payable on the various
Subordinated Liabilities and other Capital Instruments to 3 month LIBOR / EURIBOR as applicable This enables the
matching of interest earned on assets with these liabilites and thus eliminates interest rate nsk Further details are given
in Note 28
The cross currency swaps held at 30 September 2008 matured in December 2008 and January 2009 as part of the
matunty of the Japanese Yen financing transaction (see Note 5)
Hedging activities
The Company uses denvatives for hedging purposes to mitigate the interest rate nsk exposure ansing from its
issuance of its subordinated liabilities For accounting purposes the Company uses denvatives which qualify as fair value
hedges
Fair value hedges

The Company uses interest rate swaps to hedge the interest rate nsk resulting from potential changes in the fair value
of certain liabilities Hedged liabilities include subordinated liabilities issued
For the penod ended 31 December 2009 the Company recognised a net gain of £102,612,358 (2008 gain of £15,030,320)
in trading losses m respect of fair value movements on hedging instruments designated as fair value hedges
The corresponding net loss attnbutable to the hedged nsk on the hedged items, also recognised in trading
losses was £102,994,381 (2008 loss of £14,136,948)
41

31 Dec 30 Sep
13 Loans and advances to banks 2009 2008
£ £
Placements with banks - 14,332,222
The external ratings profile of loans and advances to banks is as follows

2009 2008
£ £
AAA/AA - 4,845,826
A
BBB+ / BBB / BBB- - 9,486,396
Total - 14,332,222
14 Assets classified as held for sale 31 Dec 30 Sep

2009 2008
£ £
Loans classified as held for sale 3,166,082,432

Less provisions for impairment (864,350,140)
2,301,732,292
The assets classified as held for sale are those loans and advances designated for transfer to the National Asset
Management Agency (NAMA) This designation happened on 31 December 2009 Further details are given in Note 29
15 Other loan and receivables 31 Dec 30 Sep

2009 2008
£ £
Other loans and receivables 324,655,751

324,655,751
On 30 July 2009, the Company purchased the following Tier 1 Secunties issued by fellow AIBC
Group entities
- €403 million of the €600 million Fixed rate / Vanable rate Guaranteed Non-voting Non-cumulative Perpetual
Preferred Securities issued by Anglo Irish Capital UK LP The Company paid €109m
- €526 million of the €600 million Fixed rate / Floating rate Guaranteed Non-voting Non-cumulative Perpetual
Preferred Securities issued by Anglo Irish Capital UK (2) LP The Company paid €142m
- £344 million of the £350m Fixed rate i Floating rate Guaranteed Non-voting Non-cumulative Perpetual
Preferred Securities issued by Anglo Insh Capital UK (3) LP The Company paid £93m
In all cases the Company paid 27% of par value for these Tier 1 Secunties as part of an overall liability
management programme by the AIBC Group
These purchases are classified as loans and receivables as they are not traded in an active market and they have
fixed and determinable payment dates
42
16 Loans and advances to customers
31 Dec 30 Sep
Loans and advances to customers 2009 2008
£ £
Loans and advances to customers 1,658,327,514 4,914,691,441

Amounts receivable under finance leases 2,683,961 10,427,362
Amounts receivable under hire purchase contracts 12,909,608
1,661,011,475 4,938,028,411
Provision for impairment (217,204,723) (145,050,566)

1,443,806,752 4,792,977,845
The Company's loans and advances to customers at 31 December 2009 are stated following the reclassification of loans
and related provisions to assets classified as held for sale of £3,166,082,432 and £864,350,140 respectively
Loans pledged as collateral

Loans and advances to customers include loans of £64,878,986 (2008 £41,914,722) which have been transferred to
Anglo Insh Covered Bonds LLP, a limited liability partnership in which the Company is a member The transferred
loans secure bonds issued by the UK Branch of Anglo Irish Bank Corporation Limited under its €10bn (2008 €5bn)
covered bond programme The loans remain on the Company's balance sheet as the Company retains substantially
all of the nsks and rewards relating to them
31 Dec 30 Sep
Risk concentrations 2009 %of 2008 %of
£ total loans £ total loans
United Kingdom 521,928,529 36% 3,543,945,537 74%

Europe 900,050,067 62% 1,199,489,312 25%
Loans secured on real estate 1,421,978,596 98% 4,743,434,849 99%
Other secured 21,828,156 2% 49,542,996 1%
Total loans and advances to customers

after provisions for impairment 1,443,806,752 100% 4,792,977,845 1QQ%
The analysis shows nsk concentrations based on the geographic location of the secured real estate
Asset quality
The Company monitors lending asset quality on an ongoing basis using the rating categones outlined below These
ratings provide a common and consistent framework for aggregating and comparing exposures across all lending
portfolios The categones are as follows
Good quality
Both good and high quality loans are managed similarly from a nsk perspective and consequently have been
aggregated in the current reporting penod Good quality ratings apply to exposures that are performing as expected
and are of sound financial standing These exposures are considered low to moderate nsk
Satisfactory quality ,
This rating applies to exposures that continue to perform satisfactonly, but are subject to closer monitonng
43
16 Loans and advances to customers continued
Lower quality but not past due nor impaired

This rating applies to exposures that require increased management attention to prevent any detenoration in asset
quality No evidence of specific impairment exists
Past due but not impaired

These are loans and receivables where the contractual interest or principal payments are one day or more past due As at
the end of the reporting penod there is no objective evidence of impairment due to the level of collateral and/or
personal recourse available to the Company
Impaired loans
Loans are classified as impaired and impairment losses are incurred if, and only if, there is objective evidence of
impairment as a result of one or more loss events that occurred after the initial recognition of the loan The loan is
impaired if that loss event (or events) has an impact such that the estimated present value of future cash flows is
less than the current carrying value and can be reliably measured
Credit grading of lending assets

31 December 2009
Commercial Business Residential Other Total
Banking
£ £ £ £ £
Good quality 560,649,907 21,810,954 65,420,024 83,382 647,964,267

Satisfactory quality - - 3,360,407 - 3,360,407
Lower quality but not past due
nor impaired 408,862,459 - 8,514,887 - 417,377,346
Total neither impaired nor
past due 969,512,366 21,810,954 77,295,318 83,382 1,068,702,020
Past due but not impaired 106,688,710 - 17,991,082 2,122,147 126,801,939

Impaired loans 425,722,141 289,919 39,495,456 - 465,507,516
Total loans 1,501,923,217 22,100,873 134,781,856 2,205,529 1,661,011,475
Provision for impairment on loans and advances to customers
31 December 2009
Banking
£ £ £ £ £
At beginning of period 62,487,800 1,092,885 74,425,164 7,044,718 145,050,567
Charge against profits - specific 692,212,664 2,684,631 286,052,782 57,825 981,007,902
- collective (3,676,435) (2,913,721) (6,590,156)
Write-offs - (735,287) - (4,793,094) (5,528,381)
Unwind of discount (16,219,667) 2,311 (16,261,208) - (32,478,564)
Exchange movements 45,766 25,270 22,459 - 93,495
Transfer to assets classified as
held for sale (566,528,685) (5,260) (297,816,195) - (864,350,140)
At end of penod 168,321,443 3,064,550 43,509,281 2,309,449 217,204,723
Specific 127,187,987 2,951,003 15,962,920 146,101,910

Collective 41,133,456 113,547 27,546,361 2,309,449 71,102,813
Total provision 168,321,443 3,064,550 43,509,281 2,309,449 217,204,723
44
16 Loans and advances to customers continued
Credit grading of lending assets
30 September 2008
Banking
£ £ £ £ £
Good quality 1,913,192,652 30,778,273 1,160,997,357 325,521,086 3,430,489,368

Satisfactory quality 416,704,484 - 125,065,818 25,132,000 566,902,302
nor impaired 290,365,426 - 179,011,908 19,698,964 489,076,298
Total neither impaired nor past
due 2,620,262,562 30,778,273 1,465,075,083 370,352,050 4,486,467,968
Past due but not impaired 143,857,827 - 103,375,682 2,653,599 249,887,108
Impaired loans 28,252,373 - 168,827,825 4,593,137 201,673,335
Total loans 2,792,372,762 30,778,273 1,737,278,590 377,598,786 4,938,028,411
Provision for impairment on loans and advances to customers
30 September 2008
Banking
£ £ £ £ £
At beginning of year 7,661,569 113,547 23,924,854 28,498,626 60,198,596
Charge against profits - specific 12,767,083 - 43,379,850 1,426,235 57,573,168
- collective 38,426,909 - 26,801,347 1,271,744 66,500,000
Wnte-offs (1,690,986) - (9,403,669) (23,851,503) (34,946,158)
Recovenes of previous wnte-offs 32,159 - 9,288 - 41,447
Unwind of discount (797,127) - (3,992,392) (6,157) (4,795,676)
Exchange movements 277,290 - 192,767 9,132 479,189
At end of year 56,676,897 113,547 80,912,045 7,348,077 145,050,566
Specific 12,155,803 50,680,846 5,038,628 67,875,278

Collective 44,521,094 113,547 30,231,199 2,309,449 77,175,288
Total provision 56,676,897 113,547 80,912,045 7,348,077 145,050,566
45
17 Leasing
Loans and advances to customers include finance lease receivables (including hire purchase agreements), analysed by
remaining matunty as follows 31 Dec 30 Sep
2009 2008
£ £
Gross investment in finance leases
Three months or less 1,167,248 5,614,968
One year or less but over three months 1,333,322 7,696,977
Five years or less but over one year 325,559 10,625,508
2,826,129 23,937,453
Unearned future income on finance leases (142,168) (600,483)
Net investment in finance leases 2,683,961 23,336,970
Present value of minimum lease payments receivable

Three months or less 1,352,688 5,572,579
One year or less but over three months 1,277,774 7,358,913
Five years or less but over one year 53,499 10,405,478
Present value of minimum payments receivable 2,683,961 23,336,970
Provision for uncollectable minimum lease payments receivable* 504,458 1,004,665

* Included in provisions for impairment on loans and advances to customers
There are no unguaranteed residual values accruing to the benefit of the Company (2008 £Nil)
18 Property, plant & equipment Equipment

and motor
vehicles
£
Cost or valuation
At 30 September 2007 82,171
Additions 1,110
Disposals (15,715)
At 1 October 2008 67,566

Additions
Disposals
At 31 December 2009 67,566
Accumulated depreciation
Charge for the year 12,700
Disposals (15,715)
At 1 October 2008 50,604

Charge for the penod 12,599
Disposals
At 31 December 2009 63,203
Net book value

At 31 December 2009 4,363
46
18 Property, plant & equipment continued
As at 31 December 2009, the Company had annual commitments for future minimum lease payments under
non-cancellable operating leases as follows
Property
Operating leases which expire £
Within one year 75,000

One to five years 225,000
Over five years 37,500
337,500
19 Deferred taxation 31 Dec 30 Sep

2009 2008
£ £
At 1 October (2,623,509) (4,732,269)

Charge for the penod 2,534,502 2,096,491
Exchange movements 89,007 12,269
At end of penod (2,623,509)
Analysis of credit for the period

Impairment provisions (4,825)
Leased assets 410,847 1,540,787
Arrangement fees 560,968
Derivatives (439)
Derecognition of deferred tax liability 2,123,655
2,534,502 2,096,491
Analysis of deferred taxation asset

Leased assets 1,168,642
Impairment provisions 708,935
Other 14,774
1,892,351
Analysis of deferred taxation liability

Arrangement fees 4,487,747
Denvatives 28,113
4,515,860
Represented on the balance sheet as follows

Deferred tax assets 1,892,351
Deferred tax liabilities (4,515,860)
(2,623,509)
The deferred tax assets and liabilities have been calculated based on a tax rate of 28%
At 31 December 2009, pending a final decision in relation to the restructunng of AIBC group's operations, which is
subject to EC approval, a deferred tax asset of £76,982,356 (2008 £Nil) has not been recognised by the Company in
respect of unused tax losses earned forward, netted by the temporary timing differences giving a net deferred tax
asset of £74,858,701 (2008 £Nil)
47
20 Other assets 31 Dec 30 Sep

2009 2008
£ £
Amounts owed by group undertakings 1,431,222,402 16,529,058

Sundry assets 16,898 112
1,431,239,300 16,529,170
Amounts owed by group undertakings are pnmanly provided to a fellow CDB group undertaking as part of the
ending of the Japanese Yen financing transaction (Note 5) This Japanese Yen loan has no fixed matunty and bears
interest at the rate of 3 month JPY Ltbor plus 0 875%
21 Loans from Banks 31 Dec 30 Sep

2009 2008
£ £
Loans from Banks 256,138
The external ratings profile of loans from Banks is as follows
31 Dec 30 Sep
2009 2008
AAA/AA 256,138
A
BBB+ / BBB / BBB-
Total 256,138
22 Loans and borrowings 31 Dec 30 Sep

2009 2008
£ £
Amounts owed to ultimate parent undertaking 2,418,438,318 1,769,344,016

Amounts owed to group undertakings 1,375,260,874 1,057,057,790
3,793,699,192 2,826,401,806
Amounts owed to the ultimate parent undertaking are provided by Anglo Irish Bank Corporation Limited - London
Branch The facilities are provided by AIBC as required to enable the growth of the business with interest charged
on commercial terms AIBC has confirmed that it will continue to make funding available for the foreseeable future
Amounts owed to group undertakings are provided by a fellow CDB group undertaking as part of the Japanese Yen
financing transaction (Note 5) This Japanese Yen loan has no fixed matunty and bears interest at the rate of
3 month JPY fibor plus 0 875%
48
23 Subordinated liabilities and other capital instruments
31 Dec 30 Sep
2009 2008
£ £
Undated Loan Capital
£200m Step-up Callable Perpetual Capital Secunties (a) 21,085,210 205,336,383
£250m Tier One Non-Innovative Capital Secunties (b) 32,844,546 262,025,980
Other subordinated liabilities 88,810 79,030
Dated Loan Capital

€600,000,000 Fixed RateA/ariable Rate Subordinated Notes due 2034 (c) 522,197,114 432,860,985
€600,000,000 Fixed Rate/Variable Rate Subordinated Notes due 2036 (d) 568,573,776 454,554,633
£350,000,000 Fixed Rate/Floating Rate Subordinated Notes due 2037(e) 391,650,527 370,301,264
1,536,439,983 1,725,158.275
(a) The £200m 8 5325% Step-up Callable Perpetual Capital Securities were issued by the Company on 28 June 2001
The secunties were issued at par value and have the benefit of a subordinated guarantee by Anglo Insh Bank
Corporation Limited ("AIBC" or "guarantor")
The securities are perpetual secunties and have no matunty date However, they are redeemable in whole or in part at
the option of the issuer, subject to the pnor approval of the Insh Financial Regulator and of the guarantor, at their
pnncipal amount together with any outstanding payments on 28 June 2011 or on any coupon / payment date
thereafter
The securities bear interest at a rate of 8 5325% per annum to 28 June 2011 and thereafter at a rate of 4 55% per
annum above the gross redemption yield on a specified United Kingdom government secunty, reset every five years
The interest is payable semi-annually in arrears on 28 June and 28 December
The interest rate on the secunties has been swapped to 3 month LIBOR from the fixed rate on the secunties for the
duration of the fixed rate of interest This has been treated as a fair value hedge transaction
purchased of £181 million of the £200 million 8 5325% Step-up Callable Perpetual Capital Secunties at a purchase
pnce of 27% of par
(b) On 23 July 2002, the Company issued £160m 7 625% Tier One Non-Innovative Capital Securities ('TONICS')
at an issue pnce of 99 362% A further tranche of £90m TONICS was issued on 21 March 2003 at an issue pnce of
106 378% plus accrued interest These issues also have the benefit of a subordinated guarantee by AIBC
The TONICS are perpetual and have no matunty date However, they are redeemable in whole but not in part at the
option of the issuer, subject to the pnor approval of the Irish Financial Regulator and of the guarantor, at their
pnncipal amount together with any outstanding payments on 23 July 2027 or on any coupon payment date thereafter
Interest is payable annually in arrears on 23 July on the TONICS at a rate of 7 625% per annum until 23 July 2027
Thereafter, the TONICS will bear interest at a rate of 2 4% per annum above six month LIBOR, payable semi-annually
in arrears on 23 January and 23 July
The nghts and claims of the holders of the secunties and the TONICS are subordinated to the claims of the senior
creditors of the issuer or of the guarantor (as the case may be) in that no payment in respect of the secunties or the
TONICS or the guarantees in respect of them shall be due and payable except to the extent that the issuer or the
guarantor (as applicable) is solvent and could make such a payment and still be solvent immediately thereafter and
23 Subordinated liabilities & other capital Instruments continued
the guarantor is in compliance with applicable regulatory capital adequacy requirements Upon any winding up of the
issuer or the guarantor, the holders of the securities and the TONICS will rank pari passu with the holders of preferred
secunties and preference shares issued by or guaranteed by the issuer or the guarantor and in pnonty to all other
shareholders of the issuer and of the guarantor
The interest rate on the TONICS has been swapped to 3 month LIBOR from the fixed rate on the TONICS for the
duration of the fixed rate of interest This has been treated as a fair value hedge transaction
purchased of £221 million of the £250 million 7 625% Tier 1 Non Innovative Capital Secunties at a purchase pnce of
27% of par
(c) On 30 September 2004, the Company issued €600,000,000 Fixed RateA/ariable Rate Subordinated Notes due 2034
('Subordinated Notes') at par
The Subordinated Notes are due to mature on 30 September 2034 However, they are redeemable in whole, but not
in part, at the option of the Company on but not before 30 September 2009 or on any of the subsequent half
yearly interest payment dates No redemption occurred at 30 September 2009
Interest is payable semi-annually in arrears on 30 March and 30 September The interest rate on the Subordinated
Notes is fixed at 6 45% per annum until 30 September 2005 and thereafter resets every six months at a rate linked
to the Euro ten year constant matunty swap, subject to a cap of 9% per annum There were no issue costs
The interest rate on the Subordinated Notes has been swapped to 3 month LIBOR until 30 September 2014 This
has been treated as a fair value hedge transaction
(d) On 30 September 2006, the Company issued €600,000,000 Fixed Rate/Variable Rate Subordinated Notes due 2036
The Subordinated Notes are due to mature on 29 September 2036 However, they are redeemable in whole, but not
in part, at the option of the Company on but not before 29 September 2016 or on any of the subsequent yearly
interest payment dates
Interest is payable annually in arrears on 29 September up until 29 September 2016 and thereafter quarterly on
29 December, 29 March, 29 June and 29 September The interest rate on the Subordinated Notes is fixed at
5 619% per annum until 29 September 2016 and thereafter resets every 3 months at a rate linked to the rate of
deposits ("EUR-EURIBOR-Reference Banks") for a penod of 3 months plus a fixed amount of 2 6% per annum
There were no issue costs
The nghts and claims of the holders of the Subordinated Notes are subordinated to the claims of the senior creditors
of the Company in that no payment in respect of the Subordinated Notes shall be due and payable except to the
extent that the Company is solvent and could make such a payment and still be solvent immediately thereafter
The interest rate on the Subordinated Notes has been swapped to 3 month LIBOR until 30 September 2016 This
has been treated as a fair value hedge transaction
50
23 Subordinated liabilities & other capital instruments continued
e) On 30 May 2007, the Company issued £350,000,000 Fixed Rate/Floating Rate Subordinated Notes due 2037
The Subordinated Notes are due to mature on 1 June 2037 However, they are redeemable in whole, but not in
part, at the option of the Company on but not before 01 June 2017 or on any of the subsequent quarterly interest
payment dates
Interest is payable semi-annually in arrears on 1 June and 1 December up until 1 June 2017 and thereafter
quarterly on 1 March, 1 June, 1 September and 1 December The interest rate on the Subordinated Notes is
fixed at 7 349% per annum until 1 June 2017 and thereafter resets every 3 months at a rate linked to the rate
of deposits ("EUR-GBP-LIBOR-Reference Banks") for a penod of 3 months plus a fixed amount of 1 79% per annum
There were no issue costs
The nghts and claims of the holders of the Subordinated Notes are subordinated to the claims of the senior creditors
of the Company in that no payment in respect of the Subordinated Notes shall be due and payable except to the
extent that the Company is solvent and could make such a payment and still be solvent immediately thereafter
The interest rate on the Subordinated Notes has been swapped to 3 month LIBOR until 30 May 2017 This has
been treated as a fair value hedge transaction
Undated Loans Capital excluding other subordinated liabilities

The European Commission, as a condition of its approval of the Government's capitalisation of the Bank in mid 2009,
required that no further coupon payments be made on any of the AlBC's Tier 1 Secunties following the payment due on the
Company's TONICS
In December 2009 the Board resolved that the coupon on the Company's £200 million 8 5325% Step-up Callable Perpetual
Capital Secunties, which has the benefit of a subordinated guarantee from AIBC which would have been paid on 28
December 2009, would not be paid The effect of this decision was to trigger the "Dividend and Capital Restnction", the
provision of which preclude the Company and or Guarantor from declanng, paying or distnbuting a dividend or making a
payment on any of its ordinary share capital, its preference share capital or its Tier 1 Secunties, or make any payment
on a Tier 1 Guarantee until such time as the deferred coupon is satisfied
In addition, given the vanous conditions required for the payment of distributions on the Undated Loan Capital,
including positive reserves of both the Company and the AIBC group, and notwithstanding the conditions prescnbed by the
European Commission, it is not expected that distnbutions will be paid on either the Company's or other AIBC Group's
Tier 1 secunties for the foreseeable future
31 Dec 30 Sep
24 Called up share capital 2009 2008
£ £
Ordinary share capital
Ordinary shares of £1 each
Authonsed 3,300,000,000 Ordinary shares of £1 each (2008 300,000,000) 3,300,000,000 300,000,000
Allotted, called up and fully paid 1,220,000,000 220,000,000
Dunng the penod the authonsed share capital was increased from 300,000,000 to 3,300,000,000 shares The allotted,
called up and fully paid shares were increased from 220,000,000 to 1,220,000,000 shares On 18 November 2008,
1,000,000,000 ordinary shares were issued at par for a consideration of £1 billion and subscnbed by CDB (U K ) Limited,
the parent company, thereby increasing ordinary share capital by £1,000,000,000 to £1,220,000,000
51
25 Other reserve 31 Dec 30 Sep

2009 2008
£ £
Capital contnbution reserve 200,000,000

200,000,000
This reserve relates to a deed of waiver between the Company and AIBC where AIBC irrevocably waived
£200,000,000 of loans due by the Company to AIBC
26 Memorandum items 31 Dec 30 Sep

2009 2008
£ £
Contingent liabilities
Guarantees and irrevocable letters of credit 21,325,007 44,657,242
Performance bonds, VAT guarantees and other
transaction related contingencies 10,650,217 17,006,821
31,975,224 61,664,063
Commitments
128,400,939 703,350,537
Credit lines and other commitments to lend
31 Dec 30 Sep
27 Statement of Cash flows 2009 2008
£ £
Other non-cash items
Provisions for impairment 980,037,746 124,073,168
Unwind of discount (32,478,564) (4,795,676)
Loans and advances wntten off net of recoveries (5,528,381) (34,904,711)
Gains on repurchase of financial liabilities (323,602,801)
Net decrease in accruals and deferred income (19,583) (284,262)
Net decrease in prepayments and accrued income 97,837 111,968
Depreciation and amortisation 12,599 12,700
Proceeds of capital reserve - loan forgiveness 200,000,000
818,518,853 84,213,187
Cash and cash equivalents
Loans and advances to banks

(with a matunty of less than three months - Note 32) - 4,845,928
Loans from bank 256,138
256,138 4,845,928
The Company is required by its ultimate parent, Anglo Insh Bank Corporation Limited, to utilise all surplus cash to
reduce its Loans and Borrowings owed to parent undertaking
28 Risk management and control
The Company is subject to a vanety of nsks and uncertainties in the normal course of its business activities As
required by the Disclosure Rules and Transparency Rules of the Financial Services Authonty, a descnption of the
pnncipal nsks and uncertainties facing the Company is included in the Management Report In addition to these
pnncipal nsks and uncertainties, which include general macro-economic conditions, specific nsks also anse from the
use of financial instruments The specific nsks identified and managed by the Company include credit nsk, market nsk,
liquidity risk, operational risk and compliance nsk
52
28 Risk management and control continued

In order to effectively minimise the impact of these nsks, the directors place very significant reliance on the group
processes and nsk management framework of the ultimate parent, Anglo Insh Bank Corporation Limited ("AIBC"), covenng
accountability, measurement reporting and management of nsk throughout the AIBC Group including the Company
A key objective for the AIBC Group including the Company over the next 5 years is to reduce the nsk profile of the business
This note describes the nsk management and control framework in place in the AIBC Group and sets out the key nsks
which could impact the Company and AIBC Group's future results and financial position The nsks discussed below should
not be regarded as a complete and comprehensive statement of all potential nsks and uncertainties because there may be
risks and uncertainties of which the Company or the AIBC Group is not aware or which the Company or the AIBC Group
now does not consider significant but which in the future may become significant
Risk oversight and corporate governance of AIBC Group

AIBC Group's approach lo Corporate Governance and Risk Management is to ensure that there is independent
checking of key decisions by management AIBC Group has an established Risk Oversight Framework to deliver on
this approach The key elements of this framework are descnbed below
The Board of Directors of AIBC Group (AIBC Board) approves the overall AIBC Group strategy and is responsible for
approving the AIBC Group's risk appetite The Risk and Compliance Committee of the AIBC Board has the ultimate
oversight role on behalf of the AIBC Board The key responsibilities of the committee are as follows
- Review and oversight of the nsk and compliance profile of the AIBC Group within the context of the AIBC Board
determined nsk appetite,
- Making recommendations to the AIBC Board concerning the AIBC Group's risk appetite and particular risk or compliance
management practices of concern to the committee,
- Review and oversight of AIBC management's plans for mitigation of the material risks faced by the vanous business units
of the AIBC Group,
- Oversight of the implementation and review of nsk management and internal compliance and control systems throughout
the AIBC Group, and
- The AIBC Board delegates its monitonng and control responsibilities to the AIBC Group Credit Committees for credit
nsk (including banking and treasury credit nsk) and to the AIBC Group Asset and Liability Committee ('ALCO') for
market nsk and liquidity nsk These committees compnse senior management from throughout the AIBC Group and are
supported by a dedicated Group Risk Management function, which is headed by a Group Chief Risk Officer ('CRO')
53
The AIBC Group Audit Committee's role in the risk management framework includes ensuring AIBC Group compliance
with regulatory, prudential and financial reporting responsibilities It also reports to the AIBC Board on the effectiveness
of both financial and non-financial control processes operating throughout the AIBC Group The committee is supported by
AIBC Group Finance and AIBC Group Internal Audit, which are central control functions independent of line management
AIBC Group Internal Audit provides independent, objective assurance as to whether the AIBC Group's risk management
and control framework is adequate and functioning effectively
Management of nsk is the responsibility of staff at all levels However, pnmary responsibility for managing nsk and for
ensunng adequate controls are in place lies with the AIBC Group Risk Management function The AIBC Group Risk
Management function is responsible for
i
- Supporting the AIBC Leadership Team and AIBC Board in setting the AIBC Group's risk appetite and policies, ,
- Supporting management in business decision making through independent and objective challenge to business unit
management of nsk and exposures in line with agreed nsk appetites,
- Developing and communicating risk management policies, practices, appetites and accountabilities, and
- Analysing, monitonng and reporting matenal nsk management information across all nsk types and geographies to
present an aggregated view against the AIBC Group's risk appetite to the AIBC Group Leadership Team and AIBC (
Board
Some restructunng has taken place dunng the year within the AIBC Group Risk Management function The key changes '
are as follows
- Enhancement of asset quality teams,

- Establishment of a new Quality Assurance team, and
- Establishment of a Risk Operations team
Risk appetite and strategy

Risk appetite can be defined as the total impact of nsk the AIBC Group is prepared to accept in pursuit of its
strategic objectives Risk appetite sets the boundaries that form a dynamic link between the AIBC Group's strategy,
restructunng plan, capital management plan and the nsk management framework As the strategy of the AIBC Group's
changes, the appetite for risk is revisited to confirm that it continues to support the achievement of the AIBC Group's
objectives
The AIBC Group's current nsk exposure exceeds its nsk beanng capacity Risk reduction will remain a pnonty for the
AIBC Group both in the short and medium term, until risk exposure is in line with the AIBC Group's nsk appetite
objective The AIBC Board and the Company plans to address this disparity through stabilising and de-nsking the AIBC
Group, while rebuilding confidence and trust with all stakeholders In addition, the development and implementation of
the AIBC Group's restructunng plan, with leadership focussed on ensunng timely execution of the plan and a return to
profitability will assist the AIBC in achieving its nsk appetite objective
The strategy for nsk management is the responsibility of the CRO The CRO will review the strategy for nsk management
going forward in conjunction with the senior risk management team, the AIBC Group Leadership Team and the AIBC
Group Risk and Compliance Committee
The Company relies on the governance structure and nsk appetite and strategy to ensure that the overall control
framework of the Company is operating effectively as part of the wider AIBC Group
54
Individual risk types

AIBC Group Risk Management's independent oversight and analysis covers the following four core areas
- Credit nsk,
- Market nsk,
- Liquidity and funding nsk, and
- Operational nsk
Credit risk
Credit risk is the risk that the Company will suffer a financial loss from a counterparty's failure to pay interest,
repay capital or meet a commitment and the collateral pledged as secunty is insufficient to cover the payments due The
Company's credit nsk anses pnmanly from its lending activities to customers (Banking Credit Risk) but also its use
of denvatives and investments in secunties included in the heading other loans and receivables (Treasury Credit Risk)
Banking credit risk

It is the stated aim of the AIBC Group to reduce the AIBC Group Lending Credit Risk profile as per the subscnption
agreement between the Irish Minister for Finance and AIBC
The Company's policy on Banking Credit Risk is as set out in a detailed AIBC Group Credit Policy ('the policy') which is
approved annually by the AIBC Board following recommendation by the AIBC Group Risk and Compliance Committee The
policy forms the core of the Company's credit nsk ethos and represents a comprehensive guide to policies and underwnting
cntena which govern the way in which the Company conducts its credit business The policy also
- sets out the process surrounding the credit approval process,

- outlines the manner in which Credit Risk is managed, and
- sets the context for the AIBC Group's business and sets out how the AIBC Group and the Company stnves
to reduce nsk
The current AIBC Group Credit Policy (approved November 2009) has been framed in the context of the AlBC's present
position in terms of ownership, state guarantees and short/medium term strategy It is also consistent with the AIBC
Group's Risk Appetite Statement
Consistency of approach to Banking Credit Risk across the AIBC Group and therefore for the Company is ensured through
the implementation of the policy and presence of key personnel at all Credit Committee meetings Credit Committee is the
most senior forum for approving credit exposures and consensus is required before authonsing a credit exposure with
each individual credit application approved by a valid quorum
Credit nsk relating to the loan book is identified and assessed on a combination of top-down and bottom-up nsk
assessment processes on a portfolio-wide basis Top-down processes focus on broad nsk types and common nsk dnvers,
rather than specific individual nsk events, and adopt a forward-looking view of perceived threats Bottom-up nsk
assessment is performed on a loan-by-loan basis, focusing on nsk events that have been identified through specific
qualitative or quantitative measurement tools In particular, the AIBC Group Banking Credit Risk Team monitors the AIBC
Group's exposure to geographic and industnal sectors within the loan book and proposes sectoral restnctions, where
appropnate In line with the Policy, the AIBC Group Banking Credit Risk Team ensures that no single counterparty or
group of closely related counterparties give nse to a significant concentration of credit nsk
55
Banking credit risk continued
With regard to the AIBC Group's transaction approval and review processes, the Banking Credit Risk
team in conjunction with the Quality Assurance Team within AIBC Group Risk Management oversee the
Credit Committees' meetings and penodic loan reviews Furthermore, to ensure the ongoing quality of the loan
book, the AIBC Banking Credit Risk team actively monitors appropnate transactions as part of the AIBC
Group's Asset Quality Review whilst also undertaking monthly asset quality reviews of the loan book
The performance of individual facilities is closely monitored by the AIBC Banking Credit Risk on an ongoing basis, who
maintains a list of lower quality cases These cases, while considered lower quality, are not impaired but require
increased management attention to prevent any detenoration in asset quality AIBC Banking Credit Risk also maintain a
list of satisfactory cases for exposures that continue to represent satisfactory quality loans but are subject to closer
monitoring
Impaired loans are identified m line with the recognition of'objective evidence' as defined in the AIBC Group's
provisioning policy
Specific provisions are created where one or more loss events have been recognised and as a result a shortfall is
expected between the AIBC Group's and the Company's exposure and the likely recoverable amount The recoverable
amount is calculated by discounting the value of expected future cash flows by the exposure's original effective
interest rate
Incurred but not reported ('IBNR') provisions are created on a collective basis for loans and advances where there is no
objective evidence of individual or specific impairment This provision is calculated with reference to histoncal loss
expenence supplemented by observable market evidence and management's expenenced judgement regarding current
market conditions
Lending teams, in consultation with AIBC Banking Credit Risk, devise and implement action plans in order to minimise
losses ansing from impaired loans This may involve working with the borrower to achieve a satisfactory outcome for
both the customer and the Company However, in certain circumstances the loan may be repaid from the sale proceeds of
security held, and/or by availing of recourse to the guarantor Where the proceeds from collateral are not sufficient to
repay the loan, AIBC Banking Credit Risk has the authonty to wnte off the outstanding exposure AIBC Banking Credit
Risk will make this determination, in line with AIBC Group credit policies, when it has concluded that the likelihood of
further recovery is remote and will advise the Company of the necessary requirement
Renegotiated loans are those facilities that, dunng the financial period, have had their terms renegotiated resulting in an
upgrade from impaired to performing status This upgrade can be based, among other things, on subsequent good
performance or an improvement in the credit profile of the borrower Renegotiated loans and advances were £Nil as at
31 December 2009 (30 September 2008 £nil)
56
Risk concentrations
The Company's loans and advances to customers consist pnmanly of secured term lending to the business sector An
analysis of nsk concentrations by sector is as follows
31 Dec 31 Dec 30 Sep 30 Sep

2009 2009 2008 2008
£ % £ %
Retail 1,040,275,667 63% 1,027,044,364 20%
Office 222,602,024 13% 140,819,315 3%
Mixed use 73,219,296 4% 174,133,201 4%
Industnal 40,629,657 2% 57,178,402 1%
Residential 81,717,379 5% 143,874,865 3%
Residential development 53,064,478 3% 1,593,398,527 32%
Business banking 22,100,873 1% 29,747,458 1%
Personal 2,205,529 0% 3,769,350 0%
Leisure 55,603,395 3% 78,054,480 2%
Commercial development 65,114,163 4% 1,299,919,160 26%
Other property investment 4,479,014 2% 16,259,851 0%
Other - 0% 373,829,438 8%
Loans and Advances to Customers* 1,661,011,475 100% 4,938,028,411 100%
Total loans and advances to customers are stated gross of provisions
Treasury credit risk
The Company is subject to treasury credit risk on its investment in other loans and receivables assets and its denvatives
transactions
The AIBC Treasury Credit Risk team manages credit risk inherent in all AIBC Group Treasury business including
interbank activity, denvative transactions and investment in debt secunties The AIBC Group's policy on treasury
credit nsk is set out in a detailed credit policy that has been approved by the AIBC Group Risk and Compliance
Committee Limits are assessed and proposed by an independent credit team within AIBC Group Risk Management
and are presented for consideration at the weekly AIBC Group Treasury Credit Committee meeting
Credit nsk on all treasury assets is regularly assessed The AIBC Group uses external ratings and market information,
supplemented by internal analysis, to assess the nsk associated with treasury assets
Settlement nsk anses in any situation where a payment in cash or secunties is made in the expectation of a
corresponding receipt in cash or secunties The settlement nsk on many transactions, particularly those involving
secunties, is substantially mitigated when effected via assured payment systems or on a delivery - versus - payment
basis Each counterparty's credit profile is assessed and cleanng agents, correspondent banks and custodians are
selected with a view to minimising settlement nsk
The Company's denvative activities are governed by policies approved by the AIBC Group ALCO
57
Maximum exposure to credit risk
The following table presents the Group's maximum exposure to credit nsk before collateral or other credit enhancements
31 Dec 30 Sep
2009 2008
£ £
Exposure in the statement of financial position
Denvative financial instruments 79,434,315 31,212,066
Loans and advances to banks 14,332,222
Assets classified as held for sale 2,301,732,292
Other loans and receivables 324,655,751
Loans and advances to customers 1,443,806,752 4,792,977,845
Exposure not recognised in the statement of financial position

Contingent liabilities 31,975,224 61,664,063
Commitments to lend 128,400,939 703,350,537
Maximum exposure to credit nsk 4,310,005,273 5,603,536,733
Where financial instruments are recorded at fair value, the amounts shown above represent the current credit risk
exposure but not the maximum nsk exposure that could anse as a result of changes in fair value
58
Financial assets by credit quality

The following tables include an analysis of financial assets, other than those earned at fair value, by credit quality Assets classified as held for sale are not included Other
financial assets loans and advances to banks and other loans and receivables
31 December 2009
Commercial Business Residential Other Other Financial Total

Banking Lending Assets
£ £ £ £

past due 969,512,366 21,810,954 77,295,318 83,382 324,655,751 1,393,357,771
Past due but not impaired 106,688,710 17,991,082 2,122,147 126,801,939
Impaired loans 425,722,141 289,919 39,495,456 465,507,516
1,501,923,217 22,100,873 134,781,856 2,205,529 324,655,751 1,985,667,226
30 September 2008
Commercial Business Residential Other Other Financial Total

Banking Lending Assets
£ £ £ £ £

past due 2,620,262,562 30,778,273 1,465,075,083 370,352,050 14,332,222 4,500,800,190
Past due but not impaired 143,857,827 103,375,682 2,653,599 249,887,108
Impaired loans 28,252,373 168,827,825 4,593,137 201,673,335
2,792,372,762 30,778,273 1,737,278,590 377,598,786 14,332,222 4,952,360,633
59
Aged analysis of financial assets past due but not impaired
The following tables present an analysis where contractual interest or pnncipal payments are past due Based on an
individual assessment of each past due loan, impairment is not appropriate on the basis that the level of collateral
available and/or the personal recourse available to AIBC Group is sufficient to ensure full payment
31 December 2009

Banking
£ £
Past due 1 to 30 days 50,133,521 2,304,495 1,360,329 53,798,345

Past due 31 to 60 days 1,660,052 870,838 - 2,530,890
Past due 61 to 90 days 1,804,024 940 - 1,804,964
Past due 91 days and over 53,091,113 14,814,809 761,818 68,667,740
Total 106,688,710 17,991,082 2,122,147 126,801,939
30 September 2008

Banking
£ £ £ £
Past due 1 to 30 days 12,145,723 16,042,740 1,177,603 29,366,066

Past due 31 to 60 days 12,253,329 16,515,863 28,769,192
Past due 61 to 90 days 17,689,362 28,620,520 46,309,882
Past due 91 days and over 101,769,413 42,196,559 1,475,996 145,441,968
Total 143,857,827 103,375,682 2,653,599 249,887,108
60
Collateral
The acceptance of both financial and non-financial collateral is central to the nsk mitigation and underwnting
policies adopted by the Company and AIBC Group Loans and advances to customers are collateralised
pnncipally by charges over real estate assets, charges over business assets and liens on cash deposits, and are
supplemented by personal guarantees In the case of clients with more than one transaction with the Company
or another AIBC Group entity, the Company and the AIBC Group seeks to cross-collateralise secunty to strengthen
repayment cover Where appropnate, collateral is independently valued at the time of borrowing and is subject to
regular revaluation, in line with AIBC Group credit nsk policies
Due to the significant increase in the volume of impaired loans, declining asset values and lack of market transactions
it was not feasible to obtain the fair value of collateral held against past due or impaired financial assets However,
due to the extensive review undertaken on the first tranche of assets due to transfer to NAMA the Company estimates that
collateral of £337,807,877 is held against impaired loans and advances to customers of £465,507,516 With regard to the
remainder of the past due or impaired financial assets, the Company has availed of the option under IFRS 7 not to
disclose the fair value of collateral held against past due or impaired financial assets At 30 September 2008,
collateral of £123,637,936 was held against impaired loans and advances to customers of £201,673,335
The Company has executed Collateral Support Agreements ('CSAs') with its pnncipal denvatives counterparties Under the
terms of a CSA, if the aggregate market value of a set of denvative contracts between two parties exceeds an agreed
threshold amount, the party which would be exposed to loss in the event of default receives a deposit of cash or eligible
secunties equal to the excess aggregate value over the threshold
Market risk
Market nsk is the risk of a potential adverse change in income or financial position ansing from movements in interest rates,
exchange rates or other market pnces Market nsk anses from the structure of the balance sheet and the execution of
customer trading The Company recognises that the effective management of market nsk is essential to the maintenance
of stable earnings, the preservation of shareholder value and the achievement of the Company's corporate objectives
The exposure to market risk is governed by policies prepared by AIBC Group nsk management and approved by the AIBC
ALCO and the AIBC Group Risk and Compliance Committee All risk limits are approved by AIBC Group ALCO and by the
AIBC Group Risk and Compliance Committee
Banking book risk

Banking book positions are those acquired with the intention of holding them to matunty in the normal course of business
Interest rate nsk in the banking book anses from a combination of lending, funding and non-trading treasury activities
AIBC Group Treasury manages the market nsk associated with all of these activities on a consolidated basis for the whole
of AIBC Group
Market nsk in the banking book pnmanly anses from exposure to changes in interest rates The Company's financial assets
and liabilities have interest rates that are reset at different times or under different bases There is a potential impact on
earnings and value that could occur when liabilities cannot be repnced as quickly as assets in a falling interest rate
environment or when assets cannot be repnced as quickly as liabilities in an environment of nsing rates
The Company does not have any exposure to equity nsk Currency nsk is managed through the matching, to the extent
possible of currency assets and liabilities A currency statement of financial position is provided in Note 33
61
Banking book interest rate nsk is measured by establishing the repricing characteristics of each asset, liability and
denvative instrument The nsk is managed by the AIBC Group Treasury through basis point sensitivity and nominal
position limits at total AIBC Group level
AIBC Group Risk management provides daily reporting of banking book nsk positions against approved Present Value
Basis Point and nominal position limits It provides monthly reporting to AIBC Group ALCO on banking book activity with
analysis of all significant nsk positions, including the results of stress testing
The following table shows the sensitivity of the Company's banking book, including denvatives, to an assumed 100
basis point {'bp') movement in interest rates in terms of the impact on net interest income over a twelve month penod
Sensitivity of annual net interest income to 100 bp increase GBP EUR JPY
£ £ £
At 31 December 2009 3,008,996 886,933 (158,156)
At 30 September 2008 12,918,579 558,287 (10,633,631)
This measure assumes all interest rates, currencies and matunties move at the same time and by the same amount It
does not incorporate the impact of management actions that, in the event of an adverse rate movement, could reduce
the impact on net interest income In practice, interest rate nsk is actively managed and the impact of yield curve
movements on interest income will be different from that calculated by this measure The sensitivity analysis as shown
has the same potential impact on the income statement and equity
Use of financial instruments

The Company uses financial instruments in the normal course of its business To fund asset growth the Company has
histoncally, raised funds via the capital markets by issuing subordinated liabilities and other capital instruments and
has raised additional funding to support its business from Anglo Insh Bank Corporation Limited - London Branch as
required Interest rates on financial instruments can be either fixed or vanable, with varying contractual terms from
short to long term
Where appropnate the Company through AIBC Group Treasury uses denvatives to manage interest rate and foreign
exchange exposures ansing from the use of financial instruments and the risks ansing within its interest bearing
activities, either from lending or funding
Where feasible the Company operates on a matched currency basis to avoid foreign exchange impact in its assets and
liabilities The Company relies on AIBC Group Treasury who manage interest rate nsk and foreign exchange nsk on a
consolidated basis for the AIBC Group
Derivatives
A denvative is a financial instrument which defines certain financial nghts and obligations which are
contractually linked to interest rates, exchange rates or other market pnces Denvatives are an efficient and
cost effective means of managing market nsk and limiting counterparty exposures As such they are an indispensable
element of treasury management for the Company
Further details are disclosed in Note 12 The accounting policy on denvatives is set out in Note 1 9
62
Banking book risk continued

It is recognised that certain forms of denvatives can introduce nsks which are difficult to measure and control
For this reason, it is Company and AIBC Group policy to place boundanes on the nature and extent of its participation in
denvative markets and to apply the industry regulatory standards to all aspects of its denvative activities
The Company's denvative activities are governed by policies approved by the AIBC Group ALCO These policies relate
to the management of the vanous types of nsk associated with denvatives, including market nsk, liquidity risk and credit
nsk
Liquidity risk
Liquidity nsk is the risk that the Company does not have sufficient financial resources available at all times to meet
its contractual and contingent cash flow obligations or can only secure these resources at excessive cost It is Company
policy to ensure that resources are at all times available to meet the Company's obligations ansing from the drawdown
of customer facilities and asset expansion This is achieved through a commitment from Anglo Insh Bank Corporation
Limited to continue to provide financial resources for the foreseeable future and at least until the 31 July 2011
All surplus cash is transferred to AIBC on a daily basis by the Company and any cash requirement are drawn from AIBC
on a daily basts Consequently, the Company does not carry any liquidity for its own purpose and is totally dependent on
AIBC for ongoing support
Liquidity nsk is monitored centrally by the AIBC Group ALCO, whose responsibilities in relation to liquidity include, but
are not limited to
- Setting liquidity nsk strategy for the AIBC Group,

- Approving and maintaining AIBC Group funding and liquidity policy,
- Approving and maintaining the AIBC Group contingency funding plan,
- Maintaining internal and external liquidity nsk limits,
- Liquidity stress testing and scenario analysis, and
- Providing the AIBC Group board and its Board Committees with regular liquidity updates
Liquidity risk is measured using the cash flow mismatch approach where cash inflows and outflows are analysed
to produce a net cash flow position over set time penods Cash outflows are assumed to be paid at the earliest
time penod and cash inflows to be received at the latest potential time penod AIBC Group mitigates liquidity nsk
through holding a stock of highly liquid assets which can be readily realised for cash and by actively managing the
liquidity profile of its assets and liabilities
Operational liquidity nsk is short term liquidity nsk, ranging from intraday to one month Execution of AIBC Group's
short term operational liquidity strategy and cash flow management on a daily basis is the responsibility of AIBC Group
Treasury, operating within stnct formal limits set by AIBC Group ALCO These limits ensure that a sufficient cash flow
and liquid asset buffer is maintained over and above net cashflow requirements These cash flow requirements are
required using contractual cash flows and conservative assumptions for non contractual cash flow which may fall due
AIBC Group Treasury provide formal updates to AIBC Group ALCO on a regular basis
The following tables present the cash flows payable by the Company under financial liabilities, and under contingent
liabilities and commitments which are not recognised in the statement of financial position by remaining contractual
matunties at the end of the reporting date The amounts disclosed in the tables are the contractual undiscounted cash
flows of all financial liabilities and therefore differ from the carrying amounts of liabilities in the statement of
financial position
63

31 December 2009
Over three Over one

months but year but
Not more not more not more Over
On than three than one than five five
Demand months year years years Total
£ £ £ £ £ £
Financial Liabilities
Loans from bank 256,138 256,138
Loans and borrowings 1,796,845,199 31,730,871 146,534,242 1,894,172,440 3,869,282,752
Denvative financial instruments (1) (9,482,857) 52,485,837 78,996,088 75,960,215 197,959,283
Subordinated liabilities and other capital
instruments 53,360,948 178,991,382 1,569,960,689 1,802,313,019
Contingent Liabilities (2) 16,678,022 40,139 14,571,839 685,224 31,975,224
Commitments to lend (2) - 55,103,201 1,191,000 72,106,738 128,400,939
Total Financial Liabilities, contingent
liabilities and commitments 1,813,779,359 77,391,354 268,143,866 2,224,951,872 1,645,920,904 6,030,187,355
(1) Denvative cash outflows are stated net of related inflows

(2) The Company does not expect all contingent liabilities or commitments to be drawn
64
30 September 2008
Over three Over one

months but year but
£ £ £ £ £ £
Loans and borrowings 378,496,786 806,835,167 1,431,200,835 302,652,581 2,919,185,369
Denvative financial instruments (1) 29,815,437 62,961 4,476,833 24,312,146 58,667,377
Subordinated liabilities and other capital instruments - 21,393,250 91,491,743 439,344,064 2,180,403,186 2,732,632,243
Contingent Liabilities (2) 481,521 1,582,415 24,511,661 35,088,466 61,664,063
Commitments to lend (2)
Total Financial Liabilities, contingent liabilities and
commitments 378,978,307 859,626,269 1,547,267,200 781,561,944 2,204,715,332 5,772,149,052
(1) Denvative cash outflows are stated net of related inflows

(2) The Company does not expect all contingent liabilities or commitments to be drawn
65
AIBC Group evaluates its longer term liquidity mismatch or structural liquidity nsk on a regular basis The management
of structural liquidity risk is important in identifying future funding requirements
AIBC Group ALCO is responsible for structural liquidity nsk management and provides regular formal updates to the
AIBC Group Risk and Compliance Committee and the AIBC Board
Structural liquidity nsk is managed under the guidelines set out in the AIBC Group funding policy and the AIBC Group
Risk Appetite Statement The AIBC Group Risk Appetite Statement seeks to build and maintain a funding book which is
well diversified in terms of retail, corporate and wholesale markets on a customer, segmental, geographical and
duration basis It provides both quantitative and qualitative metncs to ensure the liquidity nsk appetite is
understood and managed within parameters formally approved by the Board
Liquid assets
An important part of the operational and structural liquidity nsk strategy is maintaining a portfolio of highly liquid treasury
assets which can be realised for cash at short notice through sale and repurchase agreements
AIBC Group maintains a portfolio of liquid assets compnsing a sizeable holding of European government bonds and
other high quality bank paper which is highly liquid in the bilateral or tn-party repo market
Holding a portfolio of highly liquid assets has always formed part of the AIBC Group's liquidity management policy
ensunng the AIBC Group has been able to receive and place cash in the repo market dunng penods of market volatility
Contingency planning
The AIBC Group maintains a comprehensive contingency funding plan to deal with penods of market liquidity stress
The plan includes detailed actions which would be required depending on the nature and seventy of any potential
liquidity stress Key nsk indicators are detailed to provide early warning of a pending stress and an analysis of the
level of stress seventy for both AIBC Group and market specific stresses This is an important facet of the contingency
funding plan together with the detailed action plans The plan is reviewed on a regular basis by AIBC Group ALCO and
AIBC Group senior management
Stress testing
An important element in the identification, management and control of liquidity risk is the use of stress tests and
scenano analyses The stress testing results enable AIBC Group ALCO to analyse the effects of low probability, yet
high impact, events on the funding and liquidity position of the AIBC Group
The AIBC Group has a comprehensive stress testing framework which is consistent with market best practice for
liquidity nsk stress and scenano testing The suite of stress tests incorporates both market and AIBC Group specific
stresses including moderate and severe events over different time honzons
Some examples of the pnmary stress tests are the total closure of wholesale funding markets, two notch downgrade
stress, Insh market specific stress and market nsk stress The AIBC Group has limits in place which set the maximum
tolerance for the results of the vanous stress test scenanos, and also pre-defined courses of action to reduce the
exposure to a particular stress if deemed appropnate
Liquidity stress testing results are regularly reviewed by AIBC Group ALCO with updates provided to the AIBC Board
and the AIBC Group Risk and Compliance Committee
66
Operational risk
Operational nsk is the nsk of loss ansing from inadequate controls and procedures, unauthonsed activities,
outsourcing, human error, systems failure and business continuity In the case of legal nsk, this includes the nsk of
loss due to litigation ansing from errors, omissions and acts by the Company in the conduct of business Operational
nsk is inherent in every business organisation and covers a wide spectrum of issues
The AIBC Group's management of its exposure to operational nsk is governed by a policy prepared by AIBC Group Risk
Management and approved by the AIBC Group Risk and Compliance Committee The policy specifies that the AIBC
Group operates such measures of nsk identification, assessment, monitonng and management as are necessary to
ensure that operational nsk management is consistent with the strategic goals of the AIBC Group It is designed to
safeguard the AIBC Group's and the Company's assets while allowing sufficient operational freedom to conduct the
AIBC Group's and Company's business The policy document also sets out the responsibilities of senior management,
the requirement for reporting of operational risk incidents and the role of AIBC Group Internal Audit in providing
independent assurance
The operational nsk management process consists of the setting of strategic objectives, the identification of nsks and
the implementation of action plans to mitigate the nsks identified Recognising that operational nsk cannot be
entirely eliminated, AIBC Group implements risk mitigation controls including fraud prevention, contingency planning,
information secunty and incident management Where appropnate this strategy is further supported by nsk transfer
mechanisms such as insurance
The business units and support functions assess their operational nsk profile on a semi-annual basis The output of
these assessments are consolidated by AIBC Group Risk Management and presented to the AIBC Group Risk and
Compliance Committee The process serves to ensure that key operational nsks are proactively identified, evaluated,
monitored and reported, and that appropnate action is taken In addition the AIBC Group Risk and Compliance
Committee receives monthly information on significant operational nsk incidents
The Company relies on the AIBC Group for all system and processing and thus relies on the above process
Compliance risk
The directors of this Company and the AIBC Risk and Compliance function are responsible for ensunng that the
Company is compliant with all relevant laws and good practice guidelines This includes ensunng that all of AIBC
Group's personnel are aware of and take steps to comply with laid down policies and procedures Non compliance can
give nse to reputational loss, legal or regulatory sanctions or material financial loss
Compliance is charged with defining and identifying regulatory and compliance nsks and developing a compliance
programme for the Company that includes the implementation and review of specific policies and procedures,
compliance monitonng and education of staff on regulatory and compliance matters
The AIBC Group Risk and Compliance Committee has oversight of all compliance issues for the AIBC Group, including
this Company
67
28 Rcsk management and control continued
Capital management
The objectives of the Company's capital management policy are to efficiently manage the capital base to
optimise shareholders returns, while maintaining capital adequacy to ensure the Company's ability to continue as
a going concern
The responsibility for capital adequacy rests with the directors The directors manage the capital structure and make
adjustments to it in light of changes in economic conditions or changes in the nsk profile of assets In order to adjust
the capital structure the Company may return capital to shareholders, issue new shares or sell assets to reduce debt
The Company monitors capital on the basis of a debt-to-capital ratio Capital comprises all components of equity,
(le share capital and retained earnings) as well as subordinated liabilities and other capital instruments While the
subordinated liabilities and other capital instruments are classified as financial liabilities, they are managed as
capital due to their long term or perpetual nature
The capital ratios at 31 December 2009 and 30 September 2008 were as follows
31 Dec 30 Sep
2009 2008
£ £
Total equity 256,011,947 234,238,101

Subordinated liabilities - dated loan capital 1,482,421,417 1,257,716,882
Other quasi-capital debt instruments - undated loan capital 54,018,566 467,441,393
Capital 1,792,451,930 1,959,396,376
Total debt 3,793,699,192~ 2,826,401,806
Debt to Capital ratio 2 12 i~44~
In order to further strengthen the capital position of the Company, on 18th November 2008, the issued ordinary share
capital of the Company was increased by £1,000,000,000 See Note 24 for further details In addition AIBC agreed to
the irrevocable wnte off of £200m of the intercompany loan between AIBC and the Company which has further
increased the capital of the Company through the creation of a capital reserve of £200m
68
29 NAMA
On 7 Apnl 2009 the Irish Government announced its intention to establish a National Asset Management Agency ('NAMA'),
and on 22 November 2009, the NAMA Act provided for its establishment Under the Act, NAMA will acquire certain assets
from insh banks including their subsidianes (which includes the Company), hold, manage and realise these assets, and
facilitate the restructunng of credit institutions of systemic importance to the Insh economy On 9 February 2010 AIBC
applied to be designated as a participating institution in NAMA This application was accepted by the Insh Minister for
Finance ("Minister") on 12 February 2010 AIBC is now legally bound to participate in NAMA and is subject to NAMA's
statutory powers This requirement also applied to AlBC's subsidianes including the Company
The transfer of assets to NAMA is a fundamental aspect of AlBC's restructunng process AIBC estimates that NAMA will
acquire land and development loans and certain associated loans with a value of approximately £3,166m on a gross loan
basis (i e before taking account of £864m of loan loss provisions) from the Company AIBC and the Company have
no control over the quantity of eligible assets that NAMA will acquire or over the valuation NAMA will place on those assets
NAMA has not confirmed to AIBC or the Company the total value of eligible assets it expects to purchase or the
consideration it will pay in respect to those assets
The consideration for assets acquired by NAMA will comprise the issuance to AIBC of NAMA bonds and NAMA
subordinated bonds AIBC has agreed it will pay the equivalent consideration to the Company and retain the NAMA bonds
as part of its assets
Details in respect of the first tranche of eligible assets scheduled to transfer to NAMA are provided in Note 35
69
29 NAMA continued
Credit grading of assets classified as held for sale

Banking
£ £ £ £ £
Good quality 140,424,546 - 81,888,418 - 222,312,964

Satisfactory quality 4,695,050 - 40,391,720 - 45,086,770
nor impaired 130,852,166 - 53,292,736 -_ 184,144,902
past due 275,971,762 - 175,572,874 - 451,544,636
Past due but not impaired 73,040,506 - 103,163,765 - 176,204,271
Impaired loans 1,517,152,829 487,984 1,019,290,735 1,401,977 2,538,333,525
Total assets classified as
held for sale * 1,866,165,097 487,984 1,298,027,374 1,401,977 3,166,082,432
See Note 16 for definitions of categones of asset quality
Risk concentrations
The Company's assets classified as held for sale consist pnmanly of secured term lending to the business sector An
analysis of risk concentrations by sector is as follows
31 Dec 31 Dec
2009 2009
£ %
Retail 313,169,935 10%
Office 45,816,338 2%
Mixed use 109,272,209 3%
Industrial 42,964,682 1%
Residential 137,175,544 4%
Residential development 1,162,861,456 37%
Business banking 487,272 0%
Personal - 0%
Leisure 91,870,302 3%
Commercial development 1,252,846,822 40%
Other property investment 8,220,080 0%
Other 1,397,792 0%
Assets classified as held for sale* 3,166,082,432 100%
* Stated gross of provisions

29 NAMA continued
Aged analysis of assets classified as held for sale
These are assets classified as held for sale where contractual interest or pnncipal payments are past due Based on
an individual assessment of each past due loan, impairment is not appropnate on the basis that the level of collateral
available and/or the personal recourse available to the Company and the AIBC Group is sufficient to ensure full payment
31 December 2009

Banking
£ £
Past due 1 to 30 days 50,509,813 63,828,948 114,338,761

Past due 31 to 60 days
Past due 61 to 90 days 1,005,047 8,410,302 9,415,349
Past due 91 days and over 21,525,646 30,924,515 52,450,161
Total 73,040,506 103,163,765 176,204,271
71
30 Interest rate repricing 31 December 2009
Over three Over six Over one

months but months but year but
Not more not more not more not more Over Non
than three than six than one than five five interest
months months year years years bearing Total
£ £ £ £ £ £ £
Assets
Assets classified as held for sale 3,178,890,941 (877,158,649) 2,301,732,292
Other loans and receivables 324,655,751 324,655,751
Loans and advances to customers 1,636,050,901 24,322 (192,268,471) 1,443,806,752
Other assets 1,402,309,994 50,416,122 1,452,726,116
Total assets 6,217,251,836 - - 24,322 - (614,920,932) 5,602,355,226
Liabilities
Loans form banks (256,138) (256,138)
Loans and borrowings (3,793,699,192) - (3,793,699,192)
Denvative financial instruments (10,289,764) (10,289,764)
Other liabilities (5,658,202) (5,658,202)
Subordinated liabilities and
other capital instruments (88,810) (532,860,000) (19,010,000) (912,799,000) (71,682,173) (1,536,439,983)
Shareholders funds (256,011,947) (256,011,947)
Total liabilities (3,794,044,140) (532,860,000) - (19,010,000) (912,799,000) (343,642,086) (5,602,355,226)
Hedging Denvatives (1,464,669,000) 532,860,000 - 19,010,000 912,799,000 - -
Interest rate repnctng gap 958,538,696 - - 24,322 - (958,563,018) -
Cumulative interest rate

repricing gap 958,538,696 958,538,696 958,538,696 958,563,018 958,563,018
72
30 Interest rate repricing continued 30 September 2008
Over three Over six Over one

months but months but year but
Not more not more not more not more Over Non
than three than six than one than five five interest
months months year years years beanng Total
£ £ £ £ £ £ £
Assets
Loans and advances to banks 14,276,052 - 56,170 14,332,222
Loans and advances to customers 4,874,932,335 808,693 10,162,616 - (92,925,799) 4,792,977,845
Other assets - 39,076,435 39,076,435
Total assets 4,889,208,387 808,693 10,162,616 (22,581,128) 4,877,598,568
Liabilities
Loans and borrowings (2,826,401,806) (2,826,401,806)
Denvative financial instruments (87,221,306) (87,221,306)
Other liabilities (4,579,080) (4,579,080)
Subordinated liabilities and
other capital instruments (79,030) (474,180,000) (200,000,000) (1,074,180,000) 23,280,755 (1,725,158,275)
Shareholders funds - (234,238,101) (234,238,101)
Total liabilities (2.826,480,836) (474,180,000) (200,000,0007 (1,074,180,000)^ (302,757,732) (4,877,598,568)
Hedging Denvatives (1,748,360,000) 474,180,000 200,000,000 1,074,180,000
Interest rate repricing gap 314,367,551 808,693 _ 10,162,616 (325,338,860)
Cumulative interest rate

repricing gap 314,367,551 315,176,244 315,176,244 325,338,860 325,338,860
73
31 Average effective interest rates

31 Dec 30 Sep
2009 2008
Yield % Yield %
Assets
Loans and advances to banks 33 52
Assets classified as held for sale *
Other loans and receivables
Loans and advances to customers 45 83
Liabilities
Subordinated liabilities and other capital instruments 63 65
The above figures do not take account of denvative interest rate hedging and therefore do not reflect economic margins
earned
Interest income and expense on the interest-beanng financial instruments are recognised using the effective interest
rate method
* Assets classified as held for sale were transferred on the 31 December 2009, therefore no interest income was earned
74
32 Maturity profile 31 December 2009
Over three Over one

months but year but
£ £ £ £ £ £
Financial Assets
Denvative financial instruments 1,236,311 78,198,004 79,434,315
Assets classified as held for sale 1,491,715,214 65,701,262 482,449,200 261,172,790 693,826 2,301,732,292
Loans and advances to customers 305,129,985 31,676,115 145,307,721 863,559,741 98,133,190 1,443,806,752
Other assets 46,860,396 1,384,378,904 1,431,239,300
Total Financial Assets 1,843,705,595 97,377,377 627,756,921 1,125,968,842 1,886,059,675 5,580,868,410
Loans from banks 256,138 256,138
Loans and borrowings 1,376,955,989 31,676,115 145,307,721 863,559,741 1,376,199,626 3,793,699,192
Subordinated liabilities and other capital instruments 1,536,439,983 1,536,439.983
Total Financial Liabilities 1,377,212,127 31,676,115 145,307,721 863,559,741 2,922,929,373 5,340,685,077
The above table breaks down the Company's financial assets and liabilities by remaining contractual matunty The matunty profile for those assets and liabilities defined as financial'
have been determined in accordance with groupings that are considered most appropnate for those particular assets and liabilities
Undated subordinated liabilities have been included in amounts matunng over 5 years
Undated intercompany loans have been included in amounts matunng over 5 years
75
32 Maturity profile continued 30 September 2008
Over three Over one

months but year but
£ £ £ £ £ £
Financial Assets
Loans and advances to banks (7,062,048) 11,907,976 9,486,294 14,332,222
Loans and advances to customers 385,558,834 801,390,007 1,385,241,163 2,040,295,740 180,492,101 4,792,977,845
Total Financial Assets 378,496,786 813,297,983 1,394,727,457 2,046,346,301 205,653,606 4,838,522,133
Loans and borrowings 378,496,786 801,390,007 1,385,241,163 261,273,850 2,826,401,806
Denvative financial instruments - 24,399,377 62,821,929 87,221,306
Subordinated liabilities and other capital instruments - - - - 1,725,158,275 1,725,158,275
Total Financial Liabilities 378,496,786 825,789,384 1,385,241,163 261,273,850 1,787,980,204 4,638,781,387
The above table breaks down the Company's financial assets and liabilities by remaining contractual matunty The matunty profile for those assets and liabilities defined as 'financial'
have been determined in accordance with groupings that are considered most appropnate for those particular assets and liabilities
Undated subordinated liabilities have been included in amounts matunng over 5 years
76
31 December 2009
33 Currency statement of GBP EUR USD JPY CHF Other Total
financial position £ £ £ £ £ £ £
Assets
Assets classified as held for sale 1,958,318,468 269,876,602 5,465,259 68,071,962 2,301,732,291
Other loans and receivables 95,602,668 229,053,083 324,655,751
Loans and advances to customers 524,612,490 883,844,972 3,311,896 32,037,395 1,443,806,753
Property, plant and equipment 4,363 4,363
Current taxation 21,466,027 21,466,027
Deferred taxation
Other assets 52,652,084 18,239,208 1,360,348,008 - - 1,431,239,300
Total assets 2,697,277,694 1,435,843,012 5,465,259 1,360,348,008 3,311,896 100,109,357 5,602,355,226
Liabilities
Loans from bank 266,455 (15,355) 30 5,001 256,138
Loans and borrowings 1,885,646,884 409,918,538 5,700,031 1,376,199,626 3,200,588 113,033,525 3,793,699,192
Derivative financial instruments* 10,289,764 10,289,764
Other liabilities 5,624,506 5,624,506
Accruals and deferred income 33,696 33,696
Subordinated liabilities and other 445,476,015 1,090,963,968 1,536,439,983
Total liabilities 2,337,047,556 1,511,156,915 5,700,038 1,376,199,656 3,200,588 113,038,526 5,346,343,279
Share capital 1,220,000,000 - - - - 1,220,000,000

Other reserves 200,000,000 - - - - 200,000,000
Retained profits (1,048,184,956) (70,638,884) (19,600,952) (13,787,220) 250,115 (12,026,156) (1,163,988,053)
Shareholders' funds 371,815,044 (70,638,884) (19,600,952) (13,787,220) 250,115 (12,026,156) 256,011,947
Total equity and liabilities 2,708,862,600 1,440,518,031 (13,900,914) 1,362,412,436 3,450,703 101,012,370 5,602,355,226
77
Notes to the financial statements continued 30 September 2008
33 Currency statement of GBP EUR USD JPY CHF Other Total

financial position £ £ £ £ £ £ £
Assets
Loans and advances to banks 5,173,231 9,164,522 (154) (5,377) 14,332,222
Loans and advances to customers 3,567,282,507 1,120,739,021 7,631,356 2,772,508 94,552,453 4,792,977,845
Property, plant and equipment 16,962 16,962
Current taxation 20,450,507 73,182 20,523,689
Deferred taxation 1,892,351 1,892,351
Other assets 1,064,180 15,464,990 16,529,170
Total assets 3,627,206,067 1,145,441,715 7,631,202 2,772,508 94,547,076 4,877,598,568
Liabilities
Loans and borrowings 1,447,204,875 192,558,746 26,997,369 1,063,363,065 2,633,701 93,644,050 2,826,401,806
Denvative financial instruments* 26,404,555 60,816,751 87,221,306
Other liabilities 9,941 9,941
Accruals and deferred income 53,066 213 53,279
Deferred taxation 4,619,521 (103,661) 4,515,860
Subordinated liabilities and other 837,663,628 887,494,647 1,725,158,275
capital instruments
Total liabilities 2,315,955,586 1,140,766,696 26,997,369 1,063,363,065 2,633,701 93,644,050 4,643,360,467
Share capital 220,000,000 - - - - - 220,000,000

Retained profits 35,538,150 4,675,019 (19,366,167) (7,650,734) 138,807 903,026 14,238,101
Shareholders' funds 255,538,150 4,675,019 (19,366,167) (7,650,734) 138,807 903,026 234,238,101
Total equity and liabilities 2,571,493,736 1,145,441,715 7,631,202 1,055,712,331 2,772,508 94,547,076 4,877,598,568
The JPY liabilities are hedged through positions in other UK group companies (see Note 5 for further details)
* Cross currency swaps are shown net in the swap base currency, as these will be settled on a net basis in line with the master netting agreement
78
34 Fair value of financial assets and financial liabilities
The Company has estimated fair value wherever possible using market pnces In certain cases, however, including
advances to customers, there are no ready markets The concept of fair value assumes realisation of financial
instruments by way of a sale However, in many cases, particularly in respect of lending to customers, the Company
intends to realise assets through collection over time As such, the fair value calculated does not represent
the value of the Company as a going concern at the period end
The following table represents the carrying amount and the fair value of the Company's financial assets and liabilities
at the penod end
2009 2008
Carrying Fair Carrying Fair
amount value amount value
£ £ £ £
Non-trading financial instruments
Financial assets
Derivative financial instruments 79,434,315 79,434,315 31,212,066 31,212,066
Loans and advances to banks - - 14,332,222 14,332,222
Assets classified as held for sale 2,301,732,292 2,216,257,702
Loans and advances to customers 1,443,806,752 1,328,809,180 4,792,977,845 4,784,470,338
Financial liabilities
Loans and borrowings 3,793,699,192 3,793,699,192 2,826,401,806 2,826,401,806
Derivative financial instruments 10,289,764 10,289,764 87,221,306 87,221,306
Subordinated liabilities and other 1,536,439,983 412,799,822 1,725,158,275 614,236,597
capital instruments
The estimation of fair values of loans and advances is inherently uncertain, dependant upon many unobservable factors
and requires the exercise of considerable subjective judgement by management Market conditions at 31 December,
2009, particularly the lack of liquidity in the commercial property market and the increased significance of counterparty
credit considerations, have contnbuted to the uncertainty when estimating the fair values of loans and advances The
estimated fair value of loans and advances earned at amortised cost at 31 December 2009 includes an adjustment to
reflect the Company's assessment of credit factors that market participants would consider in valuing such assets
Readers are advised that the Company intends to realise assets through collection over time rather than by way of sale
and that the estimated fair values provided would be subject to change depending on the exact circumstances of a
particular sale scenano
Loans which are expected to be transferred from the Company to NAMA are classified as held for sale and are
earned in the Statement of Financial position on the same basis as pnor to their reclassification from loans and
advances These loans continue to be earned at amortised cost less provisions for impairment The Insh Minister
for Finance on 16 September 2009, indicated an average industry wide discount of 30% will apply to loans
transfemng to NAMA Neither AIBC not the Company have any control over the valuation of assets transfemng
to NAMA These will be determined based on the methodology outlined in the NAMA Act and the associated
regulations The fair value above is based on a discount of 30% of gross value
The fair value applied to the perpetual capital secunties and subordinated liabilities are the latest significant
transaction prices for these items at the penod end The fair value of the other financial assets and liabilities are
calculated by discounting expected future cash flows using market rates applicable at the period end The denvatives
are marked to market at penod end
35 Events after the financial reporting date
NAMA
On 30 March 2010 NAMA advised AIBC that they expect the discount on the first tranche of AlBC's loans
to fall into the 50% - 55% range but that this is a preliminary estimate and subject to audit, consistency checks
and submissions by AIBC NAMA did not provide any company specific information but based on ongoing
interaction with NAMA, the first tranche for the Company is expected to amount to £1,012m of gross eligible
assets At 31 December 2009 associated impairment provisions total £243m Applying an average discount of 50%
to these assets would result in an additional loss on transfer of approximately £263m This information relates
to assets expected to transfer in the first tranche only and may not be representative of the total portfolio As a
result AIBC and the Company are currently not in a position to accurately quantify the actual total loss that will arise
on transfer of all eligible assets to NAMA Eligible assets are expected to be acquired on a phased basis from
April 2010
36 Parent Company
The Company is a wholly owned subsidiary of CDB {U K ) Limited, a company incorporated in England, which in turn
is a wholly owned subsidiary of Anglo Insh Bank Corporation Limited, incorporated in the Republic of Ireland The
Company's financial statements have been consolidated only in the group financial statements of the ultimate
parent company and a copy of these financial statements are available from Stephen Court, 18/21 St Stephen's
Green, Dublin 2, Ireland
37 Related party transactions
The ultimate parent company, Anglo Insh Bank Corporation Limited, has provided loans to the Company The
balance on these loans at 31 December 2009 totalled £2,418,438,318 (2008 £1,769,344,016) The Company
also received loans from its other AIBC Group entities The balance on these loans at 31 December 2009
totalled 31 December 2009 totalled £1,375,260,874 (2008 £1,057,057,790)
The Company also provided loans to other AIBC Group entities The balance on these loans at 31 December 2009
£1,431,222,402 (2008 £16,529,058)
The Company incurred an intercompany interest charge of £117,363,991 for the penod (2008 £163,157,274)
The Company's Dated loan Capital (note 23) has been subscnbed for by 100% owned partnerships of CDB ( U K )
Limited
Anglo Irish Capital UK LP holds €600,000,000 Fixed Rate/Variable Rate Subordinated Notes due 2034 at
31 December 2009 with a balance of £522,197,114(2008 £432,860,985)
Anglo Irish Capital UK (2) LP holds €600,000,000 Fixed RateA/ariable Rate Subordinated Notes due 2036 at
31 December 2009 with a balance of £568,573,776 (2008 £454,554,655)
Anglo Irish Capital UK (3) LP holds £350,000,000 Fixed Rate / Floating Rate Subordinated Notes due 2037 at
31 December 2009 with a balance of £391,650,527 (2008 £370,301,264)
The Company also acquired a substantial amount of the Tier 1 Secunty issued by Anglo Insh Capital UK LP,
Anglo Insh Capital UK (2) LP and Anglo Insh Capital UK (3) LP Details are given in Note 15
80

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I

I Company No. 3091082 i

ANNUAL REPORT AND FINANCIAL STATEMENTS

ANGLO IRISH ASSET FINANCE PLC

PERIOD ENDED 31 DECEMBER 2009

Directors' report 2-5

Statement of directors' responsibilities 6

Management report 7-17

Independent auditors' report 18-19

Statement of Comprehensive Income 20

Statement of Financial position 21

Statement of changes in equity 22

Statement of Cash flows 23

Notes to the financial statements 24 - 80

B Lmehan (resigned 23 March 2010)

Anglo Insh Bank Corporation Limited

Barclays Bank pic

2. PRINCIPAL RISKS AND UNCERTAINTIES

3 PARENT COMPANY AND ULTIMATE PARENT COMPANY

4 CHANGE OF YEAR END

5 RESULTS FOR THE PERIOD AND STATE OF AFFAIRS AS AT 31 DECEMBER 2009

6 NATIONALISATION OF ULTIMATE PARENT COMPANY

DIRECTORS REPORT continued

DIRECTORS REPORT continued

8 GOING CONCERN continued

10 DIRECTORS AND SECRETARY

DIRECTORS REPORT continued

12 DISCLOSURE OF INFORMATION TO THE AUDITORS

ON BEHALF OF THE BOARD

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE

- select suitable accounting policies and then apply them consistently,

1 REVIEW OF BUSINESS PERFORMANCE

Key results for the penod include

Lending and asset quality 2009 2008

MANAGEMENT REPORT (Continued)

1 REVIEW OF BUSINESS PERFORMANCE (continued)

Lending and asset quality (continued)

% of closing loan balances 80 16% 0 00%

Total provisions 864 -

MANAGEMENT REPORT (Continued)

1 REVIEW OF BUSINESS PERFORMANCE (continued)

Japanese Yen financing arrangement

Loans and borrowings 2009 2008

Other assets 2009 2008

MANAGEMENT REPORT (Continued)

1 REVIEW OF BUSINESS PERFORMANCE (continued)

Repurchase of certain subordinated liabilities and other capital instruments

Gain on repurchase of financial liabilities at amortised cost

Subordinated liabilities and other capital instruments

MANAGEMENT REPORT (Continued)

1 REVIEW OF BUSINESS PERFORMANCE (continued)

Other loans and receivables

Share Capital and Reserves

MANAGEMENT REPORT (Continued)

2 PRINCIPAL RISKS AND UNCERTAINTIES

General economic conditions

MANAGEMENT REPORT (Continued)

2 PRINCIPAL RISKS AND UNCERTAINTIES (continued)

Restructunng of AIBC Group

MANAGEMENT REPORT (Continued)

2 PRINCIPAL RISKS AND UNCERTAINTIES (continued)

Liquidity risk - AIBC

MANAGEMENT REPORT (Continued)

2 PRINCIPAL RISKS AND UNCERTAINTIES (continued)