15. Capital Services Redemption Account (CSRA)
15.1 Background
The Capital Services Redemption Account (“CSRA”) was established under section 22 of the Finance Act, 1950 as amended. The account is used for the purpose of settling transactions of a normal banking nature that the Agency may enter into in accordance with section 54(7) of the Finance Act, 1970.
Transactions of a normal banking nature include activities such as forward exchange deals, swaps and interest on deposits which are related to debt servicing costs. Until the legislation was amended by the Finance Act, 2017, receipts of interest on deposits, other than those in a currency for which a foreign currency clearing account had been established under section 139 of the Finance Act, 1993, had to be received into the CSRA. Such amounts may be used to make payments and repayments in respect of normal banking transactions or towards defraying interest and expenses on the public debt.
Transactions of a normal banking nature include derivative transactions entered into by the Agency with the National Asset Management Agency (“NAMA”) (in accordance with sections 52 and 235 of the National Asset Management Agency Act, 2009 and Statutory Instrument No. 203/2010) and the Irish Bank Resolution Corporation Limited (in Special Liquidation) (“IBRC”) (in accordance with section 17(4) of the Irish Bank Resolution Corporation Act, 2013 and Statutory Instrument No. 57/2013) (see also note 14 above). Such transactions entered into with NAMA and IBRC are offset by matching transactions with market counterparties. As a result there is no net effect on the CSRA.
The balance in the CSRA is maintained by the Agency at a level which is subject to guidelines issued by the Minister for Finance under section 4(4) of the National Treasury Management Agency Act, 1990. Under ministerial guidelines the balance in the CSRA from year end 2015 and thereafter each year end was to be less than €1 million. To adhere to these guidelines, the Agency transfers excess funds from the CSRA to the Exchequer Account before year end.
15.2 Movement in the Account for the Year
| 2017 €000 |
2016 €000 |
|
|---|---|---|
| Balance at 1 January | 499 | 489 |
Receipts |
||
| Derivative Transactions | 7,194,111 | 8,125,347 |
| Interest on Cash and Other Financial Assets | 16,248 | 23,233 |
| 7,210,359 | 8,148,580 | |
| Payments | ||
| Derivative Transactions | (7,194,111) | (8,125,347)) |
| Interest on National Debt | (5,390) | (5,205) |
| Expenses on National Debt | - | (4,018) |
| Transfer to Exchequer Account | (11,000) | (14,000) |
| (7,210,501) | (8,148,570) | |
| Balance at 31 December | 357 | 499 |
| Movement in the Year | (142) | 10 |
15.3 Derivative Transactions undertaken for IBRC and NAMA
Receipts and payments in respect of derivative transactions undertaken in respect of IBRC and NAMA in the period are outlined below:
| Receipts €000 |
Payments €000 |
Net 2017 €000 |
Net 2016 €000 |
|
|---|---|---|---|---|
| NAMA Related Derivatives | 4,842,371 | (4,842,371) | - | - |
| IBRC Related Derivatives | 2,351,740 | (2,351,740) | - | - |
| 7,194,111 | (7,194,111) | - | - |