Generalidades, trámites y procedimientos de los POT

In the case of a fair value hedge, derivatives are measured at their fair value as an offset to profit or loss in “Net gains (losses) on financial instruments at fair value through profit or loss” symmetrically to the revaluation in profit or loss of the hedged items carried out in connection with

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Crédit Mutuel Group

Financial StateMentS

NOTES

component will offset each other partially or totally; only the ineffective portion of the hedge is recognised in profit or loss.

The portion corresponding to the rediscounting of the derivative financial instrument is recognised in profit or loss under “Interest income and charges” symmetrically to the interest income or charges for the hedged item.

If the hedging relationship is interrupted or the effectiveness criteria are not met, hedge accounting is discontinued on a prospective basis. The hedging derivatives are transferred to financial assets or financial liabilities at fair value through profit or loss and are accounted for in accordance with the principles applicable to this category. The carrying amount of the hedged item is subsequently no longer adjusted to reflect changes in fair value. In the case of initially hedged identified interest rate instruments, valuation adjustments are amortised over their remaining life. If the hedged item has been derecognised, due notably to early repayments, the cumulative adjustments are recognised immediately in profit or loss.

The group has availed itself of the possibilities offered by the European Commission as regards accounting for macro-hedging transactions. The European Union’s so-called carve out amendment to IAS 39 enables customer demand deposits to be included in hedged fixed-rate liability portfolios with no effectiveness measurement if under-hedged. The maturities of demand deposits are established as a function of the run-off rules defined for asset-liability management purposes.

For each portfolio of fixed-rate financial assets or liabilities, the maturity schedule of the hedging derivatives is reconciled with that of the hedged items to ensure that there is no over-hedging.

The accounting method for fair value macro-hedging derivatives is the same as for fair value hedges.

Changes in the fair value of the hedged portfolios are recorded in a specific line of the balance sheet, “Revaluation difference on portfolios hedged for interest rate risk”, the other side of the entry being to profit or loss.

• Cash flow hedges

In the case of cash flow hedging relationships, the derivatives are re-measured in shareholders’ equity on the balance sheet at their fair value for the portion considered effective while the portion considered as ineffective is recorded in profit or loss under “Net gains (losses) on financial instruments at fair value through profit or loss”.

Amounts recorded in shareholders’ equity are reversed through profit or loss under “Interest income and charges” symmetrically to the flows of the hedged item affecting profit or loss.

The hedged items continue to be recognised in accordance with the rules specific to their accounting category. If the hedging relationship is interrupted or the effectiveness criteria are not met, hedge accounting ceases to be applied. The cumulative amounts recorded in shareholders’ equity for the re-measurement of the hedging derivative are maintained in shareholders’ equity until such time as the hedged transaction itself affects profit or loss or when it is determined that the transaction will not take place. These amounts are then transferred to profit or loss.

If the hedged item has been derecognised, the cumulative amounts recorded in shareholders’ equity are immediately transferred to profit or loss.

3.6 DEBT SECURITIES

Debt securities (certificates of deposit, interbank market securities, bonds, etc.) that are not classified at fair value through profit or loss by option are recognised initially at their issue amount, when applicable net of transaction costs.

These securities are subsequently measured at amortised cost using the effective interest rate method.

3.7 SUBORDINATED DEBT

Both dated and undated subordinated debt is separated from other debt securities as, in the event of the issuer’s liquidation, it is repaid only after claims by other creditors have been extinguished. Subordinated debt is measured at amortised cost.

3.8 DISTINCTION BETWEEN LIABILITIES AND

SHAREHOLDERS’ EqUITY

In accordance with IFRIC 2, the interests of members are classified as shareholders’ equity if the entity has the unconditional right to refuse to redeem such interests, or if there are legal or statutory provisions that prohibit or significantly limit such redemption. Under existing articles of association and applicable legal provisions, shares issued by the structures making up the consolidating entity of the Crédit Mutuel group are recognised under shareholders’ equity.

The other financial instruments issued by the group qualify for accounting purposes as debt instruments if the group has a contractual obligation to deliver cash to the holders of such instruments. This is the case, in particular, for all the subordinated securities issued by the group.

3.9 pROvISIONS

Provisions and reversals of provisions are classified by type under the corresponding item of income or expenditure.

A provision is set aside whenever it is probable that an outflow of resources representing economic benefits will be necessary to extinguish an obligation arising from a past event and when the amount of the obligation can be estimated accurately. Where applicable, the net present value of this obligation is calculated to determine the amount of the provision to be set aside.

The provisions constituted by the group cover, in particular: - operating risks;

- employee obligations (see Note 3.12); - execution risks on signature commitments; - legal disputes and liability guarantees; - tax risks; and

- risks related to home savings (see Note 3.10).

3.10 AMOUNTS DUE TO CUSTOMERS AND

CREDIT INSTITUTIONS

These are fixed- or determinable-rate financial liabilities. They are initially recognised at fair value and measured at subsequent balance sheet dates at amortised cost using the effective interest rate method, except in the case of those recognised at fair value by option.