1998-Paribas Annual Report - BNP Paribas

Pursuant to these regulations, goodwill arising from the
exchange offers for Compagnie Bancaire and Cetelem
appears in the balance sheet for the portion paid in cash.
The balance has been charged against retained earnings,
as payment was made through an issue of shares, which
led to dilution approved by former shareholders.
D) RESTATEMENTS AND INTERCOMPANY
TRANSACTIONS
Prior to consolidation, the financial statements of companies
included in the scope of consolidation are restated
to conform to the accounting principles described
below.
In particular, reserves for general banking risks written
by certain banking units are included under equity and,
in the case of individual risks, specific provisions are
written. The valuation rules and accounting principles
specific to certain industrial sectors are not restated.
Similarly, valuation rules specific to insurance companies
are maintained in the consolidated financial statements.
All intercompany balances, as well as gains and losses on
intercompany transactions, are eliminated.
3 ACCOUNTING PRINCIPLES
A) PRESENTATION OF THE CONSOLIDATED
FINANCIAL STATEMENTS
The 1998 consolidated financial statements have been
prepared and are presented in millions of euros, at the
official French franc conversion rate of FRF 6.55957 to
the euro, fixed on December 31, 1998. Comparatives
for 1997 and 1996 were converted at the same rate.
As indicated in note 2.A.c), in 1997, Paribas sold its
retail banking activities. Reflecting the significance of
this disposal and to provide a fair representation of the
Group’s current structure, consolidated financial statements
presented herein exclude activities disposed of
during the year. Pursuant to Article 11 of the French
Commercial Code, the consequences of this presentation
are detailed in Note 4.
PARIBAS CONSOLIDATED STATEMENTS
Moreover in order to better reflect the activities of the
Paribas Group as a whole, the income statement is presented
as follows:
- total revenue from operations comprises, in addition
to the revenues and charges from banking operations,
other net income, income from insurance operations,
net gains on sale and net change in provisions on longterm
shareholdings and properties, and the Group’s
share in net income of companies accounted for under
the equity method (excluding the related goodwill
amortized in the holding Company's accounts);
- net income before provisions and tax, is obtained after
taking into account general and administrative
expenses, Depreciation of fixed assets, and Goodwill
amortization;
- net income before tax, after deduction of Net provision
for loan losses and other risks;
- net income, after deduction of tax and, when applicable,
exceptional items.
In the balance sheet, securities, treasury bills and similar
instruments are classified according to the management’s
intentions at the time of their purchase. Securities
received (delivered) under resale (repurchase) agreements
appear as a separately identified category of the
securities portfolio.
B) FOREIGN CURRENCY TRANSLATION
a) Foreign currency assets and liabilities are translated at
year-end exchange rates, the resulting gains and losses
being taken to income.
b) Balance sheets of foreign companies and branches are
translated into French francs at the year-end rate and
their income statements at the year’s average rate. Gains
and losses resulting from translation are recorded as a
change in consolidated net worth.
c) In the case of high inflation countries, fixed assets are
translated at historical rate, the resulting exchange gains
or losses being taken to income.
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