Achmea Hypotheekbank N.V. annual report 2011

The table below shows the fair value and carrying amount of the financial assets and liabilities.
In thousands of euros Carrying Fair Carrying Fair
amount value amount value
2011 2011 2010 2010
Financial assets
Loans and advances to banks and public sector 1,319,683 1,521,809 1,584,870 1,585,555
Loans and advances to customers 13,187,031 12,992,610 13,477,437 13,382,338
Financial liabilities
Deposits from banks 2,737,437 2,745,698 1,813,970 1,824,711
Funds entrusted 1,066,223 1,106,072 1,271,571 1,278,795
Debt securities issued 10,213,471 10,209,192 11,361,098 11,607,362
Subordinated liabilities 107,775 111,271 175,012 177,380
The carrying amount of loans and advances to customers includes other elements which are disclosed in note 9.
If a financial instrument is traded in an active and liquid market, the quoted price or value is the best indicator for the fair value.
The most appropriate market price for an asset held or a liability to be issued will often be the current bid price and, for an
asset to be acquired or liability held, the current offer or asking price. If Achmea Hypotheekbank holds assets and liabilities
with opposite market risks, mid rates are used as a basis for determining the fair value.
If no market price is available on an active market, the fair value is calculated on the basis of the discounted value or another
valuation method based on the market conditions on the reporting date. Generally accepted methods in the financial market
are the present value model and option valuation models. An accepted valuation method includes all factors that market
participants deem to be important for pricing. This method should also be consistent with the accepted economic models for
the valuation of financial instruments.
The basic principles for determining the fair value are:
• Using as much as possible the market price as the basis for valuation. The use of internal estimates and assessments is kept
to a minimum;
• Only adjusting the estimation method (valuation method) if an improvement in the valuation can be demonstrated or if the
valuation is essential or because there is insufficient information available.
Notes to estimation of the fair values
Loans and advances to banks or public sector
The fair value of loans and advances to banks or to the public sector is based on the present value of expected future cash
inflows, using current market interest rates.
Loans and advances to customers
The fair value of loans and advances to customers is based on the present value of expected future cash inflows, using current
market interest rates. The interest rate is based on the money market and capital market, both of which are in the public
domain. Where possible, Achmea Hypotheekbank makes use of variables that are observable in these markets. The effects of
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