Landeskreditbank Baden-Württemberg - L-Bank

Depreciation and accumulated amortization on equity investments in non-affiliated companies, affiliated
companies and securities treated as fixed assets; income from additions to equity investments in nonaffiliated
companies, affiliated companies and securities treated as fixed assets
This item represents in accordance with Section 340c(2) German Commercial Code the net expense or
income from write-downs or write-ups, respectively, on investment holdings (equity investments in affiliated and
non-affiliated companies and securities that form part of the fixed assets portfolio; see “—Equity investments in
non-affiliated companies; equity investments in affiliated companies,” “—Notes and other interest-bearing
securities” and “—Shares and other non-interest-bearing securities”).
Allocations to reserves for interest rate reductions
This item represents our net cost of interest rate subsidies. See “—Contingency reserves” and “—
Business—Reserves for Interest Subsidies.”
Derivative Transactions
Derivative transactions are primarily concluded in order to control interest rate exposure; they are not
valued for balance sheet purposes due to the fact that under German GAAP derivative transactions are offbalance
sheet transactions (they are however valued for risk managing and risk monitoring purposes).
Derivative transactions are also concluded in order to hedge balance sheet items in trading books of a bank, and
furthermore a bank can trade derivatives on its own account. Such derivative transactions are valued for the
purpose of the balance sheet of a bank. Market values for those derivatives are based on interest rates prevailing
on the last day of the year on which there is a liquid market. Where transactions are concluded for hedging
purposes in a trading book, they are valued together with the relevant balance sheet items, creating a net position.
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