as at December 31, 2003 - EFG Bank Group

56
Notes to the Consolidated Financial Statements (continued)
48. Outsourcing
The Group does not outsource any significant activities and/or operations.
49. Swiss banking law requirements
The EFG Bank Group is subject to consolidated supervision by the Swiss Federal Banking Commission. The
consolidated financial statements of the Group are prepared in accordance with International Financial Reporting
Standards (IFRS). Set out below are the deviations which would result if the provisions of the Banking Ordinance
and the Guidelines of the Swiss Federal Banking Commission governing financial statement reporting, pursuant to
Article 23 through Article 27 of Banking Ordinance, were applied in the preparation of the consolidated financial
statements of the Group.
(a) Financial investments
Under IFRS, available-for-sale financial investments (note 23) are carried at fair value. Changes in the fair value of
available-for-sale financial investments are recorded as increases or decreases to shareholders’ equity (see consolidated
statement of changes in equity) until an investment is sold, collected or otherwise disposed of, or until an investment
is determined to be impaired. At the time an available-for-sale investment is determined to be impaired, the cumulative
unrealised gain or loss previously recognised in shareholders’ equity is included in net profit or loss for the period.
On disposal of an available-for-sale investment, the difference between the net disposal proceeds and carrying
amount, including any previously recognised unrealised gain or loss arising from a change in fair value reported in
shareholders’ equity, is included in the statement of income for the period.
Under Swiss law, financial investments are carried at the lower of cost or market value. Reductions, as well as gains
or losses on disposals, are included in gains and losses from other securities.
(b) Derivative financial instruments
Under the specific rules of IAS 39, the majority of the Group’s derivative financial instruments are classified as trading
and reflected on the balance sheet at fair values. Changes in fair values are reflected in net trading income.
Under Swiss law, the majority of the Group’s derivative instruments qualify for hedge accounting and are recorded
on balance sheet at their fair values (gross positive and negative replacement values). Changes in fair values are
accounted for in accordance with the accounting treatment of the item being hedged.
(c) Extraordinary income and expense
Under IFRS, items of income and expense can only be classified as extraordinary if they are clearly distinct from the
ordinary activities and their occurrence is expected to be rare.
Under Swiss law, income and expense items related to other accounting periods, as long as they are attributable to
corrections or mistakes from previous periods, and/or not directly related with the core business activities of the
enterprise (e.g. realised gains on sale of investments in associated undertakings or property, plant and equipment) are
recorded as extraordinary income or expense.
In 2003, there were no material reclassifications with respect to extraordinary income and expense items.
EFG Bank Group