Annual Report LRP 2007 - Rheinland Pfalz Bank

80 LRP 2007 CONSOLIDATED FINANCIAL STATEMENTS
(20) Equity
The ordinary capital is the capital paid in by Landesbank
Baden-Württemberg as the owner of LRP.
The share premium includes the premiums from the issue
of equity interests, as stipulated in the Articles of
Association.
The reserves from retained earnings have been divided
into legal reserves, reserves required by the Bank’s
statutes and other retained earnings. The other retained
earnings include reinvested profits from previous
years. In addition, this item includes the effect of
the first-time adoption of IFRSs – except for the effects
of the fair value measurement effects of the first-time
adoption on available-for-sale securities and equity investments.
Fair value measurement effects of the AfS securities
and equity investments are reported under the net income
recognized directly in equity under the item
“Revaluation reserve for AfS financial instruments”, after
deduction of any deferred taxes, where applicable.
These gains and losses are not recognized in the income
statement until the asset is sold or written off due
to an impairment. The revaluation reserve also contains
the offsetting item from the recognition of deferred
tax assets or liabilities on valuation differences
that have arisen as not affecting net income.
The valuation result from cash flow hedges includes
the portion of the profit or loss that is considered an effective
hedge and is recognized directly in equity. Additionally,
the offsetting item from the recognition of
deferred tax assets and liabilities on cash flow hedges
is also reported in this item.
Minority interest is disclosed as a separate sub-item in
equity, since another shareholder apart from LRP holds
a stake in the equity of a subsidiary (50 % < investment
level LRP < 100 %).
(21) Securities Repurchase Agreements and
Securities Lending Transactions
The LRP Group carries out both securities repurchase
agreements and securities lending transactions.
Securities Repurchase Agreements
Genuine repurchase agreements (repos) are contracts
providing for the transfer of securities against payment
of a specified amount and in which there is simultaneous
agreement that the securities must be re-transferred
to the repo seller at a subsequent point in time in
return for payment of an amount agreed in advance.
As the pledgor, the LRP Group continues to carry the assets
pledged on the balance sheet date and simultaneously
recognizes the liquidity obtained as a liability to
the pledgee.
As the pledgee, the LRP Group capitalizes a corresponding
receivable from the pledgor or a corresponding
amount in the trading portfolio (providing the transaction
is a trading book repo).
In the case of an artificial repurchase agreement, the
LRP Group as the pledgor derecognizes the asset, providing
it is marketable and carries an option writer obligation
(written put option) as a liability in the trading
portfolio. If, however, the asset is not marketable, the
LRP Group continues to account for it. At the same time,
the LRP Group recognizes a liability to the pledgee to
the value of the liquidity obtained.
Measurement is performed according to the underlying
IAS 39 categories. Interest payments in the context of a
repurchase agreement are recognized as interest income
or interest expenses. Any premiums/discounts
to be accrued/deferred (or differences between the
amount received on transfer and the amount to be repaid
on re-transfer) are recognized within the relevant
balance sheet item. Amounts written back from premiums/discounts
are reported under “Net interest income”.