Annual Report 2006 - Rheinland Pfalz Bank

Notes LRP Group
LRP 2006
45
Notes to the Annual Accounts 2006
General
The Bank has prepared its unconsolidated and consolidated
annual financial statements in accordance
with the provisions of the German Commercial Code
(HGB) and the Ordinance Regarding Accounting for
Banks and Financial Services Institutions (RechKredV).
The breakdown of the balance sheets and the statements
of income complies with the forms RechKredV.
Information that may appear either in the balance
sheet or in the Notes has been included in the Notes.
In preparing the consolidated accounts the following
German Accounting Standards (GAS) published by the
German Accounting Standards Committee (GASC) were
applied:
• GAS 2 Cash Flow Statement and GAS 2-10 Cash Flow
Statements of Financial Institutions
• GAS 3 Segment Reporting and GAS 3-10 Segment
Reporting by Financial Institutions
• GAS 5 Risk Reporting and GAS 5-10 Risk Reporting
by Financial Institutions and Financial Services
Institutions
• GAS 7 Group Equity and Group Overall Result
The Notes to the unconsolidated and the consolidated
annual financial statements have been summarized
by exercising the option provided by § 298 (3) of the
HGB. These notes apply to both annual financial statements,
except for separate explanations.
Accounting and Valuation Principles
Assets, liabilities and pending transactions were accounted
for and valued in accordance with the standard
valuation rules as defined by §§ 252 et seq. of the HGB
unless otherwise stipulated by special regulations for
financial institutions pursuant to §§ 340 e et seq. of
the HGB.
Claims on banks and on customers are shown with
their principal amounts outstanding. Only claims that
conform to the requirements under § 14 (1) and (2) of
the German Mortgage Bond Act (Pfandbriefgesetz) are
shown as claims on customers secured by mortgages,
irrespective of whether or not they serve as cover for
bonds issued.
If there are any differences between nominal and disbursement
amounts or acquisition costs (premiums/
discounts) with regard to mortgage loans or other
claims with interest rate features, they will be shown at
their nominal value pursuant to § 340 e, (2) of the HGB.
Premiums and discounts are included in deferred items
on the assets or liabilities side and are released over
the term of the related asset or liability or the shorter
period for which a fixed interest rate has been agreed
upon.
Pro rata interest is treated on an accrual basis and
reported in the corresponding receivables line item.
We adhered to the strict lower of cost or market principle
by adequate risk provisioning. Discernible risks in
the lending business were adequately covered by individual
value adjustments and provisions. In addition,
we set up general provisions for country risk exposures
relating to borrowers domiciled in countries rated as
non-investment grade countries. In determining the
basis for calculation, tax regulations, the extent of specific
provisions already made as well as risk-reducing
factors (such as valuable collateral outside of the country
of domicile or the short-term nature of receivables)
are adequately taken into account. In addition, general
provisions were established for latent risks inherent in
the loan portfolio according to the relevant tax regulations
up to an amount based on past experience. Risk
provisions are reversed to the extent that the credit
risk no longer applies. In this manner, we comply with
tax regulations and commercial code provisions regarding
the requirement to reverse write-downs where the
reasons for them no longer exist.