Annual report 2006 - Dexia.com

NOTES
TO THE FINANCIAL STATEMENTS
1. ACCOUNTING PRINCIPLES AND RULES OF CONSOLIDATED
FINANCIAL STATEMENTS
These financial statements include the disclosures required by the European Accounting Regulation published up to December 31, 2006.
Additional accounting policies and disclosures may be required in order to comply with local laws, accounting standards and stock exchange
regulations.
General information 120
Notes to the financial
statements 120
1. Accounting policies 120
1.1. Basis of accounting 120
1.2. Changes in accounting policies
since the previous publication that may
impact Dexia Group 120
1.2.1 New IFRS standards, IFRIC interpretations
and amendments 120
1.2.2. IASB and IFRIC texts endorsed by
the European Commission 120
1.2.3. Change in presentation 121
1.3 Consolidation 121
1.3.1. Subsidiaries 121
1.3.2. Jointly controlled entities 121
1.3.3. Associates 121
1.4. Offsetting financial assets and
financial liabilities 121
1.5. Foreign currency translation and transactions 121
1.5.1. Foreign currency translation 121
1.5.2. Foreign currency transactions 121
1.6. Trade date and settlement date accounting 122
1.7. Realized gains and losses on
sales of financial assets 122
1.8. Impairments on financial assets 122
1.9. Interest income and expense 122
1.10. Commission income and expense 123
1.11. Insurance and reinsurance activities 123
1.11.1. Insurance 123
1.11.2. Reinsurance 125
1.12. Network costs 125
1.13. Deferred acquisition costs 126
1.14. Loans and advances due from
banks and customers 126
1.15. Financial assets or financial liabilities
held for trading and financial assets or
liabilities designated at fair value through
profit and loss 126
1.15.1. Loans and securities held for trading 126
1.15.2. Liabilities held for trading 126
1.15.3. Loans and securities designated
at fair value through profit and loss 126
1.15.4. Liabilities designated at
fair value through profit and loss 126
1.16. Loans and securities available
for sale and securities held to maturity 126
1.17. Positive/negative value of derivatives 127
1.18. Hedging derivatives 127
1.19. Hedge of the interest rate risk
exposure of a portfolio 127
1.20. Tangible fixed assets 128
1.21. Intangible assets 128
1.22. Goodwill 128
1.22.1. Positive goodwill 128
1.22.2. Impairment of goodwill 129
1.23. Other assets 129
1.24. Leases 129
1.24.1. A Dexia company is the lessee 129
1.24.2. A Dexia company is the lessor 129
1.25. Sale and repurchase agreements
and lending of securities 129
1.26. Borrowings 129
1.27. Deferred income tax 129
1.28. Employee benefits 129
1.28.1. Pension obligations 129
1.28.2. Other post-retirement obligations 129
1.28.3. Other long-term benefits 129
1.28.4. Termination benefits 129
1.28.5. Equity compensation benefits 129
1.28.6. Employee entitlements 129
1.29. Provisions 129
1.30. Share capital and treasury shares 131
1.30.1. Share issue costs 131
1.30.2. Dividends on ordinary shares 131
1.30.3. Preferred shares 131
1.30.4. Treasury shares 131
1.30.5. Insurance discretionary
participation features 131
1.31. Fiduciary activities 131
1.32. Fair value of financial instruments 131
1.33. Cash and cash equivalents 132
1.34. Earnings per share 132
2. Related party transactions 132
3. Segment reporting 132
3.1. Business segments (primary segment reporting) 132
3.2. Geographic segments
(secondary segment reporting) 132
4. Risk management policies and hedging activities 133
4.1. Market risk 133
4.1.1. Overview 133
4.1.2. Interest rate risk 133
4.1.3. Currency risk 134
4.1.4. Equity risk 134
4.1.5. Issuer risk 134
4.1.6. Price risk 134
4.2. Credit risk 134
4.3. Liquidity risk 135
4.4. Capital adequacy 135
RAPPORT DE GESTION
CONSOLIDATED
FINANCIAL STATEMENTS
COMPTES SOCIAUX
Dexia / Annual Report 2006 | 119