PA - Banco Security

f) Structured fixed income notes
Vida Security maintains foreign fixed income investments (i.e. structured notes), which are stated at the same discount rate
used to determined the price of the instrument at the moment of the purchase.
g) Summary of General Administrative Policies
During the period 2010 and 2009, the Group’s investment and internal control policies remained unchanged, according to the
policies approved by the Board and informed to the SVS as per General Standard No. 130.
2.16 Repurchase agreements and loans
The bank subsidiary (the “Bank”) enters into repurchase and resale operations as a financing tool. In this regard, the Bank’s investments
that are sold subject to a repurchase obligation and which serve as a guarantee for the loan are part of the item “trading instruments”,
presenting the obligation in the item “Repurchase contracts and loans” in liabilities. When financial instruments with a resale
agreement, these are included in “Repurchase contracts and loans” in assets.
The repurchase and resale contracts are stated at amortized cost as per the IRR of the operation.
2.17 Time deposits, debt instruments issued
The deposits that correspond to fund raised from banks whatever their instruments or term, are stated at their amortized cost. Other
debt instruments issued are valued at their issuance date and include transaction costs. The instrument are subsequently measured.
2.18 Equity and financial liabilities
Financial liabilities and equity instruments are classified according to the respective contractual agreements and considering the
economic environment.
An equity instrument is a contract representing a residual interest in the equity of Grupo Security S.A. after deducting all of the
Group’s liabilities.
Equity instruments and other instruments issued by Grupo Security S.A. are recorded at the amount received in equity, net of direct
issuance costs.
The Group’s main financial liabilities are classified as follow:
- Financial liabilities held to maturity are recorded at amortized cost using the effective interest method.
- Financial liabilities held for trading are stated at fair value, following the same criteria as financial assets held for trading. The
gains and losses from the fluctuations in fair value are included in profit or loss for the year.
Bank loans accruing interest are recorded at the amount received, net of direct issuance costs. Financial expenses, including
commissions to be paid at the moment of settlement or reimbursement and direct issuance costs, are recorded in profit or loss using
the accrual method and the effective interest method.
2.19 Disposal of financial assets and liabilities
Grupo Security derecognizes a financial asset from its statement of financial position only when the contractual rights to the cash
flows of the assets have been extinguished or the risks and rewards of the financial assets.
Grupo Security derecognizes a financial liability from its statement of financial position only when the corresponding contractual
obligation has expired, has been paid or cancelled.