Annual Report - Ahli United Bank

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Annual Report - Ahli United Bank

4. MARKET RISK (continued)Valuation and accounting policies:a) Equity investments held for strategic reasons - investments in associates and joint ventureAssociated companies are companies in which the Group exerts significant influence but does not control, normally representedby an interest of between 20% and 50% in the voting capital. The Group classifies its investments as joint venture where it is aparty to a contractual joint venture agreement. Investments in associated companies and joint ventures are accounted for usingthe equity method.b) Equity investments held for capital gainsAfter initial recognition, equity investments that are held as available-for-sale investments are remeasured at fair value. Forinvestments in equity instruments, where a reasonable estimate of the fair value cannot be determined, the investment is carriedat cost less impairment provision.The fair value of equity instruments that are quoted in an active market is determined by reference to market bid prices respectivelyat the close of business on the balance sheet date. For equity invesments that are not quoted in an active market, a reasonableestimate of the fair value is determined by reference to the current market value of another instruments that is substantiallysimilar, or is determined using net present valuation techniques.An assessment is made at each balance sheet date to determine whether there is any objective evidence that an equity instrumentsecurity may be impaired. For an investment in an equity security, a significant or prolonged decline in its fair value below its costis objective evidence of impairment.Any impairment recognised is reflected directly as a write down of the financial asset. Impairment losses on equity investmentsare not reversed through the consolidated statement of income while any subsequent increase in their fair value are recogniseddirectly in equity.TABLE - 18 EQUITY POSITION IN BANKING BOOKRisk-weightedGross weighted Capitalexposures exposures requirementUS$ ’000 US$ ’000 US$ ’000Listed 50,123 50,123 6,015Unlisted 142,153 213,229 25,587TOTAL 192,276 263,352 31,602TABLE - 19 GAINS ON EQUITY INSTRUMENTSUS$ ’000Realised gains recognised in the statement of income 34,378Unrealised (loss) gains recognised in the balance sheet:- Tier one (eligible portion) (2,249)- Tier two (eligible portion) 5,391AUB Annual Report 2009121

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