Annual Accounts and Report as at 30 June 2011 Draft - Mediobanca

A.3.2.2 Annual changes in financial assets recognized at fair value (level 3assets)FINANCIAL ASSETSHeld for trading ¹ ³Recognized at fairvalueAFS ²Hedges1. Balance at start of period 390,066 — 1,061,285 —2. Additions 71,347 — 136,057 —2.1 Purchases 53,484 — 121,653 —2.2 Profits recognized in: 17,130 — 10,590 —2.2.1 profit and loss 17,130 — 92 —- of which, gains 16,926 — — —2.2.2 net equity — — 10,498 —2.3 Transfers from other levels — — — —2.4 Other additions 733 — 3,814 —3. Reductions 172,895 — 97,183 —3.1 Disposals 23,055 — 61,227 —3.2 Redemptions 122,265 — — —3.3 Losses recognized in: 22,683 — 35,956 —3.3.1 profit and loss 22,683 — 20,956 —- of which, losses 22,391 — 20,868 —3.3.2 net equity — — 15,000 —3.4 Transfers to other levels — — — —3.5 Other reductions 4,892 — — —4. Balance at end of period 288,518 — 1,100,159 —¹ Net of the market value of options covering those attached to bond issues by Mediobanca (€395m at 30/6/11 and €333m at30/6/10) as well as options traded (€670m and €319m respectively), the values of which are recorded as both assets andliabilities for the same amount.² Includes investments in unlisted companies valued on the basis of internal models.3The amount of the redemptions is entirely due to trading involving options on listed securities forming part of delta hedgingstrategies, the values of which are recorded as both assets and liabilities in the accounts for the same amount.For more complex Level 3 instruments, the valuation models reflect a finetuningin the parameters used (“model reserve”) which allows the initial mark-tomarketto be reduced to zero and released pro rata for the duration of the contract.This technique has only been applied to four contracts, with an aggregate residualimpact of €6m, including €2.1m already charged to the profit and loss account.– 89