2012 Registration document and annual financial report - BNP Paribas

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6INFORMATIONON THE PARENT COMPANY FINANCIAL STATEMENTSNotes to the parent company financial statements6Securities available for saleThe “Securities available for sale“ category includes securities notclassified into one of the other categories.Bonds and other fixed income securities are valued at the lower of cost(excluding accrued interest) or probable market prices, which is generallydetermined on the basis of stock market prices. Accrued interest is postedto the profit and loss account under “Interest income on bonds and otherFixed Income securities“.The difference between cost and the redemption price of fixed incomesecurities purchased on the secondary market is recognised in incomeusing the actuarial method. On the balance sheet, their carrying amountis amortised to their redemption value over their remaining life .Equities are valued at the lower of cost and probable market value, whichis generally determined on the basis of stock market prices, for listedequities, or BNP Paribas SA’s share in net assets calculated on the basisof the most recent financial statements available, for unlisted equities.Dividends received are recognised in income under “Income on equitiesand other variable income instruments“ on a cash basis.The cost of securities available for sale that have been sold is determinedon a first in, first out (FIFO) basis. Disposal gains or losses, and additionsto and reversals of lower of cost and market provisions are reflected inthe profit and loss account under “Gains (losses) on securities availablefor sale“.In the case of exceptional circumstances necessitating a change ininvestment strategy, or if the securities can no longer be traded on anactive market, securities classified as “Securities available for sale“ maybe reclassified as “Debt securities held to maturity“ and must be identifiedwithin this portfolio. These securities would then be recognised accordingto the method used for “Debt securities held to maturity“.Equity securities available for sale in the mediumterm“Equity securities available for sale in the medium term” compriseinvestments made for portfolio management purposes, with the aim ofrealising a profit in the medium term without investing on a long-termbasis in the development of the issuer’s business. This category includesventure capital investments.“Equity securities available for sale in the medium term” are recordedindividually at the lower of cost and fair value. Fair value takes intoaccount the issuer’s general business outlook and the planned holdingperiod. The fair value of listed stocks corresponds primarily to the averagestock market price determined over a one-month period.Debt securities held to maturityFixed Income securities with a specified maturity (mainly bonds, interbankmarket securities, Treasury bills, and other negotiable debt securities) arerecorded under “Debt securities held to maturity“ to reflect BNP ParibasSA’s intention of holding them to maturity.Bonds classified under this heading are financed by matching funds orhedged against interest-rate exposure for their remaining lives.The difference between cost and the redemption price of these securitiesis recognised in income using the actuarial method. On the balance sheet,their carrying amount is amortised to their redemption value over theirmaturity.Interest on debt securities held to maturity is recorded in the profit andloss account under “Interest income on bonds and other Fixed Incomesecurities“.An impairment is recognised when a decline in the credit standing of anissuer jeopardises redemption at maturity.If a significant portion of the “Debt securities held to maturity“ is sold orreclassified into a different category, the sold or reclassified securitiescannot be returned to the “Debt securities held to maturity“ category atany time during the current financial period or the following two financialyears. All the securities classified as “Debt securities held to maturity“would then be reclassified as “Equity securities available for sale in themedium term“.If exceptional market circumstances necessitate a change in investmentstrategy, and “Trading account securities“ and “Securities available forsale“ are reclassified as “Debt securities held to maturity“, the sale ofany “Debt securities held to maturity“ prior to the maturity date wouldnot invoke the reclassification clauses in the above paragraph if the saleoccurred because the securities had once again become tradable on anactive market.Equity securities held for long-term investment,investments in subsidiaries and affiliatesInvestments in non-consolidated undertakings include investments inaffiliates in which BNP Paribas SA exercises significant influence overmanagement and investments considered strategic to BNP ParibasSA’s business development. This influence is deemed to exist whenBNP Paribas SA holds an ownership interest of at least 10%.Equity securities held for long-term investment are shares and relatedinstruments that BNP Paribas SA intends to hold on a long-term basisin order to earn a satisfactory long-term rate of return without takingan active part in the management of the issuing company, but with theintention of promoting the development of lasting business relationshipsby creating special ties with the issuer.Other participating interests consist of shares and other variable incomeinvestments in companies over which BNP Paribas SA has exclusivecontrol (i.e., companies that could be fully incorporated into the Group).These types of securities are recorded individually at the lower of cost andfair value. Fair value is determined on the basis of available informationusing a multi-criteria valuation approach, including discounted futurecash flows, sum-of-the-digits and net asset value methods as well asan analysis of ratios commonly used to assess future yields and exitopportunities for each line of securities.3382012 Registration document and annual financial report - BNP PARIBAS
INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTSNotes to the parent company financial statements6The fair value of listed securities is considered to be at least equal to costif the stock market price at period-end is no more than 20% below costand the stock market price has not been below cost for the preceding12 consecutive months. If these conditions are not met, and if a multicriteriavaluation shows that an impairment should be recognised onthe carrying amount, the fair value is considered to be equal to thestock market price. The same holds true if the stock market price is lessthan cost for 24 consecutive months, the closing stock market price isless than 50% of cost, or the average price over a 12-month period ismore than 30% lower than cost. For simplicity, listed securities acquiredfor less than EUR 10 million may be valued on the basis of the averageclosing stock market price.Disposals, gains and losses and provision movements are recorded inthe profit and loss account under “Net gain (loss) on disposals of fixedassets”.Dividends are recorded under “Income from variable-income securities”when they have been declared by the issuers’ shareholders or if theshareholders’ decision is unknown, when they are received.Treasury sharesTreasury shares held by BNP Paribas SA are classified and valued asfollows:■ treasury shares purchased under a market-making agreement oracquired in connection with index arbitrage transactions are recordedunder “Trading account securities“ at market price;■ treasury shares held for allocation to employees are recorded under“Securities available for sale“.Pursuant to CRC Regulation 2008-17 dated 30 December 2008, treasuryshares held for allocation to employees are valued according tothe procedure set forth in CRC Regulation 2008-15 concerning therecognition of stock options and share awards. Under CRC Regulation2008-15, such treasury shares are not impaired, but a provisionis recognised for these shares based on the services provided bythe employees who will receive the shares. The portion of sharesgranted to employees of BNP Paribas SA subsidiaries is charged to thesubsidiaries over the vesting period;■ treasury shares that are intended to be cancelled or that are notbeing held for either of the above reasons are included in long-terminvestments. Treasury shares intended to be cancelled are stated atcost; all others are stated at the lower of cost and fair value.FIXED ASSETSBuildings and equipment are stated at acquisition cost or at the adjustedvalue determined in accordance with France’s approbation laws of 1977and 1978. Revaluation differences on non-depreciable assets, recordedat the time of these statutory revaluations, are included in share capital.Fixed assets are initially recognised at purchase price plus directlyattributable costs, together with borrowing costs where a long period ofconstruction or adaptation is required before the asset can be broughtinto service.Software developed internally by BNP Paribas SA that fulfils the criteriafor capitalisation is capitalised at direct development cost, which includesexternal costs and staff costs directly attributable to the project.Subsequent to initial recognition, fixed assets are measured at cost lessaccumulated depreciation or amortisation and any impairment losses.Fixed assets are depreciated or amortised using the straight-linemethod over the useful life of the asset. Depreciation and amortisationexpense is recognised in the profit and loss account under “Depreciation,amortisation, and provisions on tangible and intangible assets“.The portion of recognised depreciation or amortisation that exceedsthe economic amount or amortisation calculated on a straight-linebasis is recorded in the balance sheet as a liability under “Regulatoryprovisions: accelerated depreciation and amortisation“. BNP Paribas SAdoes not calculate the deferred tax effects of accelerated depreciationand amortisation.When an asset consists of a number of components that may requirereplacement at regular intervals or that have different uses or differentpatterns of consumption of economic benefits, each component isrecognised separately and depreciated using a method appropriate to thatcomponent. BNP Paribas SA has adopted the component-based approachfor property used in operations.The depreciation periods used for office property are as follows: 80 yearsor 60 years for the shell (for prime and other property respectively); 30years for facades; 20 years for general and technical installations; and10 years for fixtures and fittings.Depending on its type, software is amortised over a period of no morethan 8 years in relation to infrastructure developments and 3 years or5 years in the case of software developed primarily for the purpose ofproviding services to customers.Depreciable fixed assets are tested for impairment if there is an indicationof potential impairment at the balance sheet date. Non-depreciableassets are tested for impairment annually.If there is an indication of impairment, the new recoverable amount ofthe asset is compared with the carrying amount. If the asset is foundto be impaired, an impairment loss is recognised in the profit and lossaccount. This loss is reversed in the event of a change in the estimatedrecoverable amount or if there is no longer an indication of impairment.Impairment losses are taken into account in the profit and loss accountunder “Depreciation, amortisation, and provisions on tangible andintangible assets“.Gains and losses on disposals of property, plant and equipment, andintangible assets used in operations are recognised in the profit and lossaccount under “Net gain (loss) on disposals of fixed assets“.62012 Registration document and annual financial report - BNP PARIBAS 339
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2012REGISTRATION DOCUMENTAND ANNUAL
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2012 Registration documentand annua
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1GROUP PRESENTATION1.1 Group presen
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GROUP PRESENTATIONPresentation of a
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1GROUPPRESENTATIONBNP Paribas and i
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1GROUPPRESENTATION1282012 Registrat
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2CORPORATEGOVERNANCEBoard of Direct
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2CORPORATEGOVERNANCEExecutive Commi
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32012REVIEW OF OPERATIONSBNP Pariba
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32012REVIEW OF OPERATIONSOutlook3.6
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32012REVIEW OF OPERATIONSLiquidity
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4CONSOLIDATEDFINANCIAL STATEMENTS -
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5RISKSAND CAPITAL ADEQUACY5.6 Count
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5RISKSAND CAPITAL ADEQUACYAnnual ri
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5RISKSAND CAPITAL ADEQUACYSecuritis
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8GENERALINFORMATIONDocuments on dis
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8GENERALINFORMATIONStatutory Audito
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9STATUTORYAUDITORSStatutory Auditor
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10PERSON RESPONSIBLE FOR THE REGIST
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11TABLE OF CONCORDANCEHeadings as l
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HEAD OFFICE16, boulevard des Italie
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2012 Registration document and annual financial report - BNP Paribas

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