2012 Registration document and annual financial report - BNP Paribas

INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTSNotes to the parent company financial statements6Other derivatives transactionsDepending on the nature of the instruments, gains and losses onover-the-counter contracts representing isolated open positions arerecognised in income when the contracts are settled or on a pro ratabasis. A provision for unrealised losses is recognised for each group ofhomogeneous contracts.CORPORATE INCOME TAXA charge for corporate income tax is taken in the period in which therelated taxable income and expenses are booked, regardless of the periodin which the tax is actually paid. BNP Paribas SA recognises deferredtax for all temporary differences between the book value of assets andliabilities and their tax basis according to the liability method. Recognitionof deferred tax assets depends on the probability of recovery.EMPLOYEE PROFIT-SHARINGAs required by French law, BNP Paribas SA recognises employee profitsharingin the year in which the employee entitlement arises and reportsthe amount under “Salaries and employee benefit expenses“ in the profitand loss account.EMPLOYEE BENEFITSBNP Paribas SA employees receive each of the following four types ofbenefits:■ termination benefits, payable primarily in the case of early terminationof an employment contract;■ short-term benefits such as salary, annual leave, incentive plans, profitsharingand additional payments;■ long-term benefits, including compensated absences, long-serviceawards, and other types of cash-based deferred compensation;■ post-employment benefits, including top-up banking industry pensionsin France and pension plans in other countries, some of which areoperated through pension funds.Termination benefitsTermination benefits are employee benefits payable as a result of adecision by BNP Paribas SA to terminate a contract of employmentbefore the legal retirement age or by an employee to accept voluntaryredundancy in exchange for a benefit. Termination benefits due morethan 12 months after the closing date are discounted.Short-term benefitsBNP Paribas SA recognises an expense when it has used services renderedby employees in exchange for employee benefits.Long-term benefitsLong-term benefits are benefits (other than post-employment benefitsand termination benefits) which do not fall wholly due within 12 monthsafter the end of the period in which the employee renders the associatedservices. The actuarial techniques used are similar to those used fordefined benefit post-employment benefits, except that actuarial gainsand losses are recognised immediately, as are the effects of any planamendments.This relates in particular to cash compensation deferred for more than 12months, which is accrued in the financial statements for the period duringwhich the employee provides the corresponding services. If the paymentof this deferred variable compensation is subject to the employee’scontinued presence at the vesting date, the services are presumed tohave been rendered during the vesting period and the correspondingcompensation expense is recognised on a pro rata basis over that period.The expense is recognised under salaries and employee benefit expenses,with a corresponding liability in the balance sheet. It is revised to takeaccount of any non-fulfilment of the continued presence or performanceconditions and changes in the BNP Paribas share price.If there is no continued presence condition, the expense is not deferredbut recognised immediately with a corresponding liability in the balancesheet, which is then revised on each reporting date until settlement, toaccount for any performance conditions and changes in the BNP Paribasshare price.Post-employment benefitsThe post-employment benefits provided to BNP Paribas SA employees inFrance include both defined-contribution plans and defined-benefit plans.Defined contribution plans, such as Caisse Nationale d’AssuranceVieillesse and supplemental national and trade union plans that paypensions to former BNP Paribas SA employees in France, do not giverise to an obligation for BNP Paribas SA and consequently do not requirea provision. The amount of employer’s contributions payable during theperiod is recognised as an expense.Only defined benefit plans, such as the retirement packages paid forby BNP Paribas SA’s retirement fund, give rise to an obligation forBNP Paribas SA. This obligation must be measured and recognised as aliability by means of a provision.The classification of plans into these two categories is based on theeconomic substance of the plan, which is reviewed to determine whetherBNP Paribas SA has a legal or constructive obligation to pay the agreedbenefits to employees.62012 Registration document and annual financial report - BNP PARIBAS 341