2012 Registration document and annual financial report - BNP Paribas

INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTSNotes to the parent company financial statements6in a loss for 2011, recorded under cost of risk, of EUR 1, 281 millionafter the bonds were reclassified as debt securities held to maturityon 30 June 2011 (see note 3.d). The carrying value of Greek bonds wasEUR 768 million at 31 December 2011 (see note 4.e).On 21 February 2012 an agreement was defined and supplementedbetween the Greek government, private-sector investors and theEurogroup. The agreed offer involved private-sector investors waiving53.5% of the nominal value of their Greek bonds. In exchange they willreceive the equivalent of 31.5% of the principal of the bonds held in theform of 20 new securities issued by the Greek government with maturitiesof 11 to 30 years and 15% of the principal of the bonds held in the form ofshort-term securities issued by the European Stability Fund. All of thesesecurities, received on 12 March 2012, have been recorded as securitiesavailable for sale. In addition to the exchange, each new bond issuedby Greece will be accompanied by a security linked to movements inGreece’s gross domestic product over and above those expected in theplan. These securities are recorded as derivatives.The market value of securities received in exchange for the original bondswas recognised on 12 March 2012 at 23.3% of the nominal value of theoriginal bonds. The difference between this figure and the recorded valueof the original bonds, together with the adjustment to accrued intereston the original bonds, resulted in a loss of EUR 25 million being recordedunder cost of risk.On 27 November 2012 representatives of the Eurogroup and theIMF requested that the Greek government put in place a repurchaseprogramme for part of the debt held by private investors, with the goalof cutting the country’s debt to 124% of GDP in 2020.This operation, which ran from 3 to 11 December 2012, allowed privateinvestors to participate in the repurchase offering, which was made atan average price of 33.5% of nominal value. Under this arrangement,BNP Paribas disposed of all the remaining securities in its portfolio,generating a capital gain of EUR 25 million.Note 3. NOTES TO THE 2012 PROFIT AND LOSS ACCOUNT3.a NET INTEREST INCOMEBNP Paribas SA includes in “Interest income“ and “Interest expense“ allincome and expenses from financial instruments measured at amortisedcost and from financial instruments measured at fair value that do notmeet the definition of a derivative instrument. The change in fair valueon financial instruments at fair value through profit or loss (excludingaccrued interest) is recognised under “Gains (losses) on trading accountsecurities“.Interest income and expense on derivatives accounted for as fair valuehedges are included with the revenues generated by the hedged item.2012 2011In millions of eurosIncome Expenses Income ExpensesCredit institutions 4, 557 (4, 771) 6, 559 (5, 665)Demand accounts, loans and borrowings 4, 132 (4, 242) 5, 286 (4, 491)Securities given/received under repurchase agreements 299 (529) 1, 149 (1, 174)Subordinated loans 126 124Customers 8, 731 (3, 237) 9, 757 (3, 709)Demand accounts, loans, and term accounts 8, 585 (2, 965) 9, 359 (3, 119)Securities given/received under repurchase agreements 137 (272) 369 (590)Subordinated loans 9 29Finance leases 10 (5) 15 (11)Debt securities 571 (4, 421) 1, 691 (6, 039)Bonds and other fixed-income securities 4, 304 5, 405Trading account securities 520 1, 245Securities available for sale 3, 655 3, 976Debt securities held to maturity 129 184Macro-hedging instruments (1, 127) (1, 269)TOTAL INTEREST INCOME AND EXPENSE 18, 173 (13, 561) 23, 427 (16, 693)62012 Registration document and annual financial report - BNP PARIBAS 343