Annual report 2009 - Dexia.com

Notes to the consolidated fi nancial statements7.7. Reclassification of financial assets (IAS 39 amended)From Tradingto Loans andReceivables(1)From Tradingto Available forSale Portfolio(2)From Availablefor-SalePortfolio toLoans andReceivables(3)Carrying amount of assets reclassified as at 1 Oct. 2008 6,591 2,704 90,784Carrying amount of assets reclassified as at 31 Dec. 2008 (A) 6,342 2,655 95,522Fair value of assets reclassified as at 31 Dec. 2008 (B) 6,298 2,651 93,399AMOUNT NOT TAKEN IN INCOME (1)&(2)DUE TO RECLASSIFICATION (B)-(A) (44) (4) n.a.AMOUNT NOT TAKEN IN AFS RESERVE (3)DUE TO RECLASSIFICATION (B)-(A) n.a. n.a. (2,123)P/D amortization in P&L during the year 28 12 n.a.P/D amortization in AFS Reserve during the year n.a. n.a. 293Carrying amount of assets reclassified as at 1 Oct. 2008 6,591 2,704 90,784Carrying amount of assets reclassified as at 1 Jan. 2009 0 0 874Carrying amount of assets reclassified as at 31 Dec. 2009 (A) 5,214 589 83,763Fair value of assets reclassified at 31 Dec. 2009 (B) 5,070 713 83,201CUMULATED AMOUNT NOT TAKEN IN INCOME (1)&(2)DUE TO RECLASSIFICATION (B)-(A) (144) 124 n.a.CUMULATED AMOUNT NOT TAKEN IN AFS RESERVE (3)DUE TO RECLASSIFICATION (B)-(A) n.a. n.a. (562)P/D amortization in P&L during the year 103 59 n.a.P/D amortization in AFS Reserve during the year n.a. n.a. 892Dexia decided to apply the amendment of IAS 39 & IFRS 7– Reclassification of Financial Assets for some assets. In particular,Dexia considered that after the bankruptcy of LehmanBrothers and the subsequent financial crisis, observable pricesfor some financial assets did no longer represent “fair value”,but distressed prices or indicative broker’s prices. Given thatrare circumstance, Dexia opted to reclassify certain assets from“Held for Trading” to “Available for Sale – AFS” or “Loansand Receivables – L&R” (provided the definition is met)because they are no longer held for sale in the near term.Moreover, following its change in intent, Dexia reclassifiedalso certain assets from AFS to L&R (provided the definitionis met). The reclassification to L&R reflects Dexia’s intentionand ability to hold these financial assets for the foreseeablefuture. Reclassifications have been made on 1 October 2008(see annual report 2008) and 1 January 2009.On 1 January 2009 the Group reclassified some Availablefor-salefinancial assets to “Loans and Receivables”, mainly inthe insurance portfolios. The Group identified assets, eligibleunder the amendments, for which at the reclassification dateit had a clear change of intent and ability to hold for theforeseeable future rather than to exit or trade in the shortterm. The reclassifications were made at the fair value of theassets at the reclassification date.The effective interest rates at reclassification date on assetsreclassified on 1 January 2009 ranged from 2.4% to 37.1%.The reimbursement amount of those assets reclassified wasEUR 1,061 million. If these financial assets had not beenreclassified, in 2009, there would have been a further positivemovement in shareholders’ equity (“Net gains (losses) notrecognised in the income statement”) of EUR 129 million.Impacts of reclassifications of 2008 and 2009on 2009 equity and resultsTransfer from “Held for Trading” to “Loans andReceivables” (L&R) and “Available for Sale” (AFS)The difference between the carrying amount at reclassificationdate and the reimbursement amount is amortised onthe remaining period. The impact of this amortization on theresult of the period is shown in the line “P/D amortization inP&L during the year”.The difference between the “Carrying amount of reclassifiedassets as at 31 December 2009” and the fair valuerepresents the cumulated changes in fair value as fromreclassification date until 31 December 2009 and alsoincludes the cumulated amortization of the premium discountsince reclassification.The difference is positive fortrading assets reclassified in AFS as markets have becomemore liquid and spreads have decreased in 2009, whereasfor trading assets reclassified in “Loans & Receivables”,markets remain illiquid and the difference is estimatednegative, based on model valuations.Transfer from “Available for Sale” (AFS) to “Loansand Receivables” (L&R)Dexia has a particular “Available-for-Sale” portfolio with avery long maturity, resulting in significant change in value followingsmall shifts in spreads.Only not impaired financial assets for which no quoted priceson active market were available and for which Dexia has theintention and ability to hold for the foreseeable future weretransferred to “Loans and Receivables”, except for the financialproducts portfolio (see annual report 2008).Management reportConsolidatedfinancial statementsAnnual financial statementsAdditional informationAnnual report 2009 Dexia 141