2011 Annual Report - BDO

NOTES TOFINANCIAL STATEMENTS(b) In 2011 and 2010, the Bank entered into currency forward transactions with BDOUnibank. Details of these transactions as of December 31 are presented below(see Note 13).December 31, 2011Derivative Derivative NotionalAssets Liabilities AmountBuy:PHP/USD P 380,487 P 1,225,509 US$ 10,000,000Buy:USD/PHP P 1,531,697 US$ 4,000,000December 31, 2010Buy:PHP/USD P 95,816,360 P 121,047 US$ 27,006,135(c) The Bank holds demand deposits from BDO Securities, an affiliate, amounting toP174,873,237 and P91,711,101 as of December 31, 2011 and 2010, respectively, withannual interest rates ranging from 0.15% to 3.25% both in 2011 and 2010.The Bank maintains deposits with BDO Unibank. In 2011 and 2010, deposits in BDOUnibank amounted to P17,134,275 and P65,693,056, respectively, and are included aspart of Due from Other Banks in the statements of financial position (see Note 4). Theinterest rates on these deposits ranged from 0.25% to 2.00% per annum in 2011 and 2010.(d) In November 2009, the Bank entered into an office lease agreement with BDO, anaffiliate, for a monthly rental of P966,600. The lease commenced on November 2009and will end after one year, subject to renewal as agreed by the parties. The contract withBDO was renewed last October 16, 2011. Total rental outstanding pertaining to thistransaction amounted to P5,977,640 in 2011 and P1,223,000 in 2010.(e) In December 2007, the Bank’s Board of Directors approved the outsourcing ofrisk management functions to BDO Unibank through a Risk Management ServiceAgreement. The arrangement will allow the Bank to tap the resources and expertise ofBDO Unibank in the areas covered by the new agreement, specifically in the provisionof back-up risk management personnel in case of contingencies, the preparation of riskreports, the provision of risk management policies and procedures, and the training ofthe Bank’s risk management personnel.20.02 Key Management Personnel CompensationThe total salaries and short-term benefits received by key management personnel amounted toP90.6 million and P109.8 million in 2011 and 2010, respectively.