2011 Annual Report - BDO

In 2010, the Bank has assessed two of its unquoted debt securities as impaired after consideringseveral factors that would result to a loss being incurred by the Bank. Impairment lossesrecognized in 2010 amounted to P16,425,761.In 2011, the Bank unwound the related securities, hence, the previously recognized allowancefor impairment was reversed as recovery from impairment in the amount of P76,716,633 in2011.8.02.01 Reclassification of CLNsIn 2008, pursuant to the amendments to PAS 39, the BSP issued Circular No. 628 – Guidelineson the Reclassification of Financial Assets Between Categories, in concurrence with the amendmentsto PAS 39, that allowed the reclassification of CLNs and other similar instruments that arelinked to ROPs to held to maturity investments or to loans for prudential reporting purposesof banks without bifurcating the embedded derivative. Consequently, effective August 29,2008, in accordance with such prudential reporting guidelines, the Bank reclassified the CLNslinked to ROPs amounting to P2,955,537,721 and their derivative components amounting toP113,628,498 to loans and receivables. Prior to the reclassification, the Bank presented thehost contracts under AFS securities account and the derivative components of these CLNsunder FVTPL account.On February 2, 2009, the SEC adopted the prudential regulations of the BSP under Circular628. Thus, banks which reclassified their financial instruments in accordance with BSPCircular 628 and other applicable and existing accounting standards shall be consideredcompliant with FRSP for banks as their financial reporting framework. The reconciliationsof equity, statement of financial position and profit or loss reported under PFRS to FRSP aredisclosed in Note 2.www.bdo.com.ph 89