MORNBFI Vol. 1 - Planters Development Bank

APP. Q-2008.12.31Annex ARECLASSIFICATION OF FINANCIAL ASSETS BETWEEN CATEGORIESThe following quidelines govern thereclassification of investments in debt andequity securities between categories:Section I. Conditions for ReclassificationsFIs shall be allowed to reclassify theirinvestments in debt and equity securitiesfrom the Held for Trading (HFT) orAvailable for Sale (AFS) categories to theHeld to Maturity (HTM) or Unquoted DebtSecurities Classified as Loans (UDSCL)categories, subject to the followingconditions:(1) The reclassification shall be donein accordance with the provisions of theOctober 2008 amendments to theInternational Accounting Standards (IAS)39: Financial Instruments: Recognition andMeasurements and International FinancialReporting Standards (IFRS) 7: FinancialInstruments: Disclosures;(a) Only non-derivative financialassets may be reclassified from HFT to AFS,HTM or UDSCL. This shall howeverexclude those that are Designated at FairValue through Profit or Loss (DFVPL).(b) A financial asset may bereclassified out of HFT into AFS/HTM/UDSCL only in rare circumstances and ifthere is a change in intention (i.e., thefinancial asset is no longer held for thepurpose of selling or repurchasing it in thenear term). The financial assets shall bereclassified at their fair values on theeffective date of reclassification all at thesame time. Any gain or loss alreadyrecognized in profit or loss shall not bereversed. The fair value of a financial asseton the effective date of reclassificationbecomes its new cost or amortized cost,as applicable.For this purpose, FIs may reclassify allor a portion of its financial assets for HFT toAFS/HTM/UDSCL as of the same datewhich shall be any day from 01 July 2008to 14 November 2008. For example, an FImay choose to reclassify all financial assetsbooked under HFT to AFS/HTM/UDSCL asof 01 July 2008 using their fair values as of01 July 2008. Another FI may chooseto reclassify all financial assets bookedunder HFT to AFS/HTM/UDSCL as of14 November 2008 using their fair valuesas of 14 November 2008. Thereafter, FIsshall not be allowed to "retrospectively"reclassify HFT to AFS/HTM/UDSCL. Anyreclassification on or after 15 November2008 shall take effect only from the datewhen the reclassification is made.(c) A financial asset booked under HFTthat would have also met the definition onUDSCL if the financial asset had not beenrequired to be classified as HFT at initialrecognition, may be reclassified from HFTto UDSCL if the entity has the intention andability to hold the financial asset for theforeseeable future or until maturity.(d) The financial assets shall bereclassified at their fair values on theeffective date of reclassification, notnecessarily all at the same time. Any gainor loss already recognized in profit or lossshall not be reversed. The fair value of afinancial asset on the effective date ofreclassification becomes its new cost oramortized cost, as applicable.For this purpose, FIs may reclassifysaid financial assets from HFT to UDSCLas of any date from 01 July 2008 to14 November 2008. Thereafter, FIs shallnot be allowed to retrospectively reclassifyHFT to UDSCL. Any reclassification on orManual of Regulations for Non-Bank Financial InstitutionsQ RegulationsAppendix Q-20 - Page 9