La banque d'un monde qui change 2004 - BNP Paribas

Consolidated FInancial statementsNOTE 38NON-RECURRING ITEMSIn millions of euros 2004 2003 2002Movements in provisions and incurred costs for employee benefits (159) (313) 21Compliance costs (changes in laws and regulations) (83) (45) (49)Movements in provisions for restructuring and discontinued operations (37) (59) (51)Write-downs relating to long-term investments and leased vehicles (28) - (42)Provision for losses on real estate lease contract with a call option - (10) (25)Other non-recurring expenses, net (82) (67) (28)Net non-recurring items (389) (494) (174)Non-recurring items reflect the impact on the financialstatements of events that do not relate to the ordinaryactivities of the BNP Paribas Group’s various lines of business.If these items were included under other profit and loss accountheadings, the comparability of current-period operations withthose of the reference periods would be impaired.In 2004, BNP Paribas signed a company agreement aimedat setting up a compulsory health scheme for BNP Paribasemployees in France. These employees are now all membersof this scheme known as Mutuelle du Groupe BNP Paribas.Under the agreement, the Bank will pay to Mutuelle du GroupeBNP Paribas a contribution for each active employee whois a member of the scheme and will cease to pay contributionsfor retired members. The Bank has paid a final balanceof EUR 152 million to Mutuelle du Groupe BNP Paribasto cover its total commitments with this establishmentin relation to current and future retirees.Under the French Pensions Reform Act (Act no. 2003-775)dated 21 August 2003, employees can elect to retire beforethe age of 65, but can no longer be required to do so by theiremployer. This legislative change has no impact on the rulesgoverning the retirement bonuses paid by BNP Paribas Groupcompanies in France. However, it does affect the actuarialassumptions applied to date by the Group to calculatethe present value of the related benefit obligation, becauseof the probable impact of the new legislation on the ageat which employees choose to retire. The Group has revisedits estimate of the benefit obligation based on the newassumptions and has also recorded a provision for the payrolltaxes that will now be due on retirement bonuses paid toemployees who choose to retire before the age of 65.The additional cost, in the amount of EUR 229 million,was provided for in full in 2003, in accordance with the practiceconsistently followed by the Bank and its French subsidiaries,and with Group policies.In 2003, the Bank also set up a EUR 70 million provisionin connection with the new Employment Adaptation Planimplemented in order to manage the impact of the PensionReform Act on the Group’s employee age pyramid in France.In 2004, this provision was topped up in the amountof EUR 7 million.The above provisions are included in “Movements in provisionsand incurred costs for employee benefits”.In 2004, the BNP Paribas Group recorded chargesof EUR 83 million (EUR 45 million in 2003) to reflect the costsof adapting information systems due to the applicationof International Financial Reporting Standards as from1 January 2005, and the changes in capital adequacy rulesintroduced by the international regulatory authorities.In 2002, BNP Paribas recorded a provision of EUR 49 million tocover the final costs of adapting its production and informationsystems to deal with the introduction of the single Europeancurrency, bringing the total estimated cost of the project– incurred over the period 1996 to 2002 – to EUR 500 million.The Group’s UK fleet-financing subsidiaries use an externalvaluation model to determine projected resale values of leasedvehicles. Problems were encountered in 2002 with the modelused by a recently-acquired subsidiary, leading to the adoptionof a new model and the recording of an exceptionalEUR 42 million write-down of the value of leased vehiclesto correct the valuation errors generated by the previous model.Under a real-estate lease agreement signed in 1993 by FirstHawaiian Bank, BancWest, a Group subsidiary, entered intoan agreement to lease its headquarters building locatedin Hawaii until December 2003. In early 2003, BancWest optedto purchase this building. The purchase value was written downby EUR 35 million (of which EUR 25 million were recordedin 2002) to take into account the lasting decline of the realestate market in Hawaii.263BNP PARIBAS - ANNUAL REPORT 2004