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4CONSOLIDATED FINANCIAL STATEMENTS• gains/ (losses) on the disposal of termination of loans, receivablesand held-to-maturity securities in cases set out by IAS39.• Offsetting fi nancial assets and liabilitiesIn accordance with IAS 32, Crédit Agricole CIB offsets fi nancialassets and liabilities and presents a net balance only if it hasa legally enforceable right at any time to offset the recognizedamounts and intends to either settle the net amount or to realizethe asset and liability simultaneously.• Financial guarantees givenA fi nancial guarantee contract is a contract that requires the issuerto make specifi ed payments to reimburse the holder for aloss it incurs due to the failure of a specifi ed debtor to make adue payment in accordance with the initial or amended terms ofa debt instrument.Financial guarantee contracts are initially measured at fair value,and subsequently at the higher of:• the value calculated in accordance with IAS 37 « Provisions,contingent liabilities and contingent assets », and• the amount initially recognized, less any amortisation recognizedin accordance with IAS 18 « Revenue ».Financing commitments not designated as assets at fair valuethrough profi t and loss or not deemed to be derivative instrumentsunder IAS 39 are not accounted for on balance sheet. However,provisions are recognised in relation to them in accordance withIAS 37.• Derecognition of fi nancial instrumentsA fi nancial asset (or group of fi nancial assets) is fully or partiallyderecognised if:• the contractual rights to the cash fl ows from the fi nancial assetexpire or are transferred or are deemed to have expired or beentransferred because they belong de facto to one or more beneficiaries;• substantially all the risks and rewards of ownership in the fi nancialasset are transferred.In this case, any rights and obligations created or retained at thetime of transfer are recognised separately as assets and liabilities.If the contractual rights to the cash fl ows are transferred but someof the risks and rewards of ownership, as well as control, are retained,the fi nancial assets are recognised to the extent of the entity’scontinuing involvement in the asset.A fi nancial liability is fully or partially derecognised only when thisliability is settled.Provisions (IAS 37, 19)Crédit Agricole CIB identifi es all obligations (legal or constructive)resulting from a past event for which it is probable that an outfl owof resources will be required to settle the obligation, and for whichthe due date or amount of the settlement is uncertain but can bereliably estimated. These estimates are updated as required if theeffect is signifi cant.As regards obligations other than those related to credit risk, CréditAgricole CIB has set recognised provisions covering:• operational risks,• employee benefi ts,• guarantee commitments execution risks,• claims and liability guarantees,• tax risks.Measurement of the following provisions can be made throughestimates:• Provisions for operational risks for which the judgement of themanagement is required as regards the estimate of outcomeand fi nancial effect of the incident, and even if an inventory ofidentifi ed risks is made.• Provisions for legal risks which result from the best estimateof the management given the information available at reportingdate.Detailed information is provided in paragraph 6.13.Employee benefits (IAS 19)In accordance with IAS 19, employee benefi ts are recorded infour categories:• short-term employee benefi ts, such as wages, salaries, socialsecurity contributions and bonuses payable within 12 monthsafter the end of the period;• long-term employee benefi ts, such as long-service awards,bonuses and compensation payable 12 months or more afterthe end of the period,• termination benefi ts,• post-employment benefi ts, which are recorded in the two followingcategories: defi ned-benefi t plans and defi ned-contributionplans.• Long-term employee benefi tsLong-term employee benefi ts are employee benefi ts, other thanpost-employment benefi ts and termination benefi ts that are notdue to be settled within 12 months or more after the end of theperiod in which the employees render the related services.It concerns in particular bonuses and other deferred compensationpaid 12 months or more after the end of the period in whichthey are earned.The measurement method is similar to the one used by CréditAgricole CIB for post-employment benefi ts with defi ned benefi tplans.• Post-employment benefi tsRetirement and early retirement benefits – definedbenefit plansAt each closing date, Crédit Agricole CIB determines its liabilitiesfor retirement and similar benefi ts and all other employee benefi tspertaining to the category of defi ned-benefi t plans.In accordance with IAS 19, these obligations are measured basedon a set of actuarial, fi nancial and demographic assumptions, andfollowing the Projected Unit Credit method. This method consistsin booking a charge for each period of service, for an amountcorresponding to employee’s vested benefi ts for the period. Thischarge is calculated based on the discounted future benefi ts.Liabilities for retirement and other employee benefi ts are based onassumptions made by management with respect to the discountrate, staff turnover rate and probable increases in salary and socialsecurity costs. If the actual fi gures differ from the assumptionsmade, the liability may increase or decrease in future periods (seenote 7.4).156SHELF-REGISTRATION DOCUMENT CRÉDIT AGRICOLE CIB 2010
CONSOLIDATED FINANCIAL STATEMENTS 4Discount rates are determined based on the average duration ofthe obligation, that is, the arithmetic mean of the durations calculatedbetween the valuation date and the payment date weightedby employee turnover assumptions.The return on plan assets is also estimated by management.Returns are estimated on the basis of expected returns on debtsecurities, and notably bonds.Crédit Agricole CIB does not apply the optional « corridor » approachand has directly recognised all actuarial gains and lossesin shareholders’ equity since 1 January 2010, instead of in profi tand loss previously. The main impacts of this change in accountingpolicy on the fi nancial statements as at 31 December 2009are provided in note 1.5.The amount of the provision is equal to:• the present value of the obligation to provide the defi ned benefits at closing date, calculated in accordance with the actuarialmethod recommended by IAS 19,• minus, if any, the fair value at the closing date of plan assets(if any) out of which the obligations are to be settled directly.Where plan assets include qualifying insurance policies thatexactly match the amount and timing of some or all of the benefits payable under the plan, the fair value of those insurancepolicies is deemed to be the present value of the related obligations.into account service and/or performance conditions. The fairvalue of the related liability is remeasured until its settlementtaking into account the possible non-realisation of those conditionsand the change in value of Crédit Agricole S.A. security.One of the deferred bonus plan granted by Crédit Agricole CIBentails for payment based on Crédit Agricole S.A. shares. Thisplan is accounted for in accordance with IFRS 2 dealing withshare-based payment transactions among group entities. Thisplan is recognised as a « cash settled » transaction in the accountsof Crédit Agricole CIB and as an « equity settled » transaction inthose of Crédit Agricole S.A.A description of the plans granted and the measurement methodsare provided in note 7.6 « Share-based payments ».Issuance of Crédit Agricole S.A. shares proposed to employeesas part of the group Employee Share Ownership Plan is alsogoverned by IFRS 2. Crédit Agricole CIB Group applies the treatmentset out in the release issued by the CNC on 21 December2004, supplemented by the release issued by the CNC on 7 February2007. Shares may be offered to employees with a discountof no more than 20%. These plans have no vesting period but theshares are subject to a lock-up period of fi ve years.The benefi tgranted to employees is measured as the difference between thefair value of acquired share taking into account the lock-up periodand the purchase price paid by the employee at the issue datemultiplied by the number of shares issued.Pension plans – defined contribution plansFrench employers contribute to a variety of compulsory pensionplans.Plan assets are managed by independent organisations and thecontributing companies have no legal or constructive obligation topay further contributions if the funds do not hold suffi cient assetsto pay all employee benefi ts relating to employee service in thecurrent and prior periods. Consequently, Crédit Agricole CIB hasno liabilities in this respect other than its contributions due for thepast period.Share-based payments (IFRS 2)IFRS 2 (Share-based Payment) requires share-based paymenttransactions to be measured and recognised in the income statementand balance sheet. The standard applies to share-basedplans granted after 7 November 2002, in accordance with IFRS2, and which had not yet vested on 1 January 2005. It covers twopossible cases:• share-based payment transactions settled in equity instruments,• share-based payment transactions settled in cash.Share-based transactions initiated by Crédit Agricole CIB Groupthat are eligible for IFRS 2 cover these two types of plans.The principles of determination and payment of bonuses appliedby Crédit Agricole CIB are in accordance with the regulations framingthe compensations of employees whose activities are likelyto have a signifi cant impact on risk exposure of credit institutions(the ministerial decree of 3 November 2009 and the FBF profesionalstandards for practical implementation).The expenses related to share-based plans settled in Crédit AgricoleS.A. equity instruments, and expenses related to share subscriptions,are recognised as follows:• for « equity settled » plans, as expenses under wages and salariescosts, with a corresponding increase in « consolidatedequity ». Such expenses are linearly spread over vesting period.• for « cash settled » plans, as expenses under wages and salaries,with a corresponding liability. Those expenses are linearlyspread over the vesting period ( between 3 and 4 years) takingCurrent and deferred taxCrédit Agricole CIB has been 99.9%-owned by the Crédit AgricoleGroup since 27 December 1996 and some of its subsidiariesform part of the tax consolidation Group of Crédit Agricole S.A..In accordance with IAS 12, income tax comprises all taxes basedon income, both current and deferred.IAS 12 defi nes current tax as « the amount of income taxespayable (recoverable) in respect of the taxable profi t (tax loss) for aperiod ». The taxable profi t is the profi t (or loss) for a period, determinedin accordance with rules established by the tax authorities.The rates and rules used to determine the current tax charge arethose in force in each country in which Group companies arelocated.Current tax includes all income tax, payable or receivable. Thepayment of which is not contingent on future operations, even ifsettlement is spread over several periods.Until it is paid, current tax must be recognised as a liability. If theamount is already paid in respect of current and prior periodsexceeds the amount due for those periods, the excess should berecognised as an asset.Certain transactions carried out by the entity may have fi scalconsequences that are not taken into account in determiningcurrent tax. The differences between the book value of an assetor liability and its tax base are qualifi ed by IAS 12 as temporarydifferences.IAS 12 requires that deferred taxes be recognised in the followingcases:• A deferred tax liability shall be recognised for any taxable temporarydifferences between the carrying amount of an asset orliability on the balance sheet and its tax base, unless the deferredtax liability arises from:- initial recognition of goodwill,- initial recognition of an asset or liability in a transaction thatis not a business combination and that affects neither theaccounting nor the taxable profi t (tax loss) as of the time ofthe transaction.SHELF-REGISTRATION DOCUMENT CRÉDIT AGRICOLE CIB 2010 157
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CORPORATE GOVERNANCE 2Pierre CAMBEF
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2010MANAGEMENT REPORTCRÉDIT AGRICO
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