BBK annual report eng 21.5.5

Notes to the Consolidated Financial Statements (continued)31 December 200436 Fair value of financial instrumentsThe table below sets out the estimated carrying values and fair values of those on and off balance sheet financial instruments where fair values arematerially different from carrying amounts in the consolidated financial statements:31 December 2004 31 December 2003Carrying Fair Carrying Fairvalue value Difference value value DifferenceBD ’000 BD ’000 BD ’000 BD ’000 BD ’000 BD ’000Financial assetsNon-trading investment securities 179,535 179,561 26 152,114 154,757 2,643As explained in note 7, included under non-trading investments are unquoted investments amounting to BD 33.794 million (2003: BD 12.092 million)for which fair value cannot be reliably determined.In addition, due to time and cost benefit constraints and the lack of a secondary market, it is not practicable to determine the fair value of loans andadvances to customers.37 Capital adequacyThe risk asset ratio calculated in accordance with the capital adequacy guidelines approved by the Bahrain Monetary Agency, for the Group is as follows:2004 2003BD ’000 BD ’000Capital base:Tier 1 capital 110,581 105,325Tier 2 capital 49,531 32,582Total capital base (a) 160,112 137,907Credit risk weighted exposure:On-balance sheet 748,459 733,609Off-balance sheet 94,228 83,196Total 842,687 816,805Market risk weighted exposure:On-balance sheet - -Off-balance sheet 7,993 7,300Total 7,993 7,300Total risk weighted exposure (b) 850,680 824,105Capital adequacy (a/b * 100) 18.82% 16.73%Minimum requirement 12% 12%38 Legal claimsAs at 31 December 2004, there were 17 legal suits pending against the Group aggregating BD 1.341 million (2003: BD 1.297 million). Based on theopinion of the Group's legal advisors, the management believes that no liability is likely to arise from these suits and does not consider it necessaryto carry any provisions in this regard.