consolidated annual report - Gruppo Banca Sella

of the leased asset be equal to a granted loan, that dur-
ing the life of the contract matured rents be equivalent
to the instalments of a loan and that such instalments
be subdivided into capital and interest components on
the basis of the implicit rate of the contract.
2. SECURITIES AND OFF-BALANCE SHEET
TRANSACTIONS (DIFFERENT FROM
THOSE ON CURRENCIES)
Investment securities
Investment securities are valued at specific cost, including
accrued issue discounts and adjusted by accrued
dealing discounts, the latter being determined as the
difference between the purchase price of the security
and its redemption value, net of issue discounts not yet
accrued.
Junior bonds relevant to the securitization operation
of performing loans started in year 2000 are stated at
the lower between original cost and their expected realizable
value. Junior bonds relevant to the securitization
of financial leases contracts, started in 2001, are stated
at the lower between original cost to which the related
accruals were added and the expected realizable value.
Both expected realizable values were calculated following
the recovery rate of the credit portfolio subjected to
the securitization.
Dealing securities
Securities not held as investment securities are valued
as follows:
• securities quoted on organized markets are valued at
market value, understood as the price of the last day
of quotation, including accrued issue discounts;
• not quoted debt securities are valued at normal
value, this being the value of quoted securities with
same characteristics and/or calculated on the basis
of other objective factors, such as the discounting of
cash flows at market rates, including accrued issue
discounts;
• stocks and other similar securities not quoted are
valued at the lower of cost and normal value;
• mutual funds are valued at market value, understood
as the price observed in the last working day of the
financial year.
The original value of unquoted securities is reinstated
if the reasons of the depreciation cease to apply.
Securities transactions to be settled are valued using
the criteria applied to the destination portfolios.
Repurchase agreements, which bear the obligation
for the transferee to re-sell such securities at forward,
are stated as funding or loan financial operations.
Securities loan transactions are recorded as the combination
of two transactions, functionally linked, of active
or passive loans as counterpart for funding or loan
financial transactions. These funding or loan transactions
are assimilated to repurchase agreements transactions.
Foreign currency securities are valued using the
same criteria as the above mentioned, converting the
foreign currency value of the securities into euro at end
of period spot exchange rates.
Cost value of securities is calculated on the so-called
LIFO basis with annual increments.
Derivative contracts
Derivative contracts are valued individually using
the method pertaining to their relevant type (hedging
contracts and trading derivative contracts).
The values calculated are entered into the balance
sheet separately, without offsetting assets and liabilities.
Hedging derivative contracts
These are contracts carried out with the purpose of
covering the risk of value variations of individual assets
or liabilities, as well as any group of assets or liabilities,
be they on or off-balance sheet, against the risk of market
fluctuations.
A transaction is considered as hedging if one of the
following documented conditions applies:
• intention of carrying out the hedging purpose;
• high degree of correlation between the technical
and financial characteristics of the assets or liabili-
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