ANNUAL REPORT 2008 - DG Hyp

Intangible and tangible fixed assets
Tangible fixed assets are carried at cost less regular
depreciation, where applicable. In the year under review, a
write-down to the lower going concern value under German
tax laws (Teilwert) was recognised for the building in
Rosenstrasse 2, Hamburg. Movable tangible fixed assets
are predominantly depreciated on a straight-line basis,
using the maximum rates permissible under tax laws, or
based on the declining-balance method with a subsequent
transfer to straight-line depreciation. Low-value assets are
written off in full during their year of purchase. Standard
software is reported under intangible assets, as prescribed
by accounting standard HFA 11 issued by the Main Committee
of the IDW (IDW RS HFA 11). As a result of the
change of the business model, write-downs in the amount
of € 6.5 million had to be recognised for a securitisation
software and a capitalised expected economic benefit due
to the resulting impairment.
Liabilities
Liabilities are shown on the balance sheet at the
amount due for repayment. The difference between the
nominal value and the initial carrying amount of liabilities is
recognised under deferred items and amortised over the
term of the transaction.
Liabilities classified as structured products (as defined in
Accounting Practice Statement BFA 1.003 issued by the
Banking Committee of the IdW) are accounted for as uniform
liabilities as they only contain embedded interest rate
derivatives. Such liabilities are grouped with corresponding
hedge transactions, to establish hedging relationships.
The partial profits to be paid for silent partnership contributions
are carried in their full amount.
Provisions
Contingent liabilities are covered by provisions
equalling the anticipated amount of the liability, on the
basis of prudent business judgement. Provisions for pensions
are determined using the cost (“Teilwert”) method in
accordance with actuarial principles, using the actuarial
tables 2005 G by Dr. Klaus Heubeck. The imputed rate used
for discounting was 4.5 per cent.
54 Deutsche Genossenschafts-Hypothekenbank AG | Annual Report 2008
Notes to the Financial Statements
Derivative financial instruments
Financial derivatives are accounted for separately in
auxiliary ledgers. These instruments are generally used to
hedge the interest rate and currency risk exposure of onbalance
sheet transactions. Current interest payments are
amortised and recorded in net interest income.
Income from the disposal (close-out) of interest ratebased
derivative financial instruments is generally recognised
in interest income. Where interest rate swaps are
grouped with securities, to establish hedging relationships
(asset swaps), income realised upon closing out swaps are
recognised in line with the recognition of income of the
underlying transaction, in the net result on financial assets,
or in the net risk provisioning balance, respectively.
Premiums paid or received for credit default swaps are
amortised in commission income over the terms of the
transactions.
Premium payments for swaptions entered into as a
hedge against the impact of statutory loan termination
rights pursuant to section 489 of the German Civil Code
(Bürgerliches Gesetzbuch - „BGB“) are allocated to the
investment portfolio and carried at cost.
(3) Currency translation
Assets and liabilities from foreign exchange transactions
are translated in line with section 340h of the HGB and
Statement BFA 3/1995 issued by the IdW. Book receivables,
securities, liabilities and unsettled spot transactions are
generally translated using the ECB reference rate prevailing
on the balance sheet date. Income and expenses from currency
translation are recognised in the income statement in
accordance with section 340h of the HGB. Income and
expenses from foreign exchange forwards, which were
entered into exclusively for the purpose of hedging interestbearing
balance sheet items, are recognised in interest
income.