GENERAL MEETING DRAFT - Bankier.pl

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Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction.
The fair value of a financial liability with a demand feature (e.g. a demand deposit) is not less than the
amount payable on demand, discounted from the first date that the amount could be required to be paid.
For financial instruments listed in active markets, fair value is determined on the basis of official prices in
the most advantageous market to which the Group has access (Mark to Market).
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly
available from a pricing service, dealer, broker, agency that determines prices or regulatory agency, and
those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a
published price quotation in an active market does not exist for a financial instrument in its entirety, but
active markets exist for its component parts, fair value is determined on the basis of the relevant market
prices for the component parts.
If market quotations are not available, the Group uses valuation models (Mark to Model) in keeping with
generally accepted methods used by the market. Valuation models include techniques based on the
discounting of future cash flows and on volatility estimates, and they are subject to revision both during
their development and periodically in order to ensure they remain valid over time.
These methods use inputs based on prices set in recent transactions for the instrument being valued
and/or prices/quotations for instruments having similar characteristics in terms of risk profile.
In fact, these prices/quotations are relevant for determining significant parameters in terms of the credit
risk, liquidity risk and price risk of the instrument being valued.
Reference to these "market" parameters makes it possible to limit the discretionary nature of the
valuation, and ensures that the resulting fair value can be verified.
If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use
estimates based on historical data as inputs.
As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs:
� independent price verifications (IPVs);
� fair value adjustments (FVAs).
Independent price verification requires that the prices for trading positions be verified monthly by Risk
Management units that are independent from the units that assume the risk exposure.
This verification calls for comparing and adjusting the daily price in line with valuations obtained from
independent market participants.
For instruments not quoted in active markets, the above verification process uses prices contributed by
infoproviders as a reference, and assigns a greater weighting to those prices that are considered
representative of the instrument being valued.
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