Accounting principles.
Consolidation.
Valuation and determination of results.
The consolidated financial statements include
the figures of all the financial institutions in
which the bank directly or indirectly has a long-
term interest of 50% or more. Where the interest
is more than 50%, the assets and liabilities and
the results of these subsidiaries are included in
the consolidated balance sheet and in the
consolidated profit and loss account,
respectively, third party interests being shown
separately. Where there is a 50% interest, 50% of
the assets, liabilities and results are included in
the consolidation.
Assets and Liabilities
Unless otherwise stated, assets and liabilities are
included at face value, in the case of assets, less
any diminution in their value deemed necessary.
Any premiums and discounts are included in
Debtors and Creditors, respectively, and are
taken to the profit and loss account over the
term of the item to which they relate.
Interest receivable and interest payable are
included in Debtors and Creditors, respectively.
Treasury paper, Deposit and savings certificates
repayable on the basis of accumulated interest
and Savings accounts which have interest added
to the account itself, are stated at face value plus
accrued interest.
Currencies
Results, amounts receivable and amounts
payable denominated in foreign currencies and
the relevant forward contracts are translated at
the spot exchange rates prevailing on balance
sheet date. Other forward contracts in foreign
currencies are valued at the market quotations
on balance sheet date for their remaining terms
or at prices derived therefrom.
Exchange differences which result from these
currency translations are included in Other
income in the profit and loss account, with the
following exceptions:
- exchange differences on forward transactions
entered into in connection with funds borrowed
and funds deposited, which are accounted for in
Debtors and Creditors, respectively;
- translation differences, after allowing for
effects of taxation, on the balance of monetary
assets and liabilities of foreign establishments
not located in countries with an exceptionally
high rate of inflation, which, together with the
results on the forward exchange transactions
concluded in connection therewith, are included
as a charge or an addition to the Exchange
differences reserve (in Shareholders' equity).
Securities and syndicates
Debentures purchased as investments are stated
at redemption value.
Other securities are stated at their quoted prices
as at balance sheet date less a diminution in
value for possible unmarketability, or, in the
case of unlisted securities, at estimated sales
value.
Acquired ABN group debentures are stated at
the lower of market price and cost.
Valuation differences on other securities are
taken to the profit and loss account in Other
income.
Subsidiaries and associated companies
Valuation of subsidiaries and associated
companies is on the basis of their net asset value,
applying as far as possible the same principles as
have been adopted for these financial state
ments.
Differences caused by this method of valuation,
other than those movements which, in
accordance with the principles, are accounted
for in equity, are taken to the profit and loss
account.
Differences between purchase price and net asset
value of newly acquired subsidiaries and
associated companies are accounted for in
Shareholders' equity in the year of acquisition.
68
