layouts for the p rofit and loss account and · pdf filebal ance sheet and instructions for...

FINANCIAL SUPERVISION APPENDIX IAUTHORITY

REGULATION No. 106.lJ. No. 20/420/98

1 (47)

LAYOUTS FOR THE PROFIT AND LOSS ACCOUNT ANDBALANCE SHEET AND INSTRUCTIONS FORCOMPLETION

The profit and loss account should be drawn up according to the following layout:

PROFIT AND LOSS ACCOUNT

1. Interest income2. Net income from leasing operations3. Interest expenses4. NET INCOME FROM FINANCIAL OPERATIONS5. Income from equity investments

(a) Group undertakings(b) Participating interests(c) Other undertakings

6. Commission income7. Commission expenses8. Net income from securities transactions and foreign exchange dealing

(a) Net income from securities transactions(b) Net income from foreign exchange dealing

9. Other operating income10. Administrative expenses

(a) Staff costs(aa) Salaries and fees(ab) Staff-related costs

(aba) Pension costs(abb) Other staff-related costs

(b) Other administrative expenses11. Depreciation and write-downs on tangible and intangible assets12. Other operating expenses13. Loan and guarantee losses14. Write-downs on securities held as financial fixed assets15. NET OPERATING PROFIT OR LOSS16. Extraordinary items

(a) Extraordinary income(b) Extraordinary expenses

17. PROFIT / LOSS BEFORE APPROPRIATIONS AND TAXES18. Appropriations19. Income taxes20. Other direct taxes21. PROFIT OR LOSS FOR THE FINANCIAL YEAR


REGULATION No. 106.1J. No. 20/420/98

2 (47)

Taxes attributable to extraordinary items may be separated from income taxes andentered as a separate item after extraordinary expenses. In that case, the title of item17 of the profit and loss account should read “PROFIT OR LOSS AFTEREXTRAORDINARY ITEMS”. Taxes must be broken down in the above manner ifthe difference between extraordinary expenses and extraordinary income is material.

The balance sheet should be drawn up according to the following layout:

BALANCE SHEET

ASSETS1. Liquid assets2. Debt securities eligible for refinancing with central banks3. Claims on credit institutions

(a) Repayable on demand(b) Other

4. Claims on the public and public sector entities5. Leasing assets6. Debt securities

(a) On public sector entities(b) Other

7. Shares and participations8. Participating interests9. Shares and participations in group undertakings10. Intangible assets11. Tangible assets

(a) Real estate and shares and participations in real estate corporations(b) Other tangible assets

12. Claims in respect of share, investment share capital and original fund issues13. Own retained shares and participations14. Other assets15. Accrued income and prepayments

LIABILITIES

A. LIABILITIES1. Liabilities to credit institutions and central banks

(a) Central banks(b) Credit institutions

(ba) Repayable on demand(bb) Other

2. Liabilities to the public and public sector entities(a) Deposits

(aa) Repayable on demand(ab) Other

(b) Other liabilities



3 (47)

3. Debt securities issued to the public(a) Bonds(b) Other

4. Other liabilities5. Accrued expenses and deferred income6. Compulsory provisions

(a) Pension provisions(b) Provisions for taxes(c) Other compulsory provisions

7. Subordinated liabilities

B. APPROPRIATIONS8. Depreciation difference9. Voluntary provisions

C. EQUITY CAPITAL10. Share capital/Cooperative capital/Basic capital11. Investment share capital/Original fund/Additional capital 12. Share premium account13. Revaluation reserve14. Other restricted reserves

(a) Reserve fund(b) Reserves provided for by the articles of association(c) Other reserves

15. Capital loans16. Non-restricted reserves

(a) Reserve for own retained shares and participations(b) Other reserves

17. Profit or loss brought forward18. Profit or loss for the financial year

OFF-BALANCE SHEET COMMITMENTS

1. Commitments given to a third party on behalf of a customer(a) Guarantees and pledges(b) Other

2. Irrevocable commitments given in favour of a customer(a) Securities repurchase commitments(b) Other



4 (47)

INSTRUCTIONS FOR THE COMPLETION OF THE PROFITAND LOSS ACCOUNT

Interest income

Enter under interest income all interest and interest subsidies, penalty interest, andcommissions for loan arrangement and other commissions calculated on a time basisor by reference to the amount of the principal.

The proportion of fees received on loans granted and accrued for the financial yearis also entered as interest income provided the fees are not compensation for directadministrative expenses related to the granting of the loan. Fees similar in nature tointerest are spread over the maturity of the loan as interest income.

The difference between the selling price and the lower book value of claims enteredin the balance sheet under “Claims on credit institutions” and “Claims on the publicand public sector entities” is also entered as interest income. The difference betweenthe book value and the lower selling price is entered as a deduction in interest incomewhen a loan is assigned.

Income similar in nature to interest from the financing of hire purchase contracts,factoring and accounts payable financing and other such financing is also entered here.

Accrued interest claims written off on the basis of the insolvency of a customer areentered as a deduction in interest income.

Unpaid interest on claims whose principal has been recorded as non-performing inaccordance with Regulation 105.8 must not be entered as income for the financial yearunless the claim is on a public sector entity or a public sector entity has issued acommitment as security for the claim. Unpaid interest entered as interest income onsuch claims during the financial year must be deducted from interest income in theannual accounts at the latest.

Claims acquired at below or above nominal value

If, at the time of acquisition, the amount paid for a loan or debt security was aboveor below the nominal value (eg zero-interest loans), the proportion for the financialyear of the difference between the nominal value and the purchase price is spread overthe financial year as interest income or as a deduction in interest income if it ismaterial. A counteritem is entered as an increase or decrease in the book value of theclaim.



5 (47)

Sale and repurchase agreements (repos)

The difference between the resale price and purchase price of securities or other assetsbought under repos imposing obligations on the credit institution and its contractingparty is entered as interest income and accrued income during the validity of theagreement. If the credit institution or its contracting party is merely entitled, but notobliged, to sell back the security or the asset, the difference is not entered underinterest income.

Interest rate and currency swap agreements

The difference between annual interest received and paid under interest rate andcurrency swap agreements entered into for the purpose of hedging claims and debtsecurities held as financial fixed assets is entered in the annual accounts as interestincome or an adjustment item thereto for the financial year it accrues.

Forward rate agreements, interest rate futures, interest rate options and forward exchange contracts

The proportion of income and expenses for the financial year arising from interest ratederivative contracts and forward exchange contracts entered into for the purpose ofhedging claims other than debt securities held as current assets is entered as interestincome or an adjustment item thereto.

Net income from leasing

This item includes rents from leasing contracts less planned depreciation in respect ofleasing assets. The item also includes additional depreciation in respect of leasingassets and capital gains and losses from the sale of leasing assets, fees charged tocustomers and other direct income and expenses arising from leasing contracts. Otherincome and expenses arising from leasing contracts are entered under the profit andloss account items that correspond to the nature of the income or expense items.Unpaid leasing rents must not be entered as income for the financial year, if thepurchase price of the leasing asset is to be treated as non-performing in accordancewith Regulation 105.8, unless the rent claim is on a public sector entity or secured bya commitment issued by a public sector entity. If such rents have been entered asincome during the financial year, they must be deducted from net income from leasingat the latest in connection with the drawing up of the annual accounts.

Interest expenses

Interest expenses comprise all interest, penalty interest, and commissions for loanarrangement and other commissions calculated on a time basis or by reference to theamount of principal.

The proportion of issue losses for the financial year arising in connection with theissue of loans and the proportion of fees for the financial year paid on loans received



6 (47)

are shown under interest expenses, provided they are not compensation for directadministrative expenses related to the granting of the loan.

The interest on perpetuals is entered as an expense for the financial year during whichit was accrued, regardless of whether interest payments can be postponed under theloan terms because of lack of funds distributable as dividends or for some other suchreason.

The proportion for the financial year of the issue premium on loans issued is enteredas a deduction in interest expenses.

Issue losses and premiums and fees similar in nature to interest are spread over thematurity of the loan as interest expenses.

The difference between the redemption price and book value of own debt obligationsredeemed by the credit institution before the due date is entered under interestexpenses or as a deduction therein. However, the difference between the redemptionprice and book value of such own debt obligations as have passed into the ownershipof the credit institution incidentally in connection with trading, must be entered underthe profit and loss account item “Net income from securities transactions”.

Contributions paid to the deposit guarantee fund are also entered as interest expenses.

Liabilities acquired at below or above nominal value

If the amount received when a liability was acquired is more or less than the nominalvalue (eg zero-interest loans), the difference between the nominal value and the sumreceived when the liability was acquired is spread over the maturity period as interestexpenses or a deduction therein, if it is material. A counteritem is entered as anincrease or a decrease in the book value of the liability.

Indexed liabilities

The difference, repayable at maturity, between the value of an indexed liabilityaccording to a changed bench mark and its lower nominal value must be spread overthe maturity period as interest expenses.

Interest payable on a capital loan (capital investment)

Interest payable on a capital loan (capital investment) is entered under the relevantitem as an expense for the financial year during which it accrued. The counteritem isentered in accrued expenses.



7 (47)

Sale and repurchase agreements (repos)

The difference between the repurchase and selling price of securities or other assetssold under repos imposing obligations on the credit institution and its contractingparty is entered as interest expense. The difference is entered in interest expenses andaccrued expenses during the maturity of the contract. The difference is not entered asinterest expense if the credit institution or its contracting party is merely entitled, butnot obliged, to buy or sell back the securities or assets.

Interest rate and currency swap agreements

The difference between annual interest received and paid under interest rate andcurrency swap agreements entered into for the purpose of hedging a liability is enteredas interest expense or an adjustment thereto for the financial year during which itaccrues.

Forward rate agreements, interest rate futures, interest rate options and forward exchange contracts

The proportion of expenses and income for the financial year arising from interest ratederivative contracts and forward exchange contracts entered into for the purpose ofhedging liabilities is entered as interest expenses or an adjustment item thereto.

Income from equity investments

Enter under this item dividend income from shares, income from common fund unitsand other comparable income paid from the undertaking’s distributable funds. Relatedcorporate tax credit is entered according to the statement (1994/1269) issued by theAccounting Board.

Commission income

The item includes bank charges and commissions from granting loans, arrangingfinancing for securities issues or other similar financing, guarantees and otheroff-balance sheet commitments, foreign exchange dealings, securities transactions, andprovision of trustee services, payment services, securities lending and borrowing andother comparable services.

Commissions from granting loans or arranging other similar financing are enteredunder this item only if they are compensation for direct administrative expenses arisingfrom the granting of loans or other financing.



8 (47)

Commission expenses

This item includes commissions paid to third parties for rendering the services referredto in the previous item. Commissions from securities or real estate transactions can,however, be capitalized in the purchase price of the security or real estate concerned.

Net income from securities transactions and foreign exchange dealing

Net income from securities transactions

Entries under this item consist of the positive or negative difference between theselling price and book value of debt securities, shares and participations which areheld as current assets (gross profit).

The difference between the selling price and book value is entered as income or adeduction in income when a security is transferred. A security is considered to havebeen transferred when the transaction has been concluded in a demonstrable andbinding manner.

The difference between the book value and market value of securities held for tradingpurposes on the balance sheet date is entered under this item as income or expense forthe financial year.

The difference between the book value and the lower market value of securities otherthan the securities held as current assets referred to above on the balance sheet dateis entered as a deduction under this item. If, on the balance sheet date, the marketvalue exceeds the book value, the difference between the market value and the bookvalue is entered as an increase under this item up to the amount of the purchase price.

If the securities have been sold before the accounting entity has acquired ownershipof them, the difference between the probable purchase price on the balance sheet dateand the lower selling price is entered as an expense for the financial year.

The item also includes the income and expenses arising from forward rate agreements,interest rate futures, stock-related futures and option contracts and interest rate swapsentered into for the purpose of hedging securities referred to above and for non-hedging purposes. The amount arising from the difference in the net present values ofinterest streams arising from interest rate swap agreements entered into for thepurpose of hedging debt securities which are held as current assets and for non-hedging purposes is booked as income or expense for the financial year and enteredas an increase or decrease in the item.

Net income from foreign exchange dealing

The item includes the net income from foreign exchange dealing and gains and lossesarising from translation into Finnish currency of assets, liabilities and the principal of



9 (47)

currency swap agreements. The item also comprises the proportion of income for thefinancial year arising from the valuation of forward exchange contracts, currencyfutures and currency options.

Other operating income

Enter in this item gross rental income from real estate and gross dividend income andrental income from real estate corporations, capital gains on real estate and shares andparticipations in real estate corporations, commissions and fees paid by undertakingsbelonging to the same group or consolidation group for administrative and othercomparable services, and other income from the credit institution's ordinary businessnot included in the items mentioned above.

Administrative expenses

Staff costs

Salaries and fees

Salaries and fees include wages, salaries and fees subject to withholding tax and paidduring the financial year, together with holiday pay and holiday compensation, andcompensation payable on account of dismissal.

Staff-related costs

Pension costs

In addition to pensions and employment pension contributions paid, pension costsinclude the change in the uncovered pension liability calculated on an actuarial basisfor the financial year. If the change in the uncovered pension liability is not paid to apensions institution, the counterentry is made under “Pension provisions” in thebalance sheet. Excess coverage of pension liability in a pension foundation or apension fund (hereafter referred to jointly as “pension foundation”) and an increasetherein should not be entered in this item, nor entered otherwise as income, until theexcess coverage has been refunded to the credit institution or until the creditinstitution has received notification from the pension foundation to the effect that thecredit institution is entitled to a refund of its share in the excess coverage in thepension foundation on the basis of a decision made by the board of directors of thepension foundation and permission of the Ministry of Social Affairs and Health.

Other staff-related costs

The item includes social security contributions, national pension contributions andother similar statutory staff-related costs, with the exception of employment pensioncontributions.



10 (47)

Other administrative expenses

Other administrative expenses include meals, recreation and training costs, office costsand expenses arising from information technology, telecommunications, travel,marketing and other administrative expenses which are not staff costs.

Depreciation and write-downs on tangible and intangible assets

Depreciations entered here shall be broken down into two items: planned depreciationentered on a time basis and write-downs entered owing to a permanent decrease inmarket value.

The purchase price of buildings and machinery and equipment is depreciated over theasset's useful life according to a depreciation plan, observing the general guidelinesissued by the Accounting Board. If the value of a building has been raised in theaccounts, the depreciation is made on the original purchase price. If the building'smarket value, or the market value of shares or participations in real estatecorporations entered under the balance sheet item “Tangible assets” is permanentlybelow the book value, the difference between the book value and the market value isdepreciated during the financial year when the decrease in value is recognized. Whenthe balance sheet value of real estate and shares and participations in real estatecorporations in own use is defined, the valuation basis shall be the value of the assetin relation to the expected income from ordinary business activities. Any earlierrevaluations of assets must be reversed separately as stated in Appendix III below.

The proportion of the purchase price of land on which corresponding income is nolonger expected is deducted from the purchase price of land.

Intangible assets are depreciated according to a depreciation plan over their useful life.Goodwill is depreciated within five years or, if its useful life is longer, during thisperiod, but within a maximum of 20 years.

The depreciation plans on which depreciation is based and which indicate the type ofasset involved, the account in which the depreciation is entered and the depreciationtime must be appended to the balance sheet breakdowns.

The general guideline of the Accounting Board should be applied in respect ofdepreciation made in excess of planned depreciation.

Other operating expenses

Enter in this item rental expenses, gross expenses arising from real estate and realestate corporations, including maintenance charges paid to them, capital losses arisingfrom the sale of shares and participations in real estate and real estate corporations,insurance and other security expenses including contributions paid to security funds,supervision, inspection and membership fees, losses arising from crimes and other



11 (47)

operating expenses pertaining to credit institution business which are not enteredunder other items.

Loan and guarantee losses

Actual loan losses and specific loan loss provisions included in the balance sheet items“Claims on credit institutions” and “Claims on the public and public sector entities”and those arising from off-balance sheet commitments are entered under this item.Losses attributable to debt securities are not entered here.

Actual loan losses and specific loan loss provisions must be entered in the annualaccounts as deductions from the corresponding balance sheet items.

The amounts to be written off as actual loan losses according to Regulation 106.3must be entered under expense for the financial year, unless specific loan lossprovisions have previously been made for them.

A specific loan loss provision is made once it has become probable that no paymentwill be made on the principal of the claim.

Consequently, a specific loan loss provision may be reversed in the annual accounts,if later it becomes probable that a payment will nevertheless be made on the principalof the claim.

A specific loan loss reserve must be made at least when

- the asset has been booked as non-performing on the balance sheet date,

- the solvency of the debtor or guarantors is not expected to improve sufficientlywithin two years, and

- the market value of the pledge given as collateral is not adequate to cover theamount of the principal of the claim.

If an insurance indemnity or other such compensation is expected for the loan loss orit is probable that the sum can be collected from a guarantor or from collateral, thespecific loan loss provision is entered in the annual accounts less the expectedpayment.

Amounts collected or received in respect of claims that have previously been writtenoff as actual loan losses and reversing entries in respect of specific loan loss provisionsare entered under the item as a deduction.

If, when assessing the amount of the specific loan loss provision, the paymentexpected from a debtor is not considered to cover the entire principal of the debt andthe interest accrued on it, the expected payment is first taken into account as adeduction in accrued interest receivable entered in the books of account, and secondly



12 (47)

as a repayment of principal in respect of the amount in excess of accrued interestreceivable.

If a claim of the credit institution that has arisen from the funding of a customer hasbeen substituted by property, the difference between the purchase price of theproperty and its lower probable value at the balance sheet date together with anycapital gain or loss arising from the sale of such property are entered under this item,unless the property has been transferred to be used in the credit institution's ordinarybusiness. A decision in writing must be made specifying that the purpose of use of theproperty concerned has been changed.

Loan losses arising from debt securities held as financial fixed assets are also enteredunder this item, when the debt securities have been subscribed or otherwise acquiredin order to finance a customer in a manner comparable to lending.

Losses arising from accrued income are not entered under this item.

Amounts recovered in respect of claims that have been written off as actual loanlosses and reversing entries in respect of specific loan loss provisions must, providedthey are not insignificant, be entered as a separate item in the profit and loss accountor shown in the notes to the profit and loss account and balance sheet.

Write-downs on securities held as financial fixed assets

If the market value of securities entered under the balance sheet item “Shares andparticipations in group undertakings” or “Participating interests”, or the market valueof securities held as financial fixed assets entered under the balance sheet item “Sharesand participations” or “Debt securities”, is permanently lower than their book valueon the balance sheet date, the difference between the book value and the market valueis entered as an expense under this item.

If the above write-down made on a security proves unjustified, it must be reversed.Reversing entries must be made in an account of their own in the books of accountand stated as a separate item in the profit and loss account if the amount is material.

Extraordinary items

Extraordinary items consist of income and expenses originating from non-recurring,material transactions that deviate from the ordinary business of the credit institution.

Extraordinary items do not have any distinct connection with the day-to-day businessof the credit institution, they cannot be expected to recur and their volume is materialcompared to the size of the credit institution.



13 (47)

Appropriations

Change in depreciation difference

An increase or decrease in any accumulated depreciation difference is entered here.

Change in fund for general banking risks

The increase or decrease in the provision referred to in the balance sheet item “Fundfor general banking risks” is entered here.

Change in other voluntary provisions

The increase or decrease in the provisions referred to in the balance sheet item “Othervoluntary provisions” is entered here.

Income taxes

The taxes entered on a cash basis under the item “Income taxes” that have been leviedas advance tax should be adjusted so that direct taxes are spread over the financialyear according to the accruals convention. The supplementary tax is allocated to thefinancial year for which dividends are paid.

Taxes cannot be entered directly against equity capital.

Taxes which do not pertain to the financial year are entered on a line of their own,separate from the taxes for the financial year.

Other direct taxes

Direct taxes other than those entered under the item “Income taxes” are entered here.



14 (47)

INSTRUCTIONS FOR THE COMPLETION OF THE BALANCE SHEET

ASSETS

Liquid assets

This item comprises Finnish and foreign notes and coins, cheques and bankers' draftsand other similar payment instruments.

This item comprises claims on central banks and post office banks operating atgovernment liability and which are repayable on demand.

The terms “central bank” and “post office bank” refer to the Bank of Finland and aforeign central or post office bank operating at government liability in a country wherethe credit institution has a branch.

Claims on central banks with agreed maturity dates or periods of notice are enteredunder the item “Claims on credit institutions”.

Debt securities eligible for refinancing with central banks

This item comprises Treasury bills and other debt securities which the central bankapproves as collateral for central bank refinancing other than intraday finance. Debtsecurities eligible for refinancing with central banks are entered under this itemaccording to their nature, not according to whether the credit institution itself hasaccess to central bank finance.

General rules concerning claims

Claims on credit institutions and claims on the public and public sector entities includeclaims based on debt instruments and deposits made in other credit institutions whichare not included in the item “Debt securities”.

This item also includes the purchase price of securities or other assets bought onresale terms imposing obligations on the credit institution and its contracting party.Claims of this kind are entered in the balance sheet according to the contracting party.If the credit institution or its contracting party is merely entitled, but not obliged, tobuy or sell back the security or asset, the purchase price is not entered under claims.

This item also includes claims arising from the financing of hire purchase contracts andfactoring and from accounts payable financing and other such financing.

The amount received at the time of purchase is entered as the principal amount of theclaim.



15 (47)

A claim is regarded as being repayable on demand if, under the contract terms, it canbe called in immediately upon demand or after a maximum period of notice of onebusiness day.

Claims on credit institutions

This item comprises claims on central banks other than those repayable on demandand loans and advances to credit institutions referred to in the Credit Institutions Actand comparable foreign credit institutions, plus deposits made in them. This item alsoincludes claims on the security funds of deposit banks.

Claims on the public and public sector entities

This item comprises loans and advances to parties other than credit institutions andcentral banks and other similar claims.

Leasing assets

This item comprises the purchase price, less depreciation, of assets rented out underleasing contracts, and advance payments in respect of leasing assets.

Debt securities

General rules

This item comprises bank (discount) certificates of deposit, commercial and localauthority paper, Treasury bills, government bonds, debentures and other debtsecurities, deposit receipts, and other such negotiable bearer bonds and promissorynotes made out to order and related matured and unmatured instalment coupons, withthe exception of debt securities held as financial fixed assets that have been acquiredfor the purpose of financing a customer and that are comparable to direct lending.

Bonds with equity warrants and convertible bonds are regarded as debt securities. Ifbonds with equity warrants have not been acquired separately from the warrants, thepurchase price of the bond is the first market price quoted for the bond after it hasbeen subscribed or otherwise acquired or, if this is not available, the net present valueof the principal and interest stream from the loan amount discounted at the mostclosely applicable market interest rate.

Debt securities acquired on resale terms imposing obligations on the credit institutionand its contracting party are not entered in the balance sheet under the creditinstitution's assets. If the credit institution or its contracting party is merely entitled,but not obliged, to buy or sell back the debt security, it is, however, entered in thebalance sheet. A debt security sold on repurchase terms imposing obligations on thecredit institution and its contracting party is kept in the balance sheet notwithstandingthe sale and repurchase agreement. If the credit institution or its contracting party is



16 (47)

merely entitled, but not obliged, to sell or buy back the debt instrument, it is not,however, entered in the balance sheet.

Debt securities lent to another party are entered under assets in the lender's balancesheet.

Debt securities are entered under assets in the balance sheet once they have beentransferred to the credit institution. A debt security which has been purchased isconsidered to have been transferred when the transaction has been concluded in ademonstrable and binding manner.

The purchase price for each type of debt security is calculated using the FIFO methodor the average cost method. If the latter method is applied, different types of debtsecurity must be valued as separate categories. A debt security is considered to be ofdifferent type if it differs from another debt security in terms of the type of claim itrepresents, its interest rate linkage, maturity date or the issuer's other debt securities.

A debt security for which the sum paid when it was acquired was above or belowwhat the debtor must repay under the contract terms when the claim falls due (egzero-interest loans) is also entered in the balance sheet at the price that was paid forit at the time of acquisition, adjusted by the direct commission expenses related to theacquisition. If the difference between the nominal value and the purchase price of adebt security is material, it is spread over the maturity of the debt instrument asinterest income or a deduction therein. A counteritem is entered as an increase or adecrease in the purchase price of the debt security. The proportion of the differencebetween the purchase price and the nominal value of convertible bonds thatcorresponds to the value of the conversion right is not, however, spread overmaturity.

The market value of a debt security is the net present value of the principal andinterest stream arising from the debt instrument and discounted at the market interestrate. The market interest rate is the HELIBOR rate corresponding to the remainingmaturity of the debt instrument or a long-term reference rate, or in the case of debtinstruments denominated in foreign currency, a corresponding, generally quotedinternational reference rate. If no reference rate has been quoted for the remainingmaturity, the interest rate calculated by interpolating the reference rates quoted for thetwo closest maturity periods is used. The market interest rate is the reference ratequoted closest to the balance sheet date, unless the Financial Supervision Authoritydetermines otherwise in exceptional circumstances.

If the debt instrument is quoted publicly on the balance sheet date and the quotationis determined on the basis of the prevailing market interest rate in the above manner,the last quotation on the balance sheet date or, if no trades have been done, thecorresponding bid quotation can be considered to be the selling price of the debtinstrument.



17 (47)

A debt instrument acquired in securities brokering on behalf of a customer is enteredunder this item if it has not been sold to a customer in a binding manner or the sale hasbeen cancelled on the balance sheet date.

The reference rates used in valuation or some other valuation principle must bedisclosed separately in the balance sheet breakdown.

Debt instruments held by the credit institution which have been issued by the creditinstitution itself are not entered as assets of the credit institution, with the exceptionof debt securities which are held as current assets and which have incidentally passedinto its ownership in connection with trading.

Public sector entities

This item includes bonds, Treasury bills, local authority paper and other negotiabledebt instruments and related matured and unmatured instalment coupons issued forpublic subscription by a public sector entity included in the official sectoralclassification of Statistics Finland, or by a comparable foreign public sector entity.

Other

The item includes debt instruments issued by entities other than public sector entities.

Shares and participations

The item includes shares, original fund and investment shares, and other participationsconferring a right to the equity capital of the undertaking concerned. Certificatesconferring a right to the subscription of or return on shares and participations aretreated as shares and participations, as too are common fund units. Shares andparticipations entered in the items “Participating interests” and “Shares andparticipations in group undertakings” appearing below are not, however, shown underthis item. Similarly, shares and participations in real estate corporations are notentered under this item.

Shares acquired on resale terms imposing obligations on the credit institution and itscontracting party are not entered in the balance sheet under the credit institution'sassets. If the credit institution or its contracting party is merely entitled, but notobliged, to repurchase or sell the shares or participations, they are, however, enteredin the balance sheet. Shares or participations sold on repurchase terms imposingobligations on the credit institution and its contracting party are retained in the balancesheet notwithstanding a sale and repurchase agreement. If the credit institution or itscontracting party is merely entitled, but not obliged, to sell or repurchase the sharesor participations, they are not, however, entered in the balance sheet.

Shares and participations lent to another party are entered under assets in the lender'sbalance sheet.



18 (47)

Shares and participations are entered under assets in the balance sheet when they havebeen transferred to the credit institution. The purchased shares or participations aredeemed to have been transferred when the sale has been concluded in a demonstrableand binding manner.

Stamp duty, commission and other such direct costs paid on the purchase of sharesor participations and related directly to the purchase price are capitalized in thepurchase price of the shares or participations.

Shares and participations can be valued applying the FIFO method or the average costmethod. When the latter method is used, each share series must be valued as a groupof its own.

The market value of shares is the last quotation available on the balance sheet date or,if it cannot be considered a reliable indicator of the shares' actual market value, someother market value. The last quotation is deemed to be the price of the last round lotsold in the course of ordinary trading. If a value higher than the last availablequotation is to be applied, the approval of the Financial Supervision Authority forsuch a valuation principle must be acquired. It must be stated in detail in the balancesheet how shares and participations have been valued.

Shares or participations acquired through securities brokering on behalf of a customerare entered under this item if, on the balance sheet date, they have not been sold to thecustomer in a binding manner or if the sale has been cancelled.

The purchase price of a warrant is deemed to be the difference between the totalpurchase price of the bond with equity warrants and the purchase price of the bondas calculated in the above section “Debt securities”.

Shares and participations acquired to safeguard claims on customers shall be enteredin an account of their own in the books, if the income and expenses arising from themare recognized as loan losses and adjustments thereto.

Participating interests

This item comprises shares and the participations referred to in the previous sectionin undertakings where the credit institution holds a participating interest as referredto in chapter 1, section 7, of the Accounting Act, with the exception of shares andparticipations in real estate corporations referred to below in section “Tangibleassets”. This item includes all the participating interests of the group.

Shares and participations in group undertakings

This item comprises shares and the participations referred to in the above section“Shares and participations” in subsidiaries as referred to in chapter 1, section 6, of theAccounting Act, with the exception of shares and participations in real estatecorporations referred to below in section “Tangible assets”. This item includes all



19 (47)

shares in undertakings belonging to the group. Shares and participations insubsidiaries are included in this item even if they have been excluded from theconsolidated accounts.

Intangible assets

This item comprises costs of establishment, goodwill arising in connection with thepurchase of an undertaking and other notable expenditure expected to yield incomefor more than one year.

Tangible assets

This item comprises land and water areas, buildings, shares and participations in realestate corporations, machinery and equipment and other comparable moveables. “Realestate corporations” here refers to housing companies, real estate companies and othersuch companies and cooperative societies which do not engage in any business otherthan ownership of the real estate specified in the articles of association or rules. Acredit institution's subsidiaries and participating interests of this kind are alsoconsidered to be real estate corporations.

This item does not include moveables serving as collateral for an unpaid claim, unlessthese were intended to remain in the permanent use of the credit institution itself.Immoveables and shares and participations in real estate corporations are, however,included in this item irrespective of how they have been acquired.

Land and water areas, buildings and shares and participations in real estatecorporations in the credit institution's own use include land and water areas andbuildings which are, at the end of the financial year, de facto in the own use of thecredit institution or an undertaking belonging to its group as office, storage or othercomparable premises, or which the staff uses as residences or for leisure or other suchpurpose, and shares and participations in real estate corporations conferring the rightto possess such premises. If only a part of a land or water area or a building is in theown use of a credit institution, enter under this item the proportion of the entire landor water area or building that is de facto in its own use at the end of the financial year.

Stamp duty and commissions paid at the time of acquisition and real estateimprovement expenses can be capitalized in the purchase price of real estate andshares and participations in real estate corporations.

The book value of land and water areas, buildings and shares and participations in realestate corporations can be increased in the manner described in Appendix III.

Assets entered under this item that have been acquired to safeguard claims oncustomers shall be entered in an account of their own in the books, if the income andexpenses arising from them are recognized as loan losses and adjustments thereto.



20 (47)

Claims in respect of share, investment share capital and original fund issues

The item comprises the unpaid amount for subscribed shares, investment shares ororiginal fund shares until such time as it has been paid or the subscription invalidated.

Own retained shares

Own retained shares may be entered under this item in the balance sheet, if they aresubject to public trade as referred to in chapter 1, section 3, of the Securities MarketsAct and if an amount corresponding to their purchase price is entered as a non-distributable item under “Non-restricted reserves”.

Other assets

Cash items in the process of collection

This item comprises claims arising from payment transactions and payable on demand.

Guarantee claims

This item also includes claims under a right of recourse based on guarantees and othercomparable off-balance sheet commitments.

Derivative contracts

This item includes items pertaining to options, futures and forwards and interest rateswaps to be entered under assets in the balance sheet. It also includes interestattributable to such interest rate swaps as are entered under “Net income fromsecurities transactions” in the profit and loss account.

Other

This item comprises assets which are not shown under any other item, such as claimsin respect of the sale of assets, claims in respect of compensation and moveablesserving as collateral for unpaid claims. On the other hand, the item does not includeshares serving as collateral for unpaid claims or immoveables. It does, however,include margin account claims related to derivative contracts.

Accrued income and prepayments

This item comprises interest and other income relating to the financial year but not dueuntil after its expiry adjusted or supplemented to comply with the accruals conventionand interest and other expenses incurred but relating to a subsequent financial year.



21 (47)

If it is not clear whether a payment is to be entered as payment of interest orrepayment of principal, it must in the first instance be entered as an interest payment,unless the credit institution has decided to discontinue the collection of interest.

LIABILITIES

General rules concerning liabilities

If the amount received when a liability was incurred is either more or less than theamount the credit institution is liable to repay under the loan terms when the liabilityfalls due (eg zero-interest loans), the liability is entered in the balance sheet at theamount received when the liability was incurred, adjusted by the direct commissionexpenses arising from the drawing of the liability. If the difference between the amountpayable when it falls due and the amount received when the liability was incurred ismaterial, it is spread as an interest expense or as an adjustment thereto over thematurity of the liability. A counteritem is entered as an increase or decrease in theliability's book value.

The selling price of assets sold on repurchase terms imposing obligations on the creditinstitution and its contracting party is entered under liabilities in the balance sheet. Thedifference between the repurchase price and the selling price is entered as interestexpense and accrued expense during the maturity of the liability. If the creditinstitution or its contracting party is entitled, but not obliged, to sell or repurchase theassets, the selling price is not entered under liabilities.

A liability is regarded as being repayable on demand if it can be called in immediatelyor after a maximum period of notice of one business day.

Liabilities to credit institutions and central banks

This item comprises liabilities to credit institutions and central banks referred to in theabove item “Claims on credit institutions”.

Liabilities to the public and public sector entities

The item comprises liabilities to parties other than credit institutions and central banks.

Deposits

This item consists of deposits accepted in deposit accounts as referred to in section50 of the Credit Institutions Act.



22 (47)

Other liabilities

This item consists of liabilities which are not included in deposits and which are dueto parties other than credit institutions or central banks.

Debt securities issued to the public

General rules

A debt security issued to the public refers to bonds, certificates of deposit and anyother comparable negotiable bearer bonds and promissory notes made out to orderand issued by a credit institution. Debt instruments redeemed by the credit institutionbefore their maturity are entered as a deduction in this item, with the exception of debtinstruments that have incidentally passed into the ownership of the credit institutionin connection with trading.

Bonds

This item comprises bonds issued by a credit institution.

Other

This item consists of certificates of deposit issued by a credit institution andcomparable promissory notes, other than those issued to the public.

Other liabilities

Cash items in the process of collection

This item comprises liabilities arising from payment transactions and payable ondemand.

Derivative contracts

This item comprises the amount pertaining to options, futures and forwards andinterest rate swaps to be entered under liabilities in the balance sheet. It also includesinterest attributable to such interest rate swaps as are entered under “Net income fromsecurities transactions” in the profit and loss account.

Other liabilities

The item comprises accounts payable and other liabilities which are not based on thegranting of credit, including liabilities arising from the transfer of borrowed securitiesto a third party.



23 (47)

Accrued expenses and deferred income

This item comprises interest and other expenses relating to the financial year butwhich will not be paid until after its expiry adjusted or supplemented to comply withthe accruals convention, and interest and other advance income received but relatingto a subsequent financial year.

Compulsory provisions

Pension provisions

The uncovered pension liability calculated on an actuarial basis is entered underpension provisions.

Provisions for taxes

This item comprises provisions set up in the event of probable residual taxes resultingfrom eg a tax inspection or legal proceedings.

Other compulsory provisions

Entries under other provisions comprise a provision for future specifiable expensesand losses which are likely or certain to arise, but whose amount and the time whenthey will arise is still uncertain, as explained in more detail in chapter 5, section 14, ofthe Accounting Act. Specific loan loss provisions or other comparable items relatedto the valuation of specified balance sheet items are not entered under this item butas a deduction in the item under which the relevant loan or other asset item has beenentered.

Subordinated liabilities

This item comprises subordinated debt securities issued by a credit institution andother subordinated liabilities. It also consists of perpetuals and other subordinatedhybrid capital instruments.

Appropriations

Depreciation difference

This item comprises the difference between recorded and planned depreciation.

Fund for general banking risks

This item comprises a provision set up in the annual accounts in the event ofunspecific loan loss, foreign exchange and other comparable risks connected withcredit institution business. The item includes an annual entry of the amount recorded



24 (47)

in the profit and loss account item “Appropriations”. Losses entered under the profitand loss account item “Loan and guarantee losses” cannot be entered here.

Other voluntary provisions

This item comprises voluntary appropriations other than those entered under “Fundfor general banking risks”, eg appropriations allowed under taxation laws.

Share capital / cooperative capital / basic capital

Paid-up capital is entered under this item. If the share, cooperative or basic capital ora part thereof has not been entered in the trade register, the unregistered amount mustbe stated in the balance sheet as a separate sub-item under this item.

Investment share capital/original fund/additional capital

Investment share capital as referred to in section 164 of the Cooperative Bank Act oran original fund as referred to in section 14 of the Savings Bank Act or additionalcapital as referred to in the Mortgage Society Act is entered here. If the investmentshare capital or the original fund or a part thereof has not been entered in the traderegister, the unregistered amount must be stated in the balance sheet as a separatesub-item under this item.

Share premium account

Funds accruing to a credit institution in connection with the acquisition of equitycapital that exceed the nominal value of shares, and capital gains on the sale of ownshares and shares in the parent undertaking, as referred to in chapter 12, section 3a,of the Companies Act, must be entered in the share premium account.

Revaluation reserve

The item comprises revaluations and associated reversing entries concerning buildings,real estate, shares in real estate corporations and shares and participations held asfinancial fixed assets, as approved by the Financial Supervision Authority anddescribed in more detail in Appendix III.

Other restricted reserves

Reserve fund

Payments as referred to in chapter 12, section 3, of the Companies Act are entered asan increase or decrease in the reserve fund of a limited-liability credit institution,payments as referred to in section 31, paragraph 3, and section 39 of the Savings BankAct are entered as an increase or decrease in the reserve fund of a savings bank, andpayments as referred to in section 13 of the Cooperative Bank Act are entered as an



25 (47)

increase or decrease in the reserve fund of a cooperative bank. Payments as referredto in section 25, paragraph 3 of the Mortgage Society Act are entered as an increaseor decrease in the reserve fund of a mortgage society.

Reserves provided for by the articles of association or rules

The item comprises the reserves provided for by the articles of association or rules.

Capital loans

Capital loans referred to in section 38 of the Credit Institutions Act and capitalinvestments issued before the entry into force of the Act are entered here.

Non-restricted reserves

Reserve for own retained shares and participations

The item comprises the amount corresponding to the purchase price of own retainedshares and participations entered in the balance sheet.

Other reserves

If the credit institution has non-restricted reserves formed from the profit or loss forprevious financial years and based on the articles of association, or regulations, or a decision taken by the Annual General Meeting or a similar meeting exercisinggeneral decision-making power in the credit institution, they are entered under thisitem.

Profit or loss brought forward

The profit or loss result for previous financial years is entered under this item in so faras it has not been transferred to items under equity capital or distributed as profit.

Profit or loss for the financial year

The profit or loss for the financial year shown in the profit and loss account is enteredhere.



26 (47)

OFF-BALANCE-SHEET COMMITMENTS

Commitments given to a third party on behalf of a customer

Guarantees and pledges

Guarantees, pledges and mortgages given as collateral for a liability of a third partyare entered under this item. Commitments are entered at the maximum amount towhich the guarantee, pledge or mortgage corresponds at any given time.

Contract bonds, performance bonds, export guarantees and other guarantees given onbehalf of a customer in favour of a third party for fulfilling the customer's specifiedcommercial obligation, an obligation under public law or an obligation to compensate,including letters of credit and other commitments given in favour of a seller as securityfor the execution of the sale of moveables are comparable to guarantees.

Irrevocable commitments given in favour of a customer

Securities repurchase commitments

This item comprises securities sale contracts which include a put option whereby thebuyer may sell the securities back to the credit institution if he so wishes.

Other

This item comprises the asset sales with recourse referred to in Regulation No. 106.7,forward forward deposits, the unpaid amount of partly-paid securities, underwritingobligations, binding standby facilities and unused credit lines, and other similaroff-balance sheet commitments regardless of their maturity. Commitments are enteredat the maximum amount which may fall due for payment under their terms.



27 (47)

CONTENTS OF THE NOTES TO THE ACCOUNTS

Notes to the accounts concerning the accounting principles applied

The following items shall be included in the notes to the accounts:

Valuation principles and methods and allocation principles and methods applied indrawing up the annual accounts. At least the following information should be givenunder this item:

- principles concerning the classification of asset items into current assets andfinancial fixed assets;

- valuation principles applied to assets and liabilities;

- valuation principles applied to securities;

- treatment of securities purchase and sale contracts and securities lending andborrowing;

- valuation principles applied to tangible and intangible assets and the allocationof their purchase price;

- principles applied to planned depreciation and changes therein;

- treatment of loan and guarantee losses;

- treatment of nonperforming assets;

- treatment of derivative contracts;

- translation of foreign-currency denominated items into Finnish currency;

- valuation principles and methods applied to real estate and shares andparticipations in real estate corporations, separately for those that are in thecredit institution’s own use and those that are not in its own use. If the creditinstitution holds a substantial amount of real estate or shares or participationsin real estate corporations that are not in its own use, the following informationshould be given:- date of valuation of the real estate holdings and the valuation methods

used;- the extent to which the book values of real estate holdings are based on

the cash flow method or other similar calculation method and thepresumptions the calculations are based on;

- any internal criteria confirmed by the credit institution for the entering ofwrite-downs;



28 (47)

- any special factors, such as the special features of certain marketsegments or forecasts concerning the real estate market that have beentaken into account by the credit institution in the valuation;

- principles applied in revaluation and methods applied in the assessment of thevalue of the assets subject to revaluation.

Reasons for changes in the layout of the profit and loss account or balance sheet, andan account of the effects of the changes.

Adjustments made to the data concerning the previous financial year owing to thechange in the layout of the profit and loss account or the balance sheet.

If data concerning the previous financial year are not comparable with the dataconcerning the financial year, this must be disclosed in the notes to the accounts, aswell as any income and expense items included in the profit or loss for the financialyear which have a significant effect on its comparability with the profit or loss for thepreceding financial year, or which are significant in some other way.

Income and expense concerning previous financial years and corrections of errors ifthey are significant.

Account of such components of individual balance sheet items that concern severalbalance sheet items, if this information is significant.

Reasons for or effects of any departures from the provisions in the Accounting Act,the Credit Institutions Act or the Decision of the Ministry of Finance, or theregulations issued by the Financial Supervision Authority, in the drawing up of theannual accounts. If the Financial Supervision Authority has given the credit institutiona permission to deviate from the accounting regulations, this must be disclosed in thenotes to the accounts.

Notes to the profit and loss account

1 This item comprises interest income and interest expenses broken down asfollows:

Interest income- claims on credit institutionsclaims on the public and public sector entitiesdebt securitiesother interest income

Interest expenses- liabilities to credit institutions and central banks



29 (47)

- liabilities to the public and public sector entitiesdebt securities issued to the publicsubordinated liabilities- capital loans- other interest expenses

2 This item comprises the profit and loss account item “Net income from leasing”broken down as follows:

Rental incomePlanned depreciationAdditional depreciation and loan lossesCapital gains and losses (net) from the sale of leasing assetsCommission incomeOther incomeOther expenses

Capital gains from the sale of leasing assets that are credited to customers in theform of rent refunds are deducted from rental income.

3 Show in this item net income from securities transactions, broken down asfollows:

- net income from transactions in debt securities- net income from transactions in shares and participations- net income from other securities transactions

Net income from interest rate derivatives should be included in “net incomefrom transactions in debt securities” and net income from share derivativesshould be included in “net income from transactions in shares andparticipations”.

4 Total values of securities held as current assets purchased or sold during thefinancial year, separately for debt securities and shares.

5 The profit and loss account item “Other operating income” is broken down hereas follows:

Gross rental and dividend income from real estate and real estate corporationsCapital gains from the sale of real estate and shares and participations in realestate corporationsOther income from the ordinary business of the credit institution.

The profit and loss account item “Other operating expenses” is broken downhere as follows:



30 (47)

Rental expensesExpenses from real estate and real estate corporationsCapital losses from the sale of real estate and shares and participations in realestate corporations Other expenses arising from the ordinary business of the credit institution.

6 Show here the breakdown of the profit and loss account item “Depreciation andwrite-downs on tangible and intangible assets” into planned depreciation andwrite-downs, if the amount of write-downs is significant.

7 The item includes the gross amount of losses entered under “Loan andguarantee losses” in the profit and loss account plus the amounts entered asdeductions in this item comprising of reversals of specific loan loss provisionsand claims written off earlier as actual loan losses and collected during thefinancial year, broken down as follows:

Balance sheet item Loan losses, Deductionsgross

In respect of claims on credit institutions

In respect of claims on the public and public sector entities

In respect of leasing assets(shown only in notes to consolidated accounts)

In respect of guarantees and other off-balance sheet items

In respect of other items(eg assets held temporarily)

TOTAL xxxx xxxx

The total amount of loan and guarantee losses is also shown here, broken downas follows:

+ Actual loan losses during the financial year, total- Actual loan losses during the financial year for which a specific loan loss

provision has previously been made- Recoveries in respect of actual loan losses during previous financial years+ Specific loan loss provisions made during the financial year- Reversals of specific loan loss provisions during the financial year

Loan and guarantee losses entered in the annual accounts

If the specific loan loss provisions made for the financial year include a notableamount of specific loan loss provisions concerning the customer or asset groups



31 (47)

referred to in Regulation 106.3, the amount of such loan loss provisions mustbe shown separately.

Show here also the gross amount of write-downs on securities entered underthe item “Write-downs on securities held as financial fixed assets” plus thereversals of write-downs entered as deductions in this item.

8 Show in this item a breakdown of the amounts of extraordinary income andexpenses, if they are material from the point of view of assessing the creditinstitution’s financial performance.

9 This item includes appropriations, broken down as follows:

- change in depreciation difference- change in fund for general banking risks- change in other voluntary provisions

10 Show in this item an account of changes in the compulsory provisions includedin income and expense items, if they are material.

11 Show here a breakdown of profit and loss account items combined inaccordance with section 8, paragraph 4 of the Decision of the Ministry ofFinance.

12 This item comprises the total income for the financial year, broken down byoperations and geographical markets. Show here also the breakdown of netoperating profit or loss by operations or geographical markets, if thisinformation is significant owing to a specific risk associated with the country orarea concerned, or for other reasons.

Show here the breakdown of personnel by operations and geographical markets.

Income refers here to the total for the profit and loss account items “Net incomefrom financial operations”, “Income from equity investments”, “Commissionincome”, “Net income on securities transactions and foreign exchange dealing”,and “Other operating income”.

The separate operations referred to in this item include at least banking,mortgage banking, credit card operations, finance company operations,investment firm operations, common fund operations, real estate investmentoperations and securities trading, if they have been organized within the creditinstitution or its group of undertakings into a subsidiary or other separate profitcentre.The geographical market referred to in the item is a country in which the creditinstitution or its group has one or more branches or a foreign subsidiary.



32 (47)

This information may be shown without eliminations. This fact must bementioned in the notes to the accounts.

Notes to the balance sheet

13 This items shows a breakdown of the balance sheet item “Debt securitieseligible for refinancing with central banks” into Treasury bills, governmentbonds, Bank of Finland’s certificates of deposit, banks’ certificates of depositand other.

14 Show here the amount of claims on central banks included in the balance sheetitem “claims on the public and public sector entities”.

15 A breakdown of the balance sheet item “Claims on the public and public sectorentities” according to the official sectoral classification of Statistics Finland isentered here as follows:

EnterprisesFinancial and insurance institutionsGeneral governmentNon-profit institutionsHouseholdsForeign

Specific loan loss provisions and their reversals in respect of claims included inthe balance sheet item “Claims on the public and public sector entities” are alsoentered here as follows:

Specific loan loss provisions at the beginning of the financial year+ New provisions made during the financial year- Provisions reversed during the financial year- Actual loan losses during the financial year, for which the credit

institution has previously made specific loan loss provisions

Specific loan loss provisions at the end of the financial year.

16 The principal amount of non-performing and other zero-interest assets isentered here as specified in Regulation 105.8.

17 Assets held by the credit institution which it has acquired as security for claimsare entered under this item, broken down as follows:

Real estate and shares and participations in real estate corporationsOther shares and participationsOther assets



33 (47)

Shares and participations which the credit institution has acquired in connectionwith the reorganization of a client's business operations are also shown here attheir book value.

18 The book value of subordinated debt securities, debentures and othersubordinated claims held by the credit institution are entered here by balancesheet item. The amounts of subordinated claims on undertakings belonging tothe same group or consolidation group and on undertakings where the creditinstitution holds a participating interest must be given separately.

19 Assets recorded under “Leasing assets” are entered under this item brokendown as follows:

PrepaymentsMachinery and equipmentReal property and buildingsOther assets

20 This item comprises the total book value of securities included in the items“Debt securities” and “Debt securities eligible for refinancing with centralbanks” and the book value of debt securities broken down into quoted andunquoted securities, as follows:

Debt securities Quoted OthersSecurities held as current assetsOther

Quoted securities refer to shares and other comparable securities quoted byHEX Oy, Helsinki Securities and Derivatives Exchange, Clearing House (theHelsinki Stock Exchange) or a comparable foreign stock exchange, or which aremarket securities as referred to in section 3 of the Securities Markets Act.

Enter here the total amount of the differences between the market value and thelower book value of securities which are held as current assets and which areentered under the items “Debt securities” and “Debt securities eligible forrefinancing with central banks”.

Enter here the total amount of the differences between the purchase price andthe lower nominal value of claims which are held as financial fixed assets andwhich have been entered under the items “Debt securities” and “Debt securitieseligible for refinancing with central banks” and the total amount of thedifferences between the nominal value and the lower purchase price of suchclaims insofar as such differences have not yet been allocated as interest incomeor expense. The corresponding information must be given on the balance sheetitems “Claims on credit institutions” and “Claims on the public and public sectorentities”, if the credit institution has acquired a substantial amount of suchclaims below their nominal value.



34 (47)

Enter in this item the total amounts of the book values of assets recorded in thebalance sheet as “Debt securities” and “Debt securities eligible for refinancingwith central banks” broken down as follows:

Treasury billsLocal authority paperCommercial paper Certificates of depositConvertible bondsOther bondsOther

21 Enter in this item the total book value of securities included in the item 'Sharesand participations' and the total book value of shares and participations, brokendown into quoted and unquoted securities, as follows:

Shares and participations Quoted OthersSecurities held as current assetsOther

Enter in this item the total amount of the differences between the market valuesand lower book values of listed shares and participations included in the item“Shares and participations”, separately for shares and participations held ascurrent assets and for those held as financial fixed assets.

This item also includes securities that have been lent, broken down by balancesheet item and asset category. The total book value of the securities and theiraverage remaining maturity should be shown. Also show under this item thetotal market value of borrowed securities on the balance sheet date and theiraverage remaining maturity, as well as the amount of borrowed securities thathave been transferred to a third party without there being a correspondingamount of the same securities in the borrower's balance sheet on the balancesheet date.

Enter in this item the shares and participations entered under items“Participating interests” and “Shares and participations in group undertakings”,broken down as follows:

Participating interestsin credit institutionsother

Shares and participations in group undertakingsin credit institutionsother

22 The increase and decrease in shares and participations held as financial fixedassets shown under the balance sheet item “Shares and participations” and in



35 (47)

assets shown under the balance sheet items “Shares and participations in groupundertakings”, “Participating interests” and “Tangible assets” during thefinancial year are entered in this item as follows:

Purchase price at beginning of the financial year+ increases during the financial year- decreases during the financial year+/- transfers between groups- planned depreciation during the financial year-/+ write-downs and reversing items for write-downs during the financial year+ accumulated depreciation and write-downs entered in respect of

decreases and transfers at the beginning of the financial year- accumulated depreciation at the beginning of the financial year- accumulated write-downs at the beginning of the financial year+ accumulated revaluations at the beginning of the financial year+/- revaluations and reversing items for revaluations for the financial year

Book value at the end of the financial year

The information should be broken down into the following groups:

1) Shares and participations, with the exception of shares and participationsin real estate corporations;

2) Land and water areas, buildings and shares and participations in realestate corporations;

3) Machinery, equipment and any tangible assets other than those mentionedabove.

23 Show in this item intangible assets broken down into costs of establishment,goodwill and other long-term expenditure.

24

a) Enter in this item the land and water areas, buildings and shares andparticipations in real estate corporations entered under the balance sheet item“Tangible assets”, broken down as follows:

Book value Capital investedLand and water areas and buildings

In own useOther



36 (47)

Shares and participations in real estate corporationsIn own useOther

Capital invested shall be calculated as explained in more detail below underitem b.

b) The information referred to in this item and in item c shall be disclosed only ifthe capital invested in holdings of real estate and shares and participations inreal estate corporations not in own use is equivalent to 3 per cent of the balancesheet total or more, or to 50 million Finnish markkas or more.

Enter here the following information in respect of real estate and shares andparticipations in real estate corporations owned by the credit institution otherthan those in its own use (hereafter referred to as “real estate holdings”):surface area, capital invested, net income as a percentage and rate ofunderutilization as a percentage. Show in this item the method applied in thecalculation of net income.

Capital invested is the purchase price less depreciation entered plus the share inthe debts of a real estate corporation based on the number of shares ownedtherein and/or the share in the debts of a real estate corporation based on thepercentage of shares owned therein.

The rate of underutilization is the ratio of unused surface area (in square metres)to the total rentable surface area (in square metres). By unused surface area ismeant such rentable surface area (in square metres) as does not yield rentalincome on a contractual basis on the reporting date.

If the credit institution is required to draw up consolidated accounts, the figuresshould be given as consolidated figures. The information should be brokendown as follows:

Group of real estate holdings Surface area Capital invested Net income, Rate of in square metres in per cent underutilization,

in per cent

Dwellings and residential real estateBusiness and office real estateIndustrial real estateLand, water and forest areas (undeveloped)Unfinished buildingsFinancial leasing real estateOther domestic real estateForeign real estate

TOTAL REAL ESTATE HOLDINGS xxxx xxxx xxxx% xxxx%



37 (47)

c) Enter under this item the total amount of capital invested in the real estateholdings mentioned above in item b, broken down as follows:

Net income,% Capital invested

negative0 to 3%3 to 5%5 to 7%more than 7%TOTAL xxxx

25 Enter in this item the number, total nominal value and purchase price of thecredit institution’s own retained shares or shares in the parent company, brokendown by type of share.

26 Show here a breakdown of the item “Other assets” into cash items in theprocess of collection, guarantee claims, derivative contracts and other.

27 Show here a breakdown of the item “Accrued income and prepayments” intointerest and other.

28 Show here a breakdown of asset items combined in accordance with section 8,paragraph 4 of the Decision of the Ministry of Finance.

29 Enter here the total amount of the differences between the nominal value andthe lower book value of liabilities, by balance sheet item, together with the totalamount of the differences between the book value and the lower nominal valueof liabilities.

30 Enter in this item the total amounts of the book values of liabilities recorded inthe balance sheet under “Debt securities issued to the public” broken down asfollows:

Certificates of depositBondsOther

31 Show here a breakdown of the item “Other liabilities” into cash items in theprocess of collection, derivative contracts and other.

32 Show here a breakdown of the item “Accrued expenses and deferred income”into interest and other.

33 Show in this item the breakdown of material items entered under compulsoryprovisions, if this is necessary for the clarification of balance sheet items.



38 (47)

34 For each of the credit institution's subordinated liabilities entered in the balancesheet and with a book value equivalent to more than 10 per cent of the totalamount of such liabilities, show the following information:

1. amount, currency, interest rate and maturity of the liability;2. terms concerning premature repayment of the liability; and3. rules concerning the priority of the liability and any conversion into

shares.

For the credit institution's subordinated liabilities other than those mentionedabove, show the following information:

1. total amount of the liabilities;2. information on to what extent creditors can demand premature repayment

of the liabilities; and3. amount of perpetuals included in the liabilities.

Loans targeted at undertakings belonging to the same group and consolidationgroup and at undertakings where the credit institution holds a participatinginterest must be shown separately.

35 Increases and decreases in equity capital items during the financial year areshown here, applying the following format, for each equity capital item in thebalance sheet the amount of which has changed during the financial year, withthe exception of profit or loss for previous years and the financial year inquestion:

Book value at beginning of the financial year+ increases for the financial year- decreases for the financial yearBook value at the end of the financial year

36 If the credit institution's share or investment share capital or original fund hasbeen divided into shares or participations of various types, the followinginformation must be given for each type of share or participation, if they differby type:

1) code of the share or participation;2) number of shares or participations;3) votes conferred by the shares or participations;4) restrictions concerning the acquisition of shares or participations;5) the priority right of a shareholder or owner of a participation to new

shares or participations when the share capital, investment capital ororiginal fund is raised;

6) right to dividends or interest.



39 (47)

37 Show here the total amount of non-distributable items included in non-restrictedequity.

38 Enter in this item information on decisions made during the financial yearconcerning share issues and issues of options and convertible bonds.

Show here the dates and terms of the rights issues based on the options andconvertible bonds issued by the credit institution and the type, number and totalbook value of shares they entitle subscription to, as well as their aggregate shareof all the credit institution’s shares and of the total votes conferred by all theshares.

Issues of options and convertible bonds targeted at undertakings belonging tothe same group and consolidation group and at undertakings where the creditinstitution holds a participating interest must be shown separately.

Enter here information on current authorizations issued by the Annual GeneralMeeting regarding rights issues and the issuance of options and convertiblebonds.

39 Institutions issuing securities subject to public trade shall disclose hereinformation on the division of shareholdings and the largest shareholders, in themanner stipulated in section 2, paragraph 1, points 7 and 8, of the Decision ofthe Ministry of Finance on the duty of the issuer of securities to publishinformation on a regular basis (879/1995),

40 Enter in this item information on the main terms and conditions of capitalinvestments and capital loans, and a specification of such interest or othercompensation agreed to be paid for the loan as is not entered as expense.

41 Show here a breakdown of liabilities items combined in accordance with section8, paragraph 4 of the Decision of the Ministry of Finance.

42 Show in this item the maturity breakdown of assets entered in the balance sheetitems “Debt securities eligible for refinancing with central banks”, “Claims oncredit institutions”, “Claims on the public and public sector entities” and “Debtsecurities” and of liabilities entered in the balance sheet items “Liabilities tocredit institutions and central banks”, “Liabilities to the public and public sectorentities”, and “Debt securities issued to the public” according to the remainingmaturity of the liability by balance sheet item as follows:

- 3 months3 - 12 months1 - 5 years5 years.



40 (47)

The total amount of items payable on demand and included in claims on thepublic and public sector entities is recorded separately in this item. Claimspayable on demand mean claims which, under the contract terms, are payableimmediately upon demand or after a maximum period of notice of one businessday.

It must be specified separately in this item how deposits other than fixed-termones have been classified.

43 The breakdown of asset and liability items into items denominated in domesticand foreign currency is entered here. Items translated into Finnish currency atthe exchange rate prevailing on the balance sheet date are taken into account asitems denominated in foreign currency. The amounts are specified as follows:

Domestic Foreigncurrency currency

Debt securities eligible for refinancing with central banksClaims on credit institutionsClaims on the public and public sector entitiesDebt securitiesOther assets

Liabilities to credit institutions and central banksLiabilities to the public and public sector entitiesDebt securities issued to the publicSubordinated liabilitiesOther liabilities

An analysis by currency need not be made.

Notes to the accounts concerning income taxation

44 Show in this item

- Imputed tax claims and imputed taxes due, as referred to in chapter 5,section 18 of the Accounting Act, if they are material and have not beenentered in the balance sheet.

- Breakdown of income taxes into those arising from ordinary business andthose arising from extraordinary items, if this breakdown is not shown inthe profit and loss account.

- Account on the possible impact of revaluations on income tax.



41 (47)

Notes to the accounts concerning collateral, contingent liabilities and derivativecontracts

45 Show in this item the following information on collateral:

- liability items for which the credit institution has pledged or mortgagedits assets or otherwise placed them as collateral, shown separately foreach liabilities item in the balance sheet and broken down by types ofcollateral, plus the total value of collateral, shown separately for eachbalance sheet item;

- total value of collateral given by the credit institution on own behalf insome other manner than those referred to above, broken down by type ofcollateral;

- total value of collateral given by the credit institution on behalf of anundertaking belonging to the same group, broken down by type ofcollateral.

- total value of collateral given by the credit institution other than thosereferred to in the above items, broken down by type of collateral.

46 Report under this item how the pension cover of the employees has beenarranged. In addition, enter here the direct liability arising from the creditinstitutions’ pension commitments and the credit institution’s share in anyexcess coverage of pension liability or other liabilities in the pension foundationin so far as the credit institution has not been able to enter its share in the excesscoverage as an adjustment to its pension costs. Any refunds of excess coverageentered in the profit and loss account as adjustments to pension costs shouldalso be reported here if they are material. This item also comprises theuncovered part of the liability deficit of a pension foundation for the transitionperiod laid down in the provisions concerning the entry into force of theseregulations until such time as accounting principles in accordance with theseregulations have been adopted in respect of pension liabilities.

47 If the credit institution has, on the basis of leasing contracts, undertaken tomake major leasing payments during subsequent financial years, the nominalvalue of rentals to be paid the following year and the total nominal value ofrentals to be paid during subsequent years should be shown here, plus the mainconditions of notice and redemption of these contracts.

If the credit institution has sold assets and simultaneously leased them back insuch a way that it still bears a significant commercial risk pertaining toownership of the sold and leased assets, the resulting liability must be statedunder this item.



42 (47)

48 Enter here off-balance sheet commitments given by the credit institution onbehalf of group undertakings, broken down according to the layout for off-balance sheet items.

Enter here off-balance sheet commitments given by the credit institution onbehalf of its associated undertakings, broken down as above.

This item includes other types of off-balance sheet commitments which areequivalent to more than 10 per cent of the total amount of off-balance sheetcommitments and the amount of which is at least one million Finnish markkas.The type of commitment, eg guarantees, standby facilities, etc., and the amountof commitments of such type in the annual accounts should be entered here.

49 This item includes the total values and the equivalent credit values of theunderlying instruments pertaining to interest rate, share and currency derivativecommitments and other derivatives outstanding on the balance sheet date,broken down as follows:

Values of the underlying instruments

For hedging purposes Other

Interest rate derivatives Futures and forwards Options

PurchasedWritten

Interest rate swaps

Currency derivativesFutures and forwardsOptions

PurchasedWritten

Interest rate and currency swaps

Share derivativesFutures Options

PurchasedWritten



43 (47)

Other derivativesFutures Options

PurchasedWritten

Equivalent credit values of the contracts

Interest rate derivative contractsCurrency derivative contracts

In the case of interest rate derivative contracts, enter the nominal value as thevalue of the underlying asset, in the case of currency derivative contracts, theequivalent markka value of the purchased currency on the balance sheet dateand, in the case of share derivative contracts, the market value of the shares onthe balance sheet date. Give the values as gross figures.

The total amounts of the equivalent credit values referred to in section 77 of theCredit Institutions Act shall be shown as the equivalent credit values of interestrate and currency derivative contracts. Show separately the total amount ofcontracts where the counterparty is a group undertaking.

50 Enter here the total amount of sales receivable arising from the selling of assetson behalf of customers and the total amount of accounts payable arising fromthe purchasing of assets on behalf of customers.

51 Any commitments or contingent liabilities of the credit institution other thanthose mentioned above should be shown here.

Notes to the accounts concerning the staff and members of governing and supervisorybodies

52 This item should state the average number of full-time and part-time staff in theemploy of the credit institution during the financial year, together with anychange in numbers during the financial year.

Enter in this item the total amounts of salaries and fees, pensions costs andother staff-related costs in respect of the managing director and members of theboard of directors, the supervisory board and corresponding governing bodiesand their deputies.

The amount of emoluments which depend on the credit institution's financialperformance must be listed separately.

The item comprises the total amount of loans which the credit institution or anundertaking belonging to its group or consolidation group has granted to themembers and deputy members of the supervisory board and board of directorsof the credit institution, the members of corresponding governing bodies, the



44 (47)

managing director and auditors and their deputies. The main interest and otherterms of the loans shall also be entered here. A separate entry must be made inrespect of amounts granted to members and deputy members of the supervisoryboard, the total amount granted to the members and deputy members of theboard of directors, the managing director and deputy managing directors andthe total amount granted to auditors. A loan granted to a firm of auditorsemploying an auditor is equivalent to a loan granted to the auditor.

A person or undertaking with an essential economic interest as referred to insection 69, paragraph 1, of the Credit Institutions Act is comparable to a personor undertaking as referred to above.

Enter in this item the total amounts of guarantees and other off-balancecommitments given in favour of the governing and supervisory bodies referredto above, broken down in the same manner.

This item comprises the total amount in Finnish markkas of pensioncommitments that will be incurred or that have been made in respect ofmembers and deputy members of the supervisory board and the board ofdirectors and the managing director and deputy managing directors. Show asseparate entries the total amount in respect of the members and deputy membersof the supervisory board and the total amount in respect of the managingdirector and deputy managing director. The information referred to aboveshould also be given in respect of persons who have previously been membersof the governing and supervisory bodies.

This item should include information on the total amount of shares orparticipations in the credit institution owned by the members of the supervisoryboard and the board of directors and their deputies as well as the managingdirector and the deputy managing directors, on their aggregate holding ofoptions and convertible bonds issued by the credit institution and on theiraggregate share of the total votes conferred by all the shares or participationsin the credit institution, as well as the aggregate share of the total votes, thenumber of shares and participations and the shareholding they may acquire byvirtue of their holdings of options or convertible bonds issued by the creditinstitution.

Holdings in other undertakings

53 The following information is entered here on each undertaking in which thecredit institution owns shares or participations which are held as financial fixedassets:

1) name, domicile and operations of the undertaking;2) shares or participations owned as a percentage of all the undertaking's

shares or participations;3) total book value of shares or participations owned;



45 (47)

4) equity capital according to the latest annual accounts;5) profit or loss for the financial year.

Enter in this item the information referred to above in items 1 to 5 onundertakings in which the credit institution has unlimited liability and indicatealso their corporate form.

The percentage of all shares referred to above also includes the holdings ofpersons acting in their own name but for the account of the credit institution.

If the total nominal and book value of shares or participations owned in anundertaking other than a group undertaking or an undertaking in which thecredit institution holds a participating interest amount to less than one millionFinnish markkas or less than an amount corresponding to five per cent of theequity capital shown in the credit institution's balance sheet or consolidatedbalance sheet, if the latter amount is less than one million Finnish markkas,show only the number of such undertakings and the total book value of sharesand participations owned in them. Upon an application by the credit institution,the Financial Supervision Authority may, for a special reason and for a specificperiod, allow the credit institution to enter the shares and participations referredto above without the specifications referred to in above items 1 to 5.

Report here the information referred to in above items 1 to 5 in respect ofholdings in such housing companies and real estate companies as must beincluded in the consolidated accounts because they are subsidiaries.

Information on equity capital and profit and loss for the financial year need notbe shown in respect of an undertaking which is included in the consolidatedaccounts of the credit institution or its parent undertaking as a subsidiary orassociated undertaking, or if the credit institution holds less than a half of thetotal shares or participations in the undertaking and the undertaking is notobliged to declare its balance sheet for registration.

The information referred to above in items 1 to 5 need not be shown if

- if the disclosure of the information would cause material detriment to thecredit institution or the undertaking in which it has a holding, and if thegrounds for the exemption are given; or

- if the information is of minor significance from the point of view ofobtaining a true and fair view of the performance and financial position ofthe credit institution.

Other notes to the accounts

54 The asset management services offered to the public by the credit institutionshould be reported here. Also enter in this item the total amount on the balance



46 (47)

sheet date of intermediated loans referred to in Guideline No 103.7 "On theintermediation of customers' funds as loans to other customers".

55 In the case of a cooperative bank or some other cooperative credit institution,show in this item the total amount of unpaid membership fees.

Enter in this item the amount of redeemed cooperative capital of a cooperativebank or other cooperative credit institution, and the terms and conditions anddate of the repayment of the redeemed cooperative capital.

Enter in this item the number of members of a cooperative bank.

Information concerning a credit institution belonging to a group

56 If the credit institution is part of a domestic or a comparable foreign group ofundertakings, it should report here

- the name and domicile of the parent company which has the largest numberof group undertakings and which prepares consolidated annual accounts;

- the name and domicile of the parent company which has the smallestnumber of group undertakings and which prepares consolidated annualaccounts; and

- information on where copies of the annual accounts referred to above areavailable.

Show here interest income and income on equity investments received fromother group undertakings, plus any corporate tax credit, and interest expensespaid to other group undertakings.

It is not necessary to disclose such information in respect of subsidiaries whosebalance sheet totals amount to less than ECU 10 million and are equivalent toless than one per cent of the balance sheet total of the parent company,regardless of whether they have been included in the consolidated accounts.

This item includes the total claims on other group undertakings and the totalliabilities to other group undertakings, broken down by balance sheet item.

It is not necessary to disclose such information in respect of subsidiaries whosebalance sheet totals amount to less than ECU 10 million and are equivalent toless than one per cent of the balance sheet total of the parent company,regardless of whether they have been included in the consolidated accounts.



47 (47)

If the credit institution has not drawn up consolidated accounts by virtue ofchapter 6, section 1, paragraph 4, of the Accounting Act, this departure mustbe mentioned in the notes to the profit and loss account or balance sheet of theparent undertaking, together with the name and domicile of the undertakingwhose consolidated annual accounts will include the annual accounts of theparent company and its subsidiary.

layouts for the p rofit and loss account and · pdf filebal ance sheet and instructions for...

Documents