Less than 6 months 25.00%
More than 6 months and less than 9 months 50.00%
More than 9 months and less than 12 months 75.00%
More than 12 months 100.00%
In no circumstances will the amount of hedges of credit risk exposure be less than the amount arising from the calculation of hedging for inherent losses associated with debt, even if the amount of the guarantee after applying the appropriate weighting exceeds the outstanding risk.
In addition to the identified losses, the Group recognizes an overall impairment loss on risks classified as “standard” and, therefore, not specifically identified. This loss is the inherent loss incurred at the date of preparation of the financial statements. It is quantified by applying the statistical parameters established by the Bank of Spain based on experience and on the information available concerning the Spanish banking system, which is modified when circumstances warrant.
Debt instruments classified as available for sale
The amount of the impairment losses incurred on debt instruments included in the available-for-sale financial asset portfolio is the positive difference between their acquisition cost (net of any principal repayment) and their fair value less any impairment loss previously recognized in the consolidated income statement. The market value of quoted debt instruments is deemed to be a reliable estimate of the present value of their future cash flows.
When there is objective evidence that the differences arising on measurement of these assets are due to impairment, they are removed from “Equity – Valuation adjustments – Available-for-sale financial assets” and reclassified, for the cumulative amount at that date, to the consolidated income statement. If all or part of the impairment losses are subsequently reversed, the reversed amount is recognized in the consolidated income statement for the year in which the reversal occurs.
Equity instruments classified as available for sale
The amount of the impairment losses on equity instruments included in the available-for-sale financial asset portfolio is the difference between their acquisition cost and their fair value less any impairment loss previously recognized in the consolidated income statement.
When there is objective evidence that a decline in the fair value is due to impairment, such as a fall of 40% of its market price or a situation of continued losses over a period of more than 18 months, the unrealized losses are recognized in accordance with the impairment loss recognition criteria applied to available-for-sale debt instruments, with the exception that any recovery arising on these losses is recognized under “Equity – Valuation adjustments – Available-for-sale financial assets”.
Equity instruments measured at cost
The impairment loss on equity instruments measured at cost is the difference between the carrying amount and the present value of the expected future cash flows discounted at the market rate of return for similar securities. In estimating the impairment, account shall be taken of the equity of the investee, except for “valuation adjustments” due to cash flow hedges, determined on the basis of the latest approved balance sheet, adjusted for the unrealized gains at the measurement date.
Impairment losses are recognized in the consolidated income statement for the period in which they arose, as a direct reduction of the cost of the instrument and their amount may not be reversed subsequently except in the case of a sale.
2.8. Mutual funds, pension funds and other assets under management
Mutual funds and pension funds managed are not presented on the face of the Group’s consolidated balance sheet since the related assets are owned by third parties. The fees and commissions earned in the period for the services rendered by the Group companies, such as custody and asset management fees, are included under “Fee and commission income” in the consolidated income statement.
Other assets owned by third parties and managed by consolidated entities for which a management fee is received are not presented on the face of the consolidated balance sheet (see Note 28.1).
2.9. Personnel expenses and post-employment obligations
As part of the reorganization of the ”la Caixa” Group (see Note 1, Reorganization of the ”la Caixa” Group), practically all ”la Caixa” employees were transferred to CaixaBank as of July 1, 2011 (with accounting effects as of January 1, 2011). The obligations assumed by ”la Caixa” vis-à-vis these employees were also transferred to CaixaBank at that time. Among others, these commitments include ”la Caixa”’s pension and similar obligations at June 30, 2011, primarily governed by the labor agreements on ”la Caixa”’s pension schemes, dated July 31, 2000 and July 29, 2002, and by the labor agreement on early retirement, dated December 23, 2003.
Under the labor agreement signed on July 31, 2000, retirement commitments with currently serving personnel were rolled over to an external defined contribution plan. Among other aspects, the agreement established coverage for disability and care for widows and orphans.
The agreement also arranges guaranteed future benefits for certain groups of employees, where these benefits are treated as defined benefit commitments.
In 2002, in compliance with the labor agreement signed on July 29, 2002, the present value at that date of employees retired prior to July 31, 2000 was included under the Group’s pension plan.
The transfer of commitments from ”la Caixa” to CaixaBank resulted from the agreement reached with employee representatives on April 1, 2011 in order to safeguard employees’ labor conditions. One of the key points of this agreement is that ”la Caixa” bank employees transferred to CaixaBank will be subject to the labor conditions set out in all collective labor agreements and other agreements in force in ”la Caixa” at the time of transfer, without prejudice to any subsequent modifications agreed by all the parties. As a result, CaixaBank is
required to maintain the same conditions and commitments for all employees transferred from ”la Caixa”, including post-employment obligations.
On July 10, 2011 and with the involvement of the committee set up to monitor compliance with the labor agreement of April 1, 2011, ”la Caixa” and the employee representative agreed on the basis for implementing the sixth covenant, applicable in CaixaBank as of July 1, 2011. The agreements affect all employees adhered to the pension plan (”la Caixa” and CaixaBank employees) and all pension plan beneficiaries. The key points agreed are as follows:
1) approval of the creation of a Joint ”la Caixa”/CaixaBank Pension Plan
2) approval of the amendments to transform the specifications of the ”la Caixa” employee Pension Plan to the Joint ”la Caixa”/CaixaBank Pension Plan, and incorporation of two appendices of specifications (employees of ”la Caixa” were included under the ”la Caixa” plan, while employees of CaixaBank, all beneficiaries of the former ”la Caixa” Pension Plan, and non-contributing members were included under the CaixaBank plan) 3) appointment of members of the Joint Pension Plan Monitoring Committee
4) formal creation of the Joint ”la Caixa”/CaixaBank Pension Plan Monitoring Committee
On July 12, 2011 (effective July 1, 2011), ”la Caixa” and CaixaBank signed a collective labor agreement with representatives of the main trade unions, in order to incorporate the above points in ”la Caixa” and CaixaBank’s pension and welfare scheme.