[F1ANNEX V U.K. REPORTING ON FINANCIAL INFORMATION

Textual Amendments

PART 1 U.K. GENERAL INSTRUCTIONS

4. ACCOUNTING PORTFOLIOS OF FINANCIAL INSTRUMENTS U.K.

13. For the purposes of Annexes III and IV as well as this Annex, ‘ accounting portfolios ’ means financial instruments aggregated by valuation rules. Those aggregations shall not include investments in subsidiaries, joint ventures and associates, balances receivable on demand classified as ‘ Cash, cash balances at central banks and other demand deposits ’ , nor financial instruments classified as ‘ Held for sale ’ presented in the items ‘ Non-current assets and disposal groups classified as held for sale ’ and ‘ Liabilities included in disposal groups classified as held for sale ’ . U.K.

14. Under national GAAP, institutions that are permitted or required to apply certain valuation rules for financial instruments in accordance with IFRS shall submit, to the extent that those rules are applied, the relevant IFRS accounting portfolios. Where the valuation rules for financial instruments that institutions are permitted or required to use under national GAAP based on BAD do refer to the valuation rules in IAS 39, institutions shall submit the accounting portfolios based on BAD for all their financial instruments until the valuation rules they apply refer to the valuation rules in IFRS 9. U.K.

4.1. Financial assets U.K.

15. The following accounting portfolios based on IFRS shall be used for financial assets: U.K.
(a)

‘ Financial assets held for trading ’ ;

(b)

‘ Non-trading financial assets mandatorily at fair value through profit or loss ’ ;

(c)

‘ Financial assets designated at fair value through profit or loss ’ ;

(d)

‘ Financial assets at fair value through other comprehensive income ’ ;

(e)

‘ Financial assets at amortised cost ’ .

16. The following accounting portfolios based on national GAAP shall be used for financial assets: U.K.
(a)

‘ Trading financial assets ’ ;

(b)

‘ Non-trading non-derivative financial assets measured at fair value through profit or loss ’ ;

(c)

‘ Non-trading non-derivative financial assets measured at fair value to equity ’ ;

(d)

‘ Non-trading non-derivative financial assets measured at a cost-based method ’ ;

(e)

‘ Other non-trading non-derivative financial assets ’ .

17. ‘ Trading financial assets ’ includes all financial assets classified as trading under the relevant national GAAP based on BAD. Irrespective of the measurement methodology applied under the relevant national GAAP based on BAD, all derivatives with a positive balance for the reporting institution that are not classified as hedge accounting in accordance with paragraph 22 of this Part shall be reported as trading financial assets. That classification shall also apply to derivatives which according to national GAAP based on BAD are not recognised on the balance-sheet, or have only the changes in their fair value recognised on-balance sheet or which are used as economic hedges as defined in paragraph 137 of Part 2 of this Annex. U.K.
18. Under national GAAP based on BAD, for financial assets, ‘ cost-based methods ’ shall include those valuation rules by which the debt instrument is measured at cost plus interest accrued less impairment losses. U.K.
19. Under national GAAP based on BAD, ‘ Non-trading non-derivative financial assets measured at a cost-based method ’ includes financial instruments measured at cost-based methods as well as instruments measured at the lower of cost or market ( ‘ LOCOM ’ ) under a non-continuous basis (moderate LOCOM), regardless of their actual measurement as of the reporting reference date. Assets measured at moderate LOCOM are assets for which LOCOM is applied only in specific circumstances. The applicable accounting framework provides for those circumstances, such as impairment, a prolonged decline in fair value compared to cost or change in the management intent. U.K.
20. Under national GAAP based on BAD, ‘ Other non-trading non-derivative financial assets ’ shall include financial assets that do not qualify for inclusion in other accounting portfolios. That accounting portfolio includes, among others, financial assets that are measured at LOCOM on a continuous basis ( ‘ strict LOCOM ’ ). Assets measured at strict LOCOM are assets for which the applicable accounting framework either provides for the initial and subsequent measurement at LOCOM, or the initial measurement at cost and the subsequent measurement at LOCOM. U.K.
21. Regardless of their measurement method, investments in subsidiaries, joint ventures and associates that are not fully or proportionally consolidated under the regulatory scope of consolidation are reported in ‘ Investments in subsidiaries, joint ventures and associates ’ , except where they are classified as held for sale in accordance with IFRS 5. U.K.
22. ‘ Derivatives – Hedge accounting ’ shall include derivatives with a positive balance for the reporting institution held for hedge accounting under IFRS. Under national GAAP based on BAD, banking book derivatives shall be classified as derivatives held for hedge accounting only where there are special accounting rules for banking book derivatives under the relevant national GAAP based on BAD and the derivatives reduce risk of another position in the banking book. U.K.

4.2. Financial liabilities U.K.

23. The following accounting portfolios based on IFRS shall be used for financial liabilities: U.K.
(a)

‘ Financial liabilities held for trading ’ ;

(b)

‘ Financial liabilities designated at fair value through profit or loss ’ ;

(c)

‘ Financial liabilities measured at amortised cost ’ .

24. The following accounting portfolios based on national GAAP shall be used for financial liabilities: U.K.
(a)

‘ Trading financial liabilities ’ ;

(b)

‘ Non-trading non-derivative financial liabilities measured at a cost-based method ’ .

25. ‘ Trading financial liabilities ’ includes all financial liabilities classified as trading under the relevant national GAAP based on BAD. Irrespective of the measurement methodology applied under the relevant national GAAP based on BAD, all derivatives with a negative balance for the reporting institution that are not classified as hedge accounting in accordance with paragraph 26 of this Part shall be reported as trading financial liabilities. That classification shall also apply to derivatives which according to national GAAP based on BAD are not recognised on the balance-sheet, or have only the changes in their fair value recognised on-balance sheet or which are used as economic hedges as defined in paragraph 137 of Part 2 of this Annex. U.K.
26. ‘ Derivatives – Hedge accounting ’ shall include derivatives with a negative balance for the reporting institution held for hedge accounting under IFRS. Under national GAAP based on BAD, banking book derivatives shall be classified as hedge accounting only if there are special accounting rules for banking book derivatives under the relevant national GAAP based on BAD and the derivatives reduce risk of another position in the banking book.] U.K.