Bank of Montreal 2003 Annual Report Download - page 93

BMO Financial Group 186th Annual Report 2003 89
Acceptances
Acceptances represent a form of negotiable short-term debt that is
issued by our customers and which we guarantee for a fee. We have
an offsetting claim, equal to the amount of the acceptances, against
our customers when the instruments mature. The amount due under
acceptances is recorded as a liability and our corresponding claim
is recorded as a loan in our Consolidated Balance Sheet.
Securities Sold but not yet Purchased
Securities sold but not yet purchased represent our obligation to
deliver securities which we did not own at the time of sale. These
obligations are recorded at their market value. Adjustments to the
market value as at the balance sheet date and gains and losses on the
settlement of these obligations are recorded in interest, dividend
and fee income, from securities, in our Consolidated Statement
of Income.
Securities Sold under Repurchase Agreements
Securities sold under repurchase agreements represent short-term
funding transactions where we sell securities that we already own
and simultaneously commit to repurchase the same securities at a
specified price on a specified date in the future. These securities
are recorded at their original cost. The interest expense related to
these liabilities is recorded on an accrual basis.
Subordinated debt represents our direct unsecured obligations to
our debt holders and forms part of our regulatory capital. The rights
of the holders of our notes and debentures are subordinate to the
claims of depositors and certain other creditors. We require approval
from the Superintendent of Financial Institutions Canada before
we can redeem any part of our subordinated debt.
Deposits include federal funds purchased, which are over-
night borrowings of other banks’ excess reserve funds at a United
States Federal Reserve Bank. As at October 31, 2003, we had
purchased $4,481 million of federal funds and $4,096 million
as at October 31, 2002.
Deposits include commercial paper totalling $179 million as at
October 31, 2003 and $597 million as at October 31, 2002.
Included in our deposits payable on a fixed date as at October 31,
2003 are $73,532 million of individual deposits greater than one
hundred thousand dollars, of which $40,687 million were booked in
Canada and $32,845 million were booked outside Canada. We had
(Canadian $ in millions) 2003 2002
Acceptances $ 5,611 $ 6,901
Securities sold but not yet purchased 8,255 7,654
Securities sold under repurchase agreements 23,765 24,796
$ 37,631 $ 39,351
Accounts payable, accrued expenses and other items 8,184 10,479
Accrued interest payable 984 1,125
Non-controlling interest in subsidiaries 1,518 1,571
Liabilities of subsidiaries, other than deposits 11 168
Pension liability (Note 18) 59 72
Other employee future benefits liability (Note 18) 503 477
Other $ 11,259 $ 13,892
Total $ 48,890 $ 53,243
Included in liabilities of subsidiaries, other than deposits as at
October 31, 2002 were other short-term borrowings totalling
$156 million.
Included in non-controlling interest in subsidiaries as at Octo-
ber 31, 2003 and 2002 are capital trust securities totalling $1,150
million that form part of our Tier 1 regulatory capital.
During the year ended October 31, 2003, we redeemed our Float-
ing Rate, Series B1 Subordinated Notes of US$350 million. Our
Series 17 Debentures of $250 million matured during the year.
During the year ended October 31, 2002, we redeemed our Series 24
Debentures of $250 million and our Series A Medium-Term Notes
of $450 million. Our Series 14 Debentures of $150 million matured
during the year. There were no gains or losses on redemption.
$65,304 million of such deposits as at October 31, 2002, of which
$31,529 million were booked in Canada and $33,775 million were
booked outside Canada. Of these deposits booked in Canada as at
October 31, 2003, the amount maturing within three months was
$27,356 million, between three and six months was $1,996 million,
between six and 12 months was $3,208 million and over 12 months
was $8,127 million. As at October 31, 2002, the amount maturing
within three months was $20,054 million, between three and
six months was $1,642 million, between six and 12 months was
$3,708 million and over 12 months was $6,125 million.
Note 15 Other Liabilities
Note 16 Subordinated Debt
The term to maturity and repayments of our subordinated debt required over the next five years and thereafter are as follows:
Interest Redeemable Over
(Canadian $ in millions, except as noted) Face value Maturity date rate (%) at our option 1 year 2 years 3 years 4 years 5 years 5 years Total
Series 12 $140 December 2008 10.85 December 1998 $ – $ – $ – $ – $ – $ 140 $ 140
Series 16 $100 February 2017 10.00 February 2012 ––––– 100 100
Series 18 $250 September 2010 8.80 September 2005 ––––– 250 250
Series 19 $125 March 2011 7.40 March 2006 ––––– 125 125
Series 20 $150 December 2025 to 2040 8.25 – ––––– 150 150
Series 21 $300 May 2011 8.15 May 2006 ––––– 300 300
Series 22 $150 July 2012 7.92 July 2007 ––––– 150 150
6.10% Notes US$300 September 2005 6.10 September 1998 (1) – 396 –––– 396
7.80% Notes US$300 April 2007 7.80 April 2000 (1) ––– 395 –– 395
Series A Medium-Term Notes
2nd Tranche $150 February 2013 5.75 February 2008 ––––– 150 150
3rd Tranche $400 December 2008 5.65 December 2003 (2) 400 ––––– 400
Series B Medium-Term Notes $300 June 2010 6.60 June 2005 ––––– 300 300
Total $ 400 $ 396 $ – $ 395 $ – $ 1,665 $ 2,856
(2) On October 29, 2003, we announced that we will redeem our Series A Medium-Term Notes, due
December 2008, on December 1, 2003.
(1) Redeemable at our option only if certain tax events occur.