ICICI Bank 2010 Annual Report Download - page 165

F85
schedules
forming part of the Consolidated Accounts (Contd.)
14. Credit derivative instruments
The Group deals in credit derivative instruments including credit default swaps, credit linked notes, collateralised debt
obligations and principal protected structures. The notional principal amount of these credit derivatives outstanding at
March 31, 2010 was Rs. 27,995.2 million (March 31, 2009: Rs. 33,703.4 million) in funded instruments and Rs. 32,880.9
million (March 31, 2009: Rs. 38,712.6 million) in non-funded instruments which includes Rs. 224.5 million (March 31, 2009:
Rs. 253.6 million) of protection bought by the Group. At March 31, 2010, the total outstanding mark-to-market position of
the above portfolio was a loss of Rs. 878.4 million (March 31, 2009: Rs. 6,327.3 million). The profit and loss impact on the
above portfolio on account of mark-to-market and realised gains/losses during the year ended March 31, 2010 was a net
profit of Rs. 5,080.3 million (March 31, 2009: net loss of Rs. 3,640.5 million).
15. Reclassification of investments in ICICI Bank UK PLC
In October 2008, the UK Accounting Standards Board amended FRS 26 on ‘Financial Instruments: Recognition and
Measurement’ and permitted reclassification of financial assets in certain circumstances from the ‘held for trading (HFT)’
category to the ‘available for sale (AFS)’ category, ‘held for trading (HFT)’ category to the ‘loans and receivables’ category
and from the AFS category to the ‘loans and receivables’ category.
Pursuant to these amendments, during the year ended March 31, 2009, ICICI Bank UK PLC has transferred certain assets
with fair value of Rs. 34,028.0 million (USD 670.9 million) from the HFT category to the AFS category, certain assets of fair
value Rs. 116.7 million (USD 2.3 million) from HFT category to loans and receivables category and certain assets with fair
value of Rs. 20,394.5 million (USD 402.1 million) from the AFS category to the loans and receivables category.
If these reclassifications had not been made, the Bank’s pre-tax profit for the year ended March 31, 2009 would have
reduced by Rs. 2,448.8 million (USD 53.3 million) [expense on financial instruments fair value through profit and loss for the
year ended March 31, 2009 would have increased by Rs. 2,687.7 million (USD 58.5 million) offset by change in net interest
income by Rs. 238.9 million (USD 5.2 million)] and the Bank’s pre-tax gain in available for sale reserve would have increased
by Rs. 532.6 million (USD 10.5 million).
If these reclassifications had not been made, the Bank’s pre-tax profit for the year ended March 31, 2010 would have
increased by Rs. 2,285.4 million (USD 48.1 million) [income on financial instruments fair value through profit and loss for
the year ended March 31, 2010 would have increased by Rs. 2,518.2 million (USD 53.0 million), and net interest income
reduced by Rs. 232.8 million (USD 4.9 million)] and the Bank’s pre-tax gain in available for sale reserve would have decreased
by Rs. 1,180.9 million (USD 26.3 million) during the year ended March 31, 2010.
16. Scheme support expenses of ICICI Prudential Asset Management Company Limited
During the year ended March 31, 2009, other expenditure in Schedule 16 – ’Operating expenses’ of the financial statements
includes scheme support expense of Rs. 920.2 million of ICICI Prudential Asset Management Company Limited. The Scheme
support expense consists of support given to Fixed Maturity Plans of Rs. 26.8 million towards yield shortfall, money market
scheme of Rs. 55.2 million towards liquidity crisis management and equity funds of Rs. 838.2 million as a compensation
against diminution in value of certain investments.
17. Liquidity options to employees of ICICI Prudential Life Insurance Company Limited and to employees of ICICI Lombard
General Insurance Company Limited
ICICI Bank and Prudential Plc have approved a scheme of liquidity to be provided to the employee stock option holders of
ICICI Prudential Life Insurance Company to the extent of shares exercised against options vested on or before March 31,
2007, aggregating to a maximum of 2.5 million shares. The shares would be bought at a price determined by an independent
external valuation of the shares and would be in line with the grant price for new stock options being granted. The shares
would be bought by the joint venture partners from the employee stock option holders in the proportion of their share
holding. During the year ended March 31, 2010, ICICI Bank has purchased Nil shares (March 31, 2009: 1,704,062 shares)
of ICICI Prudential Life Insurance Company pursuant to this scheme.
Similarly, ICICI Bank and Fairfax Financials Holdings Limited, Canada have approved a scheme of liquidity to be provided to
the employee stock option holders of ICICI Lombard General Insurance Company to the extent of shares exercised against
options vested on or before March 31, 2007, aggregating to a maximum of 1.1 million shares. The shares would be bought
at a price determined by an independent external valuation of the shares and would be in line with the grant price for new
stock options being granted. The shares would be bought by the joint venture partners from the employee stock option
holders in the proportion of their share holding. During the year ended March 31, 2010, ICICI Bank has purchased Nil shares
(March 31, 2009: 442,950 shares) of ICICI Lombard General Insurance Company pursuant to this scheme.
18. Transfer of Merchant acquiring operations
During the year ended March 31, 2010, the Bank and First Data, a global company engaged in electronic commerce and
payment services, formed a merchant acquiring alliance and a new entity, 81.0% owned by First Data, was formed, which
has acquired ICICI Bank’s merchant acquiring operations through transfer of assets, primarily comprising fixed assets and
receivables and assumption of liabilities, for a total consideration of Rs. 3,744.0 million. This transfer of assets and liabilities
to the new entity would be considered a ‘slump sale’ for tax purposes. The Bank realised a profit of Rs. 2,029.0 million from
this transaction, which is included in Schedule 14 – “Other income”.