Reclassifications of financial assets

These trends are partly due to the legislative amendments, adopted by the European Commission with Regulation 1004/2008 of 15 October 2008, to IAS 39 (International Accounting Standardsⁱ) "Financial instruments: Recording and measurement" and IFRS 7: "Financial instruments: additional information".

These modifications authorise the reclassification of debt instruments designated at fair valueⁱ from the "held for trading" category in rare circumstances or should the financial asset no longer be held for sale or repurchased in the shortterm. The current financial crisis is considered to be one of the unusual circumstances that can justify the companies' use of this facility.

It remains absolutely prohibited for derivatives and financial instruments designated at fair valueⁱ in the income statement (fair valueⁱ optionⁱ).

The legislative measure also concerned the possibility of reclassifying debt instruments from the "available for sale" category to the "loans and receivables" category, in the event they satisfy the conditions required for their inclusion in said category.

As clarified on 27 November 2008 with the document "Reclassification of Financial Assets -Effective Date and Transition, reclassifications made after 1 November 2008, have an effective date that corresponds to the date on which the reclassification was carried out.

Pursuant to these modifications, securities for the total amount equal to fair valueⁱ as at the date of reclassification of € 1,529.3 million, as detailed in the following table, were reclassified:

RECLASSIFICATIONS OF FINANCIAL ASSETS ⁽¹⁾
(figures in thousands of €)

 ⁽¹⁾ net of accruals

In the absence of the above mentioned reclassifications, at 31 December 2008, the Group would have recorded:

• higher write-downs of € 130.4 million (€ 83.4 million of which generated greater negative reserves of net equity),
• lower interest income relating to amortised cost amounting to roughly € 5 million
• additional negative reserves of net equity totalling € 24.5 million before the respective tax effects.

Reclassified debt securities in the AFS, HTM and L&R categories with a total nominal value of € 1,571.7 million have effective rates of interest 7.26%, with estimated cash flows of € 1,949 million. The Group maintains that, based on recent analysis carried out by leading international research companies, the current write-downs relating to debt securities (made up almost entirely of overnment, bank and corporateⁱ bonds with high credit standings) may be gradually reabsorbed before the respective maturity/repayment date.