The Group enters into transactions, which, at the time of their inception, are not recognised in the statement of financial position as assets or liabilities, however they give rise to contingent liabilities and commitments. A contingent liability or commitment is:
- a possible obligation that arises from past events and whose existence will be confirmed only at the time of occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group,
- a present obligation resulting from past events, but not recognised in the statement of financial position, because it is not probable that an outflow of cash or other assets will be required to fulfil the obligation, or the amount of the obligation cannot be estimated reliably.
For contingent liabilities and commitment granted which carry the risk of default by the commissioning party, provisions are recognised in accordance with IAS 37.
Credit lines and guarantees are the most significant items of contingent liabilities and commitment granted.
Upon initial recognition, a financial guarantee is stated at fair value. Following the initial recognition, the financial guarantee is measured at the higher of:
- the amount determined in accordance with IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ and
- the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with IAS 18 ‘Revenue’.