6 Commitments and contingent liabilities
To meet the financial needs of borrowers, FMO enters into various irrevocable commitments (loan commitments, equity commitments and guarantee commitments) and contingent liabilities. These contingent liabilities consist among others of financial guarantees, which commit FMO to make payments on behalf of the borrowers in case the borrower fails to fulfill payment obligations. Though these obligations are not recognized on the balance sheet, they do obtain Credit Risk similar to loans to private sector. Therefore, provisions are calculated for financial guarantees and loan commitments according to IFRS 9 ECL measurement methodology.
Furthermore, the contingencies include an irrevocable payment commitment (IPC) to the Single Resolution Board (SRB) in Brussels. In April 2016, the SRB provided credit institutions with the option to fulfil part of their obligation to pay the annual ex - ante contributions to the Single Resolution Fund (SRF) through IPCs.
June 30, 2019 | December 31, 2018 | |
Contingent liabilities | ||
Encumbered funds (single resolution fund) | 389 | |
Effective guarantees issued | 76,712 | 75,066 |
Less: provisions, amortized costs and obligations for guarantees (presented under other liabilities) | -2,731 | -3,331 |
Total contingent liabilities | 74,369 | 71,735 |
Guarantees received | ||
Effective guarantees received | 208,649 | 199,027 |
Total guarantees received | 208,649 | 199,027 |
Nominal amounts for irrevocable facilities is as follows:
June 30, 2019 | December 31, 2018 | |
Irrevocable facilities | ||
Contractual commitments for disbursements of: | ||
- Loans | 760,452 | 830,686 |
- Grants | 1,924 | 1,734 |
- Equity investments and associates | 683,176 | 642,606 |
- Contractual commitments for financial guarantees given | 371,479 | 334,163 |
Total irrevocable facilities | 1,817,031 | 1,809,189 |
For 2019 total irrevocable facilities contain 85% USD, 14% EUR and 1% other currencies (2018: 84% USD, 12% EUR, 2% other).