Off-balance sheet information

31. Irrevocable 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 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 fulfill part of their obligation to pay the annual ex - ante contributions to the Single Resolution Fund (SRF) through IPCs.

Moreover, FMO receives guarantees from various guarantors, which participate in the risk FMO takes. For more details refer to section 'Credit Risk' within the Risk Management paragraph.

The outstanding amount for financial guarantees issued by FMO and amount of guarantees received by FMO is as follows:

 

2019

2018

   

Contingent liabilities

  

Encumbered funds (single resolution fund)

389

-

Effective guarantees issued

98,370

75,066

Less: provisions, amortized costs and obligations for guarantees (presented under other liabilities/provisions)

-2,371

-3,331

Total guarantees issued

95,999

71,735

Total contingent liabilities

96,388

71,735

   

Effective guarantees received

211,194

199,027

Total guarantees received

211,194

199,027

Nominal amounts for irrevocable facilities is as follows:

  

2019

2018

    

Irrevocable facilities

   

Contractual commitments for disbursements of:

   

ˑ

Loans

832,434

830,686

ˑ

Grants

880

1,734

ˑ

Equity investments and associates

647,789

642,606

ˑ

Contractual commitments for financial guarantees given

301,779

334,163

Total irrevocable facilities

 

1,782,882

1,809,189

The movement in exposure for the financial guarantees issued (including contractual commitments) and ECL allowance is as follows:

Movement financial guarantees1 in 2019

Stage 1

Stage 2

Stage 3

Total

 

Outstanding exposure/Nominal amount

ECL allowance

Outstanding exposure/Nominal amount

ECL allowance

Outstanding exposure/Nominal amount

ECL allowance

Outstanding exposure/Nominal amount

ECL allowance

At January 1, 2019

339,120

-1,511

67,708

-297

2,401

-1,201

409,229

-3,009

Additions

131,775

-583

19,492

-270

-

-

151,267

-853

Exposures matured (excluding write-offs)

-159,120

299

-993

34

-234

-

-160,347

333

Transfers to Stage 1

-

-

-

-

-

-

-

-

Transfers to Stage 2

-

-

-

-

-

-

-

-

Transfers to Stage 3

-

-

-

-

-

-

-

-

Changes to models and inputs used for ECL calculations

-

1,033

-

56

-

769

-

1,858

Foreign exchange adjustments

-

-305

-

-6

-

-110

-

-421

At December 31, 2019

311,775

-1,067

86,207

-483

2,167

-542

400,149

-2,092

  • 1 Financial guarantees represent EUR 98,370 classified as contingent liabilities and EUR 301,779 classified as irrevocable facilities

Movement financial guarantees in 2018

Stage 1

Stage 2

Stage 3

Total

 

Outstanding exposure/Nominal amount

ECL allowance

Outstanding exposure/Nominal amount

ECL allowance

Outstanding exposure/Nominal amount

ECL allowance

Outstanding exposure/Nominal amount

ECL allowance

At January 1, 2018

126,806

-581

67,189

-265

4,652

-2,326

198,647

-3,172

Additions

223,715

-888

4,796

-

-

-

228,511

-888

Exposures matured (excluding write-offs)

-11,401

65

-6,305

32

-223

-

-17,929

97

Transfers to Stage 1

-

-

-

-

-

-

-

-

Transfers to Stage 2

-

-

2,028

-2,028

-2,028

2,028

-

-

Transfers to Stage 3

-

-

-

-

-

-

-

-

Changes to models and inputs used for ECL calculations

-

-100

-

1,947

-

-748

-

1,099

Foreign exchange adjustments

-

-7

-

17

-

-155

-

-145

At December 31, 2018

339,120

-1,511

67,708

-297

2,401

-1,201

409,229

-3,009

The movement in nominal amounts for loan commitments and ECL allowances is as follows:

Movement of loan commitments in 2019

Stage 1

Stage 2

Stage 3

Total

 

Nominal amount

ECL allowance

Nominal amount

ECL allowance

Nominal amount

ECL allowance

Nominal amount

ECL allowance

At January 1, 2019

624,659

-4,051

69,559

-434

11,674

-

705,892

-4,485

Additions

466,409

-2,361

3,901

-1,280

97

-

470,407

-3,641

Exposures derecognised or matured (excluding write-offs)

-362,051

2,851

-17,206

89

-6,922

-

-386,179

2,940

Transfers to Stage 1

-

-

-

-

-

-

-

-

Transfers to Stage 2

-43,868

371

43,868

-371

-

-

-

-

Transfers to Stage 3

-

-

-

-

-

-

-

-

Changes to models and inputs used for ECL calculations

-

43

-

-1,077

-

-

-

-1,034

Changes due to modifications not resulting in derecognition

-

-

-

-

-

-

-

-

Amounts written off

-

-

-

-

-

-

-

-

Foreign exchange adjustments

-

-40

-

-14

-

-

-

-54

At December 31, 2019

685,149

-3,187

100,122

-3,087

4,849

-

790,120

-6,274

Movement of loan commitments in 2018

Stage 1

Stage 2

Stage 3

Total

 

Nominal amount

ECL allowance

Nominal amount

ECL allowance

Nominal amount

ECL allowance

Nominal amount

ECL allowance

ECLs as at January 1, 2018

855,620

-6,746

38,894

-1,756

547

-

895,061

-8,502

Additions

369,733

-2,342

44,607

-332

550

-

414,890

-2,674

Exposures derecognised or matured (excluding write-offs)

-571,714

5,262

-31,798

842

-547

-

-604,059

6,104

Transfers to Stage 1

17,720

-872

-17,720

872

-

-

-

-

Transfers to Stage 2

-40,104

2

40,104

-2

-

-

-

-

Transfers to Stage 3

-6,596

-

-4,528

-

11,124

-

-

-

Changes to models and inputs used for ECL calculations

-

820

-

15

-

-

-

835

Changes due to modifications not resulting in derecognition

-

-

-

-

-

-

-

-

Amounts written off

-

-

-

-

-

-

-

-

Foreign exchange adjustments

-

-175

 

-73

-

-

-

-248

At December 31, 2018

624,659

-4,051

69,559

-434

11,674

-

705,892

-4,485