Notes to the consolidated balance sheet: liabilities

14. Short-term credits

Short-term credits reflect the cash collateral received for derivative contracts we held with positive value. We also refer to the section treasury counterparty credit risk in the Risk Management paragraph.`

15. Debentures and notes

Debentures and notes includes issued debt instruments in various currencies under FMO's Debt Issuance Programmes. In addition, a subordinated note of €175 million is also included in the Debenture and Notes. Under IFRS this note is classified as financial liability, but for regulatory purposes it is considered as Tier 2 capital.

Important terms of our subordinated note includes:

• Subordinated note amounts to €175 million and is denominated in Euro's.

• Interest rate is 150BPS until December 8, 2020 (first call date). Interest rate between the first call date and December 8, 2025 (final maturity date) will be based on a reset interest plus 140BPS.

The movements can be summarized as follows:

Line items changes in fair value represents the fair value changes attributable to the hedge risk in connection with the debentures and notes used for hedge accounting purposes.

The following table summarizes the carrying value of the debentures and notes.

The nominal amounts of the debentures and notes are as follows:

16. Current accounts with State funds and other programs

17. Other liabilities

The movements in liabilities for guarantees are set out in note 9.

18. Accrued liabilities

19. Provisions

The amounts recognized in the balance sheet are as follows.

Pension schemes

FMO’s pension schemes cover all its employees. The pension schemes are defined benefit plans and most of these plans are average-pay-schemes. FMO has a contract with a well established insurer, in which all nominal pension obligations are guaranteed. This guaranteed contract arranged that all significant risks associated with investments lies with the insurer. These significant risks are amongst others Credit risks, market risks, sufficient investment return to fund indexation of the defined benefit obligation. As a result FMO’s pension plan is exposed to counterparty risk, interest rate risk (changes of discount rate), inflation and changes in the life expectancy for pensioners. The pension assets are managed by the insurance company and strict guidelines has been agreed with the asset manager. The assets of the funded plans are held independently of FMO’s assets by the insurance company in separately administered funds. Independent actuaries value the schemes every year using the projected unit credit method.

The amounts recognized in the balance sheet are as follows:

The movements in the present value of the defined benefit obligations can be summarized as follows:

The actuarial gain on the defined benefit obligation amounts to €25,261 (2016: €54,494 loss) and is mainly due the increase of the discount rate to 2.0% (2016: 1.8%).

The movements in the fair value of plan assets can be summarized as follows:

As per 1 January 2017, FMO’s investment account with the pension insurer has been terminated. No direct asset allocation is held in relation to the new pension insurance contract. Therefore. the fair value of the plan assets can no longer be determined based on a certain asset allocation. Due to this, paragraph 115 of IAS 19 has been applied in estimating the fair value of plan assets as per 31 December 2017 based on accrued pension rights and actuarial rates.

The movement in the liability recognized in the balance sheet is as follows:

The amounts recognized in the profit and loss account as net periodic pension cost are as follows:

As from 1 January 2018 onwards, the formal retirement age in the applicable Dutch Tax framework has been adjusted from 67 to 68 years of age. As a result, FMO decided in December 2017 (after consultation with the Works Council) to adjust FMO’s pension scheme as of January 1, 2018. This increase of pension age from 67 years to 68 years resulted in a reduction of the defined benefit obligation of €3,337 which is recognized as past service cost.

The principal assumptions used for the purpose of the actuarial valuations at year-end are as follows:

The assumption for future salary growth is a range of percentages which are based on the age of individual employees. The pension indexation is conditional.

Significant actuarial assumptions are the discount rate, indexation for active participants and (general) wage inflation. Reasonably possible changes to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

Other provisions

The other provisions are provisions for severance arrangements. This provision is determined using present value calculations.

20. Shareholders’ equity

Share capital

The authorized capital amounts to €45,380, consisting of 51% A shares of €22.69 each, which can only be held by the State, and 49% B shares, also of €22.69 each, which can be held by private investors. The voting rights for A shares and B shares are equal. In addition, the equity of the company comprises of three reserves, which result from the Agreement State-FMO of November 16, 1998. These are the share premium reserve, the development fund and the contractual reserve. As long as the company continues its activities, these reserves are not available to the shareholders. Upon liquidation of FMO these reserves fall to the State, after settlement of the contractual return to the shareholders.

Share premium reserve

Share premium reserve is sole contributed by Shareholders of A shares on the transfer to the company of investments administrated on behalf of the State at the time of the financial restructuring and amounts to €29,272 (2016: €29,272).

Other reserves

Contractual reserve

The addition relates to that part of the annual profit that FMO is obliged to reserve under the Agreement State-FMO of November 16, 1998 (see ‘additional information’).

Development fund

This special purpose reserve contains the allocation of risk capital provided by the State to finance the portfolio of loans and equity investments. In 2005, FMO received the final contribution to the development fund under the Agreement State-FMO of November 16, 1998.

Available for sale reserve

Included in the available for sale reserve is a negative amount of €11,978 (2016: €30,053) for fair value changes in equity investments that were previously impaired.

Translation reserve

Non-controlling interests