Helm Bank S.A. and Subsidiary Companies. Notes... · Helm Bank Cayman was notified by the Monetary...
Transcript of Helm Bank S.A. and Subsidiary Companies. Notes... · Helm Bank Cayman was notified by the Monetary...
Helm Bank S.A. and Subsidiary Companies
Financial Statements for the Six Months
Ended on December 31 and June 30, 2013
HELM BANK S.A. AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED ON DECEMBER 31 AND JUNE 30, 2013 (All amounts are expressed in million pesos plus one decimal, except for amounts in foreign currency, the exchange rates and the nominal and intrinsic value of the shares)
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1. ECONOMIC ENTITY AND MAIN ACCOUNTING POLICIES AND PRACTICES
Helm Bank S.A. (the Bank) is a private entity, with main domicile in the city of Bogota D.C.,
incorporated by means of Public Deed number 2152 dated July 31, 1963 of Notary 8 of the
Circle of Bogota D.C. By means of Resolution number 3140 of September 24, 1993 the Finance
Superintendence of Colombia granted the renewal of the operating license in a definitive
manner. The term established in the Bylaws is until July 10, 2062; however, it may be dissolved
or extended before said term. The corporate purpose of the Bank is to execute or perform all the
operations and agreements legally permitted for banking establishments of commercial nature,
subject to the requirements and limitations of Colombian law.
As of December 31, 2013 the Bank operated with 2,039 employees (2,150 in June 2013)
through 87 offices (87 in June 2013), of which 46 are located in Bogota D.C. and 41 in different
areas of the country.
By means of public deed No. 1576 dated July 16, 2010, granted in Notary 25 of the Circle of
Bogota, the merge by integration and absorption was formalized, under which Helm Bank S.A.,
absorbed Helm Leasing S.A. Compañia de Financiamiento, a company dissolved without being
liquidated. On July 19, 2010 the registration of the merger’s deed was made in the
corresponding trade registry before the Chamber of Commerce of Bogota.
Relevant events – From July 1, 2013 until the date of issuance of the Financial Statements, the
relevant events detailed below have occurred:
The Finance Superintendency of Colombia by means of Resolution 1370/2013, stated it
had no objection to the acquisition by Banco CorpBanca Colombia S.A of 100% of the
outstanding shares as well as of the preferred shares as to dividend of Helm Bank S.A., by
means of three successive operations: The first one performed by Banco Corpbanca on
August 6, the second one performed on August 29 and the third operation, consisting in a
public takeover offer (PTO) up to 100% of the 571,749,928 non-voting preferred shares
issued by Helm Bank S.A., which was performed on December 21, 2013.
Consequently, on August 6, 2013 Banco CorpBanca Colombia S.A. made the payment for
a sum of $1,286,023,381,722.93 Colombian pesos (USD 682,878,115) in favor of several
selling shareholders of Helm Bank S.A., achieving with it a 51.60% interest over the total
of shares issued and outstanding (including common and non-voting preferred shares)
equivalent to 58.89% of the total of common shares of said financial entity, and achieving
through it an indirect interest in Helm Fiduciaria S.A., Helm Comisionista de Bolsa S.A.,
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both financial sector entities incorporated in Colombia; Helm Bank Panama S.A., Helm
Casa de Valores Panama, financial sector entities incorporated in Panama; and Helm Bank
Cayman, resulting in control situation over these companies.
On August 29, the Bank performed a second payment for a sum of $892,356,012,382.24
Colombian pesos (USD 473,840,834) in favor of several selling shareholders of Helm
Bank S.A., achieving in that way an in increase in its interest to 87.42% of the total of
shares issued and outstanding (including common and non-voting preferred shares)
equivalent to an approximate 99.75% of the total of common shares of Helm Bank S.A.
By means of Directors’ meeting minutes dated August 2, 2013, the decision to voluntarily
wind-up the company Helm Bank S.A. (Cayman) was made and by means of minutes dated
August 5, 2013, the Shareholders’ Assembly appointed the company KPMG Cayman as
the liquidators of the entity. Currently, the wind-up process is being carried out, which is
expected to conclude during the course of 2014.
The General Shareholders’ Assembly of the bank, in the meeting held on November 1,
2013 (Minutes No. 115), determined the change of the Statutory Auditor of the entity,
being the new appointed firm, the company Deloitte & Touche Ltda.
The performance by Banco Corpbanca Colombia S.A., from December 21, 2013 of a
Public Takeover Offer (PTO) for the non-voting preferred shares issued by Helm Bank
S.A.
The receipt in December 2013, of information by the major shareholder CorpBanca, a
Chilean financial entity, regarding offers for the consolidation of its business in Chile and
abroad with banking operators with recognized prestige, which offer is currently being
analyzed in order to eventually define counterparty and the structure for the operation.
As of December 31 and June 30, 2013 the Bank operated with 2,039 and 2,150 employees
respectively, through 87 offices, of which 46 are located in Bogota D.C. and 41 in different
parts of the country.
Helm Fiduciaria S.A. is a “sociedad anónima” incorporated under the laws of the Colombia,
company providing financial services, whose corporate purpose consists on the performance of
the trust business entrusted to it and in general the performance or execution of all the
operations legally permitted to trust companies subject to the requirements, restrictions and
limitations imposed by the laws of the Republic of Colombia. Helm Bank S.A. directly owns
99.98072% of this subsidiary company.
The corporate purpose of Helm Bank Cayman is to provide financial services without
restrictions. It may carry out banking business of any kind, except with customers of the
Cayman Islands, pursuant to the rules of said Islands. Helm Bank S.A. directly owns 100% of
this subsidiary company.
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In accordance to the Minutes of the directors’ meeting held on August 2, 2013, the Management
Council approved the voluntary wind-up of Helm Bank Cayman, the delivery of its Class “B”
license, issued pursuant to the Banks and Trust Companies Law of the Cayman Islands.
Helm Bank Cayman was notified by the Monetary Authority of the Cayman Islands of the
acceptance on the assignment of its Class “B” shares and Trust License. In the minutes of
directors’ meeting held on August 5, 2013, KPMG Cayman was approved as liquidator.
Helm Bank Panama S.A. is organized pursuant to the laws of the Republic of Panama and
operates since April 15, 1998 in said place with an international license granted by the Banking
Superintendency by means of Resolution 22-97 dated October 17, 1997, which authorizes it to
carry out the banking business abroad. Helm Bank S.A. directly owns 100% of this subsidiary
company.
Helm Comisionista de Bolsa S.A. pursuant to its corporate purpose, performs the activities
corresponding to a stockbroker firm subject to the legal requirements and particularly to those
established in Resolution No. 400/1995 (Sole Resolution), issued by the Finance
Superintendency (formerly known as the Superintendency of Securities), has an interest of
100% in the company Helm Casa de Valores Panama, an entity dedicated to the purchase and
sale of securities under the laws of the Republic of Panama. Helm Bank S.A. owns both directly
and indirectly, 99.996529% of Helm Comisionista de Bolsa.
As of December 31 and June 30, 2013, the value of the assets, liabilities and income of the
semester of the Parent Company and Subordinated companies included in the consolidation is
the following:
December 31
Asset
Liability
Equity
Semester’s
Income
Helm Bank S.A. (Parent
Company) (1) $ 12,984,913.0 $ 11,476,934.1 $ 1,507,978.9 $ 54,556.7
Helm Fiduciaria S.A. 46,224.6 4,492.5 41,732.1 1,340.2
Helm Comisionista de Bolsa
S.A. 22,681.5 2,398.2 20,283.3 462.6
Helm Bank Cayman S.A. 51,357.1 2,953.3 48,403.8 609.0
Helm Bank Panama S.A. 1,956,374.7 1,814,135.8 142,238.9 2,633.0
Total $ 15,061,550.9 $ 13,300,913.9 $ 1,760,637.0 $ 59,601.5
Consolidated $ 14,804,730.2 $ 13,296,359.0 $ 1,508,371.2 $ 50,608.8
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June 30
Asset
Liability
Equity
Semester’s
Income
Helm Bank S.A. (Parent
Company) (1) $ 12,671,976.4 $ 11,221,216.5 $ 1,450,759.9 $ 109,518.2
Helm Fiduciaria S.A. 45,380.4 5,290.1 40,090.3 4,454.3
Helm Comisionista de Bolsa
S.A. 30,574.3 12,342.5 18,231.9 1,506.4
Helm Bank Cayman S.A. 450,088.8 394,452.9 55,635.8 3,598.9
Helm Bank Panama S.A. 1,587,726.7 1,449,188.4 138,538.3 11,241.6
Total $ 14,785,746.6 $ 13,082,490.4 $ 1,703,256.2 $ 130,319.4
Consolidated $ 14,520,736.8 $ 13,071,548.1 $ 1,449,188.7 $ 92,616.5
(1) The information of the parent company includes its interest in the subsidiaries’ results, after the
corresponding eliminations and not including the minority interest.
Consolidated and Basic Accounting – The accounting policies and preparation of the financial
statements of the Bank and its local Subsidiary companies, are established by the Finance
Superintendence of Colombia and if there is any matter not provided in them, then the generally
accepted accounting principles in Colombia are applied pursuant to Decree 2649/1993.
Foreign subsidiary companies included in the consolidated financial statements are governed by
the accounting rules in force in the countries where they operate. For the purposes of the
consolidation, adjustments and reclassifications were performed in order to adapt them to the
rules established by the Finance Superintendency. These adjustments are not representative for
the purposes of the financial statements taken as a whole.
The results and balance sheet accounts of the foreign subordinated companies are converted to
Colombian pesos at the market representative rates of $1,926.83 per US$1 as of December 31,
2013 and $1,929.0 per US$1 as of June 30, 2013.
Intercompany accounts and transactions are eliminated in the consolidation of the financial
statements.
Basis of presentation – The financial statements have been prepared from accounting records,
kept under the historical cost method, modified in accordance with the legal standards to
acknowledge the effect of inflation only on certain non-monetary accounts of the general
balance sheet, including equity, until December 31, 2000.
Relative importance criterion – An economic event has a relative importance when, due to its
nature or amount, its awareness or lack of awareness of it, taking into account the circumstances
around it, may significantly alter the economic decisions of the users of the information.
The financial statements detail the specific amounts pursuant to the legal standards or those
representing five percent or more of the asset, liability, the equity and of the income, as the case
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may be. Inferior amounts are described when it is considered that it may contribute to a better
interpretation of the financial information.
Maturity of assets and expiration of liabilities – The maturity of assets of the Bank and its
Subordinated companies, in general, is framed according to the terms granted or agreed, such as
the loan portfolio, accounts receivable, investments and short, medium and long term deposits.
a. Transactions in foreign currency – With the approval of the Finance Superintendency, the
banks are authorized to manage bank accounts in foreign currency and other funds necessary
for the development of their operations. Transactions in foreign currency are performed
pursuant to current legal standards and are recorded at the exchange rates applicable on the
date of their occurrence. The balances denominated in foreign currency are expressed in
Colombian pesos at the market representative rates of $1,926.83 per US$1 as of December 31,
2013 and $1,929.0 per US$1 as of June 30, 2013. The differences in the exchange are
attributed to the corresponding asset and reflected in results, as the case may be.
b. Cash and cash equivalents – Cash and cash equivalents include the deposits in checking
accounts in Banco de la Republica in compliance with legal provisions on cash reserves,
monetary contraction deposits and deposits in foreign banks.
c. Assets from money market and related transactions - This item records the ordinary
interbank funds sold placed by the Parent Company and its Subordinated companies, using
the excesses in liquidity, with or without investment or loan portfolio guaranties, with
terms lower than 30 calendar days. Likewise, it records the so called "over-night"
transactions performed with foreign banks, using the funds of the Bank and its
Subordinated companies, deposited in foreign financial entities.
The operations not paid within the term stated are included in the loan portfolio.
Interbank funds are performed with first-rate entities.
Likewise, this amount records the transfer commitments in repurchase operations by means
of which the Bank and its subordinated companies acquire securities, in exchange for the
payment of an amount of money, assuming the commitment of transferring again the
ownership to the transferor the same day or in a subsequent date, at a determined price,
securities of the same type and features.
An open repurchase is the one by means of which it is established that the securities subject
to the repurchase operation are not immobilized. In this event, the transfer of the ownership
may be performed over securities of the same type and features.
A closed repurchase is the one by means of which the securities subject to the operation are
agreed to be immobilized, reason why the transfer commitment of the ownership must be
performed over the same immobilized securities, unless the replacement of such securities
is expressly established. The repurchase or repo operations are presumed closed unless
otherwise agreed.
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d. Investments – Includes the investments acquired by the Bank and its Subordinated
companies in order to maintain a secondary liquidity reserve, to acquire the direct or
indirect control of any company of the finance or technical services industry, to comply
with legal and regulatory provisions, or with the exclusive purpose of eliminating or
significantly reducing the market risk which the assets, liabilities and other items of the
financial statements may be subject to.
The accounting record and the disclosure of the investments is performed individually at
the fair exchange price, by which any security may be traded on a fixed date, pursuant to its
particular features and within the prevailing conditions in the market on such date. The fair
exchange price established corresponds to that by which a purchaser and a seller,
sufficiently informed, are willing to trade the corresponding security. The valuation and the
accounting records of the investments are performed on a daily basis.
The fair exchange price is considered as the one determined by the suppliers of prices or by
means of authorized methodologies by the Finance Superintendency of Colombia. As of
June 30, 2013, the Bank implemented Circular Letters 039 and 050 of 2012 for the
valuation of the investments using the price provided by Infovalmer as official supplier.
Classification and valuation – Investments are classified as explained below and are
represented in securities: 1) of debt and 2) equity securities. The first ones grant the
capacity as creditor of the issuer. The equity securities grant the capacity as co-owner of
the issuer and include mixed securities coming from securitization processes that
simultaneously acknowledge credit and interest rights.
The way in which the different kinds of investment are classified, valued and recorded is
indicated below:
Classification Term Features Valuation Accounting
Trading Short term Securities acquired in
order to obtain profit
from price
fluctuations.
Prices, reference rates
and/or margins calculated
and published on a daily
basis by the Colombian
Stock Exchange and other
price providers authorized
by the Finance
Superintendency are used.
The difference between the current
market value and the immediately
preceding is recorded as a higher
or lower value of the investment
and its counterpart affects the
income/(loss) for the period.
Held to
maturity
Until
maturity
Securities respect of
which the Bank has a
serious purpose and
the legal, contractual,
financial and
operational capacity
to keep them until the
expiration of their
term.
Exponentially from the
internal return rate
calculated at the time of the
purchase.
The present value is recorded as
the greater value of the investment
and its counterpart is recorded in
the income/(loss) for the period.
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Classification Term Features Valuation Accounting
Available for
sale – debt
securities
6 months After the 6 months,
they can be
reclassified in the
previous categories.
Prices, reference rates
and/or margins calculated
and published on a daily
basis by the Colombian
Stock Exchange and other
price providers authorized
by the Finance
Superintendency are used.
The exchanges occurred in these
values are recorded pursuant to the
following procedure:
• The difference between the
present value of the valuation
day and the immediately
preceding is recorded as a higher
value of the investment with
credit to income/(loss) accounts.
• The difference between the
market value and the present
value is recorded as an
unrealized income or loss
accrued, within the equity
accounts.
Available for
sale – equity
securities
Without Securities with low or
minimum
marketability,
unlisted, kept by the
Bank in its capacity
as controlling or
parent company.
Investments on equity
securities are valued on a
monthly basis and their
income/(loss) are recorded
with the same frequency, as
follows:
Low or minimum
marketability or unlisted
are increased or reduced in
the interest percentage of
the equity variations,
subsequent to the
acquisition of the
investment, calculated
based on the last certified
financial statements.
Low or minimum marketability or
unlisted:
The difference between the market
value or the updated value of the
investment and the value by which
the investment is recorded is
included as follows:
• If superior, in first instance
reduces the provision or de-
valorization until it is exhausted,
and the excess is recorded as
surplus for valuation.
• If inferior, it affects the surplus
for valorization until exhausting
it, and then the excess is
recorded as de-valuation.
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Classification Term Features Valuation Accounting
The acquisition cost is
increased or reduced in the
interest percentage
corresponding to the Bank
over the subsequent
variations of the issuer’s
corresponding equity.
For said purpose, the
variation in the issuer’s
equity is calculated based
on the certified financial
statements, as of June 30
and December 31 of each
year. However, upon
release of more recent
certified financial
statements, they are used to
establish the variation
mentioned. The Bank has a
maximum term of three (3)
months following the cut-
off date of the financial
statements, in order to
perform the relevant
update.
When dividends or income are
distributed in kind, including those
from capitalization of the equity
re-valuation account; the part
which had been recorded as
surplus for valuation is recorded as
income, with charge to the
investment and the surplus is
reversed. In cases of cash
dividends or profits, the value of
the surplus for valuation is
recorded as income, said surplus is
reversed, and the amount of the
dividends exceeding it will be
recorded as a lower value of the
investment.
Medium marketability
based on the average price
determined and published
by the stock markets, in
which it is listed. Said value
corresponds to the weighted
average price by the
amount traded in the last
five days in which there
have been negotiations.
• High and Medium
Marketability
The update of the market value of
the securities with high or medium
marketability listed in
internationally recognized foreign
stock exchanges is recorded as an
unrealized profit or loss accrued,
within the equity accounts, with
credit or charge to the investment.
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Classification Term Features Valuation Accounting
If the shares are traded in
local stock markets; and the
simple average price of the
last five days in which there
have been trades, if the
shares are traded in foreign
stock markets.
High marketability based
on the last daily weighted
average price for the trade
published by the stock
market.
The dividends or income
distributed in kind or in cash,
including those from the
capitalization of the equity
revaluation account, are recorded
as an income up to the amount that
has been recorded as unrealized
accrued profit during the year to
which the profits and revaluation
of the equity paid corresponds,
with charge to the latter. The
collection of the dividends in cash
is recorded as a lower value of the
investment.
The investments listed in foreign stock markets are valued by the closing price or, failing
this, the most recent quotation reported by the stock market in which it is traded, during the
last five days, including the valuation day. In the event that there is no closing price or
quotation during said period, these are valued by the average of the quotes listed during the
last 30 trading days, including the valuation day.
In the events in which the security is traded in several stock markets, the average of the
corresponding closing prices or quotes is taken, subject to those rules established in the
previous section.
The price of the relevant security will be converted to legal currency, using for said
purpose the market representative rate (MRR) calculated on the valuation day.
In cases in which there have been no quotations during the last 30 trading days, the
procedure is that according to the rules provided for the equity securities not listed in the
stock exchange using as purchase price, the last price of valuation recorded.
The stock exchange referred to, must be those that are members of the World Federation of
Exchanges (WFE). Otherwise, the securities will be valued subject to the rules provided for
the equity securities not listed in the stock exchange.
Investment transfer rights – Corresponds to restricted investments that have been disposed
of and represent the collateral security of commitments, as the case may be, delivered in a
simultaneous or temporary transfer repurchase operation.
In the temporary transfer of securities, the delivery of the core values will generate the
payment of the returns by the receiver, which will be caused exponentially during the term
of the operation. Such returns are an income or an expense for each of the parties as
applicable.
In those operations of temporary transfer of securities in which money resources are
delivered as support for the operation, the payment of returns may be performed and in this
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case the same will be accrued exponentially during the term of the operation. Such returns
are recorded in the balance sheets of the parties and will be an expense or income for each
of them, as applicable.
Provisions or allowances for loan losses by credit risk rating -
Category Risk Characteristics Allowances
A Normal
They meet the terms agreed in the security and they have
an appropriate capacity of payment of capital and
interests.
Not
applicable.
B
Acceptable
, greater
than
normal
It corresponds to issues with uncertainty factors that
might affect the capacity to continue meeting properly
the debt services. Likewise, its financial statement and
any other available information have weaknesses that
may affect its financial situation.
The net value
cannot be
greater than
eighty percent
(80%).
C Appreciabl
e
It corresponds to issues with a high or medium
probability of default in the timely payment of capital
and interests. Similarly, its financial statements and any
other available information show deficiencies in its
financial situation that engage the recovery of the
investment.
The net value
cannot be
greater than
sixty percent
(60%).
D Significant
It corresponds to those issues with a breach under the
terms agreed in the security, and also its financial
statements and any other available information show
deficiencies in its financial situation, so that the
probability to recover the investment is highly doubtful.
The net value
cannot be
greater than
forty percent
(40%).
E Uncollectib
le
Issuers that according to their financial statements and
any other available information estimate that the
investment is uncollectible. Moreover, if there are no
financial statements certified from at least six months
from the date of valuation.
The net value
cannot be
greater than
zero percent
(0%).
Loan portfolio and financial leasing operations – It records the loans and leasing
agreements granted by the Parent Company and its Subordinated companies under the
various authorized modalities and the financial leasing operations. The resources used in
granting the loans come from resources owned by the public in the modality of deposits
and other external and internal funding sources.
The loans are recorded for the value of disbursement and the financial leasing operations
are recorded for the value of each of the entity’s assets, prior to the relevant agreement
delivered in lease to the user for its use.
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The value to be funded of the financial leasing operations is amortized with the payment of
the financial leasing rents in the part corresponding to the capital savings.
The structure of the loan portfolio and financial leasing operations are of three types:
Consumer - They are granted to natural persons whose purpose is financing the purchase of
consumer assets or the payment of non-commercial services, regardless of the amount.
Commercial - They are granted to natural or legal persons for the development of
organized economic activities other than activities of micro-businesses; and for housing
purchase by means of the housing leasing transactions.
Mortgage - They are granted to natural persons intended for the new or used housing
purchase, or for the construction of individual housing.
Frequency of assessment - The Bank and its Subordinated companies assess every six
months in May and November, the commercial portfolio; the result of this assessment is
recorded at the end of the following month in which it is made. The behavior of the entire
independent portfolio of its kind is updated and monitored every month.
Criteria for the credit risk assessment – The credit risk is defined as the possibility that an
entity incurs in losses reducing the value of their assets, as a result of the fact that the
debtors fail to timely comply or not comply with the terms agreed in the relevant
agreements.
The Bank and its Subordinated companies evaluate the portfolio based on the following
criteria: debtors’ and co-debtors’ ability to pay; financial situation, review of the main
financial indicators in comparison to the risk acceptance criteria defined by the Bank for
each sector, cash flow of the project pursuant to the updated and recorded financial
information, in addition to the use of historical macroeconomic variables such as growth
rate, exchange rate and inflation rate as support parameters of the projection assumptions;
debt service and fulfillment of the terms agreed; information coming from credit bureaus,
consolidated with financial sector and from other commercial information sources
available; the information related to the economic group is also considered.
Additionally, the Parent Company performs a follow up of the situation of the economic
sectors, in order to report changes in their ratings. In the cases in which deterioration is
detected in any specific sector, the companies in said sector will be analyzed, with the
purpose of evaluating the Global Risk.
Credit ratings with regional entities – Regarding the rating of the loans granted to regional
entities, the Bank and its Subordinated companies review and verify the fulfillment of the
different conditions established in Law 358/1997 and observe the following aspects:
The loans in which the territorial entities pledge income as guaranty are rated in
category “D”, when there are no adequate mechanisms to reasonably verify that the
same have not been pledged as guaranty of other obligations, the guaranteed loans with
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pledge of income resulting in insufficiency to cover the amount of the obligation and
when the territorial entity has given to the loaned resources a different purpose to that
established by the Law.
The guaranteed loans with pledge of income that have previously been committed as
guaranty of another obligation are rated in category “E”; the loans requiring
indebtedness authorization by the Ministry of Finance and Public Credit or by the
respective Department, without having such authorization and the loans granted to
territorial entities which having adopted performance plans, pursuant to the established
by Law 358/1997, having not obtained compliance. In these cases, provisions for 100%
of the obligations are constituted, without taking into account the guaranty.
Fiscal Mending Law 617/2000 – The Law, seeking to structurally correct the excess of
operating expenses of the territorial entities, established that the Nation would grant
guaranties to contracted obligations by the territorial entities with financial entities
supervised by the Finance Superintendency, when all the established requirements are
fulfilled; among others, that the fiscal adjustment agreements be executed before June 30,
2001. Such guaranty would be up to 40% for the current loans as of December 31, 1999
and up to 100% for the new loans destined to be fiscally adjusted.
Some characteristics of these restructurings are the following: reversal of the provisions
constituted under the obligations subject to restructuring for the portion guaranteed by the
Nation; the portion of the obligations subject to restructuring without a guaranty by the
Nation may maintain the rating they had on June 30, 2001.
Rules for the rerating of restructured loans– Any mechanism evidenced by means of the
execution of a legal business, having as purpose the amendment of the agreed-upon
conditions, in order to allow the debtor the adequate attention to its obligation is understood
as a loan restructuring. Novations are considered restructurings. Before restructuring a loan
it must be reasonably established as being recoverable under the new conditions.
The loans may improve the rating after being restructured only when the debtor shows a
regular and effective payment behavior.
Extraordinary restructurings – Loans with extraordinary restructuring are framed, among
others, within the following parameters: restructurings’ deadlines do not exceed seven
years for their full amortization, for the case of territorial entities the deadline is up to ten
years; the agreements are accompanied with a Management Convention in order to
guarantee the fulfillment of the restructuring agreement and the viability of the company; it
is considered as unsafe practice to reserve provisions or improve the rating of the
restructured debtors, when the viability or fulfilment of the restructuring agreement is not
duly demonstrated; when a restructuring agreement is breached it will be rated immediately
to the debtor in the last category before the restructuring or in a higher risk rating.
Restructurings of Law 550/1999 – With Law 550/1999 the business reactivation and
restructurings of companies and territorial bodies was promoted and facilitated. At the
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beginning of the restructuring negotiation, the Bank suspends applying interests on current
loans and maintains the rating they had on the date of the negotiation. However, if the
customer is classified in risk category “A”, it is reclassified at least to category “B” and
100% of the allowance for accounts receivable is constituted.
Restructurings of Law 1116/2006 – With Law 1116/2006 the business reactivation and
restructuring of companies and territorial bodies was promoted and facilitated. At the
beginning of the negotiation of restructuring, the Bank suspends to apply interest on current
loans and maintains the rating they had on the date of the negotiation. However, if the
customer is classified in risk category “A”, it is reclassified to at least category “C”.
Loans’ Write-offs– The Bank authorizes, prior the approval of the Board of Directors, the
write-off of loans for those loans that, according to the Management, are considered as un
collectible or of remote or uncertain recovery, after having exhausted the corresponding
collection actions, in accordance with the opinions issued by the internal and external
attorneys.
Valuation of guaranties – As of June 30, 2012, the regulation established by External
Circular Letter 043/2011 entered into force in relation with the procedure to be applied in
order to determine the guaranties’ value at the moment of their granting and their
subsequent update.
Type of guaranty Granting Follow-up
Properties used for
housing
Technical Appraisal
Validity : 1 year
Bogota: Readjusts the Rural and Urban
Property Valuation Index IVIUR.
Armenia, Barranquilla, Bucaramanga, Cali,
Cartagena, Cucuta, Florencia, Ibague,
Manizales, Medellin, Monteria, Neiva, Pasto,
Pereira, Popayan, Quibdo, Riohacha, Santa
Marta, Sincelejo, Tunja, Valledupar and
Villavicencio: annual readjustment of the
Property Valuation Index (IVP) published by
the National Administrative Department for
Statistics (DANE) for the respective city.
Other cities: national IVP
Property different of
housing
Technical Appraisal
Validity : 3 year
Technical Appraisal
Every 3 years
Machinery and
Equipment
New or under one year of
life: invoice purchase value.
Validity: 3 years
Older than one year of life:
Technical Appraisal
Every 3 years
- 22 -
Type of guaranty Granting Follow-up
Technical Appraisal
Validity : 3 year
Vehicles Classified in fasecolda: the
value of the respective
vehicle will correspond to the
value published in such
guide.
Not classified in fasecolda:
Commercial appraisal
information published by the
Ministry of Transportation or
applying the procedure
previously described for
machinery and/or equipment.
Classified in fasecolda: the value of the
respective vehicle will correspond to the value
published in such guide.
Not classified in fasecolda: Commercial
appraisal information published by the
Ministry of Transportation or applying the
procedure previously described for machinery
and/or equipment.
Securities
Chapter I of External
Circular Letter 100/1995, or
by using the value provided
by a price supplier for
assessment by the Finance
Superintendency of
Colombia.
Chapter I of the External Circular Letter
100/1995, or by using the value provided by a
price supplier for assessment by the Finance
Superintendency of Colombia
Exceptions – Credit establishments may choose not to make such appraisal, as long one of
the following assumptions is fulfilled:
The loan(s) deadline supported with the respective guaranty does not exceed three (3)
years and its value exceeds at least twice (2) the total of the outstanding balance of the
guaranteed loan(s).
The deadline to finish the payment of the guaranteed loan(s) is lower or equal to one
year.
The appraisal cost exceeds 10% of the value of the guaranteed loan(s) balance.
The guaranteed loan is 100% provisioned.
Allowances for Loan Losses – Reference Models – As of July 1, 2007 the Bank and its
Subordinated companies Helm Bank Cayman y Helm Bank Panama use the reference
model of commercial portfolio – MRC -, established in Annex 3 of the Basic Accounting
and Financial Circular Letter 100/1995 of the Finance Superintendency.
In 2009, the regulatory entity issued the External Circular Letter 035/2009 (amended by
External Circular Letter 054/2009) in which the structure of the current reference model for
- 23 -
commercial and consumer portfolio was amended. The current regulation since April 1,
2010, establishes two different methodologies for the calculation of provisions, the use of
one or the other depends on the periodic assessment of the indicators provided by the
regulation:
Methodology 1: Cumulative Stage
Methodology 2: Non-Cumulative Stage
Based on the regulatory provisions amended by the External Circular Letter 035, the Bank
assesses on a monthly basis the indicators established in the regulation to determine the
calculation methodology depending on which stage it currently is. As of the validity of the
regulation, the Bank is in currently in the Cumulative Stage.
Reference Model of Commercial Portfolio – MRC – Such model is based on segments,
differentiated by the level of the debtors’ assets:
Ranking of the Commercial Portfolio by Level of Assets Company size Level of Assets
Large Companies More than 15,000 current monthly legal
incomes
Medium-sized companies Between 5,000 and 15,000 current monthly
legal incomes
Small companies Less than 5,000 current monthly legal
incomes
The segmentation is performed with the value of the current monthly legal incomes of the
immediately preceding financial year. In 2013 this amount was of $616,000.
A category denominated “natural persons” was created to group all the natural persons who
are debtors of commercial loans.
Commercial portfolio agreements are classified in the following categories of credit risk
according to the default days and subjective conditions, as follows:
Components of the reference model of commercial portfolio – The estimation of the
individual allowance results from applying the following formula:
Individual Provision = CIP+CIC
Category Rank PUC AA Between 0 and 29 days A
A Between 30 and 59 days B
BB Between 60 and 89 days B
B Between 90 and 119 days C
CC Between 120 and 149 days C
Default Higher than 150 days D
E
- 24 -
• Where CIP: PEmatrix_A = PImatrix_A*PDI*E
Individual Allowance: Corresponds to the total value of provisions that must be constituted
according the credit risk of each debtor.
Individual Procyclical Component (hereinafter CIP): Corresponds to the portion of the
individual provision which reflects the credit risk of each debtor, in the present.
Individual Countercyclical Component (hereinafter CIC): Corresponds to the portion of the
individual allowance of the loan portfolios which reflects the possible changes in the credit
risk of debtors in moments in which the deterioration of such assets increases. This portion
is constituted in order to reduce the impact in the income statement when such situation
occurs. The internal reference models must take into account and calculate this component
based on the available information reflecting these changes.
The estimation of the expected loss results from applying the following formula:
Expected Loss = (Probability of Default) x (Asset exposure at the moment of default) x
(Loss due to default)
Where:
Probability of Default: Corresponds to the probability where, in a period of 12 months, the
debtors of a determined commercial portfolio fall into default.
Asset exposure at the moment of default: Corresponds to the current balance of principal,
interests, accounts receivable of interest and other accounts receivable of the commercial
portfolio’s obligations.
Loss due to default: Economic deterioration in which the entity will incur in case that any
of the following events of default occur:
• Commercial loans in default higher or equal to 150 days.
• Loans considered of treasury and in default.
• When consulting the central information systems, it is established that the debtor has
obligations that have been written-off, restructured or their deadlines extended in for
the payment of principal and/or interests.
• When the debtor is in an insolvency proceeding, extraordinary restructuring,
restructuring agreements pursuant to laws 550/1999, 617/2000 and 1116/2008, or any
type of judicial or administrative procedure that implies the management or forced
liquidation by the debtor.
- 25 -
The probability of default is defined according the following matrices:
Matrix A:
Category
Large
Company
Middle-size
Company
Small
Company
Natural
Person
AA 1.53% 1.51% 4.18% 5.27%
A 2.24% 2.40% 5.30% 6.39%
BB 9.55% 11.65% 18.56% 18.72%
B 12.24% 14.64% 22.73% 22.00%
CC 19.77% 23.09% 32.50% 32.21%
Default 100.00% 100.00% 100.00% 100.00%
Matrix B:
Category
Large
Company
Middle-size
Company
Small
Company
Natural
Person
AA 2.19% 4.19% 7.52% 8.22%
A 3.54% 6.32% 8.64% 9.41%
BB 14.13% 18.49% 20.26% 22.36%
B 15.22% 21.45% 24.15% 25.81%
CC 23.35% 26.70% 33.57% 37.01%
Default 100.00% 100.00% 100.00% 100.00%
The loss due to default (PDI) by type of guaranty is as follows:
Type of guaranty
PDI
Days after the
default
Days after the
default
New
PDI
Inadmissible collateral 55% 270 70% 540 100%
Subordinated credits 75% 270 90% 540 –
Financial collateral 0-12% 100%
Commercial and residential real
estate 40% 540 70% 1,080 100%
Assets given on real-state leasing 35% 540 70% 1,080 100%
Assets given on leasing other than
real-state 45% 360 80% 720 100%
Other collateral 50% 360 80% 720 100%
Collection rights 45% 360 80% 720 100%
Without collateral 55% 210 80% 420 100%
Countercyclical Component – Is the highest value between the CIC in the last period
affected by the exposure and the difference between the PEmatrix_B and the PEmatrix_A
at the moment of the calculation of the provision (t).
ConPEPEExp
ExpCIC tiAB
ti
ti
ti
,
1,
,
1, )(;*max
- 26 -
Is a mechanism (matrix A and B) by which the Finance Superintendency explicitly
provides countercyclical adjustments, so that in the periods of improvement in the credit
quality, higher provisions that necessary are constituted to compensate in part for the
allowance that must be constituted in periods of deterioration in the credit quality.
Once applied the above concepts the value of the allowance for the commercial portfolio is
determined, as follows:
The individual allowance of loan portfolio under the reference models is established as the
sum of the procyclical component plus individual component.
Individual Procyclical Component (hereinafter CIP): Corresponds to the portion of the
individual provision which reflects the credit risk of each debtor, in the present.
Individual Countercyclical Component (hereinafter CIC): Corresponds to the portion of the
individual provision of the loan portfolios which reflects the possible changes in the credit
risk of debtors in moments in which the deterioration of such assets increases. This portion
is constituted in order to reduce the impact in the income statement when such situation
occurs. The internal reference models must take into account and calculate this component
based on the available information reflecting these changes.
Calculation of allowances under Methodology 2 – Non-Cumulative Stage – The use of the
Methodology, non-cumulative stage, will depend on the periodic assessment of the triggers
and their entry or inapplicability and will also be subject to the determination of the bank
prior communication to the Finance Superintendency pursuant to the provisions of the
Basic Accounting and Financial Circular Letter 100/1995 in its Chapter 2, numeral
1.3.4.1.1.3. Special Rules.
In this methodology, the Individual Provision will be again equal to CIP+CIC; the methods
of calculation in the Non-Cumulative Stage are described as follows.
Individual Procyclical Component (CIP): For the portfolio whose ratified rating results in
A, this component will continue being equal to the PE calculated with Matrix A (Recession
Matrix), that is, the result obtained by multiplying the exposure of each obligation, the PI
of the Matrix A and the PDI associated to the debtor’s guaranty, pursuant to that
established in the corresponding reference model.
For the obligations or B, C, D and E rated portfolio, the CIP will be equal to the PE
calculated with Matrix B (Expansion Matrix).
Individual Countercyclical Component (CIC): In the Non-Cumulative Stage, the spirit of
the rule is allowing the accumulated countercyclical provisions during the Accumulation
In case of being higher than 1 it is assumed as 1
- 27 -
Phase to gradually become non-cumulative so as to soften the impact of provisioning the
rated portfolio using Matrix B. The CICi,t will be calculated based on the following
equation:
1,
,
1,,1,, 1*;maxti
ti
titititiExp
ExpCICFDCICCIC
Where tiFD , (Non-cumulative Factor) is given by:
mCIP
mtactive
ti
ti
ti PNRCIC
CICFD
*%40*
)(
1,
1,
,
Where,
mCIPPNR
: They are the net provisions of recoveries of the month related to the
individual cyclical component in the relevant portfolio modality (m).
)(
1,
tactive
tiCIC : It is the sum of the active obligations at the time of calculation of the
provision (t) in the relevant modality (m), of the balance of individual countercyclical
component thereof in (t-1).
0, tiFD , if negative, it is assumed as zero.
When 1,
,
tti
ti
Exp
Exp is assumed as 1
Consumer Portfolio Reference Model – MRCO -From July 1, 2008, the Bank and its
Subordinated companies Helm Bank Cayman and Helm Bank Panama use the consumer
portfolio reference model –MRCO-, set forth in Annex V of Chapter II of the Basic
Financial and Accounting Circular Letter of the Finance Superintendency.
Such model is based on segments, differentiated according to the products granted:
Consumer Portfolio Classification by Segments
Segment Destination
General – Automobiles: Loans granted for the acquisition of automobiles.
- 28 -
Consumer Portfolio Classification by Segments
Segment Destination
General – Others: Loans granted for the acquisition of consumer goods other than automobiles.
Credit Cards:
Revolving loan for the acquisition of consumer goods using a plastic card.
The consumer portfolio agreements are classified in the following credit risk categories,
thus:
Category
Attention to
debt
Risk Analysis Objective Conditions
Ability to pay Credit behavior
New Loans Whose
Rating at the time
of Granting is:
Rating Granted by
Applying the Methodology
of the MRCO Rating is
Equal to:
AA Excellent Optimal Excellent AA AA
A Adequate Appropriate Adequate A A
BB Acceptable Weaknesses BB BB
B Deficient Deficiencies Deficient B B
CC Insufficient Serious Deficiencies CC CC
Default
Default higher than 90 days
Obligations written off with the entity or the system
Insolvency proceeding or any type of judicial or
administrative process that involves the management or
compulsory liquidation of the debtor.
Rating Methodology – MRCO – For the debtors that at the time of rating do not belong to
the default category, the entities that use the MRCO must apply the following model
depending on the segment to rate. This model calculates a score, which is the product of the
particular characteristics of each debtor and is given by applying the following equation:
Where, Z varies according to the segment to which the debtor belongs. The ratings are set
out on this score according to the rating ranges described below.
In order to obtain the score of the debtors that belong to the different segments, the
following formulas are applied as follows:
General
Automobiles: 2505.0*5784.1*683.0*
4960.0*4605.5*7234.1*668.1*0205.3*855.1*779.2
CRBCACA
GIMMMMMMAMAMZ
MR
DCBCB
General
others:
1727.0*323.2*443.0*1328.0*
196.0*Pr428.3*450.1*437.1*602.3*023.2*9411.1
CRBCACAHipoteca
endaMMMMMMAMAMZ
MR
DCBCB
zeScore
1
1
- 29 -
Credit Cards:
277.0*470.2*748.0*
6.0*525.3*350.2*469.3*313.1*214.1*824.1
CRBCACA
PRAMAMMMMMMMZ
MR
CBDCB
CF –
Automobiles: 58.1*725.0*
9826.0*337.3*650.1*873.4*164.2*158.2*28.2
MR
CBDCB
CACA
GIAMAMMMMMMMZ
CF – Others:
216.0*418.1*496.0*
420.0*255.3*092.2*577.4*808.1*588.1*92.1
IPCACA
GIAMAMMMMMMMZ
MR
CBDCB
Where:
AMB (Current default between 31-60 days): It takes value 1, if the default height of the
customer at the time of rating for this type of loan in the entity is higher or equal to 31 days
and lower or equal to 60 days and zero if it is not.
AMC (Current default between 61-90 days): It takes value 1, if the default height of the
customer at the time of rating for this type of loan in the entity is higher or equal to 61 days
and lower or equal to 90 days and zero if it is not.
MMB (Maximum default between 31-60 days): It takes value 1, if the maximum default
height of the customer in the last 3 years in the entity and for this type of loan is higher or
equal to 31 days and lower or equal to 60 days and zero if it is not.
MMC (Maximum default between 61-90 days): It takes value 1, if the maximum default
height of the customer in the last 3 years in the entity and for this type of loan is higher or
equal to 61 days and lower or equal to 90 days and zero if it is not.
MMD (Maximum default higher than 90 days): It takes value 1, if the maximum default
height of the customer in the last 3 years in the entity and for this type of loan is higher 90
days and zero if it is not.
CRB (Active loans): It takes value 1, if the customer at the time of rating has other
consumer loans other than the segment active with the entity.
GI (Suitable guaranty): It takes value 1, if the customer does not have a suitable guaranty
associated with its loan.
Pledge (Pledged Guaranty): It takes value 1, if the customer has a pledge as a guaranty
supporting the operation and zero if it does not.
Mortgage (Mortgage guaranty): It takes value 1, if the customer has a mortgage as a
guaranty supporting the operation and zero if it does not.
- 30 -
PR (Prepayment): It takes value 1, if the customer at the time of rating does not have a
default higher than 30 days and if the installments received is significantly higher than
expected. It significantly implies that it is higher than 10% of the installments, as
applicable.
Variables of the annual behavior – For the construction of these variables, the default
heights reached by the customer within the relevant segment in the last previous three
quarter cut-off dates at the time of rating must be considered. A quarter cut-off date means
the months of March, June, September and December.
In order to make this calculation, each default weight must be assigned with the values
shown in the following table and, once assigned they must amount to:
Default Height Group Value
Default > = 0 days and < = 30 days 10
Default > = 31 days and < = 60 days 20
Default > = 61 days and < = 90 days 30
Default > = 91 days and < = 120 days 40
Default days > = 121 days 50
a. If the customer has the default information for the three quarters required, the variable
takes the following values:
CAR (Regular annual behavior): It takes value 1, if the sum of the values for the three
quarters is equal to 50 or 60 and zero if it is not.
CAM (Bad annual behavior): It takes value 1, if the sum of the values for the three
quarters is higher than 60 and zero if it is not.
b. If the customer has the default information for only two quarters required, the variable
takes the following values:
CAR (Regular annual behavior): It takes value 1, if the sum of the values for both
quarters is equal to 30 or 40 and zero if it is not.
CAM (Bad annual behavior): It takes value 1, if the sum of the values for both quarters
is higher than 40 and zero if it is not.
c. If the customer has the default information for only one quarters required, the variable
takes the following values:
CAR (Regular annual behavior): It takes value 1, if the value assigned to the quarter is
equal to 20 and zero if it is not.
CAM (Bad annual behavior): takes value 1, if the value assigned to the quarter is higher
than 20 and zero if it is not.
- 31 -
d. If the customer does not have the default information for any of the quarters required,
the variables CAR (Regular annual behavior) and CAM (Bad annual behavior), take
value zero.
Rating ranges – Based on the scores obtained by each of the models for each customer, it is
pursued to determine a rating in the new scale established. The cut-off points of each rating
in the score produced are as follows:
Rating General
automobiles General Others
Credit cards
AA 0.24840 0.3767 0.3735
A 0.68420 0.8205 0.6703
BB 0.81507 0.8900 0.9382
B 0.94941 0.9971 0.9902
CC 1 1 1
Components of the reference model – The estimate of the individual allowance results from
the application of the following formula:
Individual Allowance = CIP+CIC
Where CIP: PEmatrix_A = PImatrix_A*PDI*E
Individual allowance: It corresponds to the total value of the allowances that must be
formed according to the credit risk of each debtor.
Individual procyclical component (hereinafter CIP): It corresponds to the part of the
individual allowance that reflects the credit risk of each in the present.
Individual countercyclical component (hereinafter CIC): It corresponds to the part of the
individual allowance of the loan portfolio that reflects the possible changes in the credit
risk of the debtors when the impairment of said assets increases. This part is formed in
order to reduce the impact in the income statement when such situation arises. The internal
or reference models must take into account and calculate this component based on the
available information that reflects those changes.
The estimate of the expected loss results from applying the following formula:
Expected loss = (Probability of default) x (Exposure of the asset at the time of default)
x (Loss due to default)
Where:
Probability of default. It corresponds to the probability that, in a period of 12 months, the
debtors of a specified segment and rating of the consumer portfolio incur in default.
- 32 -
The probability of default is defined according to the following matrices:
Matrix A:
Category
General -
Automobiles
General –
Others
Credit
Cards
AA 0.97% 2.10% 1.58%
A 3.12% 3.88% 5.35%
BB 7.48% 12.68% 9.53%
B 15.76% 14.16% 14.17%
CC 31.01% 22.57% 17.06%
Default 100.00% 100.00% 100.00%
Matrix B:
AA 2.75% 3.88% 3.36%
A 4.91% 5.67% 7.13%
BB 16.53% 21.72% 18.57%
B 24.80% 23.20% 23.21%
CC 44.84% 36.40% 30.89%
Default 100.00% 100.00% 100.00%
Since December 31, 2011, the Bank adjusted the PDI of the type without guaranty, as
provided by the External Circular Letter 043/2011.
The loss given default (PDI) by type of guaranty is as follows:
Type of Guaranty
PDI
Days After
Default
New
PDI
Days After
Default
New
PDI
Inadmissible collateral 60% 210 70% 420 100%
Admissible financial collateral 0-12%
Commercial and residential real estate 40% 360 70% 720 100%
Assets given on real estate leasing 35% 360 70% 720 100%
Assets given on non- real estate leasing 45% 270 70% 540 100%
Other collateral 50% 270 70% 540 100%
Collection rights 45% 360 80% 720 100%
No collateral 75% 30 85% 90 100%
The exposed value of assets corresponds to the current balance of principal, interest and
other items.
Countercyclical component – It is the maximum value between the CIC in the previous
period affected by the exposure, and the difference between the PEmatrix_B and the PEmatrix_A
at the time of calculation of the allowance (t).
WithPEPEExp
ExpCIC tiAB
ti
ti
ti
,
1,
,
1, )(;*max
- 33 -
It is a mechanism (matrix A and B) by means of which the Finance Superintendency
explicitly considers countercyclical adjustments, so that in the periods of improvement in
the credit quality, higher allowances than necessary are formed to compensate in part those
that must be formed in periods of impairment in the credit quality.
Once the previous concepts are applied, the value of the allowance is determined for the
commercial portfolio, thus:
The individual loan portfolio allowance under the reference models is established as the
sum of the individual procyclical component plus the individual countercyclical
component.
Individual procyclical component (hereinafter CIP): It corresponds to the part of the
individual allowance of the loan portfolio that reflects the credit risk of each debtor herein.
Individual countercyclical component (hereinafter CIC): It corresponds to the part of the
individual allowance of the loan portfolio that reflects the possible changes in the credit
risk of the debtors at the time in which the impairment of said assets increases. This part is
formed in order to reduce the impact in the income statement when such situation arises.
The internal or reference models must take this into account and calculate this component
based on the available information that reflects those changes.
Calculation of allowances under methodology No. 2 non-cumulative phase – The use of the
non-cumulative phase Methodology will depend on the periodic evaluation of the triggers
and its entry or not into service will also be subject to the determination of the bank with
prior notice to the Finance Superintendency according to allowances of the Basic Financial
and Accounting Circular Letter 100/1995 in its Chapter 2 numeral 1.3.4.1.1.3. Special
rules.
In this methodology, the Individual Allowance again will be equal to CIP + CIC, the
methods of calculation for them in the Non-cumulative Phase are described below.
Individual Procyclical Component (CIP): For the portfolio whose approved rating is A, this
component will continue being equal to the PE calculated with the Matrix A (Recession
Matrix), that is, the result obtained when multiplying the exposure of each obligation, the
PI of Matrix A and the PDI related to the debtor guarantee, as provided in the relevant
reference model.
For the obligations or B, C, D and E rated portfolio, the CIP will be equal to the PE
calculated with Matrix B (Expansion Matrix).
1 as assumed isit 1,n higher tha if
101,
,
ti
ti
Exp
Exp
- 34 -
Individual Countercyclical Component (CIC): In the Non-cumulative Phase, the spirit of
the rule is allowing the accumulated countercyclical allowances during the Accumulation
Phase are gradually applied as non-cumulative so as to soften the impact to allowance the
rated portfolio using the Matrix B. The CICi,t will be calculated based on the following
equation:
1,
,
1,,1,, 1*;maxti
ti
titititiExp
ExpCICFDCICCIC
Where tiFD , (Non-Cumulative Factor) is given by:
mCIP
mtactivas
ti
ti
ti PNRCIC
CICFD
*%40*
)(
1,
1,
,
Where,
mCIPPNR
: Are the net allowances of recoveries of the month related to the individual
procyclical component in the relevant portfolio modality (m).
)(
1,
tactivas
tiCIC : It is the sum of the active obligations at the time of calculation of the
allowance (t) in the relevant modality (m), of the balance of individual countercyclical
component thereof in (t-1).
0, tiFD , if negative, it is assumed as zero.
When 1,
,
tti
ti
Exp
Exp is assumed as 1.
Additional individual consumer portfolio allowance - From the second half of 2012, the
allowances in the External Circular 026 regarding the establishment of an additional
temporary individual allowance entered into force, where its application is reflected in the
financial statements with cut-off date on June 30, 2013.
Applies
Entities whose balances have reported balances of gross consumer portfolio at least the last
twenty-five (25) months and whose parameter “α” is higher than zero (α > 0).
The additional individual allowance will not be calculated when the parameter “α” is lower
than or equal to zero (α ≤ 0) for a period of six (6) consecutive months.
- 35 -
Additional allowance establishment - The additional individual allowance will not be
calculated with the individual procyclical component as provided in numeral 1.3.4.1.
Chapter II of the Basic Financial and Accounting Circular Letter, and 0.5% is added on the
balance of capital of each consumer loan of the reference month, multiplied by the relevant
PDI.
The individual allowance (including the additional individual allowance) may not exceed
the value of exposure of the debtor. Where this occurs, the additional individual allowance
will be adjusted.
Allowance for housing loans (mortgage portfolio) - Helm Bank maintains allowances not
lower than the percentages indicated, calculated on the outstanding payment balance:
Credit Rating
Allowance percentage
over the secured party
Allowance percentage
over the unsecured
party
A 1% 1%
B 3.2% 100%
C 10% 100%
D 20% 100%
E 30% 100%
If during 2 consecutive years, the loan has remained in category “E”, the allowance
percentage on the secured party will be increased to sixty percent (60%). If an additional
year elapses under these conditions, the allowance percentage on the secured party will be
increased to one hundred percent (100%), unless sufficient evidence can be produced on
the existence of objective factors evidencing the loan recovery and the actions performed
by the collection thereof, identifying in this case the use of judicial or extrajudicial
remedies, and indicating the status of the relevant process.
Foreign affiliates – The treatment for the portfolio allowances for foreign affiliates is as
follows:
Helm Bank Panama uses the allowance method to provide for losses in the loans. The
increases in the allowance are charged as an expense in the income statement and the
penalties for uncollectible loans are charges against the allowance. The allowance is
calculated based on a portfolio analysis and other factors that, in the opinion of the
Management, need a current consideration in the estimate of possible losses on loans,
including the classification of loan by risks required by agreement 6-2000 of the Banking
Superintendency of Panama and the impairment in the recoverable value of the loans.
The mentioned agreement 6-2000 sets out that all loans must be classified in one of the
following five categories, according to their default risk and conditions of the loan, and sets
out a minimum reserve for each classification, which is calculated on the balance of the net
loan after guarantee.
- 36 -
Rating
Minimum allowance
demanded
Normal 0%
Special mention 2%
Subnormal 15%
Doubtful 50%
Irrecoverable 100%
Additionally, the Management maintains a generic allowance that recognizes the inherent
risks related to the loan portfolio.
Helm Bank Cayman bases its portfolio allowance on an assessment to the total of the loan
portfolio conducted by the Management. The Management’s assessment is made on the
review of loans individually, the experience of recent losses, the assessment of the
guarantee, the current economic conditions and other factors
Alignment rules – The Parent Company and its Subordinated companies Helm Bank
Cayman and Helm Bank Panama carry out the internal alignment process every month and
for each debtor, for which they take the loans of the same modality granted to it to the
higher risk category, unless there is sufficient existence of reasons for their rating in a
lower risk category is shown to the Finance Superintendence.
Since the Parent Company consolidates financial statements, it grants the same rating to all
the loans that are part of the group, unless sufficient evidence can be produced for its rating
in a different risk category.
Acceptances, cash transactions and derivatives -
Acceptances – The acceptances are letters accepted by financial entities, they have a
maturity term up to one year and they may only be originated in import and export
transactions of goods or purchase-sale of movables in Colombia.
At the time of acceptance of bills of exchange, their value is recorded simultaneously with
assets and liabilities, as “acceptances on term” and if not submitted at their maturity for
collection, they are rated under the heading “acceptances after the term”. If when payment
is made they have not been covered by the purchaser of the merchandise, they are re-rated
at the loan account “covered bank acceptances”.
The values recorded with assets are assessed by the credit risk according to the general
assessment procedures of the loan portfolio.
After maturity, bank acceptances are subject to the cash reserve established for current
liabilities at sight and before thirty (30) days.
Derivatives and cash transactions –The Parent Company and its Subordinated companies
record the value of the agreements entered into between two or more parties in order to
purchase and sell assets in a future, such as foreign exchange or securities, or financial
- 37 -
futures on rates of exchange, interest rates or stock market indexes, previously defining the
amount, the price and the date of performance of the transaction, in order to provide or
obtain coverage under the terms defined by the competent authorities. Therefore, reciprocal
and unconditional rights and obligations arise. The cases, whose compliance is convened
within the three business days immediately following the day on which they are convened,
are recorded as cash transactions.
The transactions by means of which securities are acquired in primary issues conducted
abroad, whose date of execution is prior to the date of issue of securities subject thereto,
will be understood as cash operations, provided that the term for their clearing and
settlement is equal to the date of their execution or registration, that is, today (t+0) or up to
three (3) business days counted from the day following the issue of the relevant securities.
In any case, so that these operations can be reported as cash operations, it will be necessary
that they are settled and cleared by means of the delivery versus payment mechanism.
The financial assets acquired in cash operations are recorded on the date of compliance or
settlement thereof and not on the date of negotiation, unless these two coincide. Thus it is
achieved that the records in the balance are in compliance with the records of the same
transactional and registration systems. Notwithstanding the foregoing, the changes in the
market value of the alienated instruments are reflected in the income statement as from the
date of negotiation, as applicable.
Under the method of the date of settlement, the financial asset is recorded in the sale in its
balance until the delivery thereof and, additionally, it records a right to receive the money
from the transaction and an obligation to deliver the negotiated asset with the asset
accounts enabled for this type of transactions. The latter has to be valued at market prices,
in accordance with the rules set forth in Chapter I of the External Circular Letter 031/2008
applicable as from January 1, 2009, by means of which the variations of the assessment of
this obligation are recorded in the income statement.
When the purchase of the asset is carried out, it does not record the financial asset in its
balance until the delivery thereof but it records a right to receive the asset, which is valued
at market prices, and an obligation to deliver the money agreed in the operation in the asset
account enabled for this type of transactions.
When the transaction is effectively enforced, both the rights and the obligation recorded
from the time of negotiation are reversed.
In the purchase operations of securities, the right is calculated by valuing the security at
market prices and the obligation, by obtaining the present value of the purchase amount
accreted. In case of the forward sale transactions on securities, the right is calculated by
obtaining the present value of the sale amount accreted and the obligation, by valuing the
security at market prices.
The methodology of valuation for the forward and cash operations on foreign exchange
used by the Bank and its Subordinated companies is based on the estimate of the valuation
- 38 -
rate according to the market information and the maturity term of the operation. The value
of future flows of the operation is calculated based on it and on the rate contractually
agreed (obligation and right).
The valuation and its relevant accounting are made according to the regulation provided in
Chapter XVIII of the Basic Financial and Accounting Circular Letter of the Finance
Superintendence. As long as the derivative position is open, the cumulative valuation is
recorded in the income or expense accounts by valuation of derivatives, as applicable. Once
the position is settled upon maturity, the resulting profit or loss is recorded in the income or
expense accounts for sales of derivatives, as applicable, paying the balances recorded in the
results by valuation.
e. Accounts receivable – The Bank makes an allowance on its accounts receivable not related
to the loan portfolio from the thirty days applying the percentages of 1%, 20%, 50% and
100% for the accounts receivable rated in categories “B”, “C”, “D” and “E”, respectively.
The Bank accrues the interests and other portfolio items to 100% with a “C” rating and
higher.
f. Assets available for sale, foreclosed assets and returned assets from Leasing– It registers
the value of the assets received by the Parent company in payment of outstanding balances
from loans at its favor and the goods restituted of leasing operations, and which were used
no more during the performance of its corporate purpose.
The assets received in lieu of payment represented in properties are received based on the
commercial appraisal technically determined and the personal property, shares and
interests, based on the market value.
The following conditions are taken into account for the record of the assets received in lieu
of payment:
The initial registration is carried out in accordance with the value determined in the
legal awarding or the agreed upon with the debtors.
The Bank accepts assets in lieu of payment having adequate characteristics to be
transferred and obtain the best possible recovery of the exposed resources.
When the asset given in lieu of payment is not in conditions of transfer, its cost
increases with the necessary expenses incurred for sale.
If between the value by which the asset is received and the loan value to pay, there is a
resultant balance in favor of the debtor, this difference is counted as an account
payable; in case that the good’s value does not cover the entirety of the obligations, an
equivalent allowance of the discrepancy is constituted.
The assets received in payment corresponding to investment securities are valued with
the application of the criteria established in Note 1 for investments.
- 39 -
For the purposes of the realization of appraisals, supervised entities must observe the
minimum criteria and contents established in articles 1 and 2 of Decree 422/2000 and
subsequent allowances that modify or supersede them. In all cases, the technical
appraisal used by supervised entities may not have more than three (3) years of life
(elaboration date) counted from the accounting cut-off date on which is intended to be
used.
g. Allowance on assets available for sale, foreclosed assets and returned assets from
Leasing– In compliance with External Circular Letter 034/2003 issued by the Finance
Superintendency of Colombia and taking into account that the Bank and its local
Subordinated companies do not have a calculation model of individual allowances of assets
received in lieu of payment approved by the same, the individual allowances of these assets
are calculated as follows:
For the property received in lieu of payment and restituted whose receipt at the moment of
the issuance of the External Circular Letter 034/2003 of the Finance Superintendency of
Colombia is less than two years or more will be set up an allowance in monthly aliquots
until it reaches the 80% of the acquisition value of the property within a deadline expired
on December 31, 2005.
The property received in lieu of payment and restituted whose receipt at the moment of the
issuance of the External Circular Letter 034/2003 of the Finance Superintendency of
Colombia is less than two years and the received as of October 1, 2003 will be set up in
monthly aliquots within the following year to receipt of the asset, an allowance equivalent
to 30% of the acquisition cost, which increases in monthly aliquots within the second year
in an additional 30% until it reaches 60% of the acquisition cost.
Once the legal term for sale has expired without the extension is authorized, the allowance
will be 80% of the acquisition cost. In case of an extension, the remaining 20% of the
allowance is constituted within its term.
When the acquisition cost of the property is lower than the debt value registered in the
balance, the difference is immediately recognized in the income statement.
When the commercial value of the property is lower than the value in the books of the
goods received in lieu of payment, an allowance by the difference is counted.
For furniture received in lieu of payment and restituted whose receipt at the moment of the
issuance of the External Circular Letter 034/2003 of the Finance Superintendence of
Colombia is less than two years and the received as of October 1, 2003 will be set up in
monthly aliquots within the following year of receiving the good, a provision equivalent to
35% of the acquisition cost, which increases in monthly aliquots within the second year in
an additional 35% until it reaches 70% of the acquisition. Once the legal term for sale has
expired without the extension being authorized, the provision will be 100% of the
acquisition cost. In case of an extension, the remaining 30% of the allowance is constituted
within its term.
- 40 -
When the acquisition cost of the movable asset is lower than the debt value registered in
the balance, the difference is immediately recognized in the income statement.
When the commercial value of the movable good is lower than the value in the books of the
goods received in lieu of payment, an allowance for the difference is counted.
The allowances that have been constituted on assets received in payment or assets restituted
of leasing operations, may be reversed when these are completely sold. If such assets are
put in portfolio or in leasing operations, the income generated as consequence of the asset
transfer to the accounts of group 14, must be deferred until the deadline in which the
transaction was agreed.
h. Property and equipment – It registers the acquired, built or in process of import, building or
assembly tangible assets permanently used in the development of the business course and
whose useful life exceeds one year. It includes the direct and indirect costs and expenses
caused until the asset is under operating conditions.
In accordance with Circular Letter 014/2001, regarding the elimination of integral
adjustments due to inflation for accounting purposes, the value of the adjustments
performed until December 31, 2000, is part of the balances of non-monetary assets and
make up its value in the books for all purposes.
Extraordinary additions, improvements and repairs that significantly increase the useful life
of assets, are registered as a higher value and the disbursements for maintenance and
repairs performed for the conservation of the assets are charged to expenses, when accrued.
Depreciation is registered using the straight line method and in accordance with the number
of years of estimated useful life of assets over 100% of the cost of acquisition.
Annual depreciation rates for each item of assets in both the Parent Company and
Subordinated local companies are:
Buildings 5%
Equipment, furniture and office supplies 10%
Computer equipment 20%
Vehicles 20%
Helm Bank Panama depreciates its assets in accordance with the useful life as follows:
Property 20 years
Furniture and equipment 3 to 10 years
Enhancements to property 10 years
Rolling equipment 5 years
- 41 -
Property and equipment acquired during the first semester of 2013 and whose cost of
acquisition is equal or less than $1,342 are depreciated in the same accounting period, in
accordance with Decree 4344/2004.
The income or loss in the sale or retirement of property and equipment is recognized in the
semester’s operations in which the transaction is performed. The adjusted cost and
accumulated depreciation are eliminated from the respective accounts.
i. Assets under operating leasing – This item records the cost of the assets given on operating
leasing that the Parent Company, after the execution of the corresponding agreement,
delivers on lease to the user.
For the case of assets given on operating leasing, depreciation is performed over the lesser
of the useful life of the asset and the term of the leasing agreement; the methodology is that
of financial depreciation (minus the residual value) so that the depreciation of the assets on
lease keeps an adequate relation with the generated profits.
The system of financial depreciation requires that in all the months or fraction of months
the depreciation expense is recorded, and therefore, methods of depreciation with grace
periods are inadmissible, or, that use discount rates outside the market for the value
estimate of the depreciation.
In all cases, the value of non-amortized goods in lease payments (residual value) is not
subject to depreciation. However, when the entity does not have the residual value
guaranteed by a third party, the depreciation is performed for one hundred percent of the
value of the assets in leasing.
j. Branches and agencies – This item records the movement of the operations performed
between the General Directorate of the Parent Company and the subordinated companies,
their branches and agencies, as well as the operations performed between the offices of the
country.
Balances are reconciled in a daily manner and the items pending are regulated in a term no
longer than 30 calendar days.
The Parent Company and its Subordinated companies, at the closing of the accounting
period reclassify net balances reflected by the branches and agencies, to asset or liability
accounts, and the corresponding income and expenses are recognized.
k. Expenses paid in advance and deferred charges – The expenses paid in advance
correspond to expenditures incurred by the Parent Company and its Subordinated
companies during the performance of their activities, whose benefit is received in various
periods, may be recoverable and suppose the successive execution of the services to be
received.
- 42 -
Deferred charges correspond to costs and expenses that benefit future periods and are
susceptible of recovery. Amortization is recognized from the date that such charges
contribute to the generation of income, taking into account the following:
Item Amortization Expenses paid in advance: The insurance during the validity term of the insurance
policy.
The maintenance of equipment during the validity term of
the agreement and the other anticipated expenses during the
period in which the services are received or in which the
expenses or costs are accrued.
Fees due to vehicle leasing in the accounting period in
which they are paid.
Other expenses during the prepaid period.
Deferred charges:
Remodeling Not higher than two years.
Studies and projects Not higher than two years.
Computer software Not higher than three years.
Stationery and supplies Depending on consumption.
Enhancements to rented properties During the validity term of the agreement.
Fees for placement of securities During the term for their redemption or placement.
Deferred income tax "debit" By the temporary differences at the moment in which the
fiscal, legal and regulatory requirements are met
Publicity and advertising Not higher than three (3) years.
Taxes In a period of twelve (12) months.
Contributions and Affiliations In a period equal to the one paid.
Losses in adjustments due to
valuation
A period of 12 months.
Other items are amortized during the estimated period of recovery of the expenditure or by
obtaining the expected benefits.
l. Assets to be placed in leasing agreements – The new assets acquired by the Parent
Company are recorded in this item, whose agreement has not initiated due to the lack of a
requirement for its legalization. Also, assets under operating lease returned by the lessee
are also recorded in this item.
The restitution of these assets must be included for their cost in the books (acquisition cost
minus accumulated depreciation), are not subject to depreciation, but are subject to
applicable provisions.
m. Trust rights –The rights acquired by virtue of the execution of commercial trust agreements
are recorded in this item. These rights give the trustor or beneficiary the possibility to
exercise them pursuant to the agreement or the Law. Company issued bonds, whose
issuance is guaranteed by Fiduciaria de Occidente S.A. through the execution of an
Irrevocable Management of Guaranty Commercial Trust Agreement.
- 43 -
n. Appraisals - Permanent contributions, property and equipment, specifically fixed assets and
investments available for sale through participative instruments are assets subject to
valorization.
Appraisals of investments available for sale through equity instruments are included based
in the equity variations of the issuer.
Appraisals of real estate are determined when comparing the net adjusted cost of the
properties with the commercial valuations performed by recognizable specialty
independent persons or firms.
A provision is established for each property individually considered, in the event of a
impairment pursuant to the standard of prudence.
Valorizations of permanent contributions are included based on the equity variations of the
issuer or on the market value of the contribution in the club.
o. Deposits and financial claims – This item records the obligations undertaken by the Bank
in cash or term deposits through diverse authorized mechanisms, for services provided, as
well as for the operations proper to the banking activity.
p. Liabilities from money market and related transactions – This item records the funds
obtained by the Parent Company and its Subordinated companies from other financial
entities in a direct manner and without mediating for it, portfolio or investment repurchase
agreement, with the purpose of attending transitory necessities of liquidity. The maximum
term for the payment of these operations is of 30 days. The transactions not paid within the
term indicated must be included in other financial obligations.
In addition, this item records the commitments of repurchase transfer operations by means
of which the Bank and its subordinated companies transfer the ownership of securities, in
Exchange of the payment of a sum of money, bearing this type of act and at this moment,
the commitment of acquiring them back from their counterparty or acquiring securities of
the same type and features, during the same day or in a subsequent date, at a determined
price or amount. The participant in this operation is called a transferor.
An open repurchase is the one by means of which it is established that the securities subject
to the repurchase operation are not immobilized. In this event, the transfer of the ownership
may be performed over securities of the same type and features.
A closed repurchase is the one by means of which the securities subject to the operation are
agreed to be immobilized, reasons why the transfer commitment of the ownership must be
performed over the same immobilized securities, unless the replacement of such securities
is expressly established. The repurchase or repo operations are presumed closed unless
otherwise agreed.
q. Accounts Payable – This item records the pending payment amounts that the Parent
Company and its Subordinated companies have with their customers, suppliers and external
- 44 -
control bodies. These pending payments include, agreed returns for the usage of third party
resources, taxes, withholdings, labor contributions, contributions and affiliations, as well as
other payable amounts of similar characteristics.
r. Long-term Debt – This item records the nominal value of the Parent Company’s
outstanding bonds. The discounts conceded in their issuance are charged to the discount
subaccount of the placement of investment securities, and the premiums, in the premium
subaccount of the placement of investment securities.
Pursuant to Article 752 of the Code of Commerce, bonds are instruments which represent
an even part of a collective loan entered into by a company or organization subject to the
Government's inspection and supervision
s. Anticipated income – This item records the deferred income and the ones received in
advance by the Bank and its Subordinated Companies during the performance of their
activities, amortized during the period in which they are accrued or in which the services
are provided.
t. Labor obligations – Colombian labor laws establish the payment of deferred compensation
to certain employees at the date of their retirement from the Bank and its Subordinated
companies. The amount received by each employee depends on the date of entry of the
employee, contracting modality and salary. In addition, in certain cases, interest at an
annual rate of 12% is recognized over accumulated amounts in favor of each employee.
When the employee is terminated without justification, he has the right to receive
additional payments according to its time of service and salary.
Colombian labor laws require companies to pay old-age pensions to employees who meet
requirements of age and time of service. However, the Social Security Institute (now
Colpensiones) or private pension funds, have completely assumed such obligation.
u. Retirement pensions – The Parent Company applies the established in Decree 2984/2009,
which modified Decree 1517 dated August 4, 1998, allowing for an annual increase of the
amortized percentage of the actuarial calculation in four percentage points over the value
amortized for the immediately previous year.
The annual provision is increased rationally and systematically, meaning that by December
31, 2011, 100% of the corresponding calculation is amortized. From then, the amortization
will be maintained in said percentage.
The payments made to retirement pensions are charged against the provision established
for it.
v. Estimated liabilities and provisions – The Parent Company and its Subordinated companies
record provisions to cover estimated liabilities, taking into account that:
There is an acquired right and, in consequence, a contracted obligation,
- 45 -
The payment is enforceable or probable and
The provision is justifiable, quantifiable and verifiable
Likewise, this item records the estimated values of taxes, contributions and affiliations.
In addition, this item registers the estimated liability provisions in order to cover the legal
processes against the companies, whose possibility of loss is probable, pursuant to the
classification established by the attorney in charge of the process.
The provisions regarding legal processes with a possibility of probable loss are established
at the beginning of the process in a gradual manner, and based on the amount that the
attorney in charge of the process determines as the probable amount of loss for the Parent
Company.
The gradual manner in which the provision is established depends on the fulfillment of
certain procedural stages determined by the attorney in charge of the process, in accordance
with its nature. 20% of the probable amount of loss is established at the date where the
judicial decision of first instance is issued.
If the first instance sentence is unfavorable for the Parent Company, the remaining 80%
will be constituted gradually during the process of the second and last instance, according
again with the procedural steps determined by the attorney based on the nature of the
process. Likewise, the remaining provisions will be constituted based on the amount
established in the sentence, as the case may be.
If the first instance sentence was favorable for the Parent Company, there would be room
for the reversal of provisions.
Income Tax – The income tax expense of the Parent Company and its local Subordinated
companies is determined based on the taxable income or presumptive income, whichever is
greater. The provision for the income tax includes, among others, the resulting taxes from
the temporary differences between the deductible expenses for tax purposes and the
registered expenses for financial statement’s purposes. The tax benefit or expense
corresponding to certain temporary differences is recorded on an account of income tax
deferred in assets or liabilities account, respectively. The income tax is provided in the net
general balance of withholding tax and balances of credit.
According to the tax legislation of Panama, Helm Bank Panama S.A. is not subject to the
income tax payment, since it exclusively manages, from an office established in Panama,
transaction formalized, consumed and whose effects are performed abroad, and in
consequence, most of its income is foreign. In addition, the income deriving from interests
on term deposits in banks whose operation is in Panama is exempt of income tax payment.
For the case of Helm Bank Cayman S.A. currently there are no taxes over income or profits
established by the Government of the Cayman Islands.
- 46 -
w. Recognition of interests’ income and financial lease – The Parent Company and its
Subordinated companies recognize the income from financial returns and other concepts
when accrued, except the originated in:
Loans or commercial leasing agreements, rated as in default and those of consumption
rated in “C-deficient”, or in higher risk categories, or when it passes 91 days of default for
commercial, 61 days for consumption.
Those loans or leasing agreements that at least once have ceased to accrue interests,
monetary correction, adjustment in change and income by other concepts in default will
cease to accrue such income from the first day in default. Once the customer catches up
with the payments, it may be accrued once again. While its collection is made, the record is
made in contingent receivable accounts.
Regarding interest capitalization, its record is made on the account of deferred payment and
income is recognized in the extent that is effectively collected.
Regarding the income accrued due to trust fees, these are recognized when accrued,
according to the established in each trust agreement.
x. Contingent accounts – In these accounts, the operations by means of which the Bank and
its Subordinated companies acquire a right or assume an obligation whose emergence is
conditioned to the occurrence of an event or not, depending on future, eventual or remote
factors, are registered. Within the receivable contingents, the financial returns and lease
payments are recorded as of the moment in which the accrual in the accounts of loan
portfolio and goods under leasing is suspended.
y. Memorandum accounts – In these accounts, the operations performed with third parties that
due to their nature do not affect the financial situation of the Bank and its Subordinated
companies, are registered. Likewise, the fiscal memorandum accounts are included, where
the figures for the elaboration of tax statements are recorded; equally, it includes those
memorandum accounts used for tax purposes, internal control or management information.
In Helm Fiduciaria and Helm Comisionista de Bolsa, the balances corresponding to money
and goods under trust, are recorded in trust memorandum accounts, separate from company
assets and create stand-alone trust funds, according to legal provisions of the Code of
Commerce and the Finance Superintendence.
The goods subject to the trust businesses do not make part of the general guaranty of the
creditors to the trust company and only guarantee the contracted obligations in the
fulfilment of the trust agreement’s purpose.
z. Use of Estimates – The preparation of financial statements pursuant to the provisions and
instructions by the Finance Superintendency, requires the Administration to make estimates
and presumptions that may affect the registered amounts of assets, liabilities and results of
the operations. The current values or market values may differ from such estimates.
- 47 -
2. CASH AND CASH EQUIVALENTS, NET
December 31, 2013
June 30, 2013
Local currency Cash, banks and others $ 1,157,835.6 $ 929,306.0 Foreign currency Cash reserve, banks and others 331,756.5 12,306.5 Provision over available (60.9) (88.2) $ 1,489,531.2 $ 941,524.3 The cash and the deposits in the Banco de la Republica in local currency compute for purposes
of the available reserve that the credit establishments must maintain on deposits, according to
regulation.
There are no different restrictions on cash and cash equivalents.
As of December 31 and June 30, 2013, there are outstanding items, in local and foreign
currency with terms higher than 30 days for $60.9 and $88.2, respectively.
As of December 31 and June 30, 2013, the Bank has a share of 78% and 62.6%, respectively, in
the consolidated net cash.
3. ASSETS FROM MONEY MARKET AND RELATED TRANSACTIONS
Interbank funds sold
Banks $ 104,051.3 $ 314,633.6
Transfer commitments
Banks 77,289.4 139,278.7
Other entities 503.2 7,050.8
$ 181,843.9 $ 460,963.1
There are no restrictions over money market and related transactions.
As of December 31 and June 30, 2013, the Bank has a share of 29% and 48.2%, respectively, in
the interbank funds sold and transfer commitments.
4. INVESTMENTS, NET
Marketable debt securities $ 569,273.0 $ 578,965.8
Marketable equity securities 33,509.1 28,371.6
Held to maturity 399,072.8 354,312.1
Debt securities available for sale 671,669.3 822,471.2
Equity securities available for sale 4,914.2 4,914.2
Transfer rights of marketable investments in debt
securities 205,212.4 1,879.1
- 48 -
December 31,
2013 June 30,
2013
Transfer rights of investments available for sale - 164,254.1
Investment pledge in derivative transactions 32,423.7 29,586.5
Allowance for equity securities available for sale (59.2) (59.2)
$ 1,916,015.3 $ 1,984,695.4
Marketable debt securities:
Internal debt securities issued or guaranteed by
Central Government:
Treasury securities $ 242,203.8 $ 151,763.1
Colombia Bonds 118.8 -
242,322.6 151,763.1
External debt securities issued or guaranteed by
Central Government:
Structured credit notes 71,633.0 93,384.5
Bonds 19,892.5 64,129.1
91,525.5 157,513.6
Other public debt securities:
Bonds of Solidarity for Peace 1.1 3.3
Tax refund securities TIDIS 62.0 347.0
Bonds 33,975.2 43,285.5
34,038.3 43,635.8
Securities supported or guaranteed by institutions
supervised by the Finance Superintendency:
Term Deposits 9,468.5 126,936.7
Bonds 38,948.6 59,014.3
48,417.1 185,951.0
Securities supported or guaranteed by foreign
governments
Bonds 12,940.2 13,399.9
Securities supported or guaranteed by foreign
banks
Bonds 93,077.3 91,862.6 Securities issued or guaranteed by multilateral
lenders
Bonds 16,695.3 28,764.2
- 49 -
December 31,
2013 June 30,
2013
Securities issued by residents abroad
Notes 30,256.7 30,138.1
30,256.7 30,138.1
Other debt securities
Commercial papers - 314.1
$ 569,273.0 $ 578,965.8
Marketable equity securities:
High liquidity shares $ 6,054.5 $ 2,167.2
Investment funds 306.7 1,216.1
Pension and Severance Funds 21,176.4 20,675.9
International mutual funds 486.0 -
Interests in Open Mutual Fund Helm
Treasury 5,485.5 4,312.4
$ 33,509.1 $ 28,371.6
Held to maturity:
Securities issued by Governmental entities:
Debt reduction securities $ 36,637.9 $ 42,020.5
Agricultural development securities Class A 149,584.5 131,330.2
Agricultural development securities Class B 204,309.5 171,984.3
TIPS 4,034.6 6,659.1
$ 394,566.5 $ 351,994.1
Securities supported or guaranteed by institutions
supervised by the Finance Superintendency:
Term Deposits 4,506.3 2,318.0
$ 399,072.8 $ 354,312.0
Debt securities available for sale
Treasury securities $ 671,669.3 $ 990,578.7
Equity securities available for sale:
December 31
Corporate name Equity % Interest
Adjusted
cost Equity value
Valorization
(De-
valorization) Allowance Rating
Banco Central
Hipotecario (409,023.8) - $ 59.2 $ - $ - $ (59.2) E
- 50 -
December 31
Corporate name Equity % Interest
Adjusted
cost Equity value
Valorization
(De-
valorization) Allowance Rating
Tecnibanca 62,424.49 4.5 1,913.9 2,830.9 917.0 - A
ACH Colombia S.A. 23,393.26 0.5 30.0 128.3 98.3 - A
Bolsa de Valores de
Colombia 110,361.4 0.7 92.0 2,038.4 1,946.4 - A
Deposito centralizado
de Valores – Deceval 66,067.21 5.6 2,008.9 3,705.2 1,696.3 - A
Camara de
Compensacion de
Divisas S.A. 4,270.1 4.9 114.2 195.3 81.1 - NA
Camara de Riesgo
Central de Contraparte
S.A.
30,339.6.7
1.2
479.4
357.0
(122.4) -
NA
CIFIN 6,000.0 3.6 216.6 216.6 - - NA
$ 4,914.2 $ 9,471.7 $ 4,616.7,7 $ (59.2)
June 30
Corporate name Equity % Interest
Adjusted
cost Equity value
Valorization
(De-
valorization) Allowance Rating
Banco Central
Hipotecario (409,023.8) - $ 59.2 $ - $ - $ (59.2) E
Tecnibanca 57,964.9 4.5 1,913.9 2,628.6 714.8 - A
ACH Colombia S.A. 21,090.6 0.5 30.0 115.7 85.7 - A
Bolsa de Valores de
Colombia - - 92.0 - 382.1 - A
Deposito centralizado
de Valores –Deceval 52,092.1 5.5 2,008.9 2,866.9 927.2 - A
Camara de
Compensacion de
Divisas S.A. 3,632.6 3.2 114.2 115.8 36.1 - NA
Camara de Riesgo
Central de Contraparte
S.A. 29,948.7 1.2 479.4 352.4 (127.0) - NA
CIFIN 6,000.0 3.6 216.6 216.6 - - NA
$ 4,914.2 $ 6,296.0 $ 2,018.9,9 $ (59.2)
As of December 31 and June 30, 2013, the valuation was performed with the equity change,
certified as of November 30 and May 31, respectively.
- 51 -
Transfer rights in marketable debt securities
December 31,
2013 June 30,
2013
Treasury securities $ - $ 1,346.4
Other debt securities - 532.7
$ - $ 1,879.1
Transfer rights in marketable debt securities:
Treasury securities $ 205,212.4 $ 164,254.1
Investments available for sale pledged in derivative financial instruments, transactions,
structured products and others, in debt securities
Treasury securities $ 32,423.7 $ 29,586.5
There are no restrictions over investments.
The Bank’s majority share in the investments as of December 31 and June 30, 2013,
corresponds to 92% and 90.7%, respectively.
5. LOAN PORTFOLIO, NET
As of December 31 and June 30, 2013, the Parent Company and its Subordinated companies
Helm Bank Panama and Helm Bank Cayman assessed 100% of the commercial portfolio. The
result of the assessment is as follows:
December 31
Parent Company and
Subordinated
companies
Commercial
Loans
Consumer
Loans
Housing
Loans Total
A – Normal $ 8,357,095.1 $ 1,498,170.1 $ 28,013.4 $ 9,883,278.6
B – Acceptable 165,477.9 33,880.4 - 199,358.3
C – Appreciable 99,352.0 24,750.4 - 124,102.4
D – Significant 46,990.4 22,576.6 - 69,567.0
E – Uncollectible 77,279.0 22,219.9 - 99,498.9
8,746,194.4 1,601,597.4 28,013.4 10,375,805.2
Individual allowance (373,853.7)
10,001,951.5
A – Normal 329,304.0 - - 329,304.0
B – Acceptable 1,593.2 - - 1,593.2
C – Appreciable - - - -
- 52 -
December 31
Parent Company and
Subordinated
companies
Commercial
Loans
Consumer
Loans
Housing
Loans Total
D – Significant 30,983.3 - - 30,983.3
E – Uncollectible 238.3 - - 238.3
362,118.8 - - 362,118.8
General allowance (2,232.4)
$ 10,361,837.9
June 30
Parent Company and
Subordinated
companies
Commercial
Loans
Consumer
Loans
Housing
Loans Total
A – Normal $ 7,578,922.7 $ 1,371,595.8 $ 18,858.0 $ 8,969,376.5
B – Acceptable 130,933.0 44,178.8 - 175,111.8
C – Appreciable 92,648.9 21,321.5 - 113,970.4
D – Significant 139,894.5 32,825.3 - 172,719.8
E – Uncollectible 45,824.3 14,756.7 - 60,581.0
7,988,223.4 1,484,678.1 18,858.0 9,491,759.5
Individual allowance (373,352.5)
9,118,407.0
A – Normal 1,106,518.4 - - 1,106,518.4
B – Acceptable 17,519.4 - - 17,519.4
C – Appreciable 60.5 - - 60.5
D – Significant 1,956.6 - - 1,956.6
E – Uncollectible 4,070.2 - - 4,070.2
1,130,125.1 - - 1,130,125.1
General allowance (2,572.1)
$ 10,245,960.0
As of December 31 and June 30, 2013, the Bank has a share of 88% and 89.2%, respectively, in
the consolidated loan portfolio.
According to the flows expected for the bands from 1 to 90 days, depending on the Liquidity
Management format, as indicated in Chapter VI of the Basic Accounting and Financial Circular
Letter, the following is the detail of the portfolio of loans and financial leasing operations and
interest by maturity period for the Parent Company:
- 53 -
December 31,
2013 June 30,
2013
Commercial:
1 to 7 days $ 78,524.2 $ 80,936.9
8 to 15 days 183,662.4 159,169.9
16 to 30 days 650,295.4 386,485.2
31 to 90 days 1,538,683.6 958,118.7
Consumer:
1 to 7 days 18,335.1 24,350.1
8 to 15 days 14,427.8 36,034.1
16 to 30 days 107,453.0 44,925.8
31 to 90 days 376,727.8 199,718.4
$ 2,968,109.3 $ 1,889,739.1
The following are the portfolio maturities for Helm Bank Panama, determined on the basis of
the remaining period between the date of the financial statements and the contractual maturity:
Until 1 year 489,111.4
From 1 to 3 years 294,943.1
From 3 to 5 years 264,004.4
More than 5 years 193,862.0
As of December 31, 2013 the affiliate Helm Bank Cayman (in Liquidation), records loans for
$7,273.4 and $6,786.5 with maturity in one year and up to five years respectively.
Allowance of loan portfolio - The following is the movement in the loan portfolio allowance:
Initial balance $ 375,924.6 $ 356,912.5
Plus:
Allowance charged to expenses of the period 184,141.4 111,768.7
Exchange difference foreign branches 367.1 2,021.7
Less:
Reimbursement to revenues – recoveries 86,568.2 39,188.0
Use of Allowances on forgiven loans 5,534.6 8,617.1
Reversal of the allowances of the period 1,501.9 -
Transfer of allowance – portfolio sale 5,751.3 -
Write-offs 84,991.0 46,973.2
Ending balance $ 376,086.1 $ 375,924.6
In compliance with the commitment before the Finance Superintendency of Colombia within
the consolidation process of the financial statements, the recognition (application of Colombian
standards) in the item of portfolio and interest for foreign affiliates was carried out.
- 54 -
6. ACCEPTANCES AND DERIVATIVES
Quantitative information - The following is the summary of derivatives whose net value
between rights and obligations is positive for the Bank and its Subordinated companies
regarding bank acceptances:
December 31, 2013
June 30, 2013
Acceptances $ 8,245.7 $ 6,868.1
Cash transactions:
Purchase on currencies:
Right - 1,929.0
Obligation - (1,930.4)
Sale on currencies:
Right 1,149.0 996.3
Obligation (1,151.7) (996.8)
Purchase on securities:
Right - -
Obligation - -
Sale on securities:
Right - 497.3
Obligation - (532.7)
(2.7) (37.3)
Options:
Forwards:
Purchase on currencies:
Right 534,399.4 1,658,946.1
Obligation (527,549.2) (1,613,885.2)
Sale on currencies:
Right 1,230,696.6 219,497.6
Obligation (1,220,339.3) (218,401.5)
17,207.5 46,157.0
Futures:
On currencies:
Right 493,791.6 302,985.4
Obligation (493,791.6) (302,985.4)
December 31,
2013 June 30,
2013
On interest rates:
- 55 -
Right 214,525.2 184,615.2
Obligation (214,525.2) (184,615.2)
Sale on securities:
Right - 2,060.9
Obligation - 2,060.9)
Swaps:
On currencies:
Right 272,301.7 263,542.6
Obligation (256,126.8) (245,073.8)
On interest rate:
Right 245,572.9 257,941.5
Obligation (236,601.0) (245,504.3)
25,146.8 30,906.0
Options:
On currencies:
Calls 1,016.4 5,633.3
Puts 125.4 116.7
1,141.8 5,750.0
Hedging forwards:
Sale of currencies:
Right 22,275.3 25,088.6
Obligation (22,155.9) (25,074.6)
119.4 14.0
$ 51,858.4 $ 89,657.8
As of December 31 and June 30, 2013, the Parent Company has a share of 100% in
consolidated derivatives and acceptances.
In derivatives, when the present value of the obligation exceeds the present value of the rights
(the net value is negative for the Bank and its Subordinated companies), these are transferred to
liabilities. The following is the summary of derivatives whose net value is negative for the
Parent Company and acceptances:
December 31,
2013 June 30,
2013
Acceptances $ 8,245.7 $ 6,868.1
Derivatives:
Forwards:
- 56 -
December 31,
2013 June 30,
2013
Purchase on currencies:
Right (854,369.6) (255,210.1)
Obligation 861,854.3 256,479.6
Sale on currencies:
Right (732,167.1) (2,013,213.9)
Obligation 740,626.4 2,077,228.2
15,944.0 65,283.8
Swaps:
On currencies:
Right (193,279.3) (248,192.7)
Obligation 207,065.8 265,430.0
On interest rate:
Right (219,433.6) (223,083.9)
Obligation 228,521.5 233,370.0
22,874.4 27,523.4
Options:
On currencies:
Calls 746.9 3,781.1
Puts 920.7 767.7
1,667.6 4,548.8
Hedging forwards:
Right - (144,345.1)
Obligation - 146,587.2
- 2,242.1
$ 48,731.7 $ 106,466.2
The Parent Company records cash transactions and agreements executed of operations with
speculation derivatives; such as forwards, swaps and options and daily accumulated profits
from the sale of speculation derivatives in accordance with the provisions of Chapter XVIII of
the Basic Accounting and Financial Circular Letter.
In accordance with Resolution 1420/2008, the Parent Company records daily accumulated
profits from the sale of speculation derivatives as established in Chapter XVIII of the Basic
Accounting and Financial Circular Letter.
As of December 31 and June 30, 2013, the Bank had a share of 100% in consolidated
derivatives whose net value is negative and bank acceptances.
- 57 -
7. ACCOUNTS RECEIVABLE, NET
December 31, 2013
June 30, 2013
Interest $ 75,902.2 $ 85,787.5
Financial component of leasing operations 11,698.0 13,161.4
Commissions 3,803.4 4,002.4
Dividends 578.0 755.0
Fees from assets given on operating leasing 10,963.9 10,764.6
Payments from customers 24,927.9 21,466.0
Advance payments of agreements 93,725.4 94,060.6
Advance payments to personnel 0.4 4.5
Guaranteed loans 4,489.2 6,818.4
Others in foreign currencies 360.3 -
Miscellaneous 11,883.8 19,304.1
Allowance (18,823.5) (20,748.4)
$ 219,508.4 $ 235,376.1
Allowance for accounts receivable –The following is the movement in the allowance for
accounts receivable:
Initial balance $ 20,748.4 $ 17,032.3
Plus:
Allowance charged to expenses of the period 20,608.4 15,153.7
Less:
Reimbursement to revenues – recoveries 13,716.8 5,149.4
Use of Allowances on forgiven loans 3,799.6 3,296.3
Use of Allowances on loan portfolio sale 321.0 -
Write-offs 4,695.9 2,991.9
Ending balance $ 18,823.5 $ 20,748.4
As of December 31 and June 30, 2013, the Bank had a share of 96.4% and 96.4%, respectively,
in net consolidated accounts receivable.
8. ASSETS AVAILABLE FOR SALE, FORECLOSED ASSETS AND RETURNED ASSETS
FROM LEASING, NET
The detail of the goods received in lieu of payment and returned leasing assets is as follows:
Furniture assets $ 15,399.2 $ 7,070.5
Fixed Assets intended for housing 624.0 624.0
Fixed Assets other than for housing 12,801.1 9,888.4
December 31, 2013
June 30, 2013
- 58 -
Returned Furniture assets 1,856.2 6,431.4
Returned Fixed assets 18,234.7 20,885.5
Less:
Allowance of goods received in lieu of payment
intended for housing
(483.6) (452.4)
Allowance for assets other than housing (14,518.2) (13,373.8)
Allowance for returned leasing assets (8,189.5) (6,442.4)
$ 25,723.9 $ 24,631.2
The following is the detail of the furniture assets received in lieu of payment:
Securities:
Shares $ 58.0 $ 58.0
Enka Shares 717.0 717.0
Soc. Flor del Monte Shares 8,328.7 -
Fiduciary rights 1,720.7 1,720.7
Furniture assets 4,574.8 4,574.8
$ 15,399.2 $ 7,070.5
The detail of the assets received in lieu of payment, according to tenure, is as follows:
December 31
Assets
No longer
than one
Year
Between
one and
three
Years
Between
three and
five Years
Total
Allowance
Furniture $ 8,328.7 $ 267.9 $ 6,802.6 $ 15,399.2 $ 7,095.0
Fixed assets intended for
housing - - 624.0 624.0 483.6
Fixed assets other than for
housing 3,511.5 5,030.4 4,259.2 12,801.1 7,423.2
Returned assets from Leasing
Fixed assets 14,481.2 3,488.0 265.5 18,234.7 7,149.7
Furniture assets 836.8 807.5 211.9 1,856.2 1,039.8
$ 27,158.2 $ 9,593.8 $ 12,163.2 $ 48,915.2 $ 23,191.3
- 59 -
June 30
Assets
No longer
than one
Year
Between
one and
three
Years
Between
three and
five Years
Total
Allowance
Furniture $ - $ 1,720.7 $ 5,349.8 $ 7,070.5 $ 6,723.0
Fixed Assets intended for
housing - - 624.0 624.0 452.4
Fixed Assets other than for
housing 1,467.2 4,162.0 4,259.2 9,888.4 6,650.8
Returned assets from Leasing
Fixed 20,047.9 3,900.6 265.5 24,214.0 5,328.8
Furniture 1,541.3 1,349.8 211.9 3,103.0 1,113.6
$ 23,056.4 $ 11,133.1 $ 10,710.4 $ 44,899.9 $ 20,268.6
As of December 31 and June 30, 2013, the net value of these assets represents 0.38% and
0.35%, respectively, of the total assets of the Parent Company. The Parent Company considers
that the immobilization and materiality of these assets will not produce any significant negative
impacts on the financial statements.
For the assets received in lieu of payment there are updated appraisals with validity not longer
than three (3) years from December 2012; they are currently in good condition. It is the Bank’s
policy to update appraisals once this time has elapsed.
As a general policy for the marketing of the assets received in lieu of payment, the Parent
Company carries out the steps described below: the possibilities of disposal and administration
of these assets received in lieu of payment are viable, and are in charge of the Marketing of
Assets Received in lieu of Payment and Returned Assets from Leasing area, legal procedures
are carried out by the Legal Vice Presidency and the Marketing of Assets Received in lieu of
Payment and Returned Assets from Leasing area. These Assets are marketed through national
circulation newspapers, real estate brokers; they are reported to the officials of the Bank
through Intranet and are available to the customers of the Bank and third parties through the
website of the Bank. The Bank's Management has concluded that all assets are likely to be sold
in a normal market. As of December 31, 2013 and June 30, 2013, the assets received in lieu of
payment, including vehicles, are covered for basic protection against fire, earthquake, AMIT,
violent theft and business assistance, according to Business Protection Policy No. 21117 with
A.I.G. Seguros Colombia S.A. Validity Term: From December 1, 2013 to November 30, 2014.
Reinstated or returned agreements of financial leasing products (General), are covered under
policy LGP - 281, all risk coverage from property damage (real estate, furniture and fixtures,
machinery and fixed equipment, fixed and mobile and/or portable electronic and/or electric
equipment), which is effective from September 1, 2013 to September 1, 2014.
Reinstated agreements of financial leasing products (Mobile Machinery and Equipment), are
covered under Policy No. 16886, coverage for mobile machinery and equipment (yellow
machinery), which is effective from November 1, 2013 to September 1, 2014.
- 60 -
Reinstated agreements of home leasing products are covered under Policy No. 8000, home
coverage, which is in effect from September 1, 2013 to September 1, 2014.
Allowance for assets received in lieu of payment and returned leasing assets- The movement
of the allowance for foreclosed assets received is as follows:
December 31, 2013
June 30, 2013
Initial balance $ 20,268.6 $ 17,386.3
Plus allowance charged to expenses of the period 5,173.4 3,632.0
Less reversal of allowance for foreclosed assets 2,250.7 749.7
$ 23,191.3 $ 20,268.6
9. PROPERTY AND EQUIPMENT, NET
Land $ 11,032.7 $ 11,432.8
Buildings 78,353.6 79,764.2
Equipment, furniture and fixtures 29,234.3 29,463.0
Computer equipment 62,397.1 62,417.2
Vehicles 1,888.4 2,069.4
Accumulated depreciation (100,226.0) (97,507.4)
Allowances (278.2) (593.5)
$ 82,401.9 $ 87,045.7
As of December 31 and June 30, 2013, there are insurance policies covering the risks of theft,
fire, earthquake, riot, mutiny, explosion, volcanic eruption, low voltage, loss or damage to
premises, offices and vehicles.
The depreciation charged to the expenses in the semesters ended on December 31 and June 30,
2013 was of $6,967.7, $7,502.1, and $27,963.5, $25,563.1, for own usage assets and assets
given on leasing, respectively.
The valuation of the fixed assets of the Bank and local Subordinated companies is supported by
the appraisals conducted in years 2012 and 2013.
During the second half of 2013, allowances for property and equipment amounting to $903.4
was made and $322.1 was reinstated. As of December 31 and June 30, 2013, allowances for
operatingleasing assets for $610.3 and $161.0 were made, respectively.
There are no mortgages or ownership restrictions on the same nor have they been pledged.
As of December 31 and June 30, 2013, the Bank had a share of 98% and 97.7%, respectively, in
consolidated properties and equipment.
- 61 -
10. OPERATING LEASING ASSETS, NET
December 31, 2013
June 30, 2013
Machinery and equipment $ 59,742.2 $ 63,144.4 Vehicles 226,951.0 209,817.6 Furniture and fixtures 66.4 66.4 Computer equipment 288.8 308.4 Computer software 0.7 0.7 Ongoing imports 19,909.4 9,728.9 Accumulated depreciation and amortization (94,861.5) (96,273.9) Allowance (4,582.2) (3,880.8) $ 207,514.8 $ 182,911.7 As of December 31 and June 30, 2013, the total depreciation charged to income for the assets
given in leasing was of $27,963.5 and $25,563.1, respectively.
11. OTHER ASSETS, NET
Assets to be given in leasing (1) $ 78,107.1 $ 61,521.8
Deferred charges (2) 38,809.7 50,265.3
Miscellaneous (3) 13,756.3 26,321.4
Prepaid expenses (4) 5,705.5 6,520.8
Deposits 3,214.5 4,382.8
Loans to employees 2,218.7 3,064.2
Artistic and cultural assets 1,025.4 1,031.7
Permanent contributions 116.6 116.6
Allowance (5) (1,081.8) (870.3)
$ 141,872.0 $ 152,354.3 (1) Assets to be given in leasing:
Fixed assets $ 46,776.4 $ 27,229.1
Computer equipment - 39.7
Machinery and equipment 13,970.4 11,901.6
Vehicles 17,360.3 22,351.4
$ 78,107.1 $ 61,521.8
(2) Deferred charges
The movement of deferred charges is as follows:
Remodeling $ - $ 51.1
Studies and projects - -
Computer software 20,279.7 24,995.9
Supplies and stationery 505.0 500.8
Improvement to properties leased 3,639.8 4,438.1
Commission for placement of securities 1,369.7 1,808.7
Deferred income tax (*) 12,562.8 14,393.9
Taxes 452.7 784.0
- 62 -
December 31, 2013
June 30, 2013
Deposits and current liabilities - 285.7
Advertising and publicity - 92.2
Others - 2,914.9
$ 38,809.7 $ 50,265.3
(3) Other Assets - Others
The detail of other assets, others, is as follows:
Surplus from advance payments $ 80.0 $ 11,806.5
Income tax advance payments 11,686.4 -
Income withholding 1,018.4 12,903.9
Consortium or joint ventures 641.2 1,198.2
Consignments in transit - -
Petty cash 9.3 9.6
Unpaid checks 4.8 122.8
Others 316.2 280.4
$ 13,756.3 $ 26,321.4
(4) Prepaid expenses
The detail of prepaid expenses, others, is as follows:
Insurance $ 2,577.2 $ 1,585.0
Maintenance of equipment 222.7 378.0
Leases 538.8 233.4
Others 2,366.8 4,324.4
$ 5,705.5 $ 6,520.8
(5) Allowance for other assets
The movement in the allowance for other assets is as follows:
Initial balance $ 870.3 $ 582.8
Plus:
Allowance for returned assets from car leasing 659.5 634.1
Allowance for unpaid checks 0.2 9.2
Allowance for assets to be placed on leasing 23.5 -
Loans to employees 4.4 5.2
Less:
Reimbursement of allowance for returned leasing
assets
411.2 325.9
Reimbursement of employee loans 13.5 14.7
Reimbursement of allowance for unpaid checks 27.9 18.4
Forgiveness on unpaid checks - 1.6
Write-off of assets to be placed on leasing 23.5 -
Write-offs of employee loans - 0.4
- 63 -
$ 1,081.8 $ 870.3
12. APPRAISALS, NET
December 31, 2013
June 30, 2013
Permanent contributions $ 8.2 $ 8.2
Property and equipment 117,860.9 109,399.7
Artistic and cultural assets 4,136.7 4,190.4
Investments available for sale 4,739.1 2,145.9
Mark to market of investments available for sale (122.4) (127.0)
$ 126,622.5 $ 115,617.2
13. DEPOSITS AND FINANCIAL CLAIMS
Deposits in checking accounts $ 2,089,235.8 $ 1,928,284.5
Term deposit certificates:
Less than 6 months 1,857,823.4 1,658,115.6
Equal to or longer than 6 months and less than 12
months 1,257,335.1 1,094,428.1
Equal to or longer than 12 months and less than 18
months 484,417.2 342,996.4
Equal to or longer than 18 months 1,118,111.3 1,273,784.0
4,717,687.0 4,369,324.1
Deposits in saving accounts 4,391,233.6 4,265,316.4
Others:
Banks and correspondents 9,298.4 115.9
Special deposits 38.6 38.6
Current liabilities from bank services 91,350.0 65,738.1
Bank collection services 545.3 6,178.6
102,232.3 72,071.2
$ 11,299,388.7 $ 10,634,996.2
The majority shareholding of the Bank as of June 30, 2013 and December 31, 2013 corresponds
to 82.9% and 84.4%, respectively, of deposits and financial claims.
- 64 -
14. LIABILITIES FROM MONEY MARKET AND RELATED TRANSACTIONS
December 31 June 30
Balance Rate Balance Rate
Ordinary interbank legal tender (1) $ - $ 125,000.0 3.16%
Investment repurchase commitment (2) 201,035.2 3.16% 170,675.6 3.25%
$ 201,035.2 $ 295,675.6
(2) As of December 31, 2013, it corresponds to:
Entity Initial Date Final Date Value
Banco de la Republica 12-30-2013 01-02-2014 $ 201,035.2
(1) As of June 30, 2013, it corresponds to:
Entity Initial Date Final Date Value
Banco Agrario 06-28-2013 07-02-2013 $ 70,000.0
Banco Popular 06-27-2013 07-02-2013 5,000.0
Bancolombia 06-27-2013 07-02-2013 50,000.0
$ 125,000.0
(2) As of June 30, 2013, it corresponds to:
Entity Initial Date Final Date Value
Banco de la Republica 06-28-2013 07-02-2013 $ 141,037.1
Correval 06-27-2013 07-02-2013 21,768.2
Valores Bancolombia 06-28-2013 07-02-2013 1,004.4
Acciones y Valores S.A. 06-28-2013 07-02-2013 3,810.5
Casa de Bolsa 06-28-2013 07-02-2013 556.2
Bolsa y Renta S.A. 06-28-2013 07-02-2013 1,342.4
Bancolombia 06-28-2013 07-02-2013 522.4
Comercializadora R Doron SAS 06-28-2013 07-02-2013 138.0
Doblefer S.A. 06-28-2013 07-02-2013 496.4
$ 170,675.6
There are no restrictions or limitations over these transactions.
The share of the Bank as of June 30, 2013 and December 31, 2013 corresponds to 96.8% and
0.1%, respectively, of short positions in consolidated money market and related operations.
15. BANK LOANS AND OTHER FINANCIAL LIABILITIES
The following is the detail of bank loans and other financial obligations in local and foreign
currency translated into local currency:
- 65 -
December 31
Up to 1 Year
Between 1
and 3 Years
More than
3 Years Total
Banco de Comercio Exterior (1) $ 381.5 $ 20,907.1 $ 60,033.2 $ 81,321.8
FINAGRO (2) 52.0 410.1 53,790.5 54,252.6
FINDETER (3) - 7,254.0 124,942.3 132,196.3
Foreign banks (4) 329,440.8 - - 329,440.8
Others (5) - - 372.0 372.0
$ 329,874.3 $ 28,571.2 $ 239,138.2 $ 597,583.5
(1) It includes 324 obligations in local currency for $78,125.0 with interest ranging from DTF (Fixed Term
Deposit Rate) -6 to DTF +5 and final maturities until 2027; and 11 obligations in foreign currency for
$3,196.8 with an interest rate from 0.38% to 2.40% and final maturity in 2018.
(2) It corresponds to 92 obligations in local currency with interest rates between DTF -3.5 to DTF +2.0 and final
maturities until 2025.
(3) It includes 72 obligations in local currency with interest from DTF -4 to DTF +4.3 and final maturities until
2027.
(4) It corresponds to 52 obligations in foreign currency with interest rates between 0.74% and 2.15% and final
maturities until August 2014.
(5) It corresponds to 6 financial leasing operations with final maturities until January 2017, interest rates from
DTF +0 to DTF +6 and purchase options ranging from $3.1 to $13.5 and an operation with the National
Planning Department with an interest rate of 1.84% and final maturity until November 2025.
June 30
Up to 1 Year
Between 1
and 3 Years
More than
3 Years Total
Banco de Comercio Exterior (1) $ - $ 10,262.4 $ 66,868.8 $ 77,131.2
FINAGRO (2) - 4,080.2 57,675.6 61,755.8
FINDETER (3) - 38.8 105,806.2 105,845.0
Foreign banks (4) 344,161.2 - - 344,161.2
Others (5) - 112.3 863.1 975.4
$ 344,161.2 $ 14,493.7 $ 231,213.7 $ 589,868.6
(1) It includes 446 obligations in local currency for $73,827.4 with interest rates ranging from DTF -6 to DTF +5
and final maturities until 2022; and 14 obligations in foreign currency for $3,303.8 with interest rates from
1.08% to 5.00% and final maturity until 2018.
(2) It corresponds to 101 obligations in local currency with interest rates between DTF -3.5% to DTF +1.0% and
final maturities until 2024.
(3) It includes 69 obligations in local currency with interest rates from DTF -4% to DTF +4.3% and final
maturities until 2027.
- 66 -
(4) It corresponds to 115 obligations in foreign currency with interest rates between 0.23% and 0.98% and final
maturities until April 2013.
(5) It corresponds to 9 financial leasing operations with final maturities until January 2017, interest rates of DTF
+0 and DTF +6 and purchase options ranging from $0.0 to $13.5 and two operations with the National
Planning Department with interest between 2.0% and 2.02% and final maturities until May 2014.
The following is the detail of foreign banks translated into local currency:
December 31, 2013
June 30, 2013
Bank of America $ 23,665.1 $ 17,175.7
Citibank 81,309.8 106,481.0
The Bank of Montreal 28,574.8 30,844.3
Mercantil Commercebank, N.A. 15,937.3 17,108.9
Standard Chartered Bank 7,536.7 21,439.7
Deutsch Bank A.G. 70,197.5 38,547.4
Wells Fargo Bank 79,651.6 112,564.2
Bank Of Nova Scotia 22,568.0 -
$ 329,440.8 $ 344,161.2
The following is the detail of interest in respect of banks and other financial obligations in local
and foreign currency translated into local currency:
Banco de Comercio Exterior $ 439.5 $ 317.3
FINAGRO 865.8 984.9
FINDETER 244.7 210.7
National Planning Department 0.4 1.1
Foreign banks 807.3 935.5
$ 2,357.7 $ 2,449.5
16. ACCOUNTS PAYABLE
Interests:
Deposits and financial claims $ 37,689.0 $ 38,325.7
Interbank Funds Purchased - 36.6
Bank loans 2,357.7 2,449.5
Investment securities outstanding 6,574.6 21,619.0
Others 1,561.4 1,572.5
48,182.7 64,003.3
Commissions and fees 2,859.8 1,717.3
- 67 -
December 31, 2013
June 30, 2013
Others:
Lease fees payable 17.4 23.0
Taxes 2,090.4 790.6
Dividends payable 76.8 82.1
Contributions on financial transactions 5,430.5 4,435.6
Sales tax 2,678.6 2,633.6
Promissory purchasers 70.1 251.6
Suppliers 53,776.2 45,260.1
Withholdings 14,683.2 12,404.3
Miscellaneous:
Payroll 6.2 6.2
Checks drawn not collected 3,792.2 5,283.0
Values to be reimbursed - 164.3
Special collections (1) 18,139.2 79,295.8
University agreement 303.8 461.6
Balances in favor of Visa 1,105.6 1,042.6
Entities with no account 52.5 72.6
Debtors’ Group Life insurance 1,431.1 1,313.6
MasterCard compensation 62.4 142.3
Surety bonds 3,838.4 3,854.8
Surplus payments to revolving loan 13,029.1 6,156.0
Unprocessed payments and deposits 3,465.8 12,280.0
Electron card compensation 10,777.8 14,980.2
Remittances negotiated 9.1 31.9
Prepayment Redeban cards 17,532.6 15,708.3
Prepayment Visa cards 3,886.1 3,884.6
National Fund of Guaranties 2,967.3 1,431.1
Payments to be applied 2,277.1 2,507.7
Cardif insurance 1,372.5 1,278.6
Automatic PSE payments 1,236.0 8,104.7
Automatic JPAT payments 1,102.5 796.4
Portfolio payments and disbursements 1,070.8 1,357.2
Others payable in local currency 2,024.9 5,217.3
Other miscellaneous accounts payable (2) 4,946.6 3,391.4
94,429.6 168,762.2
$ 224,295.3 $ 300,363.7
(1) As of December 31, 2013 it corresponds to revenues collected through official receipt of $5,692.3, Income
withholdings for $306.8 and revenues from custom taxes for $7,338.1 mainly. As of June 30, 2013, it
corresponds to revenues collected through official payment receipt for $30,078.5, Income withholdings for
$13,111.4 and revenues from custom taxes for $8,368.4, chiefly.
- 68 -
(2) As of December 31, 2013 it mainly corresponds to: Accounts payable for $717.8, leasing insurance for
$714.8, electronic transfers for $438.8, gift certificates for $370.0, payment order rejects for $360.7, balances
in favor of MasterCard for $336.9, life insurance of agreements for $276.5, electronic services agreement for
$272.5, insurance payable for $610.6, Credicash balances for $219.0, Visa compensation for $161.5,
remittances in transit for $103.3, employee loan discounts for $10.7, parafiscal contributions and
complementary plan for $2.5, miscellaneous leasing fees for $6.3 and others for $344.7. As of June 30, 2013
it corresponds to: Gift certificates for $292.6, balances in favor of MasterCard for $278.8, Visa compensation
for $226.9, various insurance payable for $1,009.5, electronic service agreement for $213.7, electronic
transfers for $468.4, employees loan discounts for $5.2, Credicash balances for $202.5, remittances in transit
for $47.6, accounts payable for $250.5, complementary health plan for $20.4, other accounts payable for
$360.7 and others for $14.6.
As of December 31 and June 30, 2013, the share of the Bank is 95% and 93.5%, respectively, in
the consolidated accounts payable.
17. LONG-TERM DEBT
December 31, 2013
June 30, 2013
Issuance Helm Bank S.A. $ 687,716.2 $ 902,767.3
Issuance Helm Leasing S.A. 45,147.0 45,147.0
$ 732,863.2 $ 947,914.3
As of December 31, 2013, the detail of long-term debt is as follows:
December 31, 2013
Payment Method Payment Method Payment Method
Total amount
issued: $300.0 $400.0 $300.4
Bonds offered: 200.0 400.0 400
Nominal value: 1,000 1,000 1,000
Current amount: 200,247.0 184,740.0 302,729.2
Effective interest
rate: Series B60 CPI + 4.03% or 4.6% AV
Series B36 CPI + 3.0% or
3.2% AV
Series B36 CPI + 3.0% or
3.2% AV
Series B120 CPI + 5.04% or 5.7% AV
Series B60 CPI + 3.5% or
3.7% AV
Series B60 CPI + 3.5% or
3.7% AV
Series D36 fixed rate 6.19% or
6.6% TV
Series B84 CPI 4.12% or
4.3% AV
Series B84 CPI 4.12% or
4.3% AV
Series E36 IBR 1.29% or 1.9% MV
Series E36 IBR 1.64% or
1.7% MV
Series E36 IBR 1.64% or
1.7% MV
Redemption
term: Between 36 and 120 Between 36 and 84 Between 36 and 84
Guaranty. Backed by issuer Backed by issuer Backed by issuer
Payment: Negotiable. Transfer by
endorsement
Negotiable. Transfer by
endorsement
Negotiable. Transfer by
endorsement
- 69 -
The following is the detail of the bonds assumed by Helm Bank with the merger of Helm
Leasing:
December 31, 2013
Eleventh Issue I Eleventh Issue II Twelfth Issue I
Authorized 100,000 47,311 140,000
Nominal value 1,000 1,000 1,000
Current default 15,898 19,801 9,448
Effective interest rate
Series A60 DTF + 3.10%
Series B84 CPI + 7.10%
Series D60 FT + 12.95%
Series D84 FT + 13.20%
Series A60 DTF + 3.20%
Series A84 DTF + 3.40%
Series B60 CPI + 6.50%
Series B84 CPI + 7.10%
Series B60 CPI + 5.70%
Series B84 CPI + 6.00%
Series A60 DTF + 2.05%
Series D60 FT + 11.50.%
Series D84 FT + 11.80%
Payment method DTF – TV, TF TV, CPI AV DTF - TV, CPI AV DTF - TV, CPI TV- TF TV
Redemption terms
Minimum 24 and maximum 84
months
Minimum 36 and maximum 84
months
Minimum 36 and maximum
84 months
Guarantee No specific guaranty other than
the issuer’s support
No specific guaranty other than the
issuer’s support
No specific guaranty other
than the issuer’s support
Payment
Negotiable. Transfer by
endorsement
Negotiable. Transfer by
endorsement
Negotiable. Transfer by
endorsement
As of June 30, 2013, the detail of long-term debt is as follows:
June 30, 2013
Payment Method Payment Method Payment Method
Total amount
issued: $300.0 $400.0 $300.4
Bonds offered: 200.0 400.0 400
Nominal value: 1,000 1,000 1,000
Current amount:
200,247.0 400,000.0 302.520,3
Effective interest
rate: Series B60 CPI + 4.03% or 4.6% AV
Series B36 CPI + 3.0% or
3.2% AV
Series B36 CPI + 3.0% or
3.2% AV
Series B120 CPI + 5.04% or 5.7% AV
Series B60 CPI + 3.5% or
3.7% AV
Series B60 CPI + 3.5% or
3.7% AV
Series D36 fixed rate 6.19% or
6.6% TV
Series B84 CPI 4.12% or
4.3% AV
Series B84 CPI 4.12% or
4.3% AV
Series E36 IBR 1.29% or 1.9% MV
Series E36 IBR 1.64% or
1.7% MV
Series E36 IBR 1.64% or
1.7% MV
Redemption
term: Between 36 and 120 Between 36 and 84 Between 36 and 84
Guarantee. Backed by issuer Backed by issuer Backed by issuer
Payment: Negotiable. Transfer by
endorsement
Negotiable. Transfer by
endorsement
Negotiable. Transfer by
endorsement
- 70 -
The following is the detail of the bonds assumed by Helm Bank with the merger of Helm
Leasing:
June 30, 2013
Eleventh Issue I Eleventh Issue II Twelfth Issue I
Authorized 100,000 47,311 140,000
Nominal value 1,000 1,000 1,000
Current amount 15,898 19,801 9,448
Effective interest rate
Series A60 DTF + 3.10%
Series B84 CPI + 7.10%
Series D60 FT + 12.95%
Series D84 FT + 13.20%
Series A60 DTF + 3.20%
Series A84 DTF + 3.40%
Series B60 CPI + 6.50%
Series B84 CPI + 7.10%
Series B60 CPI + 5.70%
Series B84 CPI + 6.00%
Series A60 DTF + 2.05%
Series D60 FT + 11.50.%
Series D84 FT + 11.80%
Payment method DTF – TV, TF TV, CPI AV DTF - TV, CPI AV DTF - TV, CPI TV- TF TV
Redemption terms
Minimum 24 and maximum 84
months
Minimum 36 and maximum 84
months
Minimum 36 and maximum
84 months
Guarantee No specific guaranty other than
the issuer’s support
No specific guaranty other than the
issuer’s support
No specific guaranty other
than the issuer’s support
Payment
Negotiable. Transfer by
endorsement
Negotiable. Transfer by
endorsement
Negotiable. Transfer by
endorsement
Securities were registered at their nominal value with no premium or discount.
18. OTHER LIABILITIES
December 31, 2013
June 30, 2013
Consolidated labor obligations (1) $ 11,317.1 $ 9,327.1
Revenues received in advance 20,891.8 18,877.6
Deferred installments 4,460.3 7,807.0 Retirement pensions 83.1 78.5 Deferred income tax 36,006.7 26,314.9 Cancelled accounts 95.2 109.8 Installments to be applied to obligations 15,182.1 13,969.6 Cash surplus 119.9 113.0 Surplus in exchange 1.0 1.0 Consortia or joint ventures 255.7 325.4 $ 88,412.9 $ 76,923.9 (1) Labor obligations
Severance pay $ 4,206.9 $ 2,098.1
Interest on severance pay 492.4 124.4
Vacations 5,893.3 6,378.4
Vacation bonus 724.6 726.2
$ 11,317.1 $ 9,327.1
- 71 -
As of December 31 and June 30, 2013, the share of the Bank is 99% and 98.7%, respectively, in
other consolidated liabilities.
19. ESTIMATED LIABILITIES AND PROVISIONS
December 31,
2013 June 30,
2013 Severance pay $ - $ 149.9 Interest on severance pay - 9.0 Vacations 30.6 247.0 Legal bonus 10.30 34.4 Extra-legal bonus - 261.7 Bonuses 9,062.40 4,773.2 Seniority bonus 830.00 1,382.9 Other benefits 1,511.80 1,414.7 11,445.10 8,272.8 Taxes: Income and supplementary 57,853.30 76,606.9 Industry and commerce 3,815.10 3,239.2 Other taxes 116.3 116.3 61,784.7 79,962.4 Others: Interest 28.2 21.2 Contributions and affiliations 1,182.1 1,335.3 Penalties and fines 14,219.2 13,582.2 Miscellaneous 15,381.1 16,165.7 Minority interest 8.1 - 30,810.6 31,104.4 $ 104,048.5 $ 119,339.6 As of December 31 and June 30, 2013, the share of the Bank is 98% and 94.6% in consolidated
estimated liabilities and provisions, respectively.
20. EQUITY
Capital Stock- The capital of the Parent Company as of December 31, 2013 and June 30, 2013
is represented by 4,625,826,141 subscribed and paid-up shares, with a nominal value of $50
pesos, amounting to a total of $231,296.6.
In December 2007, the Bank conducted the public issuance of non-voting preferential shares
totaling $265,647.5, equivalent to 565,207,483 shares at an award price of $470 per share.
As of December 31 and June 30, 2013, the Bank has not repurchased its own shares.
- 72 -
Premium on paid-in capital- Corresponds to the difference between the value paid for the share
and its nominal value.
The shares’ placement premium for common shares is composed as follows:
December 31, 2013
June 30, 2013
Premium on paid-in capital for common shares $ 307,711.8 $ 307,711.8
Number of common shares 1,116,767,542 1,116,767,542
There was no increase for the second half of 2013
Thus Premium on paid-in capital for preferred shares consists of the following:
Premium on paid-in capital for preferred stock $ 226,387.9 $ 226,387.6
Number of preferred shares 571,749,459 571,749,459
The increase in the second half of 2013 was generated by the payment of dividends in shares
from the profits of June 2013, the subscription value of which was $538.67 pesos with a
nominal value of $50 pesos, generating $488.67 pesos per share over 469 shares.
Legal reserve - In accordance with legal provisions, the Bank and local Subordinated
companies must establish a legal reserve of 10% of liquid profits of each year up to 50% of the
subscribed capital, when intending to cover losses in excess of undistributed earnings. The
reserve cannot be used to pay dividends or to cover expenses or losses during the time in which
the entities have undistributed profits.
Other reserves – The increase in the first half of 2013 was generated by the payment of
dividends in shares from the profits of December 2012, the subscription value of which was
$500 pesos with a nominal value of $50 pesos, producing $450 pesos per share over $132,721
shares.
For tax positions $ 9,599.2 $ 2,785.9
For the protection of investments - 22,660.5
For the payment of dividends 14,346.8 168,350.2
$ 23,946.0 $ 193,796.6
Other reserves - Statutory and occasional reserves are available to the Shareholders’ Meeting of
the Bank and Subordinate Companies as appropriate.
- 73 -
21. CONTINGENT ACCOUNTS
Contingent accounts debit-
December 31, 2013
June 30, 2013
Loan portfolio interest $ 11,122.4 $ 14,444.4
Financial leasing interest 1,092.2 4,766.5
Securities handed over in closed and simultaneous
repo operations 205,212.3 164,254.1
Options rights – speculation 145,603.7 265,997.8
Fees and penalties in leasing agreements 440.8 1,608.3
Contributions pending 1.8 1.9
Fees receivable 3,755,478.6 3,615,266.4
Purchase options 159,998.2 161,368.0
Other contingencies 1,909.9 2,104.1
$ 4,280,859.9 $ 4,229,811.5
Contingent accounts- credit
Guaranties $ - $ -
Securities received from simultaneous repo
operations
503.1 30,456.2
Bank guaranties 418,719.7 353,036.8
Credit letters denominated in local currency 9,434.5 16,456.3
Credit letters denominated in foreign currency 65,411.9 110,964.0
Credit letters confirmed in local currency 59,643.9 39,924.7
Credit letters confirmed in foreign currency 3,577.4 103.0
Credit openings 996,074.1 894,179.4
Obligations from options 95,370.6 139,431.5
Other contingencies from creditors 26,916.0 26,916.0
$ 1,694,550.6 $ 1,611,467.9
22. MEMORANDUM ACCOUNTS
Debit:
Assets and securities handed over in custody $ 11,914.0 $ 10,422.7
Fair exchange price of primary covered long
positions 188,419.1 194,183.3
Assets and securities handed over as guaranty 2,370.0 783.1
Valuation of foreclosed assets 3,119.2 1,319.1
Remittances and/or other effects of payment 1,190.3 1,417.2
Assets written off 368,591.1 313,632.3
Bonds not placed 500,000.6 500,000.6
- 74 -
December 31, 2013
June 30, 2013
Inflation adjustment - assets 4,437.5 5,336.2
Distribution of subscribed and paid-up capital 231,291.3 231,296.6
Completely depreciated properties and equipment 43,469.8 35,086.7
Tax value of assets 351,441.7 351,294.5
Allowance for debtors in settlement processes 40.8 40.0
Marketable debt securities 348,110.8 345,984.2
Held to maturity investments 399,072.8 354,312.1
Investments available for sale 671,687.5 822,489.3
Other memorandum accounts – debit 298,469.4 204,046.4
$ 3,423,625.9 $ 3,371,644.3
Credit:
Assets and securities received in custody $ 1,317,871.9 $ 1,745,773.3
Assets and securities received over as security for
future loans 249,686.1 201,096.1
Guaranties pending payment 122,894.7 119,773.6
Assets and securities received as suitable guaranty 2,020,794.1 1,800,724.6
Assets and securities received as other guaranties 767,541.4 759,996.0
Payments received 16,639.6 69,563.4
Recoveries of assets 8,305.3 5,528.3
Adjustments due to mark to market of equity 83,107.7 83,107.7
Capitalization due to mark to market of equity 83,107.7 83,107.7
Return of negotiable fixed income investment 73,173.3 30,622.3
Tax value of equity 1,057,763.7 1,057,763.7
Rating of financial leasing agreements 2,519,130.6 2,485,058.2
Rating of operating leasing agreements 203,151.5 187,828.2
Rating of housing portfolio 28,155.9 18,962.1
Rating of consumer portfolio – suitable guaranty 72,155.7 45,231.5
Rating of consumer portfolio – other guaranties 1,485,306.0 1,392,337.5
Rating of commercial portfolio – suitable guaranty 167,478.0 133,904.4
Rating of commercial portfolio – other guaranties 6,570,742.0 6,661,657.3
Other memorandum accounts credit 4,278,697.1 4,088,778.5
$ 21,125,702.3 $ 20,970,814.4
23. TRANSACTIONS WITH RELATED PARTIES
The main shareholders, members of the Board of Directors and the companies where the Bank
holds investments over 10% or there are administrative, financial or economic interests, are
considered related parties. In addition, the companies where the shareholders or members of the
Board of Directors have an interest above 10% are also considered related parties.
The following is the detail of the operations with the related parties of Helm Bank S.A.
- 75 -
Operations held with shareholders - The following is the detail of the balances and payments
made to shareholders with a share greater than 10%:
December 31, 2013
June 30, 2013
Assets:
Loan portfolio $ 3.7 $ -
Treasury operations-swaps 481.7 -
Liabilities:
Deposits and financial claims $ - $ 6,0
Operations with Affiliates – As of June 30, 2013 and December 31, 2012, the following is the
detail of the assets and liabilities in operations held among the affiliates where the Bank has a
share of over 50%:
The operations held with the affiliates were carried out under the general conditions ruling in
the market for similar transactions.
Helm Comisionista de Bolsa S.A.: Liabilities: Deposits and financial claims $ 820.9 $ 3,743.2 Accounts payable 1.2 1.7 $ 822.1 $ 3,744.9 Helm Fiduciaria S.A.: Liabilities: Deposits and financial claims $ 2,701.0 $ 2,862.0 Accounts payable 1.2 1.2 $ 2,702.2 $ 2,863.2 Helm Bank Panama S.A.:
Assets:
Cash $ 366.5 $ 1,311.5
Helm Bank Cayman:
Liabilities:
Assets from market transactions $ - $ -
Helm Comisionista de Bolsa S.A.
Helm Bank S.A.:
Assets:
Cash $ 820.9 $ 3,743.2
Accounts receivable 1.2 1.6
$ 922.1 $ 3,744.8
- 76 -
December 31, 2013
June 30, 2013
Helm Bank Panama S.A.:
Assets:
Cash $ 5.5 $ 5.2
Helm Fiduciaria S.A.
Helm Bank S.A.:
Assets:
Cash $ 2,701.0 $ 2,862.0
Accounts receivable 1.2 1.2
$ 2,702.2 $ 2,863.2
Helm Bank Panama S.A.
Liabilities:
Deposits and financial claims $ 366.5 $ -
Helm Comisionista de Bolsa S.A.:
Liabilities:
Deposits and financial claims $ 5.5 $ 5.2
Helm Bank Cayman:
Liabilities:
Deposits and financial claims $ 666.8 $ 3,017.7
Helm Bank S.A.:
Assets:
Cash $ - $ -
Accounts receivable - -
$ - $ - Helm Bank Panama S.A.: Assets: Cash $ 666.8 $ 3,017.7 As of December 31, 2013 and June 30, 2012, the following is the detail of the revenues and
expenses in operations held among affiliates where the share of the Bank in each one of them is
greater than 50%:
Helm Bank S.A.
Helm Fiduciaria S.A.:
Operating revenues:
Commissions $ 4.2 $ 3.9
- 77 -
December 31, 2013
June 30, 2013
Non-operating revenues:
Leases $ 195.1 $ 174.7
Direct operating expenses:
Interest $ 83.4 $ 93.2
Commissions 6.8 5.5
Leases 116.6 118.1
$ 206.8 $ 216.8
Non-operating expenses:
Miscellaneous $ 11.8 $ -
Helm Comisionista de Bolsa S.A.:
Direct operating expenses:
Commissions $ 3.2 $ 4.4
Interest - -
Leases 35.5 10.1
$ 38.7 $ 14.5
Non-operating expenses
Leases $ 74.9 $ 73.5
Direct operating expenses:
Commissions $ 14.4 $ 39.0
Interest 38.7 53.5
$ 53.1 $ 92.5
Helm Bank Panama S.A.
Direct operating expenses:
Interest $ 1.7 $ 0.2
Helm Bank Cayman S.A.:
Direct operating expenses:
Interest $ - $ 1.5
Helm Fiduciaria S.A.
Helm Bank S.A.:
Direct operating expenses:
Interest $ 83.4 $ 93.2
Commissions 6.9 5.4
$ 90.3 $ 98.6
- 78 -
December 31,
2013 June 30,
2013
Non-operating revenues:
Leases $ 116.6 $ 118.1
Miscellaneous 11.8 -
$ 128.4 $ 118.1
Direct operating expenses:
Bank commissions $ 4.2 $ 3.9
Leases 195.1 174.7
$ 199.3 $ 178.6
Helm Comisionista de Bolsa S.A.:
Non-operating revenues:
Commissions $ - $ -
Helm Comisionista de Bolsa S.A.
Helm Bank S.A.:
Operating and non-operating revenues:
Returns $ 38.7 $ 53.5
Commissions 14.4 39.0
$ 53.1 $ 92.5
Direct operating expenses:
Leases $ 110.4 $ 83.6
Non-operating expenses
Miscellaneous-Others $ 3.2 $ 4.4
Helm Fiduciaria S.A.:
Operating expenses:
Advertising $ - $ -
Helm Bank Panama S.A.
Helm Bank S.A.:
Direct operating revenues:
Interest $ - $ -
Helm Bank Cayman S.A.:
Direct operating revenues:
Commissions $ 1.7 $ 0.2
- 79 -
December 31, 2013
June 30, 2013
Helm Bank Cayman S.A.
Helm Bank S.A.:
Direct operating revenues:
Interest $ - $ 1.5
Helm Bank Panama S.A.:
Direct operating expenses:
Commissions $ 0.1 $ 0.2
Operations with associates - then detailed balances and significant commitments to
transactions with partners:
June 30
Portfolio Deposits
Gecolsa S.A. $ 41,637.3 $ 10,568.2
Parques y Funerarias 1.6 32.2
Inversiones e Inmobiliaria - 240.3
Recordar Prevision Exequial 28.9 73.1
Colempresas S.A. 991.7 55.0
$ 42,659.5 $ 10,968.8
24. OTHER OPERATING INCOME AND EXPENSES
Other operating revenues:
Discount to suppliers $ 73.3 $ 89.8
Recoveries of portfolios 86,568.2 39,188.0
Recoveries of accounts receivable 13,716.8 5,149.4
Sale of check books 2,917.7 2,980.6
Commercial information 31.9 30.9
Wires, transportation and telephones 110.6 104.1
Joint ventures 446.8 648.2
Others 9,161.1 10,197.3
Financial component of financial leasing 162,520.2 163,872.7
$ 275,546.6 $ 222,261.0
Other operating expenses:
Taxes $ 33,254.9 $ 30,244.1 Contributions and affiliations 6,184.9 5,682.3 Insurance 18,765.5 17,165.8 Maintenance and repairs 13,325.1 11,658.4 Adaptations and installations 213.4 202.9 Cleaning and surveillance service 2,458.5 2,345.9 Temporary services 1,896.0 1,769.2 Depreciation of leasing assets 27,963.5 25,563.1
- 80 -
December 31, 2013
June 30, 2013
Advertising and publicity 3,584.9 3,029.4 Public relationships 294.9 294.9 Utilities 2,052.0 2,151.3 Electronic data processing 4,659.5 4,264.9 Travel expenses 415.6 359.9 Transportation 3,586.9 3,231.9 Supplies and stationery 1,617.9 1,559.7 Joint ventures 232.0 228.8 Donations 2.8 595.7 Administration costs for acquisition of Visa 1,014.9 841.3 Promotion - Credimillas 2,801.8 2,402.7 Administration costs of Visa issuer 3,109.7 2,610.7 Administration costs of MasterCard issuer 2,570.8 2,205.8 Costs of ATMs 510.6 496.7 Property management fees 715.8 720.2 Others 9,289.3 8,073.6 $ 140,521.2 $ 127,699.2
25. OTHER PROVISIONS
Cash $ 35.9 $ 221.3
Financial leasing assets - 161.0
Foreclosed Assets 5,832.9 4,266.0
Properties and equipment 903.4 -
Communications service 142.4 473.6
Others 349.4 232.4
$ 7,264.0 $ 5,354.3
26. NON-OPERATING INCOME AND EXPENSES
Non-operating income
Income from sale of assets foreclosed assets (1) $ 1,853.8 $ 7,238.8 Income from sale of properties and equipment 8,153.0 489.6 Income from sale of other assets 53.8 - Leases 1,518.1 1,094.2 Recoveries: Portfolio written-off (2) 8,305.3 5,528.3 Reimbursement of properties and equipment 322.1 72.4 Reimbursement of foreclosed assets 2,661.9 1,075.5 Other recoveries (3) 2,046.8 8,098.2 Stand-alone trust fund - 63.1 Consortium and Joint Ventures 311.1 - Interbank cash 62.9 1,252.0 Other revenues 576.0 10.8 $ 25,864.8 $ 24,922.9
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(1) As of December 31, 2013 it mainly corresponds to the profits generated from the relocation and realization of
movable and immovable assets reinstated in leasing agreements amounting to $735.5 and $1,118.3,
respectively. As of June 30, 2013, it mainly corresponds to the profits generated from the relocation and
realization of properties reinstated in leasing agreements, for a value of $6,860.9.
(2) As of December 31, 2013 it corresponds to recoveries of portfolios written-off in previous periods for
products of the ordinary portfolio for $4,382.8, credit card for $1,030.8, revolving loan for $1,558.9, leasing
portfolio for $1,290.1 and overdrafts for $42.7. As of June 30, 2013 it corresponds to recoveries of portfolios
written-off in previous periods for products of the ordinary portfolio for $3,336.8, credit card for $784.0,
overdraft for $19.8, leasing operations for $444.8 and revolving loan for $942.9.
(3) As of December 31, 2013, it mainly corresponds to: VISA insurance policy payment for $625.0, payment of
account payable for $164.1, reinstatement of other provisions for $309.1, reinstatement of provision for other
assets for $44.3, recoveries from claims for $263.0 and reinstatements from prior years for $641.3. As of June
30, 2013, it mainly corresponds to: Higher value provisioned in December 2012 for the Finance
Superintendency support fee for $206.7, reinstatement of interest on refinanced leasing agreements completed
in the second half of 2012 for $531.4, legalization of reconciliatory items for the sale of assets reinstated for
$190.1, reinstatement of provisions from previous years for $196.1, recoveries from claims for $460.6,
reinstatement of provision for other assets for $223.8 and reinstatement of tax provisions for $6,289.5.
Non-operating expenses and costs:
December 31, 2013
June 30, 2013
Loss in sale of foreclosed assets $ 1,299.4 $ 714.1
Loss in sale of properties and equipment 226.1 303.5
Loss from accidents – operating risk 1,472.9 1,643.5
Penalties and fines 1,366.1 1,129.0
Interest on fines 3.4 57.6
Expenses from assets received in lieu of payment 771.5 547.9
Amortization of cost surplus 731.0 967.9
Interbank cash - -
Others 1,650.0 1,077.5
$ 7,520.4 $ 6,441.0
27. INCOME TAX PROVISION
The submission of consolidated information in income statements is not permitted by
Colombian tax rules; therefore, tax losses from a consolidated subordinate cannot be used to
offset the taxable income of another consolidated subordinate. The income tax rate for
December 31 and June 30, 2013 is 34%, for Helm Bank S.A. and other local Subordinated
companies.
For the purposes of the calculation of the income tax, since 1999 it is presumed that the taxable
income will not be less than three percent of the liquid equity of the last day of the immediately
preceding year; exempt income can be deducted from this figure. Inflation-adjusted tax losses
recorded as of December 31, 2002 can also be offset.
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In accordance with Law 863/2003, the Parent Company is subject to the transfer pricing regime
for operations conducted with foreign economic related parties. No additional tax is expected as
a result of the 2012 transfer pricing study.
Tax reform – Below, the main changes to the tax system from 2013, introduced by Law 1607
of December 26, 2012 are summarized:
1. The income tax rate reduces from 33% to 25% since 2013;
2. The income tax for equity (CREE) is created since 2013. This tax is calculated based on the
gross revenues obtained, minus non-income revenues, costs, deductions, exempt income
and occasional earnings; at a rate of 9% until 2015 and 8% for the following years. For the
years 2013, 2014 and 2015 the applicable rate will be 9%. The offset of tax losses or
excesses of presumptive income are not permitted in the determination of the basis for the
liquidation of the CREE tax;
3. Legal entities subject to the income tax are exempt from the payment of parafiscal
contributions in favor of the National Learning Service – SENA and the Colombian Family
Welfare Institute - ICBF, corresponding to workers who earn, considered individually, up
to 10 minimum legal wages in force. This exemption begins from the implementation of
the income withholdings system for the collection of the income tax for equity CREE (and
in any case, before July 1, 2013);
4. It is established that solely for tax purposes, the references contained in the tax rules
relating to accounting standards will continue in force during the four years following the
entry into force of the International Financial Reporting Standards (2015);
5. The concept of permanent establishment is defined as a fixed location where a foreign
company performs its businesses in the country;
6. The procedure for calculating taxed and untaxed profits for companies that distribute
profits to their partners or shareholders is modified; and,
7. New rules concerning the transfer pricing regime in operations with economic related
parties located in trade free zones are introduced and certain operations of taxpayers with
foreign entities connected with a permanent establishment in Colombia or abroad are
regulated.
28. RATIO OF ASSETS WEIGHTED BY RISK LEVEL – TECHNICAL EQUITY
The technical equity cannot be less than 9% of assets in national and foreign currency weighted
by credit and market risk level, as stated in Article 2 of Decree 1720/2001. Compliance is
verified on a quarterly and consolidated basis with its Subordinated companies.
The classification of risk assets in each category is carried out by applying the percentages
determined by the Finance Superintendency for each of the items of assets, contingent accounts,
businesses and trust accounts established in the Sole Chart of Accounts (PUC).
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As of December 31 and June 30, 2013, the ratio achieved by the Bank and its Subordinated
companies was of 11.18% and 11.26%, respectively.
Furthermore and taking into account the new regulations for the calculation of the solvency
margin of Decree No. 1771/2012, the Management charged a total of $154,0 to the Legal
Reserve from retained earnings in the month of July 2013.
29. SUBSEQUENT EVENTS
The purchase of most of the shareholding of Helm Bank and its subsidiaries by Banco
CorpBanca Colombia was formalized on August 6, 2013.
Banco CorpBanca Colombia belongs to Grupo Saieh, one of the leading economic
conglomerates in Chile. Its founder, Alvaro Saieh, has close ties with Colombia. CorpBanca
Colombia is part of CorpBanca Chile, an entity that the Superintendency of Banks and
Financial Institutions of Chile ranks as the fourth largest private bank in that country for
placements exceeding US$20,687 million as of June 30, 2013. It is an economic agent with a
team of over 3,500 collaborators, with which it has achieved a market share of ten percent
(10%).
Helm Bank and CorpBanca Colombia will continue operating independently in terms of the
service of branches, operational and technological processes, as well as in the offering of
products and services, in respect of which no integration processes will be undertaken in the
short term.
Banco CorpBanca Colombia has already established the management team that will be
responsible for the direction of the future integrated bank.