45. Contingent liabilities and off-balance sheet liabilities received and granted

Accounting policies

As part of its operating activities the Group concludes transactions which, at the time of conclusion, are not recognised as assets or liabilities in the statement of financial position, but which give rise to contingent liabilities. Pursuant to IAS 37 a contingent liability is:

  1. a potential obligation resulting from past events whose existence will be confirmed at the moment of occurrence or non-occurrence of one or more uncertain future events which are not fully under the Group’s control; or
  2. a current obligation which arises as a result of past events but is not recognised in the statement of financial position because it is not probable that cash or other assets would have to be expended to meet the obligation or the amount of the liability could not be assessed reliably.

In accordance with IAS 37 upon initial recognition a financial guarantee agreement is measured at fair value.

Financial information

Securities covered with underwriting agreements (maximum liability of the Group to acquire securities)

Issuer of securities underwrittenType of underwritten securitiesOff-balance sheet liabilities resulting from underwriting agreementContract period
As at 31 December 2016   
Company Acorporate bonds1 125.731.12.2020
Company Bcorporate bonds1 055.031.07.2020
Company Ccorporate bonds512.015.06.2022
Company Dcorporate bonds69.431.12.2022
Company Ecorporate bonds9.031.12.2026
Total  2 771.1  

Issuer of securities underwrittenType of underwritten securitiesOff-balance sheet liabilities resulting from underwriting agreementContract period
As at 31 December 2015   
Company Acorporate bonds1 950.031.12.2020
Company Bcorporate bonds1 055.031.07.2020
Company Ccorporate bonds342.715.06.2022
Company Dcorporate bonds80.631.12.2022
Company Fcorporate bonds60.023.11.2021
Company Gcorporate bonds28.231.12.2029
Company Ecorporate bonds17.931.12.2026
Company Hcorporate bonds4.431.01.2016
Company Icorporate bonds3.430.09.2030
Total  3 542.2  

All contracts relate to the Agreement for Organization, Conducting and Servicing of the Bond Issuance Programme.

All securities of the Group under the underwriting programme have an unlimited transferability, are not listed on the stock exchange and are not traded on a regulated OTC market.

Contractual commitments

Value of contractual commitments concerning:31.12.201631.12.2015
   
intangible assets36.5178.9
tangible fixed assets23.650.3

Loan commitments granted

Nominal value of loan commitments granted31.12.201631.12.2015
   
Credit lines and limits  
to financial entities2 763.32 306.2
to non-financial entities39 525.036 157.8
to public entities3 856.34 080.4
   
Total 46 144.6 42 544.4
of which: irrevocable loan commitments31 077.930 513.9
 

Guarantee liabilities granted

Guarantees and pledges31.12.201631.12.2015
   
Guarantees in domestic and foreign trading6 060.27 555.8
Guarantees and pledges granted – domestic corporate bonds3 768.64 930.6
Letters of credit granted1 599.51 838.1
Guarantees and pledges granted - payment guarantee to financial entities150.9143.6
Guarantees and pledges granted - domestic municipal bonds351.359.3
   
Total 11 930.5 14 527.4
of which performance guarantees granted2 446.92 378.4
 

Information about the provisions recognised for off-balance sheet financial and guarantee liabilities is presented in note ‘Provisions’.

Liabilities granted by maturity

Off-balance sheet liabilities granted by
maturity - 31.12.2016
up to 1 monthfrom 1 month to 3 monthsfrom 3 months to 1 yearfrom 1 year to 5 yearsover 5 yearsTotal
       
Loan commitments granted13 809.82 542.612 354.310 993.06 444.946 144.6
Guarantee liabilities granted265.5575.93 722.16 667.9699.111 930.5
       
Total 14 075.3 3 118.5 16 076.4 17 660.9 7 144.0 58 075.1

Off-balance sheet liabilities granted by maturity - 31.12.2015up to 1 monthfrom 1 month to 3 monthsfrom 3 months to 1 yearfrom 1 year to 5 yearsover 5 yearsTotal
       
Loan commitments granted28 969.3814.83 746.72 897.46 116.242 544.4
Guarantee liabilities granted1 415.11 604.02 220.18 613.5674.714 527.4
       
Total 30 384.4 2 418.8 5 966.8 11 510.9 6 790.9 57 071.8

Off-balance sheet liabilities received

Off-balance sheet liabilities received by nominal value31.12.201631.12.2015
   
Financial303.5505.3
Guarantees7 972.36 831.1
   
Total liabilities received 8 275.8 7 336.4
 

Due to the provisions of the Agreement which require the Nordea Bank AB Group (publ) to participate in the default risk of the Mortgage Portfolio, on 1 April 2014, PKO Bank Polski SA and Nordea Bank AB (publ) concluded a special indemnity agreement (the ‘Special Indemnity Agreement’), according to which Nordea Bank AB (publ) covers, for a period of 4 years following the Closing Date, 50% of the excess of the Mortgage Portfolio cost of risk over the annual cost of risk set at 40 basis points for each year of the above-mentioned four-year contract period of the Special Indemnity Agreement.

As a part of works related to the settlement of the transaction, the Group has made a valuation of the Special Indemnity Agreement on the basis of conducted analysis of probability of cash flows arising from the Agreement. The estimated expected value is zero.

Right to sell or pledge collateral established for the Group

As at 31 December 2016 and as at 31 December 2015, there was no collateral established for the Group which the Group was entitled to sell or encumber with another pledge in the event of fulfilment of all obligations by the owner of the collateral.