Home' Trinidad and Tobago Guardian : January 26th 2017 Contents FirstCaribbean International Bank
(Trinidad and Tobago) Limited
For the year ended October 31, 2016 (Expressed in TT Dollars)
NOTES TO THE FINANCIAL STATEMENTS (continued)
2. Basis of preparation and summary of significant accounting policies (continued)
2.4 Summary of significant accounting policies (continued)
17. General reserve
The Bank has established a general reserve for loan losses in accordance with the guidelines issued by the
Central Bank of Trinidad and Tobago. The reserve has been calculated at one half of one percent of the
loan balance at the year-end after deductions of specific provisions. This reserve has been accounted for
as a general reserve through an appropriation of retained earnings.
18. Statutory reserve
The Financial Institutions Act, 2008 requires that a minimum of 10% of profit after deduction of taxes
must be transferred to a Statutory Reserve Fund until the balance on this reserve is not less than the paid
19. Statutory deposits with the Central Bank
In accordance with the provisions of the Financial Institutions Act, 1993, the Bank is required to maintain
a deposit account (known as a Cash Reserve Account) in relation to its deposit and other prescribed
liabilities with the Central Bank of Trinidad and Tobago, which at present, is equivalent to 17% (2015:
17%) of deposit and other prescribed liabilities. This Cash Reserve Account is non-interest bearing.
In addition, the Bank is required to maintain a Secondary Reserve Account and a Special Deposit Account
with the Central Bank from time to time, both of which are interest bearing. At present, the Secondary
Reserve Account is equivalent to 2% of deposits and other prescribed liabilities. The Special Deposit
Account is determined by the Central Bank, from time to time, based upon the Bank's reserve
20. Segment reporting
Business segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker is the person or group that allocates
resources to and assesses the performance of the operating segments of an entity. The Bank has
determined the Bank's Country Management Committee as its chief operating decision maker.
All transactions between business segments are conducted on an arm´s length basis, with intra-segment
revenue and costs being eliminated in head office. Income and expenses directly associated with each
segment are included in determining business segment performance.
In accordance with IFRS 8: Operating Segments, the Bank has the following business segments: Wholesale
Banking, Wealth management and Administration.
21. Fair value measurement
The Bank measures financial instruments, such as, derivatives, and available for sale investment securities
at fair value at each balance sheet date. Also, fair values of financial instruments measured at amortised
cost are disclosed in Note 24. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer
the liability takes place either:
The principal or the most advantageous market must be accessible to by the Bank. The fair value of an
asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use. The Bank uses valuation techniques that
are appropriate in the circumstances and for which sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Bank
determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
Where necessary comparative figures have been adjusted to comply with changes in presentation in the
23. Future changes in accounting policies
Certain new standards and amendments to existing standards have been published that are mandatory
for the Bank's accounting periods beginning on or after 1 November 2015.
Of these, the following are relevant to the Bank but have not been early adopted. Management is
considering the implications of these new standards, the impact on the Bank and timing of their adoption.
IFRS 9 Financial instruments - In July 2014, the IASB issued the final version of IFRS 9 Financial
Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous
versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments
project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual
periods beginning on or after 1 January 2018, with early application permitted. Except for hedge
accounting, retrospective application is required but providing comparative information is not
compulsory. For hedge accounting, the requirements are generally applied prospectively, with some
The Bank elected to early adopt the new standard effective 1 November 2017 in keeping with its ultimate
parent CIBC who has elected to early adopt due to OSFI (Office of the Superintendent of Financial
Institutions) regulations. During 2016, the Bank performed a high-level impact assessment of all three
aspects of IFRS 9. This preliminary assessment is based on currently available information and may be
subject to changes arising from further detailed analyses or additional reasonable and supportable
information being made available to the Bank in the future. Overall, the Bank expects no significant
impact on its statement of financial position and equity except for the effect of applying the impairment
requirements of IFRS 9. The Bank expects a higher loan loss allowance resulting in a negative impact on
equity and will perform a detailed assessment in the future to determine the extent.
IFRS 14 Regulatory deferral accounts - IFRS 14 is an optional standard that allows an entity, whose
activities are subject to rate-regulation, to continue applying most of its existing accounting policies for
regulatory deferral account balances upon its first-time adoption of IFRS. Entities that adopt IFRS 14 must
present the regulatory deferral accounts as separate line items on the statement of financial position and
present movements in these account balances as separate line items in the statement of profit or loss and
other comprehensive income. The standard requires disclosures on the nature of, and risks associated
with, the entity's rate-regulation and the effects of that rate-regulation on its financial statements. IFRS 14
is effective for annual periods beginning on or after 1 January 2016. Since the Bank is an existing IFRS
preparer, this standard would not apply.
IFRS 15 Revenue from Contracts with Customers - IFRS 15 was issued in May 2014 and establishes
a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15
revenue is recognised at an amount that reflects the consideration to which an entity expects to be
entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a
more structured approach to measuring and recognising revenue. The new revenue standard is applicable
to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or
modified retrospective application is required for annual periods beginning on or after 1 January 2017
with early adoption permitted. The Bank is currently assessing the impact of IFRS 15 and plans to adopt
the new standard on the required effective date.
Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests - The
amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint
operation, in which the activity of the joint operation constitutes a business must apply the relevant IFRS
3 principles for business combinations accounting. The amendments also clarify that a previously held
interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint
operation while joint control is retained. This amendment does not apply to the Bank.
IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the
reporting entity, are under common control of the same ultimate controlling party. The amendments apply
to both the acquisition of the initial interest in a joint operation and the acquisition of any additional
interests in the same joint operation and are prospectively effective for annual periods beginning on or
after 1 January 2016, with early adoption permitted. These amendments are not expected to have any
impact to the Bank.
Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and
Amortisation - The amendments change the accounting requirements for biological assets that meet the
definition of bearer plants. Under the amendments, biological assets that meet the definition of bearer
plants will no longer be within the scope of IAS 41. Instead, IAS 16 will apply. After initial recognition,
bearer plants will be measured under IAS 16 at accumulated cost (before maturity) and using either the
cost model or revaluation model (after maturity). The amendments also require that produce that grows
on bearer plants will remain in the scope of IAS 41 measured at fair value less costs to sell. For
government grants related to bearer plants, IAS 20 Accounting for Government Grants and Disclosure of
Government Assistance will apply. The amendments are retrospectively effective for annual periods
beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected
to have any impact to the Bank as the Bank does not have any bearer plants.
Amendments to IAS 27: Equity Method in Separate Financial Statements - The amendments will
allow entities to use the equity method to account for investments in subsidiaries, joint ventures and
associates in their separate financial statements. Entities already applying IFRS and electing to change to
the equity method in its separate financial statements will have to apply that change retrospectively. For
first-time adopters of IFRS electing to use the equity method in its separate financial statements, they will
be required to apply this method from the date of transition to IFRS. The amendments are effective for
annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments
will not have any impact on the Bank's financial statements.
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