International Financial Reporting Standards The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. Amaro Gomes Jan Engstrom Board Members Instrumentos Financieros Seminario sobre Normas Internacionales de Informacion Financiera Superintendencia de Entidades Financieras y Cambiarias Buenos Aires, 30 y 31 de Agosto de 2010

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Project summary Why? Brief piece of history... Enhancing financial instruments accounting (replace IAS 39): –Phase I: Classification and measurement –Phase II: Impairment –Phase III: Hedge accounting Other related issues: –Financial instruments with characteristics of equity –Offsetting –Derecognition—Disclosures

International Financial Reporting Standards The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. Phase I: Classification and measurement

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK IFRS 9 — financial assets Fair Value (No impairment) Amortised cost (one impairment method) Contractual cash flow characteristics Entity’s business model for managing + FVO for accounting mismatch (option) All other instruments: Equities Derivatives Some hybrid contracts … Equities: OCI presentation available (alternative) Reclassification required when business model changes Overview of classification model

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 5 Financial liabilities — background Seek input on best way to address ‘own credit’ Feedback on ED: Financial liabilities ‘not broken’ Financial liabilities less urgent Need to address ‘own credit’

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 6 Financial liabilities - ED Retain IAS 39 measurement requirements: –Held for trading  fair value through P&L –Hybrid liabilities  bifurcation –‘Vanilla’ liabilities  amortised cost –Maintain FVO BUT Separate out ‘own credit risk’ only if used FVO – done today for disclosure IFRS 7 (IFRS 7 B4)... ‘Own credit risk’ :

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 7 Financial liabilities ED Profit or Loss (liabilities under FVO) Total change in FVXX Change in FV due to ‘own credit’ (X) Profit for the yearXXX Statement of Comprehensive Income (liabilities under FVO) Other Comprehensive Income: Change in FV due to ‘own credit’* X * Not recycled Financial liability on balance sheet at (full) fair value

International Financial Reporting Standards The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. Phase II: Impairment

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 9 Impairment of financial assets Board redeliberations Feedback analysis (from comment letters, EAP meetings, other outreach, and user survey) November 2009 December 2010 December 2009 June 2010 September 2010 ED issued with 8 month comment period Expert Advisory Panel (EAP) meetings, other outreach, user survey, and webcasts

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Expected cash flow approach Main features: –interest revenue is recognised on the basis of expected cash flows (including initial expected credit losses) –impairment results from an adverse change in credit loss expectations –reversal of impairment loss when expectations change favourably –re-estimation of expected cash flows each period end

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Major operational issues identified Major operational issue #1: Allocation of initial expected losses (EL) Potential simplification: ‘decoupling’ of interest and credit loss calculations Major operational issue #2: Estimating lifetime expected loss Major operational issue #3: Application of impairment model to open portfolios

International Financial Reporting Standards The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. Phase III: Hedge accounting

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Hedge Accounting – broad direction Approach: –General hedge accounting first –Modification of fair value hedge accounting –Simplification of cash flow hedge accounting mechanics –Important issues: –Hedge effectiveness –Elegibility –Portfolio hedge accounting Not change hedges of net investments in foreign operations

International Financial Reporting Standards The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. FASB’s Financial Instruments Model

International Financial Reporting Standards The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation © 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. Offsetting& Derecognition—Disclosures

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Derecognition—Disclosures Exposure draft published March 2009 Stakeholders’ concerns (eg Basel Committee and the Financial Stability Board) Objectives: –Understand relationship assets and liabilities –Evaluate risks of continuing involvement

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Summary - Project timelines Projects Q3Q4Q1Q2H2 Derecognition—disclosures IFRS Classification and Measurement —financial liabilities IFRS IFRS 9 Impairment IFRS Hedge accounting ED Offsetting ED

© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK Questions or comments? Expressions of individual views by members of the IASB and its staff are encouraged. The views expressed in this presentation are those of the presenter. Official positions of the IASB on accounting matters are determined only after extensive due process and deliberation.