REG - Alpha Bank A.E. - Annual Financial Report <Origin Href="QuoteRef">ACBr.AT</Origin> - Part 14
31/03/2017 07:07
- Part 14: For the preceding part double click ID:nRSe0956Bm
E 251,017 (31.12.2015: E 338,680).
Finally, within 2016, the Bank securitized corporate loans to small and medium enterprises, through Alpha Proodos DAC, a
fully consolidated special purpose entity. These loans continue to be recognized in loans and advances to customers
considering that the Group retains the risks and rewards of these, by owning the subordinated bonds and the entitlement of
deferred consideration. The carrying value of the above securitized loans and the bonds issued from the special purpose
entity that are not owned amounts to E 627,302 and E 320,053 at 31.12.2016, respectively. On 31.12.2016, fair value of
loans amounts to E 570,411 and E 319,616 for the bonds respectively.
b) Sale and repurchase agreements of debt securities
The Group on 31.12.2016 proceeded with the transfer of Greek Government Treasury Bills, bonds of other issuers, bonds of
other countries and EFSF bonds with a repurchase agreement. These securities are still included in the Group's investment
portfolio and the respective figures are presented in the following table.
31.12.2016
Avalaible for sale portfolio Held to Maturity portfolio
Greek Government Treasury Bills Bonds of other issuers Bonds of other countries Bonds EFSF
Carrying amount of transferred securities 355,164 297,213 11,602 200,672
Carrying amount of related liability (210,055) (193,004) (8,855) (209,390)
Fair value of transferred securities 355,164 297,213 11,602 206,982
Fair value of related liability (210,055) (193,004) (8,855) (209,390)
Equity 145,109 104,209 2,747 (2,408)
31.12.2015
Avalaible for sale portfolio Held to Maturity portfolio
Greek Government Treasury Bills Bonds of other issuers Bonds of other countries Bonds EFSF
Carrying amount of transferred securities 422,013
Carrying amount of related liability (269,292)
Fair value of transferred securities 422,013
Fair value of related liability (269,292)
Equity 152,721
The Group on 31.12.2015 proceeded with the transfer of bonds of other issuers with a repurchase agreement. These securities
are still included in the Group's investment portfolio and the respective figures are presented in the above table.
41.6. Offsetting financial assets - liabilities
The following tables present derivative transactions under contracts of the International Swaps and Derivatives Association
(ISDA), which are signed with credit institutions as counterparties. In accordance with these contracts, the Group is able
to offset its assets and liabilities relating to a counterparty in case of a credit default.
Financial assets subject to offsetting
31.12.2016
Gross amount of recognized financial assets Gross amount of recognized financial liabilities offset Net amount of financial assets presented in the balance sheet Related amounts not offset Net amount
Financial instruments Cash collateral received
Derivatives 512,898 512,898 (206,892) (22,100) 283,906
On 31.12.2016 the Group possesses a reverse repo with a book value of E 50.48 million with a counterparty, with whom there
is a valid global master repurchase agreement, but there is no corresponding financial liability or a cash collateral for
possible offsetting.
31.12.2015
Gross amount of recognized financial assets Gross amount of recognized financial liabilities offset Net amount of financial assets presented in the balance sheet Related amounts not offset Net amount
Financial instruments Cash collateral received
Derivatives 682,676 682,676 (497,643) (53,942) 131,091
Financial liabilities subject to offsetting
31.12.2016
Gross amount of recognized financial liabilities Gross amount of recognized financial assets offset Net amount of financial liabilities presented in the balance sheet Related amounts not offset Net amount
Financial instruments Cash collateral given
Derivatives 1,326,826 0 1,326,826 (206,892) (1,115,828) 4,105
31.12.2015
Gross amount of recognized financial liabilities Gross amount of recognized financial assets offset Net amount of financial liabilities presented in the balance sheet Related amounts not offset Net amount
Financial instruments Cash collateral given
Derivatives 1,527,244 0 1,527,244 (497,643) (1,019,181) 10,420
Reconciliation of the net amount of financial assets and liabilities presented in the balance sheet
31.12.2016
Note Net amount presented in the balance sheet Carrying amount of financial assets in the balance sheet Financial assets not in scope of offsetting disclosures
Type of financial asset
Derivatives 16 512,898 634,323 121,425
31.12.2016
Note Net amount presented in the balance sheet Carrying amount of financial liabilities in the balance sheet Financial assets not in scope of offsetting disclosures
Type of financial liability
Derivatives 16 1,326,826 1,336,227 9,401
31.12.2015
Note Net amount presented in the balance sheet Carrying amount of financial assets in the balance sheet Financial assets not in scope of offsetting disclosures
Type of financial asset
Derivatives 16 682,676 793,015 110,339
31.12.2015
Note Net amount presented in the balance sheet Carrying amount of financial liabilities in the balance sheet Financial assets not in scope of offsetting disclosures
Type of financial liability
Derivatives 16 1,527,244 1,550,529 23,285
42. Recapitalization framework - Restructuring Plan
Recapitalization framework
On 23.7.2015, Law 4335/2015 was voted that incorporates European Directive 2014/59, in relation to recovery and resolution
of credit institutions and investment firms. This Directive established a set of rules to deal with banking crises across
the EU, in order to avoid significant adverse effects on financial stability and to ensure that shareholders and creditors
(including unsecured depositors) will share the burden of a potential recapitalization and/or the liquidation of troubled
banks.
In accordance with Law 4335/2015 the Bank of Greece is designated as the resolution authority and has the power to apply
resolution tools and exercise resolution powers.
The main resolution tools provided by Law that may be applied individually or in any combination, in cases where the
institution is considered insolvent or under imminent insolvency threat, are the following:
• the sale of business tool,
• the bridge institution tool,
• the asset separation tool (the legal framework states that this tool should be applied only in conjunction with other
resolution tools), and
• the bail-in tool (write-down or/and conversion of capital instruments and liabilities).
Exceptionally, however, Law 4335/2015 provides that in cases of exceptional systemic crisis the Ministry of Finance has the
ability to provide extraordinary state financial support through state financial stabilization measures.
Where the institution is not insolvent or on imminent insolvency situation, it may receive capital support for preventive
recapitalization purposes. The support measures in this case have a preventive and temporary nature and are limited to the
necessary funds to overcome the capital shortfall that derived from stress tests or asset quality review.
In this context, on 1.11.2015 came into force, pursuant to Law 4340/2015, some amendments to the provisions of Law
3864/2010 for the operation of the Financial Stability Fund. These changes, among others, laid the conditions for providing
capital support for preventive recapitalization purposes to Greek banks by the Financial Stability Fund.
In particular, in order for a credit institution to be eligible to receive preventive capital support, the following two
conditions must be met:
• coverage of the Capital Requirements for Existing Losses (base scenario) and
• mandatory burden sharing for holders of capital instruments and other liabilities of the receiving institution, without
these measures to cause or trigger contractual clauses or to account for as non-fulfillment of contractual obligations.
In particular with respect to capital support, this is provided through the participation of the Fund in the share capital
increase of the credit institution through the issuance of common shares with voting rights or the issuance of contingent
convertible bonds or other convertible instruments.
During the year and due to significant deterioration of the economic environment the need of recapitalization of Greek
credit institutions arose based on the above framework.
The Group covered the total of its capital needs through an exchange offer for securities issued and share capital increase
of the Bank with cash.
Specifically, on 28.10.2015 the Bank announced separate invitations to holders of all outstanding series of securities
issued by the Group's subsidiaries, Alpha Credit Group Plc, Emporiki Group Finance Plc and Alpha Group Jersey Limited to
offer all outstanding securities for exchange with non-transferable receipts issued by the Bank (Liability Management
Excersice).
The Proposal concerned Senior securities of E 985 million and Subordinated and Hybrid securities of a total amount of
E 100.9 million. The total amount of securities to be exchanged amounted to about E 1.1 billion.
Through the exchange offers funds amounting to E 1,011 million arose which oversubscribed the capital needs of the basic
scenario as these arose from the Comprehensive Assessment which was conducted by the Single Supervisory Mechanism.
Furthermore, on 25.11.2015, the Bank completed its share capital increase through a private placement to qualified and
other eligible investors, which amounted to E 1,552 million.
The total funds raised, amounting to E 2,563 million, covered the basic and adverse scenario and as a result the Bank did
not receive capital support for preventive recapitalization purposes.
Restructuring Plan
After the respective request of the Directorate-General Competition (DG Comp) of the European Committee on 21 September
2015, the Bank proceeded in reconsideration of the Restructuring Plan so as to represent the current conditions, including
the recapitalization of the Bank. The revised Restructuring Plan was approved by the DG Comp on 26 November 2015.
The revised Restructuring Plan includes the following main commitments for the Bank:
• Reduction of the number of branches in Greece up to a maximum of 563 by the end of year 2017.
• Limiting the number of employees in Greece, in banking and non-banking activities, up to a maximum of 9,504 by the end
of year 2017.
• Reduction of the total costs ot the Bank in Greece (Greek banking and non-banking activities) up to a maximum amount of
E 933 million, by the end of the year 2017, with the exemption of redundancy scheme costs and costs related to the Bank's
contribution in favor of deposit guarantee funds or resolution funds.
• Reduction of the cost of funding through the decrease of cost of deposits collected in Greece, taking into account the
macroeconomic factors at each time
• To further strengthen Bank's balance sheet through compliance to net loans to deposits ratio, up to a maximum of 119%
on 31 December 2018, as regards to Greek banking activities.
• Reduction of the total size of the portfolio of foreign assets by 30 June 2018.
• Restriction on providing additional capital to foreign subsidiaries.
• Divestment of listed and unlisted companies' securities portfolio (except for specific cases).
• Reduction of the Bank's venture portfolio to E 40 million up to the end of year 2017.
• Restriction on the purchase of non-investment grade securities.
• Apply a maximum limit of annual remuneration packages that the Bank pays to any employee or manager up to the end of
year 2017.
• Adoption of guidelines regarding Group credit policy, and the corporate governance framework, as well as, other
commitments, which include restrictions on Bank's ability to proceed to specific acquisitions.
It is noted that in the revised Restructuring Plan there are no longer restrictions on the distribution of dividends over
securities included in equity or subordinated securities. Also there are no restrictions on repurchases or the exercise of
prepayment options for securities included in equity or subordinated securities.
The macroeconomic estimates and assumptions on which the provisions of the revised Restructuring Plan were based, are
listed below:
2014 2015 2016 2017 2018
Nominal GDP % (1.8) (3.2) (0.7) 3.4 4.1
Real GDP % 0.8 (2.3) (1.3) 2.7 3.1
Unemployment rate % 26.5 26.9 27.1 25.7 24.2
Inflation rate % (1.4) (0.4) 1.5 0.9 1
Alpha Bank has already made significant restructuring actions of its activities, to fully restore viability, according to
the rules of the European Commission for financial institutions that have received public subsidies and, to fully comply
with the commitments undertaken in the context of the revised Restructuring Plan, while the above compliance has already
been achieved to a large extent before the relevant deadline. The Bank's progress regardings its full compliance with the
commitments included in the revised Restructuring Plan is being monitored and reported to the European Commission on a
quarterly basis by Mazars LLP, which has been designated as the Monitoring Trustee of the Restructuring Plan.
43. Capital adequacy
The Group's policy is to maintain a robust capital base to safeguard the Bank's development and retain the trust of
depositors, shareholders, markets and business partners.
Share capital increases are performed after Shareholders' General Meeting or Board of Directors' decisions in accordance
with the articles of association or the relevant laws.
Treasury shares are allowed to be purchased based on the terms and conditions of law.
The capital adequacy is supervised by Single Supervising Mechanism of ECB, to which reports are submitted every quarter.
The minimum requirements regarding Tier I ratio and the capital adequacy ratio of the Group are stipulated by Bank of
Greece Governor's Acts.
The capital adequacy ratio compares regulatory capital with the risks assumed by the Bank (risk-weighted assets).
Regulatory capital includes Tier I capital (share capital, reserves and non-controlling interests), additional Tier I
capital (hybrid securities) and Tier II capital (subordinated debt). Risk-weighted assets include the credit risk of the
investment portfolio, the market risk of the trading portfolio and operational risk.
Since January 1, 2014 EU Directive 2013/36/EU dated 26 June 2013 which was incorporated into the Greek Justice System
through the law 4261/2014 along with the EU Regulation 575/2013/EU, dated June 26, 2013 "CRD IV" came into force, which
gradually introduce the new capital adequacy framework (Basel III) of credit institutions.
According to the above regulatory framework, for the calculation of capital adequacy ratio the effective transitional
arrangements are followed.
Moreover:
• besides the 8% capital adequacy limit, there are limits of 4.5% for Common Equity ratio and 6% for Tier I ratio, and
• is required the maintenance of capital buffers additional to the Common Equity Capital, from 1.1.2016 and gradually
until 31.12.2019.
In particular:
• from 1.1.2016 a capital buffer of 0.625% exists which will gradually rise to 2.5% on 31.12.2019.
• The Bank of Greece through the acts issued by the Executive Committee settled the following capital buffers:
- Countercyclical capital buffer rate for the fourth quarter of 2016 and the first quarter of 2017, "zero percent" (Act
103/6.9.2016 & 107/19.12.2016).
- Other systemically important institutions (O-SII) buffer for 2016 "zero percent" (Act 56/18.12.2015).
These limits should be met both on a standalone and on a consolidated basis.
31.12.2016(estimate) 31.12.2015* (restated) 31.12.2015 (published)
Common Equity Tier I 17.1% 16.6% 16.7%
Tier I 17.1% 16.6% 16.7%
Capital Adequacy Ratio 17.1% 16.8% 16.8%
On 8 December 2016, the ECB informed Alpha Bank that for 2017 the Total SREP Capital Requirement (TSCR) at 12,25%. The TSCR
is composed of the minimum own fund requirements (8%), according to article 92(1) of the CRR and additional own fund
requirements (P2R), according to article 16(2)(a) of the Regulation 1024/2013/EU, and also the combined buffer requirements
(CBR, according to article 128(6) of the Directive 2013/36/EU. The above minimum ratio should be maintained on a phase-in
basis under applicable transitional rules under CRR/CRD IV, at all times.
Data concerning the disclosure of information supervisory nature regarding capital adequacy risk management, (Pilar ÉÉÉ -
Regulation 575/2013) will be published on the Bank's website.
* The change of 10 basis points in 31.12.2015 capital adequacy ratio is due to the final calculation of the credit risk
weighted assets which became final after the publication of the 2015 Annual Financial Report.
44. Related party transactions
The Bank and the Group companies enter into a number of transactions with related parties in the normal course of business.
These transactions are performed at arms length and are approved by the Bank's committees.
a. The outstanding balances of the Group's transactions with key management personnel consisting of members of the Bank's
Board of Directors and Executive Committee, their close family members and the entities controlled by them, as well as, the
results related to these transactions are as follows:
31.12.2016 31.12.2015
Assets
Loans and advances to customers 916 11,460
Liabilities
Due to customers 12,302 26,200
Employee defined benefit obligatins 260 453
Total 12,562 26,653
Letters of guarantee and approved limits 1,500 11,689
From 1 January to
31.12.2016 31.12.2015
Income
Interest and similar income 79 242
Fee and commission income 76 147
Total 155 389
Expenses
Interest expense and similar charges 47 166
Key management and close family members income 3,647 3,469
Total 3,694 3,635
b. The outstanding balances with the Group's subsidiaries, associates and joint ventures as well as the results related to
these transactions are as follows:
31.12.2016 31.12.2015
Assets
Loans and advances to customers 229,559 161,890
Other Assets 229 527
Total 229,788 162,417
Liabilities
Due to customers 22,642 21,494
From 1 January to
31.12.2016 31.12.2015
Income
Interest and similar income 6,359 5,721
Fee and commission income 4 4
Other income 233 593
Total 6,596 6,318
Expenses
Interest expense and similar charges 142 262
Other expenses 2,236 2,042
Total 2,378 2,304
c. The Employees Supplementary Fund maintains deposits with the Bank amounting to E 296 (31.12.2015: E 4,590). Periods'
interest expenses relating to deposits amount to E 18.On 31.12.2016, the Supplementary Fund does not own Alpha Bank shares
(31.12.2015: E 114).
d. The Hellenic Financial Stability Fund (HFSF) exerts significant influence on the Bank. In particular, according to Law
3864/2010 and the Relationship Framework Agreement (RFA) signed on 23.11.2015, which replaced the previous signed in 2013,
HFSF has participation in the Board of Directors and in other significant Committees of the Bank. Therefore, according to
IAS 24, HFSF and its related entities are considered related parties for the Bank.
The outstanding balances of the transactions as well as the results related to these transactions are analyzed as follows:
From 1 January to
31.12.2016 31.12.2015
Income
Fee and commission income 10 49
45. Auditors' fees
During 2016, the total fees of "KPMG Certified Auditors A.E.", statutory auditor of the Bank, are analyzed below, as stated
in paragraphs 2 and 32, article 29 of Law 4308/2014.
From 1 January to
31.12.2016 31.12.2015
Fees for statutory audit 1,502 1,527
Fees for the issuance of tax certificate 334 351
Fees for other audit related services 110 481
Fees for other non-audit services 41 79
Total 1,987 2,438
46. Disclosures of Law 4151/2013
According to Article 6 of Law 4151/2013, the capitals from dormant deposit accounts will be used by the Greek State to
cover government needs, after the write off of the rights of depositors or their legal heirs.
According to Law 3601/2007, dormant deposit account to credit Institution is an account on which no transaction by
depositors has been recorded for a period of 20 years from the day following the last transaction. The crediting or
capitalizing of interest to an account will not constitute a transaction and do not interrupt the prescription.
Following the expiry of the 20-year period, the credit institutions in Greece are obliged to: a) transfer to the State the
aggregate balance of dormant deposit accounts, including any interest, by the end of April of each year by depositing the
relevant amount in a special account in the Bank of Greece b) notify the General Accounting Office (GAO) and the General
Directorate of Public Property to fulfill the obligations arising from the Law 4151/2013, and c) to provide information to
beneficiaries and heirs after the lapse of twenty years for the transfer of the respective amounts, if asked. The
abovementioned amounts will be recorded as income in the Annual State Budget.
The auditors in the notes to the published annual financial statements of credit institutions will confirm whether or not
they complied with the provisions of the law on dormant deposits indicating the amount that was transferred to the State.
Based on the combined provisions of paragraph 6 of Article 1 from 18/7/2015 PNP as amended and currently in force and
ratified by the Law No. 4350/2015 and the corresponding Articles 7 & 8 of Law 4151/2013 (A' 103) the Bank must return until
the end of April of 2016 the balances of the dormant deposits that complete 20 years period until Friday, 17th of June
2015. After this date the deadline of Articles 7 and 8 of that Law is suspended.
In accordance with the above laws and regulations, the Bank did not transfer principal of the dormant deposit accounts for
the fiscal year 2016 (2015: E 0.7 million, number of deposit accounts 3,813).
47. Assets held for sale and discontinued operations
The Bank, under the approved by the European Committee Restructuring Plan (note 42) and the fulfillment of the relevant
commitment relating to the deleveraging of part of the assets of its international activities, proceeded to the sale of the
operations of the Bulgaria Branch, to the sale of Alpha Bank A.D. Skopje and Ionian Hotel Enterprises S.A., while it also
began the process for the sale of Alpha Bank Srbija, APE Fixed Assets A.E., APE Commercial Property A.E. and APE Investment
Property A.E.
Bank's branch in Bulgaria
On 17.7.2015, the Bank and Eurobank, with a joint statement, announced their agreement, in main terms, for the transfer of
operations of the Bank's Branch in Bulgaria to Eurobank's subsidiary in Bulgaria (PostBank). On 6.11.2015 the Bank and
Postbank signed the relevant contract, finalizing the terms of the transfer which provided for a transfer price of Euro 1
and the partial undertaking of the Branch's debt obligations by the buyer. The transfer was completed on 1.3.2016.
From 30.6.2015 the assets of Bulgaria Branch, and directly related liabilities, meet the requirements to be classified as
"Held for sale" in accordance with IFRS 5, as at that date the management had decided to sell the unit and was already in
the process of negotiations with the prospective buyer. At the same time, Bulgaria Branch is a distinct geographical area
of operations for the Group which is included in the Southeast Europe segment for operating segment disclosure purposes.
After the classification of the Bulgaria Branch, which is the only company in the banking sector through which the Group
operates in Bulgaria, as an asset held for sale, its activities are classified as "discontinued operations" for the Group.
Therefore, in the year 2015, the Group, in the preparation of financial statements, valued the assets and liabilities of
the Bulgaria Branch at the lowest price between the book value and fair value less costs to sell recognizing the difference
which was amounted to E 89,007 as "Loss after income tax from discontinued operations" in the Income Statement.
After the above valuation, the Branch's assets on 31.12.2015 amounted to E 387,947 and Branch's liabilities amounted to
E 277,675.
During 2016 the Group adjusted the loss from the sale of Bulgaria branch based on the net assets on the day of the
transfer.
Income Statement and Total Comprehensive Income
The results and cash flows arising from Bulgaria Branch are presented as "discontinued operations" in the Income Statement
and in the Statement of Cash Flows.
(Amounts in thousand of Euro)
From 1 January to
31.12.2016 31.12.2015
Interest and similar income 3,123 22,273
Interest expense and similar charges (556) (5,943)
Net interest income 2,567 16,330
Fee and commission income 842 6,183
Commission expense (74) (397)
Net fee and commission income 768 5,786
Dividend income 2
Gains less losses on financial transactions 64 604
Other income 79 844
Total income 3,478 23,566
Staff costs (1,575) (9,626)
General administrative expenses (2,042) (12,324)
Depreciation and amortization (397) (2,803)
Other expenses (30) (37)
Total expenses (4,044) (24,790)
Impairment losses and provisions to cover credit risk 1,563 (5,303)
Profit/(loss) before income tax 997 (6,527)
Income tax
Profit/(loss) after income tax 997 (6,527)
Difference due to valuation at fair value (89,007)
Result from the disposal, after income tax (748)
Profit/(loss) after income tax from discontinued operations 249 (95,534)
The amount of cash and cash equivalent of the Bulgaria Branch, which was transferred at disposal, amounted to E 9,942.
Alpha Bank AD Skopje
The Bank, during the fourth quarter of 2015, began the process of selling its subsidiary Alpha Bank Skopje (ABS). ABS is
the smallest Group subsidiary in the Balkans and it has a small presence in the local market in Skopje (market share<2%).
As part of this process, investors, which were shortlisted from a broader investor list, were invited to submit their bids
on the acquisition of the 100% of ABS shares and on the 100% of the hybrid instrument (subordinated loan) which was granted
to ABS from the parent company (both of them combined the "Perimeter Transaction").
The disposal was completed on 10.5.2016 for a total amount of E 3.2 million.
Based on the above, on 31.12.2015 ABS assets and the related liabilities satisfy the conditions for classification as "held
for sale" in accordance with IFRS 5, while its operations, which constitute a distinct geographical area for the Group,
included in the Southeast Europe segment for operating segment disclosure purposes, have been classified as "discontinued
operations".
Therefore, for the preparation of the 31.12.2015 financial statements the Group valued the subsidiary's assets and
liabilities at the lower of book and fair value less cost to sell, recognizing the difference which amounted to E 14,414 as
a loss in the income statement in "Net profit / (loss) after income tax from discontinued operations". The fair value was
determined based on the financial bids which were received from the potential investors for the Transaction Perimeter and
the Bank's estimate for the final price. After the above valuation, the assets of Alpha Bank AD Skopje on 31.12.2015
amounted to E 84,470 and its liabilities to E 80,714.
During 2016, the Group adjusted the result from the sale of its subsidiary by E 1,535, based on its net assets on the
transfer date.
Income Statement and Total Comprehensive Income
The results and cash flows arising from Alpha Bank AD Skopje are presented as "discontinued operations" in the Income
Statement, in the Statement Comprehensive Income and in the Cash Flow Statement.
The following table analyzes the amounts presented in the Income Statement.
(Amounts in thousand of Euro)
From 1 January to
31.12.2016 31.12.2015
Interest and similar income 1,525 4,964
Interest expense and similar charges (382) (1,013)
Net interest income 1,143 3,951
Fee and commission income 404 1,136
Commission expense (183) (619)
Net fee and commission income 221 517
Dividend income 14
Gains less losses on financial transactions 132 401
Other income 40 125
Total income 1,536 5,008
Staff costs (907) (2,812)
General administrative expenses (691) (2,495)
Depreciation and amortization (134) (409)
Other expenses (80) (159)
Total expenses (1,812) (5,875)
Impairment losses and provisions to cover credit risk (482) (1,170)
Profit/(loss) before income tax (758) (2,037)
Income tax 21 199
Profit/(loss) after income tax (737) (1,838)
Difference due to valuation at fair value (14,414)
Gain from the disposal after income tax 1,535
Profit/(loss) after income tax, from discontinued operations 798 (16,252)
Exchange differences on translating and hedging the net investment in foreign operations (40) 47
Amounts that may be reclassified in the Income Statement from discontinued operations (40) 47
Total Comprehensive Income after income tax 758 (16,205)
The amount of cash and cash equivalent of Alpha Bank Skopje, which was transferred at disposal, amounted to E 10,973.
Ionian Hotel Enterprises Á.Å.
On 27.10.2016, the Group, following the announcement on 17.2.2016 for its intention to sell Ionian Hotel Enterprises Á.Å.
through an Invitation for Expressions of Interest, signed the final sale agreement for the subsidiary. The sale was
completed on 16.12.2016. The final price of the transaction, including the refinancing of the existing debt of the
subsidiary (E 67.2 million), amounted to E 143.3 million.
In addition, with the signature of the transfer agreement, the Group acquired the right to invest E 5.2 million and take
preference shares issued by the subsidiary or shares of the company that will emerge after the merger of the subsidiary
with the buyer. The issuance of preference shares will be accompanied by sale/purchase option contracts between the Group
and the buyer's shareholders. Ôhis mechanism enables the Group to collect an additional amount depending on how the value
of the company will develop and therefore represents a contingent consideration. This right was recognised in other assets
at fair value which was E 4.5 million as at 31.12.2016.
The total result from the sale of Ionian Hotel Enterprises SA was a loss of E 38,273 and was recorded in gains and losses
from financial transactions.
From the above, an amount of E 37,916 had already been recorded as a loss during the first nine month period of the year as
the Group valued its assets and related liabilities at the lower of carrying amount and fair value less cost to sell, under
IFRS 5, due to their classification as "Held for sale" on 31.12.2015. Assets of Ionian Hotel Enterprises AE as at
31.12.2015 amounted to E 185,701 and liabilities amounted to E 8,392. Because the company is not a separate material
business segment for the Group, the requirements in order to be classified as discontinued operation are not met. The
company is included in "Other" for operating segment disclosure purposes. The amount of cash and cash equivalents of Ionian
Hotel Enterprises S.A which was transferred at disposal amounted to E 67.8.
APE Fixed Assets Á.Å., APE Commercial Property Á.Å., APE Investment Property Á.Å.
Consultants were engaged in June of the current year and the liquidation procedure of the Bank's participations in APE
Fixed Assets AE, APE Commercial Property AE and APE Investment Property AE started. APE Fixed Assets AE is a Bank's
subsidiary, while APE Commercial Property AE and APE Investment Property AE are joint ventures, where the control is
exercised jointly by the Bank and the other shareholder.
From 30.6.2016 the abovementioned investments meet the requirements to be classified as "held for sale" in accordance with
IFRS 5, as on that date Management had decided their sale and initiated an active programme to find buyer, while the sale
is expected to be completed within one year.
According to IFRS 5 the assets held for sale or disposal groups are valued at the lower of book and fair value less cost to
sell and they are presented in the balance sheet separately from other assets and liabilities. As regards to the subsidiary
APE Fixed Assets AE the Group proceeded to the measurement of the fair value of the assets and liabilities which it
consolidates, while with regards to the joint ventures APE Commercial Property AE and APE Investment Property AE which are
consolidated with the equity method, the Group measured the fair value of its participation and of the loans and
receivables from those companies which constitute part of the net investment in them. From the abovementioned measurement
losses amounting to E 19.3 million arose which were recognized in caption Gains less losses on financial transactions in
the Income Statement.
Taking into account that the companies are not a separate major line of business for the Group the criteria to be
characterized as 'discontinued operations' are not met. The companies are included in "Other" for operating segment
disclosure purposes.
In the table below an analysis of the assets and liabilities regarding APE Fixed Assets AE, APE Commercial Property AE and
APE Investment Property AE is presented, which are classified in the Balance Sheet as assets held for sale.
Balance Sheet
(Amounts in thousand of Euro)
31.12.2016
ASSETS
Loans and advances to customers 47,570
Investments in associates and joint ventures 39,244
Investments in real estate 39,872
126,686
Valuation at fair value (19,317)
Assets held for sale 107,369
LIABILITIES
Deferred tax liabilities 296
Total liabilities related to assets hed for sale 296
Amounts recognized directly in Equity related to assets held for sale (122)
Non-controlling interest related to assets held for sale 10,953
Alpha Bank Srbija A.D.
In the fourth quarter of 2016, the Bank initiated the procedures in order to sell its subsidiary Alpha Bank Srbija A.D. In
this context, on 30.1.2017, the Bank agreed with a potential buyer, to sell all the shares owned. The contract was signed
on 23.2.2017 while the completion of transaction is subject to obtaining the relevant regulatory approvals. In addition to
the transfer of all shares of the subsidiary, the agreement includes the assignment of a subordinated debt contract, which
amounts to E 27.11 million and was granted to the subsidiary by the Bank.
Based on the above, on 31.12.2016 the total assets of Alpha Bank Srbija A.D. and the related liabilities meet the criteria
set under IFRS 5 to be classified as assets held for sale, while its business activities, which constitute a distinct
geographical area of operation for the Group and are included in South East Europe segment for operating segment
disclosure purposes, have been characterized as discontinued operations.
Consequently, for the purpose of the preparation of financial statements on 31.12.2016, the Group valued the subsidiary's
assets and liabilities at the lower of carrying amount and fair value less cost to sell , recognizing a loss of of E 72,722
in Profit/(Loss) after tax from discontinued operations. Taking into account the classification of subsidiary as held for
sale and the tax laws (note 11), at this caption was also recorded a deferred tax income of amount E 84,441 which was
calculated as the difference between the carrying amount of assets and liabilities and their tax base, resulting in a
profit after tax which amounts to E 11,719. After the above valuation, on 31.12.2016 the assets of Alpha Bank Srbija A.D.
amounted to E 512,403, its liabilities to E 406,058, while the amounts that have been recognized directly in equity
amounted to a loss of E 68,457. It must be noted that the amount that has been recognized directly in equity will be
reclassified to income statement when the sale of subsidiary takes place.
The above figures of subsidiary are analyzed as follows:
Balance Sheet
(Amounts in thousand of Euro)
31.12.2016
ASSETS
Cash and balances with Central Banks 74,172
Due from banks 39,041
Loans and advances to customers 344,244
Investment securities
- Available for sale 93,225
Investment property 5,593
Property, plant and equipment 19,721
Goodwill and other intangible assets 1,366
Deferred tax assets 3,555
Other assets 3,758
584,675
Valuation at fair value (72,272)
Assets held for sale 512,403
LIABILITIES
Due to banks 16,635
Due to customers (including debt securities in issue) 385,367
Liabilities for current income tax and other taxes 579
Defined benefit obligations to employees 222
Other liabilities 2,332
Provisions 923
Liabilities related to assets held for sale 406,058
Amounts recognized directly in Equity related to assets held for sale (68,457)
Income Statement and Statement of Comprehensive Income
The results and cash flows arising from Alpha Bank Srbija AD presented as "discontinued operations" in the Income
Statement, the Statement of Comprehensive Income and in the Cash Flow Statement with a restatement of comparative period
1.1.2015 to 31.12.2015.
The following table analyzes the amounts presented in the Income Statement.
(Amounts in thousand of Euro)
From 1 January to
31.12.2016 31.12.2015
Interest and similar income 30,607 41,696
Interest expense and similar charges (4,905) (7,442)
Net interest income 25,702 34,254
Fee and commission income 7,799 7,847
Commission expense (1,707) (2,297)
Net fee and commission income 6,092 5,550
Gains less losses on financial transactions 551 1,822
Other income 705 1,350
Total income 33,050 42,976
Staff costs (11,620) (13,488)
General administrative expenses (13,700) (16,598)
Depreciation and amortization (2,059) (2,414)
Other expenses (90) (1,276)
Total expenses (27,469) (33,776)
Impairment losses and provisions to cover credit risk 4,443 (32,160)
Profit/(loss) before income tax 10,024 (22,960)
Income tax (24) (56)
Profit/(loss) after income tax 10,000 (23,016)
Difference due to valuation at fair value 11,719
Profit/(loss) after income tax, from discontinued operations 21,719 (23,016)
Net change in available for sale securities reserve (113) 2,747
Exchange differences on translatin and hedging the net investment in foreign operations (1,307) (838)
Income tax 2 3
Amounts that may be reclassified in the Income Statement from discontinued operations (1,418) 1,912
Total Comprehensive Income after income tax 20,301 (21,104)
Other assets held for sale
Assets held for sale also include other held for sale assets of the Group which amount to E 5.4 million (31.12.2015: E 4.9
million) resulting to a total amount of E 625,216, on 31.12.2016 (31.12.2015: E 663,063).
In addition, the Bank's participations to the companies "Selonda A.E.G.E." and "Nireus A.E.G.E." have been classified to
Assets held for sale, since it intends to transfer these companies in the near future at their fair value, which was
determined in the amount of E 1.
The Group assesses at each reporting date of the financial statements, the actions undertaken within the context of the
restructuring plan's implementation in order, where criteria of IFRS 5 are met (listed in note 1.17 of financial statements
on 31.12.2016) the assets and liabilities that are directly associated with them, to be classified as held for sale.
48. Corporate events
a. On 26.1.2016 the Bank participated in Aktua Hellas Holding A.E. establishment, which registered in Greece with 45% and
share capital of E 25 thousand.
b. On 2.2.2016 the Bank participated in the share capital increase of the joint venture Alpha TANEO AKES, with an amount of
E 51 thousand.
c. On 18.2.2016 the Bank participated in the share capital increase of its subsidiary, Alpha Group Investments Ltd with the
amount of E 57.82 million.
d. On 19.2.2016 the subsidiary of the Bank, Alpha Group Investments Ltd, participated in the share capital increase of
Group subsidiaries, AEP Amarousioun I A.E., AEP Amarousion II A.E., AEP Chalandriou A.E., AEP Neas Kifisias A.E. and AEP
Kallirois A.E. for E 19.99 million, E 13.19 million, E 22.64 million, E 1 million and E 1 million, respectively.
e. On 24.2.2016 the joint venture Aktua Hellas Holding A.E. , established the company Aktua Hellas Financial Solutions A.E.
with a share capital of E 100 thousand.
f. On 1.3.2016 the transfer of operations of the Bank's branch in Bulgaria to Eurobank's subsidiary in Bulgaria (Postbank),
was completed.
g. On 22.4.2016 the Bank participated in the share capital increase of joint ventures Aktua Hellas Holding A.E., with the
amount E 45 thousand.
h. On 4.5.2016 the subsidiary company of the Bank, Alpha Group Investments Ltd founded AGI-SRE Participations 1 Ltd company
registered in Cyprus with the amount of E 1 thousand
i. On 10.5.2016 the sale of all shares of the Bank's subsidiary, Alpha Bank A.D. Skopje was completed.
j. On 13.5.2016 the Bank participated in the share capital increase of its subsidiary Alpha Group Investments Ltd with the
amount of E 11.9 million.
k. On 17.5.2016 Alpha Bank, Eurobank and KKR Credit reached an agreement to assign the management of credit and equity
exposures to a selected number of Greek companies into a platform managed by Pillarstone.
l. On 23.5.2016 the subsidiary company of the Group AGI-RRE Participations 1 Ltd participated in the share capital increase
of the Group subsidiary Asmita Gardens S.R.L. with the amount of E 2 million.
m. On 8.6.2016 the subsidiary company of the Group, AGI-SRE Participations 1 Ltd founded AGI-SRE Participations 1 D.O.O.
company registered in Serbia, with the amount of E 1 thousand.
n. On 9.6.2016 the subsidiary of the Group, AGI-CYPRE Ermis Ltd, proceeded to the acquisition of the total number of shares
of AGI-CYPRE Alaminos Ltd with the amount of E 1.8 thousand.
o. On 16.6.2016 the subsidiary of the Group, AGI-CYPRE Ermis Ltd, proceeded to the acquisition of the total number of
shares of AGI-CYPRE Mazotos Ltd with the amount of E 1.8 thousand.
p. On 16.6.2016 the subsidiary of the Group, AGI-CYPRE Ermis Ltd, proceeded to the acquisition of the total number of
shares of AGI-CYPRE Tochni Ltd with the amount of E 1.8 thousand.
q. On 14.7.2016 the Bank, as a result of relative restructuring agreement of the company Dias Aquaculture ABEE, acquired
additional shares of Selonda Aquacultures AEGE, from the share capital increase, conducted by contribution in kind of all
the assets and part of the liabilities of company Dias Aquaculture Á.Â.Å.Å. to the company Selonda Aquacultures AEGE.
Therefore, the Bank's share in the latter changed from 23.01% to 21.97%. The Bank, which identified at zero the fair value
of the shares acquired, intends to dispose all of its shares of Selonda Aquacultures AEGE in the near future.
r. On 22.7.2016 the Bank participated, proportionally to its share, in the share capital increase of the joint venture
Aktua Hellas Holding A.E., by the amount of E 570 thousand.
s. On 29.7.2016 the Bank's subsidiary, Alpha Group Investments Ltd, acquired the 50% of the shares of the company AEP
Eleona A.E., for an amount of E 11.9 million.
t. On 2.8.2016, the Bank participated proportionally to its share, in the share capital increase of the joint venture Alpha
TANEO AKES by paying the amount of E 90 thousand.
u. On 22.8.2016 the Bank proceeded to the acquisition of 97.27% of shares of Ionian Hotel Enterprises A.E. from the related
companies Alpha Group Investments Ltd, Ionian Equity Participations Ltd, Ionian Holdings A.E., Oceanos A.T.O.E.E. and Alpha
Supporting Services A.E. by 89.77%, 1.87%, 1.87%, 1.87% and 1.87% respectively in the context of the internal restructuring
plan of the portfolio of Alpha Bank Group in order to service the business initiatives and under the agreed with the best
practices terms which are followed in similar transactions.
v. On 14.9.2016 the subsidiary of the Group Alpha Astika Akinita A.E., proceeded to the acquisition from Alpha Group
Investments Ltd of the total number of shares of Alpha Real Estate Services LLC for the amount of E 11 thousand.
w. On 26.9.2016 the Bank participated in the share capital increase of its subsidiary, APE Fixed Assets A.E. with the
amount of E 72.2 thousand
x. On 29.9.2016 the subsidiary of the Bank , Alpha Group Investments Ltd participated in the share capital increase of the
Group subsidiary, AEP Chanion A.E. with the amount of E 10.6 million.
y. On 6.10.2016 the Bank has obtained one share of the subsidiary bank Alpha Bank Srbija A.D. without any payment, as a
result of a donation by the minority shareholder. Therefore, the Bank's participation stood at 100%.
z. On 21.10.2016, the subsidiary of the Group, Alpha Astika Akinita A.E. sold the total
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