Allowing banks to reclassify financial assets for the purpose of trading for a specified period in accordance with the conditions stipulated in the decision

Greetings and after,

In the framework of the Egyptian Capital Market Authority's response to unusual events in the previous period of the year 2011, and based on the rules for the preparation and presentation of financial statements for banks and the recognition and measurement bases adopted by the Board of Directors of the Central Bank of Egypt on December 16, 2008, which allow banks to reclassify financial assets held for trading into other items (during the period from July 1, 2008, to December 31, 2008) only, under the circumstances of the global financial crisis that occurred at that time, the Board of Directors of the Central Bank of Egypt, in its meeting held on June 7, 2011, has allowed banks to reclassify financial assets held for trading in accordance with the conditions stipulated in the following decision:

"From January 1, 2011, to June 30, 2011, the following rules shall be applied:

• Banks are allowed to reclassify financial assets held for trading and whose purpose upon acquisition was not to sell them or repurchase them in the near future (despite the fact that they may have been acquired primarily for the purpose of selling or repurchasing them in the near future), such that the financial assets held for trading are reclassified at their fair value on the reclassification dates into the available-for-sale financial assets item if the Bank has the intent and ability to hold them in the foreseeable future, or into the held-to-maturity financial investments item, or into the loans and advances item if the Bank has the intent and ability to hold those loans to their maturity dates, and this is only according to the circumstances and subject to meeting the conditions of the item transferred to, and no previous losses recognized before the reclassification date are reversed, and no profits are recognized before that date.

The fair value of the financial assets transferred on the reclassification dates becomes the carrying value of those assets.

• For financial assets held for trading that are reclassified in periods starting from the beginning of the year 2011, reclassification shall be based on fair value on the reclassification dates, and this treatment is limited to debt instruments and not equity instruments.

• For financial assets held for trading reclassified into available-for-sale financial assets during the period from January 1, 2011, to June 30, 2011, only, a decrease in their fair value is not considered impairment during the aforementioned period.

• All other provisions regarding reclassification as stipulated in the rules for the preparation and presentation of financial statements for banks and the recognition and measurement bases issued by the Central Bank of Egypt on December 16, 2008, shall apply. "

Please be so kind as to take the necessary action in this regard.

Accept the highest respect,,,
Gamal Naguib

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