Mizuho Bank Europe Annual Report 2018

46 MIZUHO BANK EUROPE N.V. 5.5 Notes to the Financial Statements 1. General Information Group structure Mizuho Bank Europe N.V. (MBE) was established in 1974 and is a 100% subsidiary of Mizuho Bank Ltd., which in turn is a wholly-owned subsidiary of the Mizuho Financial Group. MBE is a public limited liability company with its corporate seat in Amsterdam and registered at the Chamber of Commerce under RSIN number: 003263332. MBE is located at Apollolaan 171, 1077 AS in Amsterdam (the Netherlands) and has three branches: Brussels (Belgium), Vienna (Austria) and Madrid (Spain). Activities The main activities of MBE and all its branches are corporate banking, to lead and participate in syndicates and to deal in bonds and other financial instruments such as foreign exchange and derivative products. MBE has a banking license under the Dutch Financial Supervision act (Wet op het financieel toezicht). Currency MBE uses euro (€) as functional currency and presentation currency, since the currency of the primary economic environment, the Netherlands, is euro. Going concern The Management Board has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, the Management Board is not aware of any material uncertainties that may cast significant doubt upon the ability of the bank to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis. 2. Accounting principles 2a. Basis of preparation The financial statements for this financial year have been prepared in accordance with the legal requirements for the financial statements of banks contained in Title 9, Book 2 of the Dutch Civil Code. The financial statements have been prepared on a historical cost basis, unless stated otherwise. The principle accounting policies adopted are set out below. These have been applied consistently for all years presented. 2b. Foreign currencies Assets and liabilities denominated in foreign currencies as well as forward transactions in foreign currencies, which relate to funds borrowed and lent, are converted at the spot rate as at balance sheet date. Other outstanding forward transactions in foreign currencies are valued at the applicable forward rate for the residual term to maturity as at the balance sheet date. Exchange rate differences arising from the conversion of assets and liabilities are stated in the profit and loss account. Transactions and the resulting income and charges in foreign currencies are converted at the rate applicable on transaction date. 2c. Use of estimates in the preparation of financial statements In preparing the financial statements, the Management Board is required to make estimates and assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and application of judgment are inherent in determining estimates. Although these estimates are based on the Management Board’s best knowledge of current events and actions, actual results in the future could differ from such estimates and the differences may be material to the financial statements. At the year-end, MBE reviews its significant individual loans and advances to assess whether an impairment loss should be recorded in the profit and loss account. The Management Board’s judgement is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. The estimates are based on assumptions about a number of factors and are based on any arrears in loan and interest repayments at the year-end and loan losses recorded during the financial year. The cost of the defined benefit pension plan and the pension liabilities is determined using an independent actuarial valuation. The actuarial valuation involves making assumptions on discount rate, expected inflation, expected wage increases, expected