Mizuho Bank Europe Annual Report 2018

50 MIZUHO BANK EUROPE N.V. deposits taken from customers. Current accounts and overnight deposits are due on demand. 3n. Other liabilities Other liabilities are recorded at their carrying value and measured at amortized costs. The other liabilities comprise of the revaluation of the derivatives recorded at cost, expenses payable and other amounts payable. The revaluation of the derivatives recorded at cost includes derivatives such as hedge swaps, FX and money market transactions. 3o. Provisions MBE has a defined benefit pension plan for which contributions are made to a separate pension insurance fund. The valuation of the pension plan is in accordance with article ASC 715 compensation – retirement benefits issued by Financial Accounting Standards Board (FASB). The cost of providing benefits under the defined benefit plan is determined separately using the projected unit credit actuarial valuation method. Actuarial gains and losses are recognized as income or expense, when the net cumulative unrecognized actuarial gains and losses at the end of the previous reporting year exceed 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognized over the expected average remaining working lives of the employees participating in the plan. The defined benefit asset or liability comprises the present value of the defined benefit obligation less the fair value of plan assets out of which the obligations are to be settled directly. The value of the assets is restricted to the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan. 3p. Contingent liabilities Contingent liabilities consist of guarantees and irrevocable letters of credit and acceptances. They are included at their face value and are recorded off-balance. The contingent liabilities commit MBE to make payments on behalf of customers in the event of a specific act. Guarantees and irrevocable letters of credit carry a similar credit risk to loans. 3q. Commitments Commitments represent the undrawn part of the committed facilities. They are included at their face value and are recorded off-balance. Even though these committed facilities may not be recognized on the balance sheet, they do contain credit risk and are therefore part of MBE’s overall risk. 4. Recognition of income and expenses 4a. Recognition of income and expense Revenue is recognized to the extent that it is probable that economic benefits will flow to the bank and the revenue can be reliably measured. Expenses are recognized in the year to which they relate. Negative interest on government bonds is reclassified. 4b. Interest and similar income and expenses For all financial instruments measured at amortized cost and financial instruments designated at fair value, through profit and loss, interest income and expense are recognized on an effective interest rate method. 4c. Commission income and expense Commission income and expense is attributed to the period in which it arises. It comprises of (a) Income earned from services over a certain period in time and (b) Income earned from transaction services. 4d. Result on financial operations The result on financial operations comprises of foreign currency results, which are mainly a result of foreign currency transactions on behalf of customers, and fair value changes of the derivatives recorded at fair value through the profit and loss. 4e. Operating expenses Operating expenses are taken to the profit and loss account in the period to which they relate. Amortization and depreciation charges on tangible and intangible fixed assets are based on cost and are calculated by a straight-line method over the estimated lives of the concerning assets. Leases entered into by MBE are operating leases. The total payments made under operating leases are charged to staff costs and other administrative expenses in the profit and loss account on a straight line basis over the period of the lease.