CFM INDOSUEZ Wealth Management - 2019 annual report

59 The rights of use recognised as of the date of initial application essentially concern real estate leases (bank branches, office buildings). The standards and interpretations published by the IASB as of 31 December 2019 but not yet adopted by the European Union are not applicable by the Group. Their application will only become mandatory from the date set by the European Union, and as such they are not applied by the Group at 31 December 2019. Three amendments to existing standards published by the IASB are pending adoption by the European Union: Amendments to IAS 1/IAS 8 Presentation of Financial Statements, IFRS 3 Business combinations and IFRS 9, IAS 39 and IFRS 7 Financial instruments (with the possibility of early adoption). IBOR reform As a user of critical benchmarks, CFM Indosuez Wealth Group is extremely aware of the importance of benchmarks and the implications of the changes being introduced under ongoing reforms. Crédit Agricole Group’s Benchmarks project is overseeing the benchmarks transition for the entire Group and is ensuring that all entities comply with the Benchmarks Regulation (BMR). This project has been implemented among Group entities to prepare all business lines and support clients with the transition to new benchmarks. It involves identifying and analysing the impact of the reform. In particular, a mapping of all exposures and contracts has been produced to estimate Crédit Agricole Group’s consolidated exposure to the reform. The main indices to which the Group is exposed are: • EONIA • Critical benchmarks identified in the BMR: Euribor, Libor USD, Libor GBP, Libor JPY, Libor CHF, Libor EUR, Wibor, Stibor + Hibor In light of the details available to date, for Eonia contracts, the transition period should end on 3 January 2022. For the other indices, ongoing work does not currently allow an end date to be estimated. As of 31 December 2019, the mapping shows a nominal amount of hedging instruments affected by the reform of € 1,343 billion, USD 201 million and CHF 4 million. The Group will apply the amendments to IFRS 9 published by the IASB on 26 September 2019 while uncertainties regarding the future of these benchmarks continue to impact the amounts and maturities of interest rates. 1. 2 a c c o u n t i n g p r i n c i p l e s a n d p o l i c i e s Use of judgement and estimates in the preparation of the financial statements By their nature, the assessments required to prepare the financial statements require the formulation of assumptions and involve risks and uncertainties as to their realisation in the future. Future realisations can be influenced by many factors, including: • national and international market activities; • fluctuations in interest rates and foreign exchange rates; • economic and political conditions in certain business sectors or countries; • changes in regulations or legislation. These are just a few examples. • Accounting estimates which require assumptions to be made are mainly used for the following measurements: • financial instruments measured at fair value; • pension plans and other future benefits; • impairment of debt instruments at amortised cost or at fair value through other comprehensive income recyclable to income; • provisions; • deferred tax assets. The procedures for using judgement or estimates are described in the relevant paragraphs below. Financial instruments (IFRS 9, IAS 39 and IAS 32) Definitions IAS 32 defines a financial instrument as any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity, that is, any contract representing contractual rights or obligations to receive or pay cash or other financial assets. Derivatives are financial assets or liabilities whose value changes in line with the value of an underlying asset, which require little or no initial investment, and which are settled at a future date. Financial assets and liabilities are treated in the financial statements in accordance with the provisions of IFRS 9 as adopted by the European Union. IFRS 9 defines the principles for the classification and measurement of financial instruments, impairment due to credit risk and hedge accounting, excluding macro-hedging transactions. However, it should be noted that CFM Indosuez Wealth Group has made use of the option not to apply the general hedge accounting model under IFRS 9. All hedging relations continue to be recognised in accordance with IAS 39 pending future macro-hedging provisions. Annual Financial Statements 2019