UBI Banca Group

2. Available-for-sale financial assets
2.1 Definition
Available-for-sale financial assets (AFS) are defined as non-derivative financial assets
designated on initial recognition as such or that are not classified as:
(1) loans and receivables (see section below);
(2) financial investments held until maturity (see section below);
(3) financial assets held for trading and measured at fair value recognised through profit or
loss (see section below).
These financial assets are recognised within item 40 “Available-for-sale financial assets”.
2.2 Recognition criteria
Available-for-sale financial assets are recognised initially when, and only when, the company
becomes a party in the contract clauses of the instrument and that is on the date of
settlement, at fair value which generally coincides with the cost of them. This value includes
costs or income directly connected with the instruments themselves.
The recognition of available-for-sale financial assets may result also from the reclassification
out of “held-to-maturity investments” or, but only and only in rare circumstances and in any
case only if the asset is no longer held for sale or repurchase in the short term, out of
“financial assets held for trading”; in this case the recognition value is the same as the fair
value at the moment of reclassification
2.3 Measurement criteria
Subsequent to initial recognition, available-for-sale financial assets continue to be recognised
at fair value with interest (resulting from application of the amortised cost) recognised through
profit or loss and changes in fair value recognised in equity within item 140 “Fair value
reserves”, except for losses due to impairment, until the financial asset is derecognised, at
which time the profit or loss previously recognised in equity must be recognised through profit
or loss. Equity instruments for which the fair value cannot be reliably measured according to
the methods described are recognised at cost.
The measurement of the fair value of available-for-sale financial assets is based on the prices
quoted on active markets or on internal measurement models which are generally used in
financial practice as described in greater detail in Part A.3.2 of the Notes to the financial
statements “Fair Value Hierarchy”.
At the end of each financial year or interim reporting period, objective evidence of impaired
value is assessed, which in the case of equity instruments is also held to be significant or
prolonged.
As concerns the significance of the impairment, significant indications of impairment exist
where the market value of an equity instrument is less than 35% of its historical cost of
acquisition. In this case impairment is recognised through profit or loss without further
analysis. If the impairment is less then it is recognised only if the valuation of the instrument
performed on the basis of its fundamentals does not confirm the soundness of the company
and that is its earning prospects.
As concerns the permanence of the impairment, it is defined as prolonged when the fair value
remains below its historical cost of purchase for a period of longer than 18 months. In this
case the impairment is recognised through profit or loss without further analysis. If the fair
value continues to remain below its historical purchase cost for periods shorter than 18
months, then the impairment to be recognised through profit or loss is determined by
considering, amongst other things, whether the impairment is attributable to general negative
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