Allowance for credit losses

The Bank classifies the allowance for credit losses into two components:

Allowance for loan losses:

(In thousands of US$)	Year ended December 31, 2011														Year ended December 31,
	Corporations			Banking and financial institutions		Middle-market companies			Sovereign			Total			2010			2009
Balance at beginning of the year		54,160			18,790		5,265			400			78,615			73,789			54,648
Provision (reversal of provision) for loan losses		(5,295	)		10,017		4,312			(193	)		8,841			9,091			18,293
Loan recoveries and other		-			1,716		440			-			2,156			996			866
Loans written-off against the allowance for loan losses		-			-		(1,065	)		-			(1,065	)		(5,261	)		(18	)
Balance at end of the year		48,865			30,523		8,952			207			88,547			78,615			73,789

Components:
Generic allowance		34,065			30,523		8,952			207			73,747			67,115			59,432
Specific allowance		14,800			-		-			-			14,800			11,500			14,357
Total allowance for loan losses		48,865			30,523		8,952			207			88,547			78,615			73,789

Provision (reversal of provision) of generic allowance for credit losses are mostly related to changes in volume and composition of the credit portfolio. The increase in the generic allowance for loan losses in 2011 was primarily due to an increase in the loan portfolio mitigated by an improvement of the risk profile of the Region and a prudent portfolio management.

Following is a summary of loan balances and reserves for loan losses:

(In thousands of US$)	December 31, 2011
	Corporations		Banking and financial institutions		Middle-market companies		Sovereign		Total
Allowance for loan losses
Specific allowance		14,800		-		-		-		14,800
Generic allowance		34,065		30,523		8,952		207		73,747
Total of allowance for loan losses		48,865		30,523		8,952		207		88,547
Loans
Loans with specific allowance		32,000		-		-		-		32,000
Loans with generic allowance		2,290,413		2,164,163		445,731		27,266		4,927,573
Total loans		2,322,413		2,164,163		445,731		27,266		4,959,573

(In thousands of US$)	December 31, 2010
	Corporations		Banking and financial institutions		Middle-market companies		Sovereign		Total
Allowance for loan losses
Specific allowance		11,200		-		300		-		11,500
Generic allowance		42,960		18,790		4,965		400		67,115
Total of allowance for loan losses		54,160		18,790		5,265		400		78,615
Loans
Loans with specific allowance		28,000		-		1,002		-		29,002
Loans with generic allowance		2,056,386		1,701,062		223,756		54,126		4,035,330
Total loans		2,084,386		1,701,062		224,758		54,126		4,064,332

Reserve for losses on off-balance sheet credit risk:

(In thousands of US$)	Year ended December 31,
	2011			2010			2009

Balance at beginning of the year		13,335			27,261			30,724
Provision (reversal of provision) for losses on off-balance sheet credit risk		(4,448	)		(13,926	)		(3,463	)
Balance at end of the year		8,887			13,335			27,261

The reserve for losses on off-balance sheet credit risk reflects the Bank’s management estimate of probable losses on off-balance sheet credit risk items such as: confirmed letters of credit, stand-by letters of credit, guarantees and credit commitments (see Note 18). The 2011’s decrease in the reserve for losses on off-balance sheet credit risk was primarily due to changes in volume, composition, and risk profile of the portfolio.