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Allowance for credit losses | 12 Months Ended
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Dec. 31, 2012
Receivables [Abstract] |
Allowance for credit losses |
| 9. | Allowance for credit losses
The Bank classifies the allowance for credit losses into two components:
| a) | Allowance for loan losses:
(In thousands of US$) |  | Year ended December 31, 2012 |
|  | Corporations |  |  | Banking and financial institutions |  |  | Middle- market companies |  |  | Sovereign |  |  | Total |
Balance at beginning of the year |  |  | 48,865 |  |  |  | 30,523 |  |  |  | 8,952 |  |  |  | 207 |  |  |  | 88,547 |
Provision (reversal of provision) for loan losses (1) |  |  | (8,887 | ) |  |  | (1,704 | ) |  |  | 1,690 |  |  |  | 558 |  |  |  | (8,343 | )
Loan recoveries and other |  |  | - |  |  |  | 17 |  |  |  | 245 |  |  |  | - |  |  |  | 262 |
Loans written-off against the allowance for loan losses |  |  | (7,490 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (7,490 | )
Balance at end of the year |  |  | 32,488 |  |  |  | 28,836 |  |  |  | 10,887 |  |  |  | 765 |  |  |  | 72,976 |
Components: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Generic allowance |  |  | 32,488 |  |  |  | 28,836 |  |  |  | 10,887 |  |  |  | 765 |  |  |  | 72,976 |
Specific allowance |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total allowance for loan losses |  |  | 32,488 |  |  |  | 28,836 |  |  |  | 10,887 |  |  |  | 765 |  |  |  | 72,976 |
(In thousands of US$) |  | Year ended December 31, 2011 |  |  | Year ended December 31, 2010 |
|  | Corporations |  |  | Banking and financial institutions |  |  | Middle- market companies |  |  | Sovereign |  |  | Total |  |  |  |
Balance at beginning of the year |  |  | 54,160 |  |  |  | 18,790 |  |  |  | 5,265 |  |  |  | 400 |  |  |  | 78,615 |  |  |  | 73,789 |
Provision (reversal of provision) for loan losses (1) |  |  | (5,295 | ) |  |  | 10,017 |  |  |  | 4,312 |  |  |  | (193 | ) |  |  | 8,841 |  |  |  | 9,091 |
Loan recoveries and other |  |  | - |  |  |  | 1,716 |  |  |  | 440 |  |  |  | - |  |  |  | 2,156 |  |  |  | 996 |
Loans written-off against the allowance for loan losses |  |  | - |  |  |  | - |  |  |  | (1,065 | ) |  |  | - |  |  |  | (1,065 | ) |  |  | (5,261 | )
Balance at end of the year |  |  | 48,865 |  |  |  | 30,523 |  |  |  | 8,952 |  |  |  | 207 |  |  |  | 88,547 |  |  |  | 78,615 |
Components: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Generic allowance |  |  | 34,065 |  |  |  | 30,523 |  |  |  | 8,952 |  |  |  | 207 |  |  |  | 73,747 |  |  |  | 67,115 |
Specific allowance |  |  | 14,800 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 14,800 |  |  |  | 11,500 |
Total allowance for loan losses |  |  | 48,865 |  |  |  | 30,523 |  |  |  | 8,952 |  |  |  | 207 |  |  |  | 88,547 |  |  |  | 78,615 |
(1) It includes releases of specific reserves for $7,931 thousand during 2012, $1,600 thousand during 2011, and $1,031 thousand during 2010. Provision (reversal of provision) of generic allowance for credit losses are mostly related to changes in volume and composition of the credit portfolio. The decrease in the generic allowance for loan losses in 2012 was primarily due to an increased exposure in countries, customers and type of transactions with better ratings and a decreased exposure in those with lower ratings. Following is a summary of loan balances and reserves for loan losses:
(In thousands of US$) |  | December 31, 2012 |
|  | Corporations |  |  | Banking and financial institutions |  |  | Middle- market companies |  |  | Sovereign |  |  | Total |
Allowance for loan losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Generic allowance |  |  | 32,488 |  |  |  | 28,836 |  |  |  | 10,887 |  |  |  | 765 |  |  |  | 72,976 |
Specific allowance |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total of allowance for loan losses |  |  | 32,488 |  |  |  | 28,836 |  |  |  | 10,887 |  |  |  | 765 |  |  |  | 72,976 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans with generic allowance |  |  | 2,741,251 |  |  |  | 2,192,023 |  |  |  | 681,912 |  |  |  | 100,370 |  |  |  | 5,715,556 |
Loans with specific allowance |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total loans |  |  | 2,741,251 |  |  |  | 2,192,023 |  |  |  | 681,912 |  |  |  | 100,370 |  |  |  | 5,715,556 |
(In thousands of US$) |  | December 31, 2011 |
|  | Corporations |  |  | Banking and financial institutions |  |  | Middle- market companies |  |  | Sovereign |  |  | Total |
Allowance for loan losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Generic allowance |  |  | 34,065 |  |  |  | 30,523 |  |  |  | 8,952 |  |  |  | 207 |  |  |  | 73,747 |
Specific allowance |  |  | 14,800 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 14,800 |
Total of allowance for loan losses |  |  | 48,865 |  |  |  | 30,523 |  |  |  | 8,952 |  |  |  | 207 |  |  |  | 88,547 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans with generic allowance |  |  | 2,290,413 |  |  |  | 2,164,163 |  |  |  | 445,731 |  |  |  | 27,266 |  |  |  | 4,927,573 |
Loans with specific allowance |  |  | 32,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 32,000 |
Total loans |  |  | 2,322,413 |  |  |  | 2,164,163 |  |  |  | 445,731 |  |  |  | 27,266 |  |  |  | 4,959,573 |
| b) | Reserve for losses on off-balance sheet credit risk:
(In thousands of US$) |  | Year ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Balance at beginning of the year |  |  | 8,887 |  |  |  | 13,335 |  |  |  | 27,261 |
Reversal of provision for losses on off-balance sheet credit risk |  |  | (4,046 | ) |  |  | (4,448 | ) |  |  | (13,926 | )
Balance at end of the year |  |  | 4,841 |  |  |  | 8,887 |  |  |  | 13,335 |
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 19). The 2012’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.

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