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Trading assets and liabilities

12 Months Ended

Dec. 31, 2012

Trading Assets and Liabilities [Abstract]

5.	Trading assets and liabilities

The fair value of trading assets and liabilities is as follows:

	December 31,
(In thousands of US$)	2012		2011

Trading assets:
Sovereign bonds		5,146		20,415
Cross-currency interest rate swaps		49		21
Forward foreign exchange		50		-
Future contracts		20		-
Total		5,265		20,436

Trading liabilities:
Interest rate swaps		100		748
Cross-currency interest rate swaps		32,182		4,836
Forward foreign exchange		22		-
Total		32,304		5,584

Sovereign bonds outstanding as of December 31, 2012, 2011 and 2010, have generated gains of $0.1 million during 2012 and 2010, respectively, and loss of $0.7 million during 2011 which have been recorded in earnings.

As of December 31, 2012 and 2011, bonds with a carrying value of $1.3 million and $19.0 million, respectively, secured repurchase agreements accounted for as secured borrowings and derivative financial instruments transactions.

During 2012, 2011 and 2010, the Bank recognized the following gains and losses related to trading derivative financial instruments:

	Year ended December 31,
(In thousands of US$)	2012			2011			2010

Interest rate swaps		(310	)		(299	)		(2,091	)
Cross-currency interest rate swaps		11,537			(4,858	)		(1,662	)
Credit default swap		-			-			13
Forward foreign exchange		27			93			-
Future contracts		207			(29	)		-
Total		11,461			(5,093	)		(3,740	)

These amounts are reported in the Net gain (loss) from trading securities and Net gain (loss) from the investment fund trading lines in the consolidated statements of income.

In addition to the trading derivative financial instruments, the Bank has hedging derivative financial instruments that are disclosed in Note 21.

As of December 31, 2012 and 2011, trading derivative liabilities include interest rate swap and cross-currency interest rate swap contracts that were previously designated as fair value hedges of securities available-for-sale, and foreign-currency loans and borrowings, respectively that no longer qualify for hedge accounting. Hedge accounting of certain fair value hedges was discontinued during 2012. Adjustments to the carrying value of the hedged underlying transactions are amortized in the interest expense line over the remaining term of these transactions. Changes in the fair value of these derivative instruments after discontinuation of fair value hedge accounting are recorded in Net gain (loss) from trading securities.

As of December 31, 2012 and 2011, information on the nominal amounts of derivative financial instruments held for trading purposes is as follows:

	2012						2011
(In thousands of US$)	Nominal		Fair Value				Nominal		Fair Value
	Amount		Asset		Liability		Amount		Asset		Liability

Interest rate swaps		35,291		-		100		17,000		-		748
Cross-currency interest rate swaps		155,081		49		32,182		85,163		21		4,836
Forward foreign exchange		7,152		50		22		-		-		-
Future contracts		6,896		20		-		139		-		-
Total		204,420		119		32,304		102,302		21		5,584