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Derivative financial instruments for hedging purposes | 12 Months Ended
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Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
| 21. | Derivative financial instruments for hedging purposes
As of December 31, 2014 and 2013, quantitative information on derivative financial instruments held for hedging purposes is as follows:
|  | 2014 |  | 2013 |
|  | Nominal |  | Fair value(1) |  | Nominal |  | Fair value(1) |
|  | Amount |  | Asset |  | Liability |  | Amount |  | Asset |  | Liability |
Fair value hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 167,865 |  |  | 17 |  |  | 1,285 |  |  | 494,558 |  |  | 4,625 |  |  | 1,403 |
Cross-currency interest rate swaps |  |  | 282,490 |  |  | 1,062 |  |  | 31,556 |  |  | 269,488 |  |  | 2,783 |  |  | 6,834 |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 891,500 |  |  | 2,691 |  |  | 1,805 |  |  | 453,000 |  |  | 393 |  |  | 243 |
Cross-currency interest rate swaps |  |  | 56,000 |  |  | - |  |  | 5,547 |  |  | 126,308 |  |  | 6,392 |  |  | - |
Forward foreign exchange |  |  | 126,058 |  |  | 8,554 |  |  | - |  |  | 88,130 |  |  | 684 |  |  | 92 |
Net investment hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange |  |  | 5,146 |  |  | - |  |  | 94 |  |  | 5,810 |  |  | 340 |  |  | - |
Total |  |  | 1,529,059 |  |  | 12,324 |  |  | 40,287 |  |  | 1,437,294 |  |  | 15,217 |  |  | 8,572 |
Net gain on the ineffective portion of hedging activities (2) |  |  |  |  |  | 106 |  |  |  |  |  |  |  |  | 353 |  |  |  |
| (1) | The fair value of assets and liabilities is reported within the derivative financial instruments used for hedging - receivable and payable lines in the consolidated balance sheets, respectively.
| (2) | Gains and losses resulting from ineffectiveness and credit risk in hedging activities are reported within the derivative financial instruments and hedging line in the consolidated statements of income as derivatives financial instruments and hedging.
The gains and losses resulting from activities of derivative financial instruments and hedging recognized in the consolidated statements of income are presented below:
2014 |
|  |  |  |  |  |  | Gain (loss) |  |  |  |
|  |  |  |  |  |  | reclassified from |  |  |  |
|  |  |  |  |  |  | accumulated |  | Gain (loss) |
|  | Gain (loss) |  |  |  | OCI to the consolidated |  | recognized on |
|  | recognized in OCI |  |  |  | statements of income |  | derivatives |
|  | (effective portion) |  | Classification of gain (loss) |  | (effective portion) |  | (ineffective portion) |
Derivatives – cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | (1,947) |  |  |  |  |  |  |  |  |
Cross-currency interest rate swaps |  |  | (11,904) |  | Gain (loss) on foreign currency exchange |  |  | - |  |  | - |
|  |  |  |  | Interest income – loans |  |  | (4) |  |  | - |
Forward foreign exchange |  |  | 8,633 |  | Interest income – securities available-for-sale |  |  | (238) |  |  | - |
|  |  |  |  | Interest income – loans |  |  | (2,011) |  |  | - |
|  |  |  |  | Interest expense – borrowings and debt |  |  | - |  |  | - |
|  |  |  |  | Gain (loss) on foreign currency exchange |  |  | 3,011 |  |  | - |
Total |  |  | (5,218) |  |  |  |  | 768 |  |  | - |
Derivatives – net investment hedge |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange |  |  | 38 |  | Gain (loss) on foreign currency exchange |  |  | - |  |  | - |
Total |  |  | 38 |  |  |  |  | - |  |  | - |
2013 |
|  |  |  |  |  |  | Gain (loss) |  |  |  |
|  |  |  |  |  |  | reclassified from |  |  |  |
|  |  |  |  |  |  | accumulated |  | Gain (loss) |
|  | Gain (loss) |  |  |  | OCI to the consolidated |  | recognized on |
|  | recognized in OCI |  |  |  | statements of income |  | derivatives |
|  | (effective portion) |  | Classification of gain (loss) |  | (effective portion) |  | (ineffective portion) |
Derivatives – cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 226 |  |  |  |  |  |  |  |  |
Cross-currency interest rate swaps |  |  | (734) |  | Gain (loss) on foreign currency exchange |  |  | - |  |  | - |
|  |  |  |  | Interest income – loans |  |  | (11) |  |  | - |
Forward foreign exchange |  |  | 1,544 |  | Interest income – securities available-for-sale |  |  | (1,461) |  |  | - |
|  |  |  |  | Interest expense – borrowings and debt |  |  | 31 |  |  | - |
|  |  |  |  | Gain (loss) on foreign currency exchange |  |  | 1,562 |  |  | - |
Total |  |  | 1,036 |  |  |  |  | 121 |  |  | - |
Derivatives – net investment hedge |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange |  |  | 464 |  | Gain (loss) on foreign currency exchange |  |  | - |  |  | - |
Total |  |  | 464 |  |  |  |  | - |  |  | - |
2012 |
|  |  |  |  |  |  | Gain (loss) |  |  |  |
|  |  |  |  |  |  | reclassified from |  |  |  |
|  |  |  |  |  |  | accumulated |  | Gain (loss) |
|  | Gain (loss) |  |  |  | OCI to the consolidated |  | recognized on |
|  | recognized in OCI |  |  |  | statements of income |  | derivatives |
|  | (effective portion) |  | Classification of gain (loss) |  | (effective portion) |  | (ineffective portion) |
Derivatives – cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 217 |  |  |  |  |  |  |  |  |
Cross-currency interest rate swaps |  |  | 3,740 |  | Gain (loss) on foreign currency exchange |  |  | 2,481 |  |  | - |
|  |  |  |  | Interest income – loans |  |  | (564) |  |  | - |
Forward foreign exchange |  |  | 1,742 |  | Interest expense – borrowings and debt |  |  | (169) |  |  | - |
|  |  |  |  | Gain (loss) on foreign currency exchange |  |  | 3,679 |  |  | - |
Total |  |  | 5,699 |  |  |  |  | 5,427 |  |  | - |
Derivatives – net investment hedge |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange |  |  | 109 |  | Gain (loss) on foreign currency exchange |  |  | - |  |  | - |
Total |  |  | 109 |  |  |  |  | - |  |  | - |
The Bank recognized in earnings the gain (loss) on derivative financial instruments and the gain (loss) of the hedged asset or liability related to qualifying fair value hedges, as follows:
2014 |
|  |  |  | Gain |  | Gain |  |  |  |
|  | Classification in consolidated |  | (loss) on |  | (loss) on |  | Net gain |
|  | statement of income |  | derivatives |  | hedge item |  | (loss) |
Derivatives - fair value hedge |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | Interest income – securities available-for-sale |  |  | (1,800) |  |  | 2,345 |  |  | 545 |
|  | Interest income – loans |  |  | (361) |  |  | 3,112 |  |  | 2,751 |
|  | Interest expense – borrowings and debt |  |  | 3,737 |  |  | (16,204) |  |  | (12,467) |
|  | Derivative financial instruments and hedging |  |  | (994) |  |  | 1,021 |  |  | 27 |
Cross-currency interest rate swaps |  | Interest income – loans |  |  | (853) |  |  | 1,695 |  |  | 842 |
|  | Interest expense – borrowings and debt |  |  | 4,538 |  |  | (10,031) |  |  | (5,493) |
|  | Derivative financial instruments and hedging |  |  | (24,335) |  |  | 24,434 |  |  | 99 |
|  | Gain (loss) on foreign currency exchange |  |  | - |  |  | - |  |  | - |
|  |  |  |  | (20,068) |  |  | 6,372 |  |  | (13,696) |
2013 |
|  |  |  | Gain |  | Gain |  |  |  |
|  | Classification in consolidated |  | (loss) on |  | (loss) on |  | Net gain |
|  | statement of income |  | derivatives |  | hedge item |  | (loss) |
Derivatives - fair value hedge |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | Interest income – securities available-for-sale |  |  | (3,088) |  |  | 4,649 |  |  | 1,561 |
|  | Interest income – loans |  |  | (39) |  |  | 350 |  |  | 311 |
|  | Interest expense – borrowings and debt |  |  | 3,192 |  |  | (16,204) |  |  | (13,012) |
|  | Derivative financial instruments and hedging |  |  | (3,622) |  |  | 3,942 |  |  | 320 |
Cross-currency interest rate swaps |  | Interest income – loans |  |  | (795) |  |  | 1,548 |  |  | 753 |
|  | Interest expense – borrowings and debt |  |  | 6,905 |  |  | (12,452) |  |  | (5,547) |
|  | Derivative financial instruments and hedging |  |  | (6,117) |  |  | 6,150 |  |  | 33 |
|  | Gain (loss) on foreign currency exchange |  |  | (430) |  |  | 458 |  |  | 28 |
|  |  |  |  | (3,994) |  |  | (11,559) |  |  | (15,553) |
2012 |
|  |  |  | Gain |  | Gain |  |  |  |
|  | Classification in consolidated |  | (loss) on |  | (loss) on |  | Net gain |
|  | statement of income |  | derivatives |  | hedge item |  | (loss) |
Derivatives - fair value hedge |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | Interest income – securities available-for-sale |  |  | (2,982) |  |  | 4,776 |  |  | 1,794 |
|  | Interest expense – borrowings and debt |  |  | 1,564 |  |  | (12,022) |  |  | (10,458) |
|  | Derivative financial instruments and hedging |  |  | 59 |  |  | - |  |  | 59 |
Cross-currency interest rate swaps |  | Interest income – loans |  |  | (239) |  |  | 522 |  |  | 283 |
|  | Interest expense – borrowings and debt |  |  | 8,024 |  |  | (11,187) |  |  | (3,163) |
|  | Derivative financial instruments and hedging |  |  | 12 |  |  | - |  |  | 12 |
|  | Gain (loss) on foreign currency exchange |  |  | 5,873 |  |  | (6,469) |  |  | (596) |
|  |  |  |  | 12,311 |  |  | (24,380) |  |  | (12,069) |
For control purposes, derivative instruments are recorded at their nominal amount (“notional amount”) in memorandum accounts. Interest rate swaps are made either in a single currency or cross currency for a prescribed period to exchange a series of interest rate flows, which involve fixed for floating interest payments, and viceversa. The Bank also engages in certain foreign exchange trades to serve customers’ transaction needs and to manage the foreign currency risk. All such positions are hedged with an offsetting contract for the same currency. The Bank manages and controls the risks on these foreign exchange trades by establishing counterparty credit limits by customer and by adopting policies that do not allow for open positions in the credit and investment portfolio. The Bank also uses foreign currency exchange contracts to hedge the foreign exchange risk associated with the Bank’s equity investment in a non-U.S. dollar functional currency foreign subsidiary. Derivative and foreign exchange instruments negotiated by the Bank are executed mainly over-the-counter (OTC). These contracts are executed between two counterparties that negotiate specific agreement terms, including notional amount, exercise price and maturity. The maximum length of time over which the Bank has hedged its exposure to the variability in future cash flows on forecasted transactions is 6.48 years. The Bank estimates that approximately $222 thousand of losses reported in OCI as of December 31, 2014 related to forward foreign exchange contracts are expected to be reclassified into interest income as an adjustment to yield of hedged loans during the twelve-month period ending December 31, 2015. The Bank estimates that approximately $220 thousand of losses reported in OCI as of December 31, 2014 related to forward foreign exchange contracts are expected to be reclassified into interest income as an adjustment to yield of hedged available-for-sale securities during the twelve-month period ending December 31, 2015. Types of Derivatives and Foreign Exchange Instruments Interest rate swaps are contracts in which a series of interest rate flows in a single currency are exchanged over a prescribed period. The Bank has designated a portion of these derivative instruments as fair value hedges and a portion as cash flow hedges. Cross currency swaps are contracts that generally involve the exchange of both interest and principal amounts in two different currencies. The Bank has designated a portion of these derivative instruments as fair value hedges and a portion as cash flow hedges. Forward foreign exchange contracts represent an agreement to purchase or sell foreign currency at a future date at agreed-upon terms. The Bank has designated these derivative instruments as cash flow hedges and net investment hedges. In addition to hedging derivative financial instruments, the Bank has derivative financial instruments held for trading purposes that have been disclosed in Note 12.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5618551-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5708775-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624181-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624258-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624163-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5708773-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624177-113959 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41620-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5579245-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5580258-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5579240-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41641-113959 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41638-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624171-113959 + Details
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