BSTDB Financial Statements For 2019

BLACK SEA TRADE AND DEVELOPMENT BANK
Financial Statements for the Year Ended

31 December 2019
Together with Auditor’s Report

Table of Contents
Page
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Independent Auditor’s Report 2– 6
Income Statement 7
Statement of Comprehensive Income 8
Statement of Financial Position 9
Statement of Changes in Members’ Equity 10
Statement of Cash Flows 11
Notes to the Financial Statements 12 – 65
1
Deloitte Certified Public
Accountants S.A.
3a Fragkokklisias & Granikou str.
Marousi Athens GR 151-25
Greece
Tel: +30 210 6781 100

www.deloitte.gr
INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and Governors of Black Sea Trade and Development Bank
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Black Sea Trade and Development Bank (the Bank), which
comprise the statement of financial position as at 31 December 2019, and the statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended, and notes to
the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Bank as at 31 December 2019, and its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Bank in accordance with the International
Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code)
together with the ethical requirements that are relevant to our audit of the financial statements in Greece,
and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA
Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
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Key audit matter How the matter was addressed in our audit
Expected Credit Loss on Loans at amortized cost
Loans at amortized cost amounted to € 1,808 Based on our risk assessment and following a
million as at 31 December 2019 (€ 1,318 million risk based approach, we have evaluated the
as at 31 December 2018) and loss impairment impairment methodologies applied and
to € 43 million (€ 35 million as at 31 December assumptions made by Management in relation
2018) as presented on the Statement of to this key audit matter, which included, inter
Financial Position. The charge for the period for alia, the following audit procedures:
impairment losses on loans amounted to € 1.8 • We assessed the design and
million for the year ended 31 December 2019 (€ implementation of internal controls relevant
6.3 million for the year ended 31 December to the ECL, including controls relevant to the
2018). determination of significant credit risk
parameters, inputs applied into the
The Bank establishes allowances for impairment impairment calculation engine, ECL results
on loans at amortized cost, for expected credit and relevant disclosures.
losses (ECL) on both an individual and • With the support of our credit and modelling
collective basis. specialists, we tested the appropriateness
of the criteria (significant increase in credit
The estimation of ECL on loans at amortized risk, days past due) used for staging
cost is considered a key audit matter as it assessment of loans at amortized cost. We
involves critical Management judgement and further performed substantive procedures
accounting estimates with high level of and on a sample basis we tested the timely
subjectivity and complexity. identification of exposures with significant
increase in credit risk and timely
The most significant Management judgements identification of credit impaired exposures.
and accounting estimates relate to: • With the support of our credit and modelling
• The criteria used for the staging specialists, we assessed the
assessment of loans at amortized cost. appropriateness of the credit risk models
• The determination of credit risk parameters, used by performing recalculations on a
such as Loss Given Default (LGD), sample basis and by challenging relevant
Probability of Default (PD) and the Management significant assumptions. As
Exposure at Default (EAD) and the data part of our substantive procedures, we
used to build and run the credit risk models tested accuracy and completeness of critical
to calculate ECL. data used in ECL calculation.
• The use of a model for ECL calculation. • We assessed the completeness and
accuracy of disclosures in accordance with
Management provided further information about the provisions of the relevant accounting
principles and accounting policies for standards.
determining the allowance for impairment on
loans at amortized cost, the management of
credit risk and the review of impairment in notes
4, 11 and 14 to the financial statements.
3
Key audit matter How the matter was addressed in our audit
Information Technology General Controls and controls over financial reporting
The Bank’s financial reporting processes is Based on our risk assessment, we have tested
highly dependent on Information Technology the design and operating effectiveness of
(IT) systems supporting automated accounting Information Technology General Computer
reconciliation procedures and calculations, thus Controls (ITGCs) relevant for financial reporting.
leading to a complex IT environment pervasive
in nature and in which a significant number of Our assessment included the evaluation of user
transactions are processed daily. access over applications, operating systems
and databases, IT operations as well as the
This is a key audit matter since it is important process followed over changes made to
that controls over access security, cyber risks, application systems/programs at all layers.
system change, data-center and network
operations are designed and operate effectively Our IT audit procedures were performed with
to ensure complete and accurate financial the support of IT specialists and included,
records/information. among others, testing of:
• User access provisioning and de-
Management has developed a system efficiency provisioning process.
plan including aspects such as access, change • Privileged access to applications, operating
management, data-center and network controls systems and databases.
in applications, databases and operating • Periodic review of user access rights.
systems in response to these risks, as • Change management process.
described in detail in note ‘Operational Risks’. • Data-center and network operations.
Other matters
For the opinion on the prior year’s financial statements, whose data are presented for comparative
purposes, reference should be made to the auditors’ report issued by other auditors on 19 April 2019.
Other Information
Management is responsible for the other information. The other information comprises the information
included in the Annual report, but does not include the financial statements and our auditor’s report thereon.
The Annual report is expected to be made available to us after the date of this auditor’s report.
Our opinion on the financial statements does not cover the other information and we will not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above when it becomes available and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.
When we read the Annual report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to those charged with governance.
4
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRSs, and for such internal control as management determines is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Bank’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Bank or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Bank’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Bank's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Bank to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
5
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Despina Xenaki.
Athens, 7 May 2020
The Certified Public Accountant
Despina Xenaki
Reg. No SOEL:14161
Deloitte Certified Public Accountants SA
3a Fragkokklisias & Granikou str.,
GR 151-25 Marousi, Athens, Greece
Reg. No SOEL:E 120
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INCOME STATEMENT
For the year ended 31 December 2019
Presented in thousands of EUR Note 2019 2018
Interest and similar income 7 93,969 78,717

Interest and similar expense 8 (53,274) (37,974)
Net interest (expense) on derivatives (4,113) (7,599)
Net interest income 36,582 33,144
Net fees and commissions 9 967 1,652

Net gains from equity investments through profit or loss 15 268 572
Net gains from debt investment securities through OCI 119 29
Foreign exchange income (losses) (1,067) (1,352)
Other income (loss) 4 (3)
Operating income 36,873 34,042
Personnel expenses 10,25 (15,758) (15,952)

Administrative expenses 10 (5,187) (4,770)
Depreciation and amortization 17,18 (572) (453)
Income before impairment 15,356 12,867
Impairment (losses) on loans at amortized cost 11 (1,841) (6,292)

Impairment (losses) on debt investment securities through OCI 12 (111) (368)
Fair value (losses) on loans through profit or loss 14 477 (446)
Fair value gains (losses) on equity investments through profit or loss 15 (217) (585)
Net income for the year 13,664 5,176
The accompanying notes, on pages 12 to 65 are an integral part of these financial statements.
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STATEMENT OF OTHER COMPREHENSIVE INCOME
Other comprehensive income (expense):

Items that will not be reclassified subsequently to profit or loss:
Actuarial (losses) gains on defined benefit scheme 23 (3,020) 2,414
Gains on equity investments financial assets 23 4,219 713
Items that are or may be reclassified subsequently to profit or loss:
Gains (losses) on investment securities financial assets 23 12,518 (8,929)
Other comprehensive income (expense) 13,717 (5,802)
Total comprehensive income (loss) 27,381 (626)
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STATEMENT OF FINANCIAL POSITION
At 31 December 2019
Assets
Cash and due from banks 24 82,621 48,598
Debt investment securities at amortized cost 12,24 - 49,339

Debt investment securities at fair value through other
comprehensive income 12,24 420,591 346,640
Less: impairment losses 12 (765) (644)
Debt investment securities net 419,826 395,335
Derivative financial instruments – assets 13 3,128 662
Loans at amortized cost 14,5 1,808,187 1,318,418

Less: deferred income 14 (8,170) (3,052)
Less: impairment losses 11,5 (43,314) (34,775)
Loans at fair value through profit or loss 14 12,754 12,277
Loans net of impairment 1,769,457 1,292,868
Equity investments at fair value through profit or loss 15,5 798 1,015
Equity investments at fair value through other
comprehensive income 15,5 29,588 26,640
Equity investments at fair value 30,386 27,655
Other assets 16 35,853 29,541

Property and equipment 17 489 455
Intangible assets 18 422 653
Right of use assets 21 1,255 -
Total Assets 2,343,437 1,795,767
Liabilities
Borrowings
Amounts due to banks 19 246,437 227,109
Debts evidenced by certificates 19 1,238,718 726,921
Derivative financial instruments – liabilities 13 6,552 24,164
Payables and accrued interest 20 20,262 15,973
Lease liability 21 1,059 -
Total liabilities 1,513,028 994,167
Members' Equity
Authorized share capital 22 3,450,000 3,450,000
Less: unallocated share capital 22 (1,161,500) (1,161,500)
Subscribed share capital 22 2,288,500 2,288,500
Less: callable share capital 22 (1,601,950) (1,601,950)
Less: payable share capital past due 22 - (1,428)
Paid-in share capital 686,550 685,122
Reserves 23 54,009 32,957

Retained earnings 89,850 83,521
Total members' equity 830,409 801,600
Total Liabilities and Members' Equity 2,343,437 1,795,767
Off-balance-sheet items
Commitments 5 353,496 252,801
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STATEMENT OF CHANGES IN MEMBERS’ EQUITY
Share capital
Presented in thousands EUR Retained
Subscribed Callable Payable Reserves Earnings Total
At 31 December 2017 2,288,500 (1,601,950) (44,984) 33,583 83,521 758,670
Total comprehensive income - - - (5,802) 5,176 (626)

Members’ contributions - - 43,556 - - 43,556
Transfer to general reserve - - - 5,176 (5,176) -
At 31 December 2018 2,288,500 (1,601,950) (1,428) 32,957 83,521 801,600
Total comprehensive income - - - 13,717 13,664 27,381

Members’ contributions - - 1,428 - - 1,428
Transfer to general reserve - - - 7,335 (7,335) -
At 31 December 2019 2,288,500 (1,601,950) - 54,009 89,850 830,409
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STATEMENT OF CASH FLOWS
Cash flows from operating activities

Adjustment for:
Depreciation and amortization 17,18 572 453
Impairment losses 11,12 1,952 6,660
Fair value (gains) losses on loans at FVTPL 14 (477) 446
Fair value (gains) losses on equity investments at FVTPL 15 217 585
Net interest income (36,582) (33,144)
Foreign exchange adjustment on provisions 11 198 1,073
Operating (loss) before changes in operating assets (20,456) (18,751)
Changes in:
Derivative financial instruments 13 (20,078) 6,919
Other assets 16 (2,147) (189)
Accounts payable 20,21 4,191 (808)
Deferred income 14 5,118 (3,167)
Fair value movements 23 16,737 (8,216)
Cash generated from operations (16,635) (24,212)
Proceeds from repayment of loans 14 381,756 377,988
Proceeds from repayment of equity investments 2,096 4,756
Funds advanced for loans 14 (871,130) (572,966)
Funds advanced for equity investments (825) (859)
Foreign exchange and other adjustments (4,874) (827)
Interest income received 89,804 75,522
Interest expense paid (52,117) (44,214)
Net cash from / (used in) operating activities (471,925) (184,812)
Cash flows from investing activities

Proceeds from investment securities at FVTOCI 812,753 409,139
Purchase of investment securities at FVTOCI (759,717) (523,141)
Purchase of property, software and equipment 17,18 (379) (408)
Net cash from / (used in) investing activities 52,657 (114,410)
Cash flows from financing activities

Proceeds received from share capital 22 1,428 43,556
Proceeds from borrowings 20 1,267,253 433,639
Repayments of borrowings 20 (736,128) (202,201)
Net cash from / (used in) financing activities 532,553 274,994
Net increase in cash and cash equivalents 113,285 (24,228)
Cash and cash equivalents at beginning of year 24 172,253 196,481
Cash and cash equivalents at end of year 24 285,538 172,253
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NOTES TO THE FINANCIAL STATEMENTS
1. ESTABLISHMENT OF THE BANK
Agreement Establishing the Bank
Black Sea Trade and Development Bank (‘Bank’), whose headquarters are located at 1 Komninon Street,
Thessaloniki, in the Hellenic Republic, was established as an international financial organization under the
Agreement Establishing the Bank dated 30 June 1994 (‘Establishing Agreement’). In accordance with
Article 61 of the Establishing Agreement, following the establishment of the Bank the Establishing
Agreement came into force on 24 January 1997. The Bank commenced operations on 1 June 1999.
The purpose of the Bank is to accelerate development and promote cooperation among its shareholder
countries. As a regional development institution, the Bank is well placed to mobilize financial resources and
to improve access to financing for businesses in the whole region as well as for those active only in its
individual Member Countries. The Bank offers project and trade financing facilities, equity participations and
guarantees. Bank financing of projects and programs is available directly or in cooperation with other
national and international development institutions. The Bank may also, where appropriate, provide
technical assistance to potential customers.
As at financial position date the Bank's shareholders comprised of the following 11 countries: Albania,
Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russian Federation, Turkey and
Ukraine.
Headquarters Agreement
The status, privileges and immunities of the Bank and persons connected therewith in the Hellenic Republic
are defined in the Headquarters Agreement between the Government of the Hellenic Republic and the Bank
(‘Headquarters Agreement’) signed on 22 October 1998.
Board of Governors and Board of Directors
Each of the Member States of the Bank is represented on the Board of Governors (BoG), with all powers
of the Bank vested in the BoG. With the exception of certain reserved powers, the BoG has delegated the
exercise of its powers to the Board of Directors (BoD), while retaining overall authority. At financial position
date the members are: Republic of Albania, Erjon Luci, Deputy Minister of Finance; Republic of Armenia,
Arthur Javadyan, Chairman, Central Bank of Armenia; Republic of Azerbaijan, Samir Sharifov, Minister of
Finance; Republic of Bulgaria, Marinela Petrova, Deputy Minister of Finance; Georgia, Koba Gvenetadze,
Governor National Bank of Georgia; Hellenic Republic, Adonis-Spyridon Georgiadis, Minister of
Development & Investments; Republic of Moldova, Ion Chicu, Minister of Finance; Romania, Eugen Orlando
Teodorovici, Minister of Public Finance; Russian Federation, Sergey Storchak, Deputy Minister of Finance;
Republic of Turkey, Bulent Aksu, Deputy Minister of Treasury & Finance; Ukraine, Timofiy Mylovanov,
Minister of Economic Development, Trade & Agriculture.
The BoD, chaired by the President of the Bank, is responsible for guiding the general operations of the
Bank. Each of the Bank’s Member States appoints a Director and an Alternate Director, who has full powers
to act for the Director when the Director is not present. At financial position date the members are: Republic
of Albania, Arian Kraja, Secretary General, Ministry of Finance & Economy; Republic of Armenia, Davit
Ananyan, Chairman of the State Revenue Committee; Republic of Azerbaijan, Famil Ismayilov, Deputy
Head, International Relations Department, Ministry of Finance; Republic of Bulgaria, Petya Kuzeva,
Director, Government Debt Directorate, Ministry of Finance; Georgia, Nikoloz Gagua, Deputy Minister of
Finance; Hellenic Republic, Ioannis Tsakiris, Deputy Minister of Development & Investments; Republic of
Moldova, Elena Matveeva, Head, Public Debt Department, Ministry of Finance; Romania, Diana Blindu,
Head of Division, General Directorate for International Financial Relations, Ministry of Public Finance;
Russian Federation, Evgeny Stanislavov, Director, Department of Economic Cooperation, Ministry of
Foreign Affairs; Republic of Turkey, Kemal Cagatay Imirgi, Acting Director General, Foreign Economic
Relations, Ministry of Treasury and Finance; Ukraine, Vitaliy Lisovenko, Governmental Envoy for Public
Debt Management, Ministry of Finance.
BoG and BoD members can be changed at any time upon the discretion of the respective Member State.
12
Notes to the Financial Statements
The financial statements for the year ended 2019 were submitted by the Management to the Board of
Directors (BoD) for approval on 7 May 2020, and were approved on that date.
Pursuant to Article 23 of the Establishing Agreement, these financial statements shall be subject to approval
by the Board of Governors (BoG) in their Annual Meeting to be held on 18 June 2020.
2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
2.1 Basis of Preparation
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as published by the International Accounting Standards Board (IASB).
Basis of measurement
The financial statements have been prepared on a historical cost basis except for financial assets
and financial liabilities held at fair value through profit or loss and all derivative contracts, which
have been measured at fair value in accordance with IFRS 9.
Functional and presentation currency
The Bank’s functional currency is the Euro (EUR) as defined by the European Central Bank (ECB).
The Euro is most representative of the Bank’s operations and environment as a significant
percentage of the Bank’s lending operations are in Euro, and the administrative expenses and
capital expenditures are primarily denominated and settled in this currency. The Bank’s
presentation currency is the EUR.
Judgments and assumptions
IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Use of available
information and application of judgment are inherent in the formation of estimates in the following
areas: impairment of loans-and-receivables, valuation of financial instruments not quoted in active
markets, including OTC derivatives and certain debt securities, impairment of investment securities,
estimation of retirement benefits obligation, and contingencies from litigation. Actual results in the
future may differ from those reported.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed in the Note ‘Use of estimates’.
2.2 Going Concern
The financial statements have been prepared on a going concern basis. As disclosed in Note 27, 2020
began with the outbreak of a new strain of Coronavirus (COVID-19) pandemic, subsequent to the year-end
Management have performed procedures to assess and monitor the financial and operational impacts of
COVID-19 as detailed in Note 27. Management have not identified the need for asset impairments and are
of the view that the Bank will continue to operate through this pandemic as a going concern.
2.3 Adoption of New and Amended Standards (IFRS) EU
New standards and amendments to standards as well as IFRIC 23 which were issued by the International
Accounting Standards Board (IASB), applied on 1 January 2019:
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• Amendment to International Financial Reporting Standard 9 ’Financial Instruments':

Prepayment Features with Negative Compensation.
On 12.10.2017 the International Accounting Standards Board issued an amendment to IFRS 9

that permits some pre-payable financial assets with negative compensation features, that would
otherwise been measured at fair value through profit or loss, to be measured at amortized cost or
at fair value through other comprehensive income. The amendment to IFRS 9 clarifies that a
financial asset passes the SPPI criterion regardless of the event or circumstance that cause the
early termination of the contract and irrespective of which party pays or receives reasonable
compensation for the early termination of the contract. The adoption did not have any material
impact on the Bank’s financial statements.
• International Financial Reporting Standard 16 ’Leases’

On 13.1.2016 the International Accounting Standards Board issued IFRS 16 ‘Leases’ which
supersedes:
- IAS 17 ‘Leases’
- IFRIC 4 ‘Determining whether an arrangement contains a lease’
- SIC 15 ‘Operating Leases – Incentives’ and
- SIC 27 ‘Evaluating the substance of transactions involving the legal form of a lease’.
The new standard significantly differentiates the accounting of leases for lessees while essentially
maintaining the existing requirements of IAS 17 for the lessors. In particular, under the new
requirements, the classification of leases as either operating or finance is eliminated. A lessee is
required to recognize, for all leases with term of more than 12 months, the right-of-use asset as
well as the corresponding obligation to pay the lease payments. The above treatment is not
required when the asset is of low value.
At initial recognition, the right-of-use asset comprises the amount of the initial measurement of the
lease liability, any initial direct costs, any lease payments made before the commencement date
as well as an estimate of dismantling costs.
At initial recognition, the lease liability is equal to the present value of the lease payments that are
not paid at that date. This has been adopted by the Bank with no significant impact on its financial
position.
• Amendments to International Accounting Standard 19 ‘Employee Benefits’: Plan Amendment,

Curtailment or Settlement
On 7.2.2018 the International Accounting Standards Board issued an amendment to IAS 19 with
which it specified how companies determine pension expenses when changes to a defined benefit
pension plan occur. In case that an amendment, curtailment or settlement takes place IAS 19
requires a company to remeasure its net defined benefit liability or asset. The amendments to IAS
19 require specifically a company to use the updated assumptions from this remeasurement to
determine current service cost and net interest for the remainder of the reporting period after the
change to the plan. In addition, the amendment to IAS 19 clarifies the effect of a plan amendment,
curtailment or settlement on the requirements regarding the asset ceiling. The adoption did not
have material impact on the Bank’s financial statements.
• Amendment to International Accounting Standard 28 ’Investments in Associates’: Long-term

Interests in Associates and Joint Ventures.
On 12.10.2017 the International Accounting Standards Board issued an amendment to IAS 28 to

clarify that long-term interests in an associate or joint venture that form part of the net investment
in the associate or joint venture —to which the equity method is not applied—should be accounted
for using IFRS 9, including its impairment requirements. In applying IFRS 9, the entity does not
take account of any adjustments to the carrying amount of long-term interests that arise from
applying IAS 28. The adoption did not have material impact on the Bank’s financial statements.
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• Improvements to International Accounting Standards – cycle 2015-2017.
As part of the annual improvements project, the International Accounting Standards Board issued,
on 12.12.2017, non-urgent but necessary amendments to various standards.
• IFRIC Interpretation 23 ‘Uncertainty over Income Tax Treatments’.
On 7.6.2017 the International Accounting Standards Board issued IFRIC 23. The Interpretation
clarifies application of recognition and measurement requirements in IAS 12 when there is
uncertainty over income tax treatments. The Interpretation specifically clarifies the following:
- An entity shall determine whether to consider each uncertain tax treatment separately or
together with one or more other uncertain tax treatments based on which approach better
predicts the resolution of the uncertainty.
- The estimations for the examination by taxation authorities shall be based on the fact that
a taxation authority will examine amounts it has a right to examine and have full knowledge
of all related information when making those examinations.
- For the determination of taxable profit (tax loss), tax bases, unused tax losses, unused
tax credits and tax rates, an entity shall consider whether it is probable that a taxation
authority will accept an uncertain tax treatment.
- An entity shall reassess an estimate if the facts and circumstances change or as a result
of new information.
The adoption did not have material impact on the Bank’s financial statements.
Except for the standards mentioned above, the following amendments to standards which are effective for
annual periods beginning after 1 January 2019.
• Amendment to International Financial Reporting Standard 9 “Financial Instruments’, to

International Accounting Standard 39 ’Financial Instruments’ and to International Financial
Reporting Standard 7 ’Financial instruments: Disclosures’: Interest rate benchmark reform.
Effective for annual periods beginning on or after 1.1.2020:
On 26.9.2019 the International Accounting Standards Board issued amendments to IFRS 9, IAS 39 and
IFRS 7, according to which temporary exceptions from the application of specific hedge accounting
requirements are provided in the context of interest rate benchmark reform.
In accordance with the exceptions, entities applying those hedge accounting requirements may assume
that the interest rate benchmark is not altered as a result of the interest rate benchmark reform. Relief is
provided regarding the following requirements:
- The highly probable requirement in cash flow hedge,

- Prospective assessments,
- Separately identifiable risk components.
The adoption is not expected to have any material impact on the Bank’s financial statements.
• Amendments to International Accounting Standard 1 ’Presentation of Financial Statements’

and to International Accounting Standard 8 ‘Accounting Policies, Changes in Accounting
Estimates and Errors: ’Definition of material’.
On 31.10.2018 the International Accounting Standards Board, as part of the Disclosure Initiative, issued
amendments to IAS 1 and IAS 8 to align the definition of ‘material’ across the standards and to clarify
certain aspects of the definition.
15
The new definition states that information is material if omitting, misstating or obscuring it could reasonably
be expected to influence decisions that the primary users of general purpose financial statements make
on the basis of those financial statements, which provide financial information about a specific reporting
entity. The amendments include examples of circumstances that may result in material information being
obscured. The IASB has also amended the definition of material in the Conceptual Framework to align it
with the revised definition of material in IAS 1 and IAS 8.
• Amendment to International Financial Reporting Standard 3 “Business Combinations”:

Definition of a Business.
On 22.10.2018 the International Accounting Standards Board issued an amendment to IFRS 3 aimed at
resolving the difficulties that arise when an entity determines whether it has acquired a business or a group
of assets. The amendments:
- Clarify the minimum requirements required in order a business to have been acquired,
- The assessment for the acquisition of either a business or a group of assets is simplified
and it is based on current condition of acquired elements rather than on the market
participant’s ability to integrate them into his own processes,
- The definition of outputs is amended so that apart from the revenue arising from ordinary
activities falling within the scope of IFRS 15, it also includes other income from main
activities such as income from investment services,
- Guidance is added to assess whether a production process is substantive both in cases
where a product is produced at the date of acquisition and in cases where there is no
product produced,
- An optional exercise is introduced based on the fair value of the assets acquired to assess
whether a business or group of assets has been acquired.
The adoption is not expected to have any impact on the Bank’s financial statements.
• Amendment to International Financial Reporting Standard 10 ’Consolidated Financial

Statements’ and to International Accounting Standard 28 ’Investments in Associates and Joint
Ventures’: Sale or contribution of assets between an investor and its associate or joint venture.
Effective date: To be determined.
On 11.9.2014 the International Accounting Standards Board issued an amendment to IFRS 10

and IAS 28 in order to clarify the accounting treatment of a transaction of sale or contribution of
assets between an investor and its associate or joint venture. In particular, IFRS 10 was amended
in order to be clarified that in case that as a result of a transaction with an associate or joint venture,
a parent loses control of a subsidiary, which does not contain a business, as defined in IFRS 3, it
shall recognize to profit or loss only the part of the gain or loss which is related to the unrelated
investor’s interests in that associate or joint venture. The remaining part of the gain from the
transaction shall be eliminated against the carrying amount of the investment in that associate or
joint venture. In addition, in case the investor retains an investment in the former subsidiary and
the former subsidiary is now an associate or joint venture, it recognizes the part of the gain or loss
resulting from the remeasurement at fair value of the investment retained in that former subsidiary
in its profit or loss only to the extent of the unrelated investor’s interests in the new associate or
joint venture. The remaining part of the gain is eliminated against the carrying amount of the
investment retained in the former subsidiary.
In IAS 28, respectively, it was clarified that the partial recognition of the gains or losses shall be
applied only when the involved assets do not constitute a business. Otherwise, the total of the
gain or loss shall be recognized.
16
On 17.12.2015, the International Accounting Standards Board deferred the effective date for the
application of the amendment that had been initially determined. The new effective date will be
determined by the International Accounting Standards Board at a future date after taking into
account the results of its project relating to the equity method.
• International Financial Reporting Standard 14 ’Regulatory deferral accounts’.
On 30.1.2014 the International Accounting Standards Board issued IFRS 14. The new standard, which is
limited-scope, addresses the accounting treatment and the disclosures required for regulatory deferral
accounts that are maintained in accordance with local legislation when an entity provides rate-regulated
goods or services. The scope of this standard is limited to first-time adopters that recognized regulatory
deferral accounts in their financial statements in accordance with their previous GAAP. IFRS 14 permits these
entities to capitalize expenditure that non-rate-regulated entities would recognize as expense.
• International Financial Reporting Standard 17 “Insurance Contracts”
On 18.5.2017 the International Accounting Standards Board issued IFRS 17 which replaces IFRS 4
’Insurance Contracts’. In contrast to IFRS 4, the new standard introduces a consistent methodology for
the measurement of insurance contracts. The key principles in IFRS 17 are the following:
An entity:
- Identifies as insurance contracts those contracts under which the entity accepts significant
insurance risk from another party (the policyholder) by agreeing to compensate the
policyholder if a specified uncertain future event adversely affects the policyholder;
- Separates specified embedded derivatives, distinct investment components and distinct
performance obligations from the insurance contracts;
- Divides the contracts into groups that it will recognize and measure;
- Recognizes and measures groups of insurance contracts at:
i. A risk-adjusted present value of the future cash flows (the fulfilment cash flows)
that incorporates all of the available information about the fulfilment cash flows in
a way that is consistent with observable market information; plus (if this value is
a liability) or minus (if this value is an asset);
ii. An amount representing the unearned profit in the group of contracts (the
contractual service margin).
- Recognizes the profit from a group of insurance contracts over the period the entity
provides insurance cover, and as the entity is released from risk. If a group of contracts is
or becomes loss-making, an entity recognizes the loss immediately;
- Presents separately insurance revenue, insurance service expenses and insurance
finance income or expenses; and
- Discloses information to enable users of financial statements to assess the effect that
contracts within the scope of IFRS 17 have on the financial position, financial performance
and cash flows of an entity.
It is also noted that in November 2018 the International Accounting Standards Board proposed to defer
the IFRS 17 effective date to 1.1.2022.
• Amendment to the International Accounting Standard 1 ’Presentation of Financial

Statements’: Classification of liabilities as current or non-current.
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On 23.1.2020, the International Accounting Standards Board issued amendments to IAS 1 relating to the
classification of liabilities as current or non-current.
More specifically:
- The amendments specify that the conditions which exist at the end of the reporting period
are those which will be used to determine if the liability must be classified as current or
non-current.
- Management expectations about events after the balance sheet date must not be taken
into account.
- The amendments clarify the situations that are considered settlement of a liability.
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3. SIGNIFICANT ACCOUNTING POLICIES
A summary of the Bank’s accounting policies applied in the preparation of these financial statements are
presented in this section. These policies have been consistently applied to all periods presented in the
financial statements.
3.1 Foreign Currencies Translation
Foreign currency transactions being revenues, expenses, gains and losses are initially recorded in EUR by
applying to the foreign currency amount the exchange rate between the EUR and the foreign currency at
the rate prevailing at the date of transaction.
When preparing the financial statements exchange gains and losses arising from the translation of
monetary assets and liabilities denominated in foreign currencies at the end of year are recognized in the
income statement.
Non-monetary items that are measured at historical cost are translated using the historical exchange rate
at the date of the transaction. Translation differences on non-monetary items which are held at FVTPL as
prepayments are recognized in the income statement. Translation differences on non-monetary items which
are at FVTOCI as equity investments are included in other comprehensive income.
The Bank uses the official exchange rates published for the EUR by the European Central Bank (ECB).
The exchange rates used by the Bank at the financial position date were as follows.
31 December 31 December
2019 2018
= United States dollar 1.12340 1.14500
= Pound sterling 0.85080 0.89453
= Russian ruble 69.95630 79.71530
1 EUR = Azerbaijan manat 1.90350 1.94680
= Georgian lari 3.20950 3.07010
= Armenian dram 537.26000 553.65000
= Romanian leu 4.78300 4.66350
3.2 Recognition and Derecognition of Financial Instruments
The Bank recognizes a financial asset or financial liability in its statement of financial position when it
becomes a party to the contractual rights or obligations.
The Bank derecognizes a financial asset or a portion of a financial asset when (i) loses control of the
contractual rights that comprise the financial asset or a portion of the financial asset or (i) the Bank retains
the right to receive cash flows from the asset, but has assumed the obligation to pay it in full without material
delay to a third party under a ‘pass through’ arrangement. The Bank derecognizes a financial liability when
a liability is extinguished, that is when the obligation specified in the contract is discharged, cancelled or
expires. The evaluation of the transfer of risks and rewards of ownership precedes the evaluation of the
transfer of control for derecognition transactions.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the
carrying amount allocated to the portion of the asset derecognized) and the sum of (i) the consideration
received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or
loss that had been recognized in OCI is recognized in net income or loss.
3.3 Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash on hand,
placements with other financial institutions and debt securities with original maturities of three months or
less. These are highly liquid assets that are readily convertible to a known amount of cash and are subject
to insignificant risk of change in value due to the movements in market rates.
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3.4 Financial Assets
The classification of financial assets defines how existing information is reflected in the financial statements.
In particular, the valuation method and the impairment calculation are defined by this classification, which
are based on criteria established by the Bank.
3.4.1 Classification
The Bank recognizes a financial asset in its financial statements at the time of the creation of the
contractual claim (that is, the day the transaction took place). In recognition, the Bank determines
the business model to which it belongs. Financial assets are classified in three categories:
1. Financial assets measured at amortized cost (AC): this category classifies each asset or
group of assets for which the Bank's business model constitutes its holding for the purpose
of collecting contractual cash flows. The possible sale of financial assets should not be the
result of business planning for their management. Financial assets are classified at AC only
if both of the following criteria are met:
- The objective of the Bank’s business model is to hold the asset in order to collect
the contractual cash flows; and
- The contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal outstanding:
(i) Principal is the fair value of the financial asset at initial recognition.
(ii) Interest consist of consideration for the time value of money, for the credit
risk associated with the principal amount outstanding during a particular
period of time and for other basic lending risks and costs, as well as a profit
margin.
The Bank’s operations, which are non-derivative with fixed or determinable payments and
with fixed maturities, meeting the above criteria are measured initially at fair value plus
transaction costs and including any premium or discount that may arise on the date of
acquisition. Third party expenses, such as legal fees, incurred in securing a loan are treated
as part of the cost of the transaction. These financial assets are subsequently measured
at AC using the effective interest method, less any provision for impairment or
uncollectability. All other fees and relating income generated are reported in the income
statement (see note ‘Net fees and commissions’). All such financial assets are recognized
on settlement date.
These financial assets include cash and cash equivalents, loans and advances on amounts
disbursed to operations, receivables accrued, and certain debt investments that meet the
above criteria.
2. Financial assets measured at fair value through other comprehensive income (FVTOCI),
and are after reclassified at fair value through profit or loss (FVTPL) on derecognition: gains
or losses arising from the measurement are recorded in a separate members’ equity
account. This category classifies each asset or group of assets for which the Bank's
business model recommends that it be held for the purpose of collecting contractual cash
flows and selling them when the business planning of their acquisition has been achieved.
Debt instruments are classified and subsequently measured at FVTOCI only if both of the
following criteria are met:
- The objective of the Bank’s business model is achieved by both collecting the
contractual cash flows and selling the financial asset; and
- The contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal outstanding:
(i) Principal is the fair value of the financial asset at initial recognition.
(ii) Interest consist of consideration for the time value of money, for the credit
risk associated with the principal amount outstanding during a particular
period of time and for other basic lending risks and costs, as well as a profit
margin.
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This category includes Treasury financial assets such as euro commercial paper (ECP) or
bonds that are intended to be held to maturity, which may or may not be sold in the future.
Their fair value is determined by reference to quoted market bid prices. The unrealized
gains and losses that arise from fluctuations in fair value are recognized as a separate
component of member’s equity until the financial asset is sold or derecognized for any other
reason or until the investment is determined to be impaired, at which time the cumulative
gain or loss previously reported in member’s equity is included in income. Foreign
exchange gains or losses and any income accrued, by using the effective interest rate
method are recognized directly in income. All such financial assets are recognized on trade
date.
Financial assets not meeting the above criteria, as well as those financial assets
designated shall be measured at FVTPL.
In order to classify assets in the above two categories, contractual cash flows should consist solely
of payments of principal and interest (SPPIs).
3. Financial assets (equity instruments) measured at FVTOCI. On initial recognition the Bank
can make an irrevocable election, on an instrument-by-instrument basis, to designate
investments in an equity instrument not held for trading nor contingent consideration, as a
financial asset measured at FVTOCI. Those not elected are measured at FVTPL.
Dividends received are recorded in the income statement.
After initial recognition at cost, plus transaction costs, these financial assets are
subsequently measured at fair value with all gains and losses arising from changes in fair
value (realized and unrealized), including foreign exchange gains and losses, recognized
in other comprehensive income as a separate component of members’ equity. For those
not purchased from an active market the fair value is determined using accepted valuation
techniques. These valuation techniques used are net asset value and earnings-based
valuations using comparable information and discounting cash flows. All such financial
assets are recognized on settlement date.
The cumulative gains or losses are not reclassified, e.g. not recycled, to income on disposal
of the investments and no provisions for impairments are recognized in the income
statement. However, the cumulative gain or loss after the investment is subsequently
derecognized can be transferred within members’ equity.
4. Financial assets measured at FVTPL: this category classifies items that do not meet the
SPPI criterion as well as the items that the Bank holds for trading. Their classification
depends primarily on the following two important factors (i) the Bank’s business model for
these assets and (ii) the characteristics of the contractual cash flows of the asset.
These financial assets are initially measured at their fair value and subsequently carried at
fair value on the statement of financial position with all changes in fair value gains and
losses and foreign exchange gains and losses, recognized in the income statement in the
period in which they occur. Transaction costs on these financial assets are expensed in the
income statement. This category includes any treasury assets held for trading or resale to
realize short-term fair value changes as well as any loans for which either of the criteria for
recognition at AC is not met. It can also include a debt instrument or an equity instrument
that is not within the category nor measured at FVTOCI. Derivative instruments are also
categorized as financial assets at FVTPL. All such financial assets are recognized on trade
date.
In addition, a debt instrument that could meet AC criteria can be designated and measured
at FVTPL. Upon initial recognition, if such designation significantly reduces or eliminates
a measurement or recognition inconsistency, referred to as an ‘accounting mismatch’,
which would arise from measuring assets or recognizing the gains and losses on them on
different bases.
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3.4.2 Measurement
The Bank measures financial assets at fair value on initial recognition, as detailed above. In the
event the Bank considers that the fair value on initial recognition differs from the transaction price,
that difference is recognized as a gain or loss on initial recognition but only if the fair value is based
on a requested active market price for identical assets or is based on a valuation technique using
data solely from identified markets. In all other cases the fair value is adjusted to the amount of the
transaction price.
Financial assets that are subsequently measured at either AC or debt instruments at FVTOCI, are
subject to provisions for impairment.
Based on the Bank's credit policy, the Bank does not originate credit-impaired financial assets, nor
does the Bank purchase credit-impaired assets, exception being those loans would be acquired at
a deep discount.
Financial assets are not reclassified subsequent to their initial recognition, except in the period after
the Bank changes its business model for managing financial assets.
3.4.3 Business model assessment
The factor of the business model refers, amongst others, to the manner in which the Bank manages
its financial assets by classifying them in portfolios that are part of its business model. The
assessment process applied by the Bank through its business model, based on strategic objectives,
classifies its assets in the following three categories in accordance with IFRS 9:
i) Hold to collect
Each asset or group of assets for which the Bank's business model recommends that it be held for
the purpose of collecting contractual cash flows is classified as ‘Hold to collect’.
ii) Hold to collect and sell
Each asset or group of assets for which the Bank's business model recommends that it be held for
the purpose of collecting contractual cash flows and selling them when the strategic planning of
their acquisition has been achieved is classified as ‘Hold to collect and sell’.
iii) Trading portfolio
The financial assets held for trading are classified as ‘Trading portfolio’.
The adopted business model determines the source of revenue, as it arises from individual
portfolios either through the collection of contractual cash flows or from the sale of financial assets
or the combination of the above.
The assessment of the business model reflects the Bank's strategy under normal business
conditions. The assessment is not affected by actions required in ‘emergency situations’ (e.g.
liquidity needs, non-inherent capital requirements for credit risk, etc.). Also, Management decisions
taken to comply with new regulatory guidelines are not included in the assessment.
In general, the Bank has included the majority of its loan portfolios in the hold-to-collect business
model. The assessment of a business model is made within the definition of operational objectives
as defined by the Bank's Management, as well as in the operational management of its assets. The
assessment is effected at portfolio level rather than at individual asset levels.
The Business Model applied to loan portfolio, treasury portfolio and equity investment portfolio is
reassessed at each reporting period. The reassessment of the Business Model has been
established in order to determine if evidence initially used has changed.
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3.4.4 Loans
Loans originated by the Bank, is where money is provided directly to the borrower. Loans are initially
recorded at fair value, which is usually the net amount disbursed at inception including directly
attributable origination costs and certain types of fees or commission (e.g. syndication commission,
front-end, commitment fees and handling charges) that are regarded as an adjustment to the
effective interest rate of the loan, and are subsequently measured at amortized cost using the
effective interest rate method.
Loans that are designated as at FVTPL are recognized at a value arrived at by using a combination
of discounted cash flow models. These models incorporate market data pertaining to interest rates,
a borrower’s credit rating, and underlying assets. Where unobservable inputs have been used, a
sensitivity analysis has been included under ‘fair value hierarchy’ described within the ‘Risk
Management’ section of this report.
3.5 Impairment
3.5.1 Financial assets
The impairment requirements of IFRS 9 apply to financial instruments that are measured at AC or
FVTOCI, and off-balance-sheet lending commitments such as loan commitments and financial
guarantees. These financial assets will be tested to determine whether their credit quality has
changed significantly since the date of their creation. This resulted in the classification of the data
in 3 stages, which in ascending order indicates the credit risk and corresponding provisioning
charge of each item. As such, stage 1 includes assets whose credit quality is not significantly
degraded and the impairment that they will incur will be equal to a 12-month Expected Credit Loss
(ECL). Stage 2 includes assets whose credit quality has been substantially downgraded and are
subject to lifetime ECL. The same applies to the items classified in Stage 3, where all the impaired
items, including non-performing loans (NPLs), fall.
Financial instruments, including equity instruments, carried at FVTPL are not subject to impairment
requirements as their fair value reflects the credit of these exposures. Additionally, equity
investments measured at FVTOCI are also not subject to impairment requirements, but a negative
reserve balance in relation to the carrying amount of that equity investment, e.g. representing an
impairment loss, shall be recognized in other comprehensive income and shall not be recycled
(reclassified and transferred) to net income or loss.
The Bank measures impairment losses on an individual basis. Similarly, the assessment for
transferring financial assets between Stages 1, 2 and 3, are also made on an individual basis. The
Bank applies three main components to measure expected credit losses which are a LGD, PD and
EAD. In order to perform the ECL calculation, the Bank uses the Moody’s Analytics IFRS
ImpairmentCalc tool. Within the tool, the Bank provides probabilities of default and loss given
defaults and assigns scenarios for potential credit risk deterioration. There can be transfers of
exposures from one stage to another, depending on whether there is a change in the credit risk of
that exposure. Probability of default is an estimate of the likelihood of default over a given time
horizon.
The Bank uses information obtained from the Global Emerging Markets (GEMs) database in order
to assign PDs to its lending asset classes. GEMs is an IFI-wide initiative designed to pool default
and recovery rates experienced by IFIs in emerging markets. Treasury asset classes derive their
PDs from the assigning rating agency. LGD is an estimate of the loss arising on default. The Bank
uses information obtained from the GEMs database to assign LGDs to its lending asset classes,
and treasury asset classes derive their LGDs from the assigning rating agency.
Calculation of expected credit loss
The Bank recognizes allowance for ECLs that reflect changes in credit quality since initial
recognition to financial assets that are measured at AC and FVOCI, including loans, debt securities,
and loan commitments. No ECLs are recognized on equity investments. ECLs are a probability-
weighted average estimate of credit losses that reflects the time value of money. Upon initial
23
recognition of the financial instruments in scope of the impairment policy, the Bank records a loss
allowance equal to 12-month ECL, being the ECL that result from default events that are possible
within the next twelve months. Subsequently, for those financial instruments that have experienced
a significant increase in credit risk (SICR) since initial recognition, a loss allowance equal to lifetime
ECL is recognized, arising from default events that are possible over the expected life of the
instrument. The expected credit losses are weighted on the basis of three macroeconomic
scenarios (adverse, basic and favorable).
Classification of loans into stages based on credit risk (Staging)
The Bank has introduced a number of criteria for the classification of financial assets in stages.
These criteria are intended to check whether there has been a significant deterioration in the credit
quality of financial assets since inception. Essentially, the Bank examines:
- Days past due;
- If there has been a significant downgrade of the credit rating of the assets;
- Qualitative parameters indicating a change in credit quality (e.g. dealing with financial
difficulties); and
- Whether a financial asset characterized as credit-impaired.
Basic parameters used for the calculation of expected credit loss
The calculation of expected credit losses is based on the probability of default (PD), loss given
default (LGD), exposure at default (EAD) and other parameters such as the credit conversion factor
(CCF) and the prepayment rate. The Bank has obtained from an external provider a system of
calculating expected credit losses. The basic parameters have been drawn from statistical models
developed in cooperation with the external provider, utilizing the existing risk management
infrastructure and practices of the Bank and the know-how and experience of the provider.
PD represents the probability that a debtor will default on his debt obligations either over the next
12 months or over the remaining maturity of his debt. In accordance with IFRS 9, the Bank uses
non-discriminatory point-in-time PDs that adjust to macroeconomic assumptions using the ECL.
EAD is defined as the estimate of the exposure in the event of a default of the debtor. The EAD of
a financial asset represents its gross carrying amount in the event of a default.
LGD represents the extent of the loss that the Bank expects for exposures that are in default and
is defined as the difference between the contractual cash flows and those that the Bank expects to
collect, including collateral amounts. LGD, which is usually expressed as a percentage of the EAD,
varies according to the category of the counterparty, the category and priority of the claim, the
existence of collateral and other credit enhancements.
CCF is used to convert credit lines and other off-balance sheet exposures into EAD amounts. It is
considered as an assumption representing the percentage of undrawn exposures expected to be
disbursed prior to the occurrence of the default event. The prepayment rate is an estimate of
premature repayments of a financial exposure that exceeds contractual repayments on the basis
of the repayment schedule and is expressed as a percentage of the EAD in each reporting period,
resulting in a reduction in the EAD.
The Bank has made use of three macroeconomic scenarios (adverse, basic and favorable) taking
into account the relative chances of each of the scenarios. The baseline scenario is the most likely
scenario and is in line with the Bank's information for strategic planning and budgeting purposes.
Significant increase in credit risk
At each reporting date, the Bank assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition. When making the assessment, the Bank compares
the risk of a default occurring on the financial instrument as at the reporting date with the risk of a
default occurring on the financial instrument as at the date of initial recognition and considers
reasonable and supportable information, that is available without undue cost or effort, that is
indicative of significant increases in credit risk since initial recognition.
24
Generally, there will be a significant increase in credit risk before a financial asset becomes credit-
impaired or an actual default occurs. The assessment of significant increase in credit risk is key in
transferring an exposure from Stage 1 to Stage 2 or to Stage 3 and the respective change in the
ECL measurement from 12-month to lifetime ECL. A combination of quantitative and qualitative
factors structured as primary and secondary drivers will be considered and are also supplemented
with backstop options. The backstop triggers automatic stage transfers even though the primary
and secondary indicators may not trigger such transfer, unless this result is due to a data error,
operational issues, or timing difference in applying cash received up to 30 days to the customer
account.
Credit-impaired
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is
credit- impaired includes observable data about the following events:
- Significant financial difficulty of the issuer or the borrower;
- A breach of contract, such as a default or past due event;
- The lender(s) of the borrower, for economic or contractual reasons relating to the
borrower's financial difficulty, having granted to the borrower a concession(s) that the
lender(s) would not otherwise consider;
- It is becoming probable that the borrower will enter bankruptcy or other financial
reorganization;
- The disappearance of an active market for that financial asset because of financial
difficulties; or
- The purchase or origination of a financial asset at a deep discount that reflects the incurred
credit losses.
It may not be possible to identify a single discrete event – instead, the combined effect of several
events may have caused financial assets to become credit-impaired.
Definition of default
The definition of default used for determining the risk of a default occurring shall be applied
consistently to all financial instruments unless information becomes available that demonstrates
that another default definition is more appropriate for a particular financial instrument. The Bank's
definition of default is based on the regulatory definition under Article 178 of the ‘Regulation (EU)
No 575/2013 of the European Parliament and of the Council of the European Union of 26 June
2013 on prudential requirements for credit banks and investment firms and amending Regulation
(EU) 648/2012’ (CRR). A default is considered to have occurred when either of the following
conditions had taken place.
i) Qualitative
Unlikeliness to Pay (UTP) criterion: the Bank considers that the obligor is unlikely to pay its credit
obligations to the Bank without recourse by the Bank to actions such as realizing security. Below
there are some elements that are taken as indications of unlikeliness to pay (in line with CRR
(Article 178)).
- The Bank puts the credit obligation on non-accrued status.
- The Bank recognizes a specific credit adjustment resulting from a significant perceived
decline in credit quality subsequent to the institution taking on the exposure.
- The Bank has filed for the obligor's bankruptcy or a similar order in respect of an obligor's
credit obligation to the Bank, the parent undertaking or any of its subsidiaries.
- The obligor has sought or has been placed in bankruptcy or similar protection where this
would avoid or delay repayment of a credit obligation to the Bank, the parent undertaking
or any of its subsidiaries.
ii) Quantitative
Past due criterion: the exposure is past due more than 90 days on any credit obligation to the Bank.
25
Impairment losses for guarantees are recognized while a guarantee is in effect and the amounts
are determined based on the level of utilization of the guarantee. The methodology is consistent to
that of loan commitments, and such losses are included in ‘Other liabilities’.
Interest income is calculated on the gross carrying amount for financial assets in Stage 1 and 2. As
the primary definition for credit-impaired financial assets moving to Stage 3, the Bank applies the
definition of default, and interest income is calculated on the net carrying amount for these financial
assets only.
If the amount of impairment subsequently decreases due to an event occurring after a write-down,
the release (i.e. reverse) of the impairment is credited to the provision for impairment asset losses.
Unwinding of the discount is treated as income and remaining provision is then reassessed.
3.5.2 Non-financial assets
At each financial position date, the Bank reviews the carrying value of the non-financial assets and
assesses whether there is any indication of impairment. If such indications exist, an analysis is
performed to assess whether the book value of the specific assets can be recovered. The
recoverable amount is the higher amount between the net value of sale (value of sale reduced by
sale expenses) and of the value in use (as calculated from the net cash flows). If the carrying value
of an intangible asset exceeds its recoverable value, then an impairment loss is recorded in the
income statement.
3.5.3 Renegotiated financial assets
When necessary, the Bank seeks to restructure a financial asset that may involve extending the
payment arrangements and the agreement of new loan terms and conditions. These are generally
renegotiated in response to an adverse change in the financial condition of the borrower.
Modifications occur when the contractual cash flows of a financial asset are renegotiated or
otherwise modified. Some modifications result in derecognition of the existing asset and recognition
of a new asset, while other modifications do not result in derecognition. Modifications that result in
derecognition are considered to be substantial modifications. A significant or substantial change is
defined when the customer enters into a new loan contract (i.e. completely new product and new
pricing) that has a different interest rate type, loan amount, term period (temporary term extension
is excluded), and/or customer (e.g. from single customer to joint or change in one of the joint
customer names).
A distressed restructuring is an indication of unlikeliness to pay where this is likely to result in a

diminished financial obligation caused by the material forgiveness, or postponement of either
principal, interest or, where relevant fees. Distressed restructuring occurs when forbearance
measures have been extended towards a debtor. Therefore, those forborne exposures where the
forbearance measures are likely to result in a diminished financial obligation are classified as
defaulted.
Restructured operations will be considered cured and normalized after two successful repayments
and could therefore be subject to a Stage movement.
3.5.4 Write-offs
According to the IFRS 9 (B5.4.9), the gross carrying amount of a financial asset may be directly
reduced when there is no reasonable expectation of recovering the financial asset in its entirety or
a portion of it. As such, the Bank may record a write-off of Stage 3 loans. The Bank may also, on
an ad-hoc basis, examine the need for any further write-offs of Stage 2 loans if there is relevant
evidence.
3.5.5 Write-backs
Recoveries (write-backs) of an asset, or part thereof, are credited to the income statement if
previously written off.
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3.6 Financial Liabilities
The Bank recognizes a financial liability in its financial statements at the time of the arising from the item
(that is, the day the transaction took place). Financial liabilities primarily include (a) borrowings and (b) other
liabilities.
3.6.1 Borrowings
Borrowing transactions which are amounts due to financial institutions and debts evidence by
certificates, are recognized in the statement of financial position at the time the funds are transferred
to the Bank. They are measured initially at cost, which comprises the fair value of the funds
transferred, less any transaction costs. In instances where the Bank uses derivative instruments to
hedge the fair value of borrowing transactions, such borrowings are subsequently carried in the
statement of financial position at fair value where the AC value is adjusted to fair value by the
hedged risks, with any changes in value recognized in income. Relevant interest expenses are
reported in the income statement using the effective interest rate method.
3.6.2 Other liabilities
Other liabilities that are not derivatives or designated at FVTPL, are recorded at AC. The amounts
include accrued finance charges on borrowings and other accounts payable.
3.7 Offsetting of Financial Assets and Liabilities
Offsetting of financial assets and liabilities in the financial statements is permitted if, and only if, there is a
currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net
basis, or to realize the asset and settle the liability simultaneously.
3.8 Derivatives
In the ordinary course of business, the Bank enters into various types of transactions that involve derivative
financial instruments. A derivative financial instrument is a financial contract between two parties where
payments are dependent upon movements in price in one or more underlying financial instruments,
reference rates or indices.
The Bank primarily makes use of derivatives for the below strategic purposes:
- Many of the Bank’s issued securities, excluding commercial paper, are individually paired
with a swap to convert the issuance proceeds into the currency and interest rate structure
sought by the Bank.
- To manage the net interest rate risks and foreign exchange risks arising from all financial
assets and liabilities.
- Through currency swaps, to manage funding requirements for the Bank’s loan portfolio.
Derivatives can include interest rate and cross currency swaps, forward foreign exchange contracts, interest
rate future contracts, and options on interest rates and foreign currencies. Such financial instruments are
initially recognized in the statement of financial position at cost and are carried as assets when fair value is
positive and as liabilities when fair value is negative. Changes in fair value of derivatives are included in the
income statement. Fair values are obtained from quoted market prices, to the extent publicly available,
discounted cash flows and options pricing models as appropriate.
IFRS 9 introduces a new general hedge accounting model, which links hedge accounting to risk
management activities by the Bank’s Management. According to the new model, additional hedging
strategies may meet the hedge accounting criteria, new requirements apply to the effectiveness of hedging,
while terminating hedge accounting will be permissible only under certain conditions. The International
Accounting Standards Board with regard to the macro-hedging accounting is carrying out a separate work
that is in progress. Until such work is completed as an accounting policy, the Bank will continue to apply
the requirements of IAS 39 for hedge accounting.
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3.8.1 Hedge accounting
The Bank has chosen to continue to apply the hedge accounting requirements of IAS 39, instead
of the requirements of IFRS 9, and has applied this accounting policy to all its hedging relationships.
In order to manage particular risks, the Bank applies hedge accounting for derivative transactions
which meet specified criteria relative to debt securities issued by the Bank. A valid hedge
relationship exists when a specific relationship can be identified between two or more financial
instruments in which the change in value of one instrument (the hedging instrument) is highly
negatively correlated to the change in value of the other (the hedged item). The Bank only applies
hedge accounting treatment to individually identified hedge relationships on a one-to-one basis.
The Banks policies on risk management are not take significant interest rate or foreign exchange
risks, and aims where possible to match assets and liabilities and derivatives that can only be used
for hedging. The majority of the Bank’s lending activities is at floating rates linked to USD LIBOR
or EURIBOR. When lending at a fixed rate the Bank will often use interest rate swaps to produce
floating rate interest payments. The Banks borrowings, particularly by bond issuance, tend to be
fixed rate and sometimes not in EUR or USD and the Bank will use either interest rate swaps or
cross currency interest rate swaps to produce floating rate liabilities in USD or EUR. All the Bank’s
interest rate or cross currency swaps are explicitly tied to a balance sheet asset or liability. Typically,
the fixed rate on the swap and the matching asset or liability have the same characteristics (term,
payment dates etc.). Foreign exchange forwards (paired purchases and sales of currencies on
different dates) of maturities typically less than three months are not tied to specific assets or
liabilities. These are undertaken to manage surpluses and shortfalls in EUR and USD and are not
undertaken for speculative purposes. All derivatives are documented under an ISDA agreement
with a CSA and marked to market and collateralized daily.
When hedge accounting is applied, the Bank designates and documents the relationship between
the hedging instrument and the hedged item as well as its risk management objective and strategy
for undertaking the hedging transactions and the nature of the risk being hedged. This
documentation includes a description of how the Bank will assess the hedging instrument’s
effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows
attributable to the hedged risk. Hedge effectiveness is assessed at inception, even when the terms
of the derivative and hedged item are matched.
If the hedging instrument expires or is sold, terminated or exercised, or where the hedge no longer
meets the criteria for hedge accounting, the hedge relationship is discontinued prospectively. Any
fair value adjustment is recognized immediately in the income statement. At the financial position
date the Bank did not have any cash flow hedge.
i) Fair value hedge
Changes in the fair value of the derivatives that are designated and qualify as fair value hedges,
and that prove to be highly effective in relation to hedged risk, are included in the income statement
as fair value hedges under ‘net gains or losses at fair value on hedging activities’, along with the
corresponding change in fair value of the hedged asset or liability that is attributable to that specific
hedged risk.
3.8.2 Financial impact
Before the impact of derivatives and hedge accounting adjustments the Bank returned a net income
of EUR 17,777 thousand in 2019 compared with EUR 12,775 thousand in 2018. After allowing for
derivative and hedge accounting adjustments the Bank’s net income for 2019 was EUR 13,664
thousand (2018: EUR 5,176 thousand). All contracts that are considered derivatives for accounting
purposes are carried at fair value in the statement of financial position.
The Department of Treasury, under the guidance of ALCO, is responsible for the primary usage
and managing interest rate and currency risks in the Bank’s statement of financial position.
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3.9 Financial Guarantees
Issued financial guarantees are initially recognized at their fair value, being the premium (fee) received and
subsequently measured at the higher of the unamortized balance of the related fees received and deferred,
and the expenditure required to settle the commitment at the financial position date. The latter is recognized
when it is both probable that the guarantee will require to be settled and that the settlement amount can be
reliably estimated. Financial guarantees are recognized within other financial assets and other financial
liabilities.
3.10 Property and Equipment
Property and equipment include leasehold improvements and transportation and other equipment. Property
and equipment are initially recorded at cost, which includes all costs that are required to bring an asset into
operating condition. Subsequently to initial recognition, property and equipment are measured at cost less
accumulated depreciation and accumulated impairment losses.
Costs incurred subsequently to the acquisition of an asset, which is classified as property and equipment
are capitalized, only when it is probable that they will result in future economic benefits to the Bank beyond
those originally anticipated for the asset, otherwise they are expensed as incurred.
At each reporting date the Bank assesses whether there is any indication that an item of property and
equipment may be impaired. If any such indication exists, the Bank estimates the recoverable amount of
the asset. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is
written down immediately to its recoverable amount. Gains and losses on disposal of property and
equipment are determined by reference to their carrying amount and are taken into account in determining
net income or loss.
Depreciation is provided to write off the cost of each asset to their residual values on a straight-line basis
over their estimated useful lives. The annual depreciation rates applied were as follows:
- Expenditure on leasehold buildings and improvements are

depreciated over the remaining term of the lease -
- Transportation vehicles 20.0%
- Furniture and office accessories 20.0%
- Personal computers 33.3%
- Office and telecommunication equipment 20.0%
3.11 Intangible Assets
Intangible assets comprise software expenditures and other intangible assets. These assets are amortized
on a straight-line basis over the best estimate of their useful lives, which is software for desktops of three
years and software for servers of five years. At each reporting date, management reviews intangible assets
and assesses whether there is any indication of impairment. If such indications exist an analysis is
performed to assess whether the carrying amount of intangible assets is fully recoverable. A write-down is
made if the carrying amount exceeds the recoverable amount.
3.12 Right of Use Assets
Right-of-use assets comprise those assets that the Bank, as the lessee, has control of the underlying assets
during the term of the lease. Control is considered to exist if the Bank has:
- The right to obtain substantially all of the economic benefits from the use of an identified
asset; and
- The right to direct the use of that asset.
The Bank provides for the recognition of a right-of-use asset and a lease liability upon lease commencement
in case that there is a contract, or part of a contract, that conveys to the Bank the right to use an asset for
a period of time in exchange for a consideration. More details are provided within the lease accounting
policy Note 3.20.
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3.13 Taxation
In accordance with Article 52 of the Establishing Agreement, the Bank, its assets, property, income and its
operations and transactions are exempt from all taxation and all customs duties in all Member Countries.
The Bank is also exempt from any obligation for payment, withholding or collection of any tax or duty. Also,
no tax shall be levied on salaries or emoluments paid by the Bank to employees. These tax exemptions are
also included and elaborated upon in Article 12 of the Headquarters Agreement with the Hellenic
Government, ratified by Greek Law 2380/No.38/7.3.1996.
3.14 Provisions
The Bank records provisions for potential obligations and risks when the following circumstances exist (a)
there is an existing legal or constructive obligation as a result of past events (b) for the obligation to be
settled an outflow of resources embodying economic benefits is possible and (c) a reliable estimate of the
amount of the obligation can be made.
3.15 Share Capital and Dividends
In accordance with Article 36 of the Establishing Agreement, the Board of Governors shall determine
annually what part of net income or surplus of the Bank from operations shall be allocated to reserves,
provided that no part of the net income or surplus of the Bank shall be distributed to members by way of
profit until the general reserves of the Bank shall have attained the level of 10% of the subscribed capital
including all paid, unpaid but payable, and unpaid but callable share capital.
3.16 Reserves and Retained Earnings
In accordance with the Establishing Agreement of the Bank the general reserve is created from the profits
of the Bank for meeting any unforeseeable risks or contingencies.
The revaluation reserve represents the accumulated change in fair value of those financial assets that are
measured at fair value through other comprehensive income of the Bank.
The retained earnings of the Bank is the accumulated undistributed and unallocated net income over the
years.
3.17 Income and Expense
Interest income and expense are recognized in the income statement using the effective interest method.
The effective interest rate (EIR) is the rate that exactly discounts estimated future cash payments or receipts
through the expected life of the financial instrument (or, where appropriate, a shorter period) to:
- The gross carrying amount of the financial asset; or

- The amortized cost of the financial liability.
When calculating the EIR for financial instruments other than purchased or originated credit-impaired assets
the Bank estimates future cash flows considering all contractual terms of the financial instrument, but not
the ECL. For purchased or originated credit-impaired financial assets, a credit-adjusted EIR is calculated
using estimated future cash flows including the ECL.
The calculation of the EIR includes transaction costs and fees paid or received that are an integral part of
the effective interest rate. Transaction costs include incremental costs that are directly attributable to the
acquisition or issue of a financial asset or financial liability.
i) Amortized cost and gross carrying amount
The AC of a financial asset or financial liability is the amount at which the financial asset or financial
liability is measured on initial recognition minus the principal repayments, plus or minus the
cumulative amortization using the effective interest method of any difference between that initial
amount and the maturity amount and, for financial assets, adjusted for any ECL allowance.
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The gross carrying amount of a financial asset’ is the AC of a financial asset before adjusting for
any ECL allowance.
ii) Calculation of interest income and expense
Interest income and expense are recognized in the income statement for all interest bearing
instruments using the effective interest rate method. Interest income includes interest on loans and
advances to customers, coupons earned on fixed income investment securities and accrued
discount and premium on treasury bills and other instruments.
Fees and direct costs relating to a loan origination or acquiring an investment security, financing or
restructuring and to loan commitments are deferred and amortized to interest income over the life
of the instrument using the effective interest rate method.
Once a financial asset or a group of similar financial assets has been written down as a result of
an impairment loss, interest income is recognized using the rate of interest used to discount the
future cash flows for the purpose of measuring the impairment loss.
The EIR of a financial asset or financial liability is calculated on initial recognition of a financial asset
or a financial liability. In calculating interest income and expense, the EIR is applied to the gross
carrying amount of the asset (when the asset is not credit- impaired) or to the AC of the liability.
The EIR is revised as a result of periodic re-estimation of cash flows of floating rate instruments to
reflect movements in market rates of interest. The EIR is also revised for fair value hedge
adjustments at the date amortization of the hedge adjustment begins.
However, for financial assets that have become credit-impaired subsequent to initial recognition,
interest income is calculated by applying the effective interest rate to the amortized cost of the
financial asset. If the asset is no longer credit-impaired, then the calculation of interest income
reverts to the gross basis.
For financial assets that were credit-impaired on initial recognition, interest income is calculated by
applying the credit-adjusted EIR to the AC of the financial asset. The calculation of interest income
does not revert to a gross basis, even if the credit risk of the financial asset improves.
iii) Fees and commissions
Fee and commission income and expense that are integral to the EIR on a financial asset or
financial liability are included in the EIR. Other fee and commission income – including account
servicing fees, investment management fees, sales commission, placement fees and syndication
fees – is recognized as the related services are performed. If a loan commitment is not expected
to result in the draw-down of a loan, then the related loan commitment fee is recognized on a
straight-line basis over the commitment period.
A contract with a customer that results in a recognized financial instrument in the Bank’s financial
statements may be partially in the scope of IFRS 9 and partially in the scope of IFRS 15. If this is
the case, then the Bank first applies IFRS 9 to separate and measure the part of the contract that
is in the scope of IFRS 9 and then applies IFRS 15 to the residual.
Fee and commission income from contracts with customers under the scope of IFRS 15 is
measured based on the consideration specified in a contract with a customer. The Bank recognizes
revenue when it transfers control over a service to a customer. The adoption of IFRS 15 had no
impact on the Bank’s financial statements as the execution and completion of the transaction
requested by a customer is done at point in time, and this is consistent with the Bank’s existing
accounting policy.
Other fee and commission expenses relate mainly to transaction and service fees, which are
expensed as the services are received.
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3.18 Staff Retirement and Termination Benefits
The Bank has established a pension plan, where the fund’s assets are held separately from the Bank’s own
assets, for all its eligible employees, consisting of three pillars:
a. The first pillar is a defined post-employment benefit scheme financed entirely by the Bank.
The scheme’s funding level and the Bank’s contributions are determined on the basis of
actuarial valuations performed by qualified, independent actuaries on an annual basis at
the end of each annual reporting period. The actuarial valuation uses the projected unit
credit method and a number of financial and demographic assumptions. The most
significant assumptions include age, years of service or compensation, life expectancy, the
discount rate, expected salary increases and pension rates. The actuarial liability is the
present value of the defined benefit obligation as at the reporting date minus the fair value
of the plan assets. The Bank is under the obligation to maintain the scheme fully funded,
and to this effect, has always liquidated any past service deficit over the course of the year
following the relevant actuarial valuation.
Actuarial and asset gains or losses are recognized in ‘Other comprehensive income’, and
net gains or losses are included in remeasurements where any change in the effect of the
asset ceiling, excluding those amounts that have been already included in personnel
expenses, are also included.
b. The second pillar is a defined post-employment contribution scheme to which both the
employee and the Bank contribute equally at a rate of 0-12% of basic salary. The Bank has
no obligation to pay further contribution if the employee discontinues their contribution.
Each employee determines his/her contribution rate and the mode of investment of the
contributions.
c. The third pillar is a defined contribution scheme funded entirely by each employee, up to
40% of basic salary and is recorded in the Bank’s financial statements.
As an alternative, staff are entitled to retirement benefits from the Greek State Social Insurance Fund
(EFKA), which is a defined contribution scheme.
Current service costs in respect of both the pension plan (a) and (b) and EFKA are recognized as an
expense in the period which they relate and are included in ‘Personnel expenses’.
The Bank may offer termination benefits to employees that are separated based on the Bank’s separation
policy. These benefits, including indemnities and any related retirement benefits, are recognized in income
as an expense in the same period they are incurred.
3.19 Related Parties
Related parties include entities, which the Bank has the ability to exercise significant influence in making
financial and operational decisions. Related parities include key management personnel, and close family
members of key management personnel.
3.20 Leases – the Bank as a Lessee
On 1 January 2019 the Bank adopted IFRS 16, ‘Leases’. This Standard has established the principles for
the recognition, measurement and presentation of leases, and provides a single lessee accounting model
that is required at the commencement date of the lease. The objective is to report information that (a)
faithfully represents lease transactions and (b) provides a basis for the amount, timing and uncertainty of
cash flows arising from leases. The Bank as a lessee is required to recognize right-of-use assets
(representing the Bank’s right to use the underlying leased assets) and a lease liability (representing the
Bank’s obligation to make lease payments), in the statement of financial position.
The Bank applied the practical expedient in IFRS 16 to contracts that were identified as leases in order to
determine whether an arrangement contains a lease, on transition to contracts that were previously
identified as leases under IAS 17 and IFRIC 4. Consequently, the Bank’s leases are only for office space;
32
it does not lease land, corporate vehicles, or technical or IT equipment, nor does it have any sale-and-
leaseback transactions. The Bank elected to apply the modified retrospective transition approach, without
restatement of comparative figures. Under this approach, the Bank was able to choose on a lease by lease
basis to measure the right-of-use asset at the same amount as the lease liability.
The Bank’s leases for right-of-use assets are initially recognized and measured at cost similarly to other
non-financial assets, and the lease liability is initially recognized and measured at the present value of future
lease payments that are not paid at that date similarly to other financial liabilities. The lease payments can
be discounted using the interest rate implicit in the lease, if such is available, or alternatively the Bank’s
incremental borrowing rate. The Bank will apply this measurement – except for those with lease term of 12
months or less, making use of the shot-term leases and leases of low value, exemptions under this
Standard.
Regarding subsequent measurement, the Bank acting as a lessee, has applied the cost model for the
measurement of the right-of-use asset; where this asset is measured at cost, less any accumulated
depreciation and any accumulated impairment losses, and adjusted for the remeasurement of the lease
liability. The lease liability is measured by increasing the carrying amount to reflect any interest on it and
that is separately recognized as an expense; the lease liability’s carrying amount is reduced to reflect the
lease payments made. In case of any reassessments (e.g. a change in future lease payments resulting
from a change in an index or rate used to determine those payments) or lease modifications (e.g. a change
in the lease term, lease conditions or any penalty) specified, the carrying amount of the lease liability will
be remeasured to reflect revised lease payments.
4. USE OF ESTIMATES
The preparation of financial statements involves Management in critical judgements, estimates and
assumptions that affect the reported amounts of assets and liabilities, income and expense in the Bank’s
financial statements and accompanying notes. The Bank believes that the critical judgments, estimates and
assumptions used in the preparation of the its financial statements are appropriate given the factual
circumstances as of the date of preparation. The most significant areas, for which critical judgments,
estimates and assumptions are required in applying the Bank’s accounting policies, are the following:
a. Provisions for the impairment of Loan operations. Management is required to exercise

judgment in making assumptions and estimates when calculating loan impairment
provisions on both individually and collectively assessed loans. The methodology and
assumptions used are reviewed regularly by the Bank to reduce any differences between
loss estimates and actual loss experience. The estimation methods used by the Bank’s
management for collective impairment allowances, include the use of statistical analyses
of historical information, supplemented with significant judgment, to assess whether current
economic and credit conditions are such that the actual level of incurred losses is likely to
be greater or less than historical experience. In determining the provision amounts the
Bank takes into consideration PD and LGD factors extracted from the GEMs database.
For loans that are individually assessed which have a lifetime ECL and that are credit-
impaired, the impairment allowance results from the impairment test that is conducted on
the basis of objective evidence obtained through a risk asset review process. An
impairment test includes projected cash in-flows and out-flows, available for debt service
until maturity, which are discounted at the EIR to reach a net present value for a particular
operation, less any collateral that can be realized.
Provisions for impairment of investment securities is assessed collectively, using the same
methodology as loans.
b. In reaching estimates of fair value instruments Management judgment needs to be

exercised. Management judgment is required in determining the category to which certain
instruments should be allocated. This specifically arises when the valuation is determined
by a number of parameters some of which are observable while others are not. The Bank
provides a sensitivity analysis of the impact upon the level 3 financial instruments of using
a reasonably possible alternative for the unobservable parameter.
33
c. Staff retirement benefits. The Bank’s has established a pension plan for its staff which is
described in ‘Staff retirement and termination benefits’ accounting policy and is detailed
under staff retirement plan in Note ‘Employee benefits’. The present value of retirement
benefit obligations is sensitive to the actuarial and financial assumptions used, including
the discount rate applied. At the end of each year, the Bank determines the appropriate
discount rate and other assumptions to be used to determine the present value of estimated
future pension obligations, based on interest rates of suitable long-term bonds and on the
EUR currency.
5. RISK MANAGEMENT
The Bank’s activities are subject to a variety of risks, some of which are not within the Bank’s control:
including risks relating to changes in interest rates, foreign exchange rates, declines in liquidity and
deterioration in the credit quality of its loan portfolio. The Bank monitors and manages the maturities of its
loans, its interest rate and exchange rate exposure, its liquidity position and the credit quality of each
individual loan and equity investment in order to minimize the effects of changes in them relative to the
Bank’s profitability and liquidity position. The BoD has approved risk management policies and guidelines
that are delegated to the Management of the Bank for the identification and measurement of risk, as well
as being subject to risk limits and controls.
To manage risks the Bank has established an Asset and Liability Committee (ALCO), a Credit Committee
that implement the Bank’s credit and lending policies, the Office of the General Counsel, the Department of
Risk Management and the Department of Financial Analysis, which together are responsible for devising,
implementing and monitoring the Bank’s risk management policies, including financial, credit and market
risks.
The ALCO is responsible for monitoring and managing the Bank’s overall asset and liability position in
accordance with the Bank’s treasury policies. It monitors and manages the Bank’s liquidity position, maturity
gaps, interest income and expense and the condition of the international financial markets and is
responsible for assigning market risk limits. The ALCO consists of members of the Bank’s Management
and a member of the Department of Treasury that has regular monthly meetings.
The Credit Committee is responsible with respect to credit matters. Its key responsibilities include: approval
of lending operations for submission to the BoD for final approval, establishing specific parameters (e.g.
policies, limits, targets, guidelines) for operational decision-making, approval of changes to the manuals
that prescribe how operations are to be analyzed, approved, administered and monitored and approval of
any amendments, restructuring and other operation-related matters. The Credit Committee consists of
members of the Bank’s Management, and has regular meetings as required to monitor and manage overall
risk concentration by reference to borrower and industry exposure and critically reviews each individual
loan and equity investment proposals made by the lending business areas. A major function of the Credit
Committee is to minimize the credit risk presented by each individual loan and equity investment proposal,
and the overall portfolio risk of the Bank.
Once an operation is approved and disbursed, it is then monitored to ensure thorough and regular
evaluations of its credit quality. Operations are monitored according to a schedule coordinated by the
Department of Project Implementation and Monitoring, with inputs from the originating Operation Teams
regarding the availability of financial data. Monitoring reports are completed by the Bank’s Department of
Project Implementation and Monitoring based on financial analysis prepared by the Department of Financial
Analysis. Risk asset reviews, based on the previously mentioned monitoring reports, are performed by the
Department of Risk Management, and may result in a downgrade or upgrade of an operation’s status and,
if a significant deterioration is noted, trigger an impairment test.
Should an operation display signs of weakness during the regular monitoring and/or through risk asset
reviews, an impairment test is immediately carried out by the Department of Risk Management and
appropriate remedial actions are taken, as required. These measures include, but are not limited to, a
detailed assessment of the financial and operational performance of the operation, additional due diligence,
stopping disbursement of any undisbursed amounts, preparation of remedial strategies and carrying out
further impairment tests. Besides, in addition to regular site visits carried out by the Operations Teams,
such a visit can be conducted by the Department of Project Implementation and Monitoring and, when
appropriate, accompanied by the Department of Financial Analysis.
34
For the Bank a conservative approach to risk taking together with effective risk management, are critical to
the Bank’s continuing operations. The application of sound banking principles in the Bank’s credit process
seeks to ensure that the significant credit risks are properly identified and managed while other risks
resulting from its activities are mitigated to the extent possible.
Importantly, the Bank is recognized as an international financial institution, and as such can expect to benefit
from the preferred creditor status customarily and historically afforded to such institutions. This preferred
creditor status serves to provide an additional layer of comfort against the risks of non-payment on
sovereign debt or by private sector borrowers as a result of local laws creating a delay or freeze on
foreign-currency exchanges. The Bank is exposed to the following risks discussed below.
Financial Risk
The Bank’s exposure to financial risk is through its financial assets and financial liabilities including any
receivables from these financial assets. The key aspects of the Bank’s financial risk are (i) credit risk (ii)
liquidity risk and (iii) market risk.
a) Credit risk
The Bank is subject to credit risk, which is the risk that customers or counterparties will be unable to meet
their obligations as they fall due. Credit risk arises principally from the Bank’s lending activities as well as
other activities where the Bank is exposed to counterparty default risk. Regular reviews by the departments
of Risk Management, Financial Analysis and Project Implementation and Monitoring are conducted of all
exposures within the lending portfolios, typically on a semi-annual basis, though exposures that are
perceived to be more vulnerable to possible default are reviewed more frequently.
At each review there is (i) an assessment of whether there has been any change in the risk profile of the
exposure (ii) recommendations of actions to mitigate risk and (iii) reconfirming or adjusting the risk ratings,
and for equity investments, reviewing of fair value. Where relevant, the level of the expected credit loss is
evaluated and reconfirmed or adjusted. Responsibility for operations considered to be in jeopardy may be
transferred from the original lending department to a corporate recovery team in order to most effectively
manage the restructuring and recovery process.
For credit risks incurred by the Bank’s Treasury in its investment and hedging activities, the BoD has
approved policies and guidelines for the determination of counterparty and investment exposure limits in
bonds, that includes member state bonds, and euro commercial paper. The Bank’s Risk Management
Department assigns and monitors these counterparty and issuer credit risk limits. Treasury credit risks are
also reviewed on a regular basis by the Bank’s Asset and Liability Committee.
The table below summarizes the maximum exposure to credit risk and indicates the worst-case scenario,
without taking into consideration collateral, other credit enhancements or provisions of impairment.
At At
Presented in EUR (000) 2019 2018
Cash and due from financial institutions 82,621 48,598
Debt investment securities 420,591 395,979
Derivative financial instruments 3,128 662
Loans 1,820,941 1,330,695
Other assets 35,853 29,541
On-balance-sheet 2,363,134 1,805,475
Undrawn commitments 353,496 252,801
Total 2,716,630 2,058,276
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a1. Analysis by rating agency
The tables below provide an analysis of financial investments in accordance with their Moody’s rating as
follows.
2019
Aaa – A1 – Baa1 –
Presented in EUR (000) Aa3 A3 Ba3 Unrated Total
Analysis by Moody’s rating
Cash and bank balances 82,621 - - - 82,621

Debt investment securities 177,917 50,213 192,461 - 420,591
Equity investments - - - 30,386 30,386
At 31 December 260,538 50,213 192,461 30,386 533,598
Of which issued by
Corporates/Governments 177,917 50,213 192,461 30,386 450,977

Cash deposits at banks 82,621 - - - 82,621
At 31 December 260,538 50,213 192,461 30,386 533,598
Of which classified as
Fair value through profit or loss - - - 798 798

Fair value through other comprehensive income 177,917 50,213 192,461 29,588 450,179
Amortized cost 82,621 - - - 82,621
At 31 December 260,538 50,213 192,461 30,386 533,598
2018
Aaa – A1 – Baa1 –
Presented in EUR (000) Aa3 A3 Ba3 Unrated Total
Analysis by Moody’s rating
Cash and bank balances 48,598 - - - 48,598

Debt investment securities 21,813 105,979 268,187 - 395,979
Equity investments - - - 27,655 27,655
At 31 December 70,411 105,979 268,187 27,655 472,232
Of which issued by
Corporates/Governments 21,813 105,979 268,187 27,655 423,634

Cash deposits at banks 48,598 - - - 48,598
At 31 December 70,411 105,979 268,187 27,655 472,232
Of which classified as
Fair value through profit or loss - - - 1,015 1,015

Fair value through other comprehensive income 21,813 105,979 218,848 26,640 373,280
Amortized cost 48,598 - 49,339 - 97,937
At 31 December 70,411 105,979 268,187 27,655 472,232
36
a2. Credit risk analysis
The tables below provide an analysis of the Bank’s internal expected credit loss rating scale from 1 (lowest
risk) to 15 (highest risk) and how it corresponds to the external ratings of Moody’s credit rating service.
Risk Internal risk External Grade of

rating rating category rating equivalent investment
1 Excellent Aaa Investment
1 Very strong Aa1 – Aa3 Investment
2 Strong A1 – A3 Investment
3,4,5 Good Baa1 – Baa3 Investment
6,7,8 Fair Ba1 – Ba3 Investment
9,10,11 Weak B1 – B3 Investment
12,13,14 Special attention Caa1 –Caa3 Classified
15 Expected loss Ca – C Classified
a3. Credit risk in loans portfolio
The table provides overview of the exposure amount and allowance for credit losses by financial asset class
broken down into stages as per IFRS 9 requirements, including movements of non-performing. Internally,
loans that are within the 12-month ECL are categorized as standard.
Presented in EUR (000)
Provisions for impairment

Lifetime Lifetime Lifetime Lifetime
ECL not ECL ECL not ECL
Internal risk 12-month credit credit 12-month credit credit
rating category ECL impaired impaired Total ECL impaired impaired Total
Excellent - - - - - - - -
Very strong - - - - - - - -
Strong - - - - - - - -
Good 6,751 - - 6,751 1 - - 1
Fair 645,612 - - 645,612 680 - - 680
Weak 807,563 214,986 - 1,022,549 2,118 4,618 - 6,736
Special attention 25,073 57,304 50,898 133,275 92 1,368 34,437 35,897
Expected loss - - - - - - - -
At 31 December 2019 1,484,999 272,290 50,898 1,808,187 2,891 5,986 34,437 43,314
Presented in EUR (000)
Provisions for impairment

Lifetime Lifetime Lifetime Lifetime
ECL not ECL ECL not ECL
Internal risk 12-month credit credit 12-month credit credit
rating category ECL impaired impaired Total ECL impaired impaired Total
Excellent - - - - - - - -
Very strong - - - - - - - -
Strong - - - - - - - -
Good 8,442 - - 8,442 1 - - 1
Fair 669,613 44,020 - 713,633 1,461 891 - 2,352
Weak 372,775 139,822 - 512,597 2,058 1,985 - 4,043
Special attention - 42,009 41,737 83,746 - 1,398 26,981 28,379
Expected loss - - - - - - - -
At 31 December 2018 1,050,830 225,851 41,737 1,318,418 3,520 4,274 26,981 34,775
At At
At 1 January - 9,164
Classified as non-performing - -
Write-off - (9,164)
At end of year - -
37
a4. Credit risk by country and sector
The Bank uses international best practices for lending activities in order to diversify risk by country and by
sector, while also preserving the needs of the Bank’s Member States in accordance with the Banks mandate
to promote economic development in the Black Sea Region.
The concentration of credit risk in lending portfolios is presented below, also including the undrawn
amounts. The Bank is generally well diversified by country and by sector.
At At
2019 2018
Outstanding Undrawn Outstanding Undrawn
Presented in EUR (000) balance commitments balance commitments
Concentration by instrument
Loans 1,820,941 335,959 1,330,695 233,099

Equity investments 30,386 7,905 27,655 8,680
Guarantees - 9,632 - 11,022
At end of year 1,851,327 353,496 1,358,350 252,801
Concentration by country
Albania 40,136 67 37,629 87

Armenia 92,731 387 91,730 431
Azerbaijan 121,519 387 53,867 6,544
Bulgaria 116,447 32,386 153,265 32,418
Georgia 116,119 28,712 113,856 20,802
Greece 386,898 12,503 202,146 2,953
Moldova 38,022 18,555 38,909 2,181
Romania 136,841 684 172,322 7,707
Russia 217,662 56,367 128,113 59,940
Turkey 420,399 134,229 306,218 70,322
Ukraine 164,553 69,219 60,295 49,416
At end of year 1,851,327 353,496 1,358,350 252,801
Concentration by sector
Consumer discretionary 59,671 41,214 13,634 30,247

Consumer staples 89,200 28,856 103,029 118
Energy 228,050 - 155,586 -
Financial institutions 612,049 38,743 537,037 85,109
Health care 91,060 26,138 75,021 42,177
Industrials 269,758 102,000 182,167 -
Information technology 4,129 - 5,734 -
Materials 123,231 55,919 110,200 33,987
Real estate 3,480 32,000 2,617 32,000
Telecom services - - 16,665 -
Utilities 370,699 28,626 156,660 29,163
At end of year 1,851,327 353,496 1,358,350 252,801
The Bank is restricted to operating in its 11 Member States and individual country limits are set as a
maximum at 30% of planned commitments. This limit is calculated on the basis of the BoD approved
operations, minus repayments and cancellations. Individual operations are further constrained by the Single
Obligor Limit and by monitoring of Sectoral Exposure.
38
a5. Collateral and credit enhancements
The Bank mitigates credit risk by holding collateral and other credit enhancements against exposure to
customers and counterparties where it believes such security is necessary. The Bank defines security as
mechanisms, procedures and assets negotiated in transactions that are meant to protect it against loss in
case of non-performance. Security includes, but is not limited to, material assets, financial instruments,
guarantees, covenants and comfort letters.
• Loans and advances. The BoD approved guidelines for taking security under lending operations
set the levels and types of collateral and other credit enhancements recommended for a given risk
profile.
The main types of collateral that may be obtained by the Bank are: mortgages on properties and
equipment, pledges of equity shares and investment instruments, assignment of rights on certain
contracts, cash or blocked deposits and other third party guarantees. If necessary, the Bank
reassesses the value of collateral in order to determine if additional collateral is needed to be
provided by the borrower. At 31 December 2019 the secured portfolio was 57.2% (2018: 52.4%) of
the outstanding loans balance.
• Other financial instruments. Collateral held as security for financial assets other than loans and
advances is determined by the nature of the instrument. Bonds and euro commercial paper held
by the Bank as investment securities are generally unsecured. The Bank may hold cash or
government securities as collateral against its derivative contract counterparties. At 31 December
2019 the Bank had pledged cash collateral in an amount of EUR 1,350 thousand (2018: EUR
22,810 thousand).
• For loans that are credit-impaired at the reporting date the Bank has collateral held as security an
amount of EUR 38,864 thousand to mitigate credit risk. The types of collateral with approximate
values are real estate EUR 21,782 thousand, machinery and equipment EUR 6,175 thousand, and
pledged shares EUR 10,907 thousand.
b) Liquidity risk
Liquidity risk arises in the general funding of the Bank’s financing and investment activities and in the
management of positions. It concerns the ability of the Bank to fulfill its financial obligations as they become
due and is a measure of the extent to which the Bank may require funds to meet those obligations. It
involves both the risk of unexpected increases in the cost of funding the portfolio of assets at appropriate
maturities and rates and the risk of being unable to liquidate a position in a timely manner on reasonable
terms.
The Bank’s liquidity policy aims to balance the term and currency structure of the Bank’s assets and
liabilities. Liquidity management is concentrated on the timing of cash in-flows and out-flows, as well as the
adequacy of available cash and liquid securities. The Bank maintains liquid assets at prudential levels to
ensure that cash can quickly be made available to honor all its obligations, even under adverse conditions,
the Bank has access to the funds necessary to satisfy customer needs, maturing liabilities and its own
working capital requirements. For this, the Bank estimates and relates all expected cash flows from assets
and liabilities.
The Bank takes into consideration, to the extent feasible, the guidance documents issued by the Basel
Committee on Banking Supervision. The Bank sets limits to control its liquidity risk exposure and
vulnerabilities and regularly reviews such limits. The limit framework includes also measures ensuring that
in a period of market stress, available liquidity exceeds liquidity needs and that the Bank can continue to
operate.
The Bank’s commitment to maintaining a strong liquidity position is established in policies approved by the
BoD. The liquidity policy requires that the Bank maintain its liquidity position at a minimum of 50% of the
following 12 months’ net cash requirement, including committed, undisbursed project and trade finance
loans.
39
The Bank’s liquidity position is monitored regularly, and the ALCO is primarily responsible for the
management of liquidity risk and the liquidity profile of the Bank. The Bank’s liquid assets are maintained
in short-term and negotiable securities that primarily are: (i) cash and bank balances (ii) short term deposits
with investment grade rated counterparties (iii) Euro-denominated commercial paper issued by investment
grade parties and (iv) investment grade bonds.
The table below presents the cash flows payable on financial liabilities placed into relevant maturity groups,
based on the remaining period from the financial position date to the contractual maturity date. It indicates
the earliest maturity dates that the Bank’s counterparties have the ability to demand repayment.
The figures represent undiscounted cash flows, and include estimated interest amounts, and therefore do
not match to the statement of financial position.
From 1 From 3 From 1

Up to 1 month to 3 months to year to Over 5
Presented in EUR (000) month months 1 year 5 years years Total
Borrowings 6,603 39,443 136,427 1,421,627 19,769 1,623,869

Derivative financial instruments - 6,552 - - - 6,552
Payables and accrued interest - 13,785 7,536 - - 21,321
Financial Liabilities at 31 December 2019 6,603 59,780 143,963 1,421,627 19,769 1,651,742
Borrowings 18,240 24,107 232,861 754,250 27,958 1,057,416

Derivative financial instruments - 24,164 - - - 24,164
Payables and accrued interest - 12,002 3,971 - - 15,973
Financial Liabilities at 31 December 2018 18,240 60,273 236,832 754,250 27,958 1,097,553
For the Bank’s financial assets, the majority mature from one year and over taking into consideration the
latest possible repayment date.
c) Market Risk
Market risk is the risk that changes in foreign exchange rates, interest rates or market prices of financial
instruments may result in losses to the Bank. Market risk arises on such instruments that are valued at
current market prices (mark to market basis) or those valued at cost plus any accrued interest (accruals
basis).
The Bank funds its operations by using the Bank’s own share capital and by borrowing in the international
capital markets. The Bank aims to match, wherever possible, the currencies, tenors and interest rate
characteristics of its borrowings with those of its lending portfolios. When necessary, the Bank uses
derivative instruments to reduce its exposure to exchange rate and interest rate risks.
The Board has approved risk management policies and limits within which exposure to market risk is
monitored, measured and controlled. The ALCO monitors and manages these risks while the asset and
liability function within the Department of Treasury has primary responsibility for ensuring compliance with
these policies and limits.
40
c1. Foreign exchange risk
The Bank’s risk management policies seek to minimize currency exposures or any unanticipated changes,
favorable or unfavorable, in foreign exchange rates that could affect the income statement, by requiring net
liabilities in any one currency to be matched closely with net assets in the same currency. The Bank will not
take discretionary currency positions. This is achieved primarily by holding or lending the proceeds of the
Bank’s borrowings in the currencies in which they were borrowed.
The Bank regularly monitors its assets and liabilities in order to ensure the Bank takes no significant foreign
exchange risks and, after swap activities, adjusts the net asset currency composition to the Bank’s
functional currency to maintain a matched foreign exchange position. As a matter of policy, the Bank aims
to keep foreign exchange exposure as close to zero as possible, with exceptions to this practice requiring
approval from the ALCO. For local currency transactions the Bank matches the operation’s currency with
borrowings in the same currency, as such there is no material exposure. The tables below provide a
currency breakdown of the Bank’s assets and liabilities, showing that the effect of any currency fluctuations
on the net exposure is minimal.
United
States Swiss
Presented in EUR (000) Euro dollar franc Other Total
Assets
Cash and bank balances 73,948 7,776 - 897 82,621
Debt investment securities 149,277 271,314 - - 420,591
Impairment losses on debt investment securities (765) - - - (765)
Derivatives financial instruments 3,128 - - - 3,128
Loans 1,069,985 590,485 - 160,471 1,820,941
Deferred income (2,541) (4,854) - (775) (8,170)
Impairment losses on loans (36,476) (2,417) - (4,421) (43,314)
Equity investments 12,463 17,691 - 232 30,386
Other assets 19,509 12,965 156 3,223 35,853
Total 1,288,528 892,960 156 159,627 2,341,271
Liabilities
Borrowings 96,477 1,029,024 184,366 175,288 1,485,155
Derivative financial instruments 6,552 - - - 6,552
Payables and accrued interest 10,612 7,911 44 2,754 21,321
Total 113,641 1,036,935 184,410 178,042 1,513,028
Net financial instruments 1,174,887 (143,975) (184,254) (18,415) 828,243
Derivative financial instruments (351,342) 152,023 184,264 18,820 3,765

Currency balance at 31 December 2019 823,545 8,048 10 405 832,008
United
States Swiss
Presented in EUR (000) Euro dollar franc Other Total
Assets
Cash and bank balances 46,266 1,691 - 641 48,598
Debt investment securities 165,120 230,859 - - 395,979
Impairment losses on debt investment securities (103) (541) - - (644)
Derivatives financial instruments 662 - - - 662
Loans 744,365 466,721 - 119,609 1,330,695
Deferred income 1,454 (3,483) - (1,023) (3,052)
Impairment losses on loans (13,342) (17,263) - (4,170) (34,775)
Equity investments 12,988 14,667 - - 27,655
Other assets 15,095 12,732 141 1,573 29,541
Total 972,505 705,383 141 116,630 1,794,659
Liabilities
Borrowings 126,794 595,473 88,860 142,903 954,030
Derivative financial instruments 24,164 - - - 24,164
Payables and accrued interest 6,134 8,595 51 1,193 15,973
Total 157,092 604,068 88,911 144,096 994,167
Net financial instruments 815,413 101,315 (88,770) (27,466) 800,492
Derivative financial instruments 11,376 (103,351) 88,739 22,568 19,332

Currency balance at 31 December 2018 826,789 (2,036) (31) (4,898) 819,824
41
c2. Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate, favorably or unfavorably,
due to changes in market interest rates. The length of time for which the rate of interest is determined on a
financial instrument indicates to what extent it is exposed to that interest rate risk.
The Bank’s interest rate risk management activities aim to enhance profitability, by limiting the effect on
asset values of adverse interest rate movements in order to increase net interest income by managing
interest rate exposure. The majority of the Bank’s loan portfolio is variable interest rate and the Bank has a
policy aimed at minimizing interest rate mismatches between its assets and liabilities that seeks to ensure
that the interest rate payment periods for its liabilities are matched as closely as possible to interest rate
payment periods for the Bank’s assets. As a matter of policy, the Bank does not take discretionary interest
rate positions.
The tables below provide information on the extent of the Bank’s interest rate exposure based either on the
contractual maturity date of the financial instruments or, in the case of instruments that re-price to a market
rate of interest before maturity, the next re-pricing date as at the financial position date.
Interest bearing
From 1 From 3 From 1 Non-
Up to 1 month to 3 months to year to interest
Presented in EUR (000) month months 1 year 5 years bearing Total
Assets
Cash and bank balances 82,617 - - - 4 82,621
Debt investment securities 153,278 55,000 29,085 183,228 - 420,591
Derivative financial instruments - - - - 3,128 3,128
Loans 274,438 412,265 648,712 485,526 - 1,820,941
Equity investments - - - - 30,386 30,386
Other assets - - - - 35,853 35,853
Total 510,333 467,265 677,797 668,754 69,371 2,393,520
Liabilities
Borrowings 189,828 294,970 153,646 846,711 - 1,485,155
Payables and accrued interest - - - - 21,321 21,321
Total 189,828 294,970 153,646 846,711 27,873 1,513,028
Derivative financial instruments (3,854) (129,074) (652,087) 785,015 - -
Interest rate risk at 31 December 2019 316,651 43,221 (127,936) 607,058 41,498 880,492
Interest bearing
From 1 From 3 From 1 Non-
Up to 1 month to 3 months to year to interest
Presented in EUR (000) month months 1 year 5 years bearing Total
Assets
Cash and bank balances 48,581 - - - 17 48,598
Debt investment securities 72,407 45,000 76,451 202,121 - 395,979
Derivative financial instruments - - - - 662 662
Loans 200,385 273,619 617,183 239,508 - 1,330,695
Equity investments - - - - 27,655 27,655
Other assets - - - - 29,541 29,541
Total 321,373 318,619 693,634 441,629 57,875 1,833,130
Liabilities
Borrowings 36,698 185,835 207,952 523,545 - 954,030
Payables and accrued interest - - - - 15,973 15,973
Total 36,698 185,835 207,952 523,545 40,137 994,167
Derivative financial instruments 1,250 (109,698) (310,072) 418,520 - -
Interest rate risk at 31 December 2018 285,925 23,086 175,610 336,604 17,738 838,963
42
c3. Sensitivity analysis
Currency risk sensitivity
The Bank is marginally sensitive to exchange rate fluctuations of the US dollar and the Euro. The
Bank’s paid-in capital is held in Euro and the Bank’s loan portfolio is typically denominated between
50% US dollar and 50% Euro. In addition, the Bank’s administrative expenses are denominated in
Euro, and its income is typically denominated between 50% US dollar and 50% Euro. The Bank
has addressed this sensitivity to currency risk by increasing its percentage of loans denominated
in Euro, and therefore increasing its Euro denominated income.
Interest rate sensitivity
The Bank’s interest rate sensitivity analysis comprises two elements. Firstly, there is the differential
between the interest rate the Bank earns on its assets and the cost of borrowing to fund these
assets. For this element the Bank does, as closely as possible, match interest rate periods, thus
minimizing or even eliminating sensitivity. Secondly, there is the absolute rate earned on assets
that are funded by the Bank’s member’s equity resources. The majority of the Bank’s member’s
equity resources are currently invested in the Bank’s loan portfolio at floating rates; therefore,
subjecting earnings on member’s equity resources to minor degree of fluctuation.
The table below details the re-pricing gap by currency. A parallel upward or downward shift in the EUR and
USD curves of 50 basis points would have generated the maximum loss or gain respectively.
At At
Euro 1,124,000 936,000
United states dollar 128,000 191,000
Total re-pricing gap 1,252000 1,127,000
Shift of 50 basis points in the EUR curve 6,259 5,637
c4. Equity price risk
The Bank has a small equity investments portfolio and as such does not have significant market risk
exposure concerning foreign exchange or equity price risk on this portfolio. At 31 December 2019 the Bank’s
equity investments are classified at FVTOCI, except for one, and which are primarily unlisted.
The Bank takes a long-term approach of its equity investments and has no intention of exiting to any,
therefore accepts the short-term volatilities in value from exchange rate and price risk. The Bank expects
the effect on net income to be of little to no impact.
Additional sensitivity information for the Bank’s equity investments has been included under ‘fair value
hierarchy’ later in this section and in Note ‘Equity investments’.
43
Operational Risk
Like all financial institutions, the Bank is exposed to operational risks arising from its systems and
processes. Operational risks include the risks of losses resulting from inadequate or failed internal
processes, people, systems, legal, and from external events which could have a negative financial or
adverse reputational impact. The Bank has a low tolerance for losses arising from the operational risks the
Bank is exposed to.
The Office of Compliance and Operational Risk Management (CORMO) has oversight on operational risk
activities across the Bank. The Bank’s operational risk framework is a network of processes, procedures,
reports and responsibilities that are used to identify, manage and monitor the operational risks of the Bank.
These include committees, working groups, day-to-day practices such as the collection and analysis of key
risks, risk of loss incidents and both strategic and work cultural practices. This provides a structured
approach to managing operational risk and seeks to apply consistent standards and techniques for
evaluating risks across the Bank. The Bank has a comprehensive set of policies and procedures that
indicate how operational risks should be managed throughout the Bank.
The sources of operational risk emerge in various ways, including business interruptions, inappropriate
behavior of employees (including fraud), failure to comply with applicable laws and regulations or failure of
vendors to perform in accordance with their contractual arrangements. These events could result in financial
losses, as well as reputational damages to the Bank. The Bank’s operational risk management focuses on
proactive measures to mitigate the operational risk.
Where any incident may occur the Bank systematically collects, analyses and reports data on that incident
to ensure the Bank understands the reasons it occurred and how controls can be improved to reduce or
better avoid the risk of any future incident.
The Bank’s risk and control assessments are comprehensive, primarily bottom-up, of the key operational
risks in each business area. They are based on Bank-wide operational risk definitions, that classifies risks
under a standardize approach, covers the inherent risks of each business area and control function,
provides an evaluation of the effectiveness of the controls in place to mitigate these risks, determines the
residual risk ratings and requires a decision to either accept or remediate any remaining risk.
Concerning cyber crime, which is risk of loss or damage to the Bank’s business areas and customers as a
result of actions committed or facilitated through the use of networked information systems, the Bank’s
Department of Information Technologies (IT) and information security policies and procedures ensure that
all servers and computers have up to date antivirus software. Backups are made regularly and regular
access control checks, system penetration and vulnerability tests along with disaster recovery tests are
performed.
The Bank’s anti-cyber attack controls are checked and aligned with industry best practice by the IT
Department.
The Bank produces regularly management information reports covering the key inputs and outputs of
operational risk. These reports are used to monitor outcomes against agreed targets and tolerance levels.
The Bank utilizes the Bank’s IT systems and other information tools to ensure operational risks are identified
and managed properly.
Overall, the Bank is committed to follow the best practices and market standards in the area of
accountability, transparency and business ethics. Due diligence on customers and counterparties take into
consideration the Anti-Fraud Corruption and Monetary Laundering Policy and Know-Your Customer
Procedures. The Bank also has a contingency and business continuity plans, and a disaster recovery off-
site which aims to ensure the continuity of its operations and protect the interests of all the key stakeholders
of the Bank, namely, the member countries, bondholders and other creditors as well as employees and
their families, in the event of any disturbance in office locations.
44
Financial Assets and Liabilities
The tables below identify the Bank’s financial assets and financial liabilities in accordance with their
categories. The fair value of the financial assets and financial liabilities is disclosed as equal to the carrying
value, plus accrued interest, as all bear a variable interest rate and are given at market terms and conditions.
At
31 December
2019
Fair value Fair value
through through Amortized Carrying
Presented in EUR (000) profit or loss OCI cost amount
Assets
Cash and bank balances - - 82,621 82,621
Debt investment securities - 420,591 - 420,591
Loans 12,754 - 1,808,187 1,820,941
Deferred income - - (8,170) (8,170)
Impairment losses on loans - - (43,314) (43,314)
Equity investments 798 29,588 - 30,386
Other assets - - 35,853 35,853
Total financial assets 13,552 450,179 1,875,177 2,338,908
Liabilities
Borrowings - - 1,485,155 1,485,155
Payables and accrued interest - - 21,321 21,321
Total financial liabilities - - 1,506,476 1,506,476
At
31 December
2018
Fair value Fair value
through Through Amortized Carrying
Presented in EUR (000) profit or loss OCI cost amount
Assets
Cash and bank balances - - 48,598 48,598
Debt investment securities - 346,640 49,339 395,979
Loans 12,277 - 1,318,418 1,330,695
Deferred income - - (3,052) (3,052)
Impairment losses on loans - - (34,775) (34,775)
Equity investments 1,015 26,640 - 27,655
Other assets - - 29,541 29,541
Total financial assets 13,292 373,280 1,408,069 1,794,641
Liabilities
Borrowings - - 954,030 954,030
Payables and accrued interest - - 15,973 15,973
Total financial liabilities - - 970,003 970,003
45
Fair Value Hierarchy
For those above financial instruments measured at fair value, the Bank uses the following hierarchy for
determining and disclosing the fair value of financial instruments by valuation technique:
• Level 1: Quoted market prices in active markets for identical assets or liabilities;
• Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair
value are observable, either directly or indirectly; and
• Level 3: Techniques which use inputs that have a significant effect on the recorded fair value
that are not based on observable market data.
The tables below identify the Bank’s financial instruments measured at fair value.
Carrying
Presented in EUR (000) Level 1 Level 2 Level 3 amount
Derivative financial instruments – assets - 3,128 - 3,128
Fair value through profit or loss:
Loans - 12,754 - 12,754
Equity investments - - 798 798
Fair value through other comprehensive income:
Equity investments - 29,588 29,588
Derivative financial instruments – liabilities - (6,552) - (6,552)
At 31 December 2019 420,591 9,330 30,386 460,307
There have been no transfers between Level 1 and Level 2 during the year. For Level 1 market prices are
used whereas for Level 2 the valuation techniques used are broker quotes and observable market data.
For Level 3 the valuation technique used is the net asset value (‘NAV’), and equity calculations based on
EBITDA and market data.
Carrying
Presented in EUR (000) Level 1 Level 2 Level 3 amount
Derivative financial instruments – assets - 662 - 662
Fair value through profit or loss:
Loans - 12,277 - 12,277
Equity investments - - 1,015 1,015
Fair value through other comprehensive income:
Equity investments - 26,640 26,640
Derivative financial instruments – liabilities - (24,164) - (24,164)
At 31 December 2018 346,640 (11,225) 27,655 363,070
46
Fair Value Measurement in Level 3
The table provides a reconciliation of the fair values of the Bank’s Level 3 financial assets of the fair value
hierarchy.
At At
At 1 January 27,656 31,361
Total gains or (losses) recognized in the income statement (217) (585)
Total gains or (losses) recognized in other comprehensive income 4,219 713
Purchases, sales, issues and settlements (1,272) (3,834)
At end of year 30,386 27,655
Sensitivity Analysis for Level 3
The table below indicates a possible impact on net income for the Level 3 financial instruments carried at
fair value at the financial position date, on an estimated 5% increase or decrease in net assets value of the
equity investments based on the Bank’s participation.
Carrying Favorable Unfavorable

Presented in EUR (000) amount change change
Equity investments 30,386 1,519 (1,519)
Capital Management
At the inception of the Bank, initial authorized share capital was SDR 1 billion, which was fully subscribed
by the Member States. In December 2007 the BoG approved an increase of the Bank’s authorized share
capital to SDR 3 billion and authorized the offering of SDR 1 billion to the existing Member States for
subscription, with the objective of increasing subscribed capital to a total of SDR 2 billion. The increase
allows the Bank to implement its operational strategy to a substantial degree. The Bank does not have any
other classes of capital.
In October 2008 the above new shares in the amount of SDR 1 billion that were offered for subscription to
the Bank’s Member States were fully subscribed and allocated. Accordingly, the Bank’s paid-in share capital
was doubled from SDR 300 million to SDR 600 million. The remaining SDR 1 billion of authorized share
capital has not yet been allocated.
Pursuant to Resolution 131 of the BoG a unanimously adopted the first amendment to the Establishing
Agreement, which became effective on 21 June 2013. As of this effective date, and as per Resolution 131
of the BoG, the unit of account of the Bank became the EUR and all of the Bank’s authorized share capital
was redenominated from SDR to EUR. The conversion rate applied was SDR to EUR fixed at 1:1.15.
The share capital usage of the Bank is guided by statutory and financial policy parameters. Article 15 of the
Establishing Agreement limits the total amount of outstanding loans, equity investments and guarantees
made for ordinary operations to 150% of the Bank’s unimpaired subscribed capital, reserves and surpluses,
establishing a 1.5:1 institutional gearing ratio. Additionally, disbursed equity investments shall not at any
time exceed an amount corresponding to the Bank’s total unimpaired paid-in capital, surpluses and general
reserve.
At the 36th meeting of the BoD in 2008, the operational gearing ratio was set at 100% of the Bank’s
unimpaired paid-up capital, reserves and surpluses, and the usable portion of the callable capital. This limit
on the total amount of operations which includes all callable capital is approximately EUR 2.45 billion.
47
The Bank preserves an actively managed capital stock to prudently cover risks in its activities. As a
multilateral financial institution, the Bank is not subject to regulatory capital requirements. However, the
Bank uses standards proposed by the Basel II Capital Accord as a benchmark for its risk management and
capital framework. Pursuant to Article 5 of the Establishing Agreement, the BoG shall at intervals of not
more than five years review the capital stock of the Bank. In substance, the primary objective of the Bank’s
capital management is to ensure adequate share capital is available to support the Bank’s operations.
6. OPERATING SEGMENTS
The Bank is a multilateral financial institution, which in accordance with the Establishing Agreement, is
dedicated to accelerating development and promoting co-operation among the Bank’s shareholder
countries. The Bank operates in a specific geographical area and the primary reporting format for business
segments are the Lending and Treasury operations. Lending activities represent investments in projects
such as loans, equity investments and guarantees. Treasury activities include raising debt finance, investing
surplus liquidity, and managing the Bank’s foreign exchange, liquidity and interest rate risks.
2019 2018
Presented in EUR (000) Lending Treasury Total Lending Treasury Total
Income statement
Interest income 82,707 11,262 93,969 70,129 8,588 78,717

Net fees and commissions 947 20 967 1,652 - 1,652
Other income (expense) 272 119 391 569 29 598
Total segment revenues 83,926 11,401 95,327 72,350 8,617 80,967
Less: interest expense (52,762) (512) (53,274) (37,513) (461) (37,974)
Less: net interest expense on derivatives - (4,113) (4,113) - (7,599) (7,599)
Foreign exchange - (1,067) (1,067) - (1,352) (1,352)
Less: personnel and other admin. expenses (19,474) (1,471) (20,945) (19,283) (1,439) (20,722)
Less: depreciation and amortization (563) (9) (572) (442) (11) (453)
Segment income before impairment 11,127 4,229 15,356 15,112 (2,245) 12,867
Less: impairment / fair value (losses) (1,581) (111) (1,692) (7,323) (368) (7,691)
Net income for the year 9,546 4,118 13,664 7,789 (2,613) 5,176
31 December 2019 31 December 2018
Presented in EUR (000) Lending Treasury Total Lending Treasury Total
Financial position
Segment assets 1,837,862 505,575 2,343,437 1,351,172 444,595 1,795,767

At end of year 2,343,437 1,795,767
Segment liabilities 1,506,476 6,552 1,513,028 970,003 24,164 994,167

Members’ equity - - 830,409 - - 801,600
At end of year 2,343,437 1,795,767
7. INTEREST AND SIMILAR INCOME
Interest and similar income is analyzed as follows:
Year to Year to
From loans and advances 82,707 70,129
From placements with financial institutions 41 126
From investment securities at amortized cost - 51
From investment securities at fair value through OCI 11,221 8,411
Interest and similar income 93,969 78,717
48
8. INTEREST AND SIMILAR EXPENSE
Interest and similar expense is analyzed as follows:
Year to Year to
From borrowed funds 7,770 6,435
From issued debt 43,691 29,619
From amortized issuance and arrangement costs 1,301 1,459
From other charges 512 461
Interest and similar expense 53,274 37,974
9. NET FEES AND COMMISSIONS
Net fees and commissions is analyzed as follows:
Year to Year to
Guarantee fees 356 276
Management fees 408 371
Appraisal fees 30 195
Administration fees 26 36
Arrangement fees - 132
Surveillance fees 57 54
Prepayment / cancellation fees 20 489
Other fees 70 99
Net Fees and commissions 967 1,652
10. PERSONNEL AND ADMINISTRATIVE EXPENSES
Administrative expenses is analyzed as follows:
Year to Year to
Salaries and benefits 12,819 12,672
Staff retirement plans 2,939 3,280
Personnel expenses 15,758 15,952
Professional fees and related expenses 1,328 1,094

Utilities and maintenance 1,606 1,474
Other administrative 2,253 2,202
Administrative expenses 5,187 4,770
The average number of staff employed during the year was 112 (2018: 111). The number of staff at 31
December 2019 was 113 (2018: 110). Further analysis of the staff retirement plan is presented in the Note
‘Employee benefits’.
49
11. IMPAIRMENT LOSSES ON LOANS
Loans that are measured at amortized cost are stated net of provisions for impairment, which includes also
their related provisions for impairment on undrawn commitments. A summary of the movements in
provisions for impairment is as follows:
Stage Stage Stage

Presented in EUR (000) 1 2 3 Total
At 31 December 2017 1,453 1,088 45,455 47,996
Charge 3,284 3,239 7,221 13,744
Release (1,656) (2,608) (3,188) (7,452)
Against write-offs - - (20,586) (20,586)
Foreign exchange adjustments 439 2,555 (1,921) 1,073
At 31 December 2018 3,520 4,274 26,981 34,775
Charge - 1,423 1,573 2,996
Release (4) (691) (460) (1,155)
Upon initial recognition - - 6,181 6,181
Foreign exchange adjustments (625) 980 162 517
At 31 December 2019 2,891 5,986 34,437 43,314
At each reporting date, the Bank recognizes loss allowances based on either 12-month ECL or lifetime
ECL, depending on whether there has been a significant movement in credit risk of the financial instrument
since its initial recognition.
Total impairment losses on loans have increased by an amount of EUR 8,539 thousand compared to the
previous year. An amount of EUR 1,083 thousand has increased for Stages 1 and 2, primarily due to the
increase in the Bank’s loan portfolio. The remaining amount of EUR 7,456 thousand was due to the
deterioration of a few loans in Stage 3 to reducing their carrying amount and the purchase of a loan at deep
discount.
Staging Criteria 12-month ECL (Stage 1)
As IFRS 9 does not distinguish between individually significant or not individually significant financial
instruments, the Bank measures potential credit losses for all non-impaired operations (Stage 1 and Stage
2) on an individual operation basis based on the asset class. Their PD and LGD are multiplied by general
market scenarios assigned within the Moody's Analytics IFRS lmpairmentCalc tool. Provisions for
impairment in Stage 1 are therefore affected by the specifics of any particular operation together with
general market scenarios. They are meant to protect against potential risks that are considered present, or
within a 12-month horizon, and derived from potentially adverse developments in operating conditions
beyond the control of individual borrowers.
Staging Criteria lifetime ECL (Stages 2 and 3)
When an operation deteriorates substantially in credit quality, it enters Stage 2 and an expected credit loss
calculation is performed on a Lifetime Expected Credit Loss (LECL) basis. Stage 2 operations are those
that have experienced an overall credit quality downgrade but are still performing. They are not considered
credit-impaired.
Stage 3 operations have objective evidence of impairment that immediately impacts the ECL.
Revolving facilities and undrawn commitments
Revolving credit facilities have no fixed term and they can be cancelled at the discretion of the Bank at any
point in time. These facilities are subject to, at a minimum, an annual credit review. In this regard, the date
of the latest credit review provides the relevant date to assess if there is any increase in credit risk, as at
that point in time. The Bank may amend the terms and conditions of the exposure.
50
The estimate of the ECLs on irrevocable loan commitments is consistent with its expectations of drawdowns
on that loan commitment. Therefore, the Bank considered (i) the expected portion of the loan commitment
that will be drawn down within 12 months of the reporting date when estimating 12-month expected credit
losses and (ii) the expected portion of the loan commitment that will be drawn down over the expected life
of the reporting date when estimating lifetime expected credit losses. At 31 December 2019 the amount of
expected credit losses was EUR 311 thousand (2018: EUR 376 thousand).
12. DEBT INVESTMENT SECURITIES
Debt investment securities are analyzed as follows:
At At
Bonds 217,674 282,311
Commercial papers 202,917 113,668
Less: impairment losses (765) (644)
Debt investment securities net of impairment 419,826 395,335
At each reporting date, the Bank recognizes loss allowances based on either 12-month ECL or LECL. All
debt investment securities are recognized only on a 12-month ECL as there has been no significant
movement in their credit risk since their initial recognition.
13. DERIVATIVE FINANCIAL INSTRUMENTS
The table below shows the Bank’s outstanding forward foreign exchange contracts. The first column shows
the sum of notional amounts, which is the amount of a derivative’s nominal value, and is the basis upon
which changes in the value are measured. The second column shows the market value of the notional
amounts and also the net valuation attributable to fair value hedges.
At At
2019 2018
Notional Fair Notional Fair
Presented in EUR (000) amount value amount value
Assets Liabilities Assets Liabilities
Currency swap purchases 57,000 57,000 - 33,012 - 33,019
Currency swap sales (56,840) (56,525) - (33,569) - (33,569)
Designated fair value hedges - 2,653 (6,552) - 662 (23,614)
Derivative financial
instruments 160 3,128 (6,552) (557) 662 (24,164)
The above derivative financial instrument contracts with financial counterparties have been documented
under International Swaps and Derivative Association (ISDA) Master Agreements with Credit Support
Annexes (CSAs). Pursuant to such arrangements the Bank is eligible to offset assets and liabilities in the
event of a counterparty default occurrence.
The Bank’s hedge accounting is based on a clearly documented relationship between the item hedged and
the hedging instrument, having a one-on-one relationship, which is documented at the time a hedge
transaction is entered into. This relationship arises within the context of the Bank’s borrowing activities in
which the Bank’s issued bonds are combined with swaps to achieve floating-rate debt in a currency sought
by the Bank.
51
14. LOANS
The Bank offers a range of loan facilities directed to investments for both project and trade financing, and
tailored to meet an individual operation’s requirements. Loans may be denominated in any convertible
currency, or a combination of convertible currencies in which the Bank is able to fund itself.
At At
Loans at amortized cost:
At 1 January 1,318,418 1,132,359
Disbursements 871,130 572,966
Less: repayments (381,756) (377,988)
Write-offs - (20,586)
Foreign exchange movements 395 11,667
Outstanding disbursements 1,808,187 1,318,418
Less: deferred income (8,170) (3,052)
Less: impairment losses (43,314) (34,775)
Loans at fair value:

Outstanding disbursements 14,939 14,939
Fair value adjustment (2,185) (2,662)
Loans net of impairment 1,769,457 1,292,868
At 31 December 2019 the principal amount of outstanding disbursements was EUR 1,823,126 thousand
(2018: EUR 1,333,357 thousand).
The carrying amount of loans with respect to their related Stages and allowance for impairment is analyzed
as follows:
At At
Stage 1 1,484,999 1,050,830
Less: deferred income (8,170) (3,052)
Less: allowance for impairment (2,891) (3,520)
Carrying amount 1,473,938 1,044,258
Stage 2 272,290 225,851

Carrying amount 266,304 221,577
Stage 3 50,898 41,737

Carrying amount 16,461 14,756
Fair value through profit or loss 12,754 12,277

Carrying amount 1,769,457 1,292,868
Interest is generally based on Libor for USD loans and Euribor for EUR loans plus a margin. Margins are
dependent on the risk category of each loan and typically range from 1.5% to 8.0%. The fair value of the
loan portfolio is approximately equal to carrying value plus accrued interest as all loans bear a variable
interest rate and are given at market terms and conditions. Further analysis of the loan portfolio is presented
in Note ‘Risk management’.
52
15. EQUITY INVESTMENTS
A primary focus of the Bank is to facilitate access to funding for those small and medium-size enterprises
with the potential for positive economic developmental impact. With this objective in mind, the Bank,
together with a number of other institutions has invested in the entities as detailed below.
At At
2019 2018
% of Fair Fair
Presented in EUR (000) Investment Cost Value Cost value
Balkan Accession Fund 9.09 - 798 - 1,015
At fair value through profit or loss - 798 - 1,015
SEAF Caucasus Growth Fund 21.39 5,423 4,270 5,488 4,289

Access Bank, Azerbaijan 0.06 792 232 14,759 -
A-Park Kaluga, Russia 19.99 1,714 785 1,714 340
Emerging Europe Accession Fund 10.14 2,204 5,524 2,303 5,981
Rusal 0.01 4 185 4 123
ADM Ceecat Recovery Fund 5.37 4,285 4,966 4,988 5,652
European Virgin Fund 21.05 7,673 13,236 8,264 10,255
Teamnet International 8.33 5,599 - 5,599 -
Natfood 37.98 - - - -
EOS Hellenic Renaissance Fund 2.53 498 390 47 -
At fair value through other comprehensive income 28,192 29,588 43,166 26,640
Equity investments at fair value 28,192 30,386 43,166 27,655
The valuation of such investments, which are unlisted, has been estimated using the most recent
management accounts or the latest audited accounts as of 31 December 2019, as Management considers
that these provide the best available estimate of the investments’ fair value. The techniques applied to
perform these valuations include equity calculations based on EBITDA and market data.
During the year the Bank had realized a net income of EUR 237 thousand from its investment in the Balkan
Accession Fund.
On disposal or exit of an equity investment for those at fair value through other comprehensive income, the
cumulative gain or loss is realized with a corresponding reversal of the unrealized gain or loss that was
recorded prior to the exit from that investment, and is not recycled to the income statement.
As of 31 December 2019 the Bank has a committed amount of EUR 7,905 thousand towards further
participation in the above entities. Further analysis of the equity investment portfolio is presented in the
Note ‘Risk management’.
As of 31 December 2019 the Bank has few equity investments where it holds slightly more than 20 per cent
of the investee share capital, but does not exert significant influence, hence the investment is not accounted
for as an investment in an associate under IAS 28.
53
16. OTHER ASSETS
Other assets is analyzed as follows:
At At
Accrued interest 24,334 20,169
Advances and prepaid expenses 6,165 5,690
Other prepayments 187 187
Guarantee deposits 5,167 3,495
Other assets 35,853 29,541
17. PROPERTY AND EQUIPMENT
Property and equipment is analyzed as follows:
Furniture Computers
Buildings and office and office
Presented in EUR (000) (leasehold) Vehicle accessories equipment Total
Cost
At 31 December 2017 850 106 550 1,722 3,228

Additions 26 - 54 111 191
Disposals - - (11) (28) (39)
At 31 December 2018 876 106 593 1,805 3,380
Additions 6 44 33 213 296
Disposals - - (23) (243) (266)
At 31 December 2019 882 150 603 1,775 3,410
Accumulated depreciation
At 31 December 2017 797 34 491 1,405 2,727

Charges 39 21 31 146 237
Disposals - - (11) (28) (39)
At 31 December 2018 836 55 511 1,523 2,925
Charges 23 23 33 183 262
Disposals - - (23) (243) (266)
At 31 December 2019 859 78 521 1,463 2,921
Net book value
At 31 December 2019 23 72 82 312 489

At 31 December 2018 40 51 82 282 455
At 31 December 2017 53 72 59 317 501
54
18. INTANGIBLE ASSETS
Intangible assets comprising computer software is analyzed as follows:
Presented in EUR (000) Total
Cost
At 31 December 2017 4,342

Additions 217
Additions 83
Accumulated amortization

Charges 217
Additions 314
Net book value
At 31 December 2019 422

55
19. BORROWINGS
Borrowing facilities and bond issues, arranged as at the financial position date, are analyzed below. In
addition to medium- or long-term borrowings and bond issuance, the Bank utilizes short-term financing in
the form of ECP issuance or borrowings from commercial banks for cash management purposes. At 31
December 2019 the Bank had issued debt securities in the amount of EUR 1,238,718 thousand.
At At
2019 2018
Amount Amount Amount Amount
Presented in EUR (000) used arranged Used arranged
Euro 96,477 146,477 126,794 146,794
United States dollar 1,029,024 1,118,039 595,473 595,473
Swiss franc 184,366 184,366 88,860 88,860
Romanian lei 82,023 82,023 56,227 56,227
Azerbaijan manat 5,415 5,415 - -
Georgian lari 84,125 84,125 83,059 83,059
Armenian dram 3,725 3,725 3,617 3,617
Total 1,485,155 1,624,170 954,030 974,030
The interest rate on borrowings falls within an approximate range of Euribor or USD Libor of plus 0 to 375
basis points. There is no collateral against the above borrowed funds. The fair value of the borrowings is
approximately equal to their carrying value.
20. PAYABLES AND ACCRUED INTEREST
Payables and accrued interest is analyzed as follows:
At At
Accrued interest 11,652 10,495
Social insurance fund (EFKA) contributions 3 4
Pension plan obligation 7,536 3,971
Suppliers and other accrued expenses 1,012 1,444
Other 59 59
Payables and accrued interest 20,262 15,973
21. LEASE LIABILITY
The Bank has entered into a lease contract only for its Headquarters premises, which includes renewal
options and periodic escalation clauses. There are no other commitments at end of year arising from non-
cancellable lease contract. On adoption of IFRS 16 the impact in the statement of financial position of the
recognition of right-of-use asset and corresponding lease liability, together with the movement for 2019, is
analyzed as follows:
Presented in EUR (000) Total

Operating lease commitment at 31 December 2018 1,931
Discounting (weighted average incremental borrowing rate) -
Lease liability due to initial application of IFRS 16 at 1 January 2019 1,931
Prepayment of rental (196)
Interest expense on the lease liability -
Lease payments recognized in other administrative expenses (676)
Lease liability 31 December 2019 1,059
56
IFRS 16 indicates that at the commencement date, the lessee (the Bank) will discount the lease payment
using (a) the interest rate implicit in the lease or (b) the lessee’s incremental borrowing rate if the interest
rate implicit in the lease cannot be determined. The incremental borrowing rate is the rate of interest that a
lessee would have to pay to borrow the funds to obtain (i) an asset of a similar value to the underlying asset
(ii) over a similar term (iii) with similar security (iv) in a similar economic environment. As the Bank has only
one lease arrangement that is nearing maturity, Management concluded that any adjustment or any
subsequent interest does not have a material impact on the financial statements.
The Bank presents right-of-use assets separately as property and equipment, and the lease liability
separately within payables and accrued interest, in the statement of financial position. Consequently, the
Bank recognizes lease payments and interest, if any on the lease liability on a straight-line basis over the
period of the lease term, similarly to any benefits received or that are receivable, in the income statement.
When a lease is terminated before the lease period has expired, any payments required to be made to the
lessor, by way of penalty, are recognized as an expense in the period the termination takes place.
22. SHARE CAPITAL
From the Bank’s inception, and in accordance with Article 4 of the Establishing Agreement, the Bank
denominated its authorized share capital in the Special Drawing Right (SDR) as defined by the International
Monetary Fund (IMF). Resolution 131 of the BoG unanimously adopted the requisite amendments to
paragraph 1 of Article 4 and Articles 23 and 24 of the Establishing Agreement, to expressly include among
the exclusive powers of the BoG the change of the unit of account of the Bank, and the redenomination of
all capital stock of the Bank. These amendments to the Establishing Agreement became effective on 21
June 2013 (the ‘Effective Date’). In accordance with such Resolution 131 of the BoG as of the Effective
Date the unit of account of the Bank became the EUR and the authorized capital stock of the Bank was
redenominated into three billion four hundred and fifty million EUR (3,450,000,000), divided into three million
(3,000,000) shares having a par value of one thousand and one hundred and fifty EUR (1,150) each,
inclusive of all subscribed and unallocated shares. Accordingly, as of the Effective Date, all outstanding
share capital commitments of participating members in respect of their subscribed shares were converted
into EUR.
The authorized capital stock of the Bank may be increased at such time and under such terms as may seem
advisable.
The Bank’s capital stock is divided into paid-in shares (fully paid and payable in installments) and callable
shares. Payment for the paid-in shares subscribed to by members was made over a period of years in
accordance with Article 6 of the Establishing Agreement for the initial capital raising purpose of the Bank,
and as determined in advance by the Bank for capital increases (in the only capital increase of the Bank so
far, the structure of payments specified was similar to the one in Article 6). The same Article states that
payment of the amount subscribed to in respect of the callable shares is subject to call only as and when
required by the Bank to meet its obligations.
Under Article 37 of the Establishing Agreement any member may withdraw from the Bank by transmitting a
notice in writing to the Bank at its Headquarters. Withdrawal by a member shall become effective and its
membership shall cease on the date specified in its notice, but in no event less than six months after such
notice is received by the Bank. However, at any time before the withdrawal becomes finally effective, the
member may notify the Bank in writing of the cancellation of its notice of intention to withdraw. Under Article
39 of the Establishing Agreement after the date on which a member ceases membership, it shall remain
liable for its direct obligations to the Bank, and also remain responsible for its contingent liabilities to the
Bank, incurred as of that date. No member has ever withdrawn its membership, nor has any ever indicated
to the Bank it might do so. Were a member to withdraw from the Bank, at the time a member ceases
membership, the Bank shall arrange for the repurchase of such a member’s shares by the Bank as part of
the settlement of accounts with such a member, and be able to impose conditions and set dates pursuant
to the same Article 39 of the Establishing Agreement. Any amount due to the member for its shares shall
be withheld so long as the member, including its central bank or any of its agencies, has outstanding
obligations to the Bank, which may, at the option of the Bank, be applied to any such liability as it matures.
57
If losses are sustained by the Bank on any guarantees or loans which were outstanding on the date when
a member ceased membership and the amount of such losses exceeds the amount of the reserves provided
against losses on the date, the member concerned shall repay, upon demand, the amount by which the
repurchase price of its shares would have been reduced if the losses had been taken into account when
the repurchase price was determined.
Under Article 42 of the Establishing Agreement in the event of termination of the operations of the Bank,
the liability of members for the unpaid portion of the subscribed capital of the Bank shall continue until all
claims of creditors, including all contingent claims, have been discharged.
All participating members had fully subscribed to the initial authorized share capital in accordance with
Article 5 of the Establishing Agreement. Subsequently, at the Sixth Annual Meeting of the Board of
Governors held on 6 June 2004 three Member States, Armenia, Georgia and Moldova requested a 50%
reduction of their portion of subscribed capital, from 2% to 1% of the initial authorized capital and the BoG
approved their request. On 5 October 2008 the new shares pursuant to the capital increase of the Bank
were offered in the same structure as the initial authorized share capital, in the amount of EUR 1.15 billion,
and were fully subscribed by the Member States. Furthermore, Azerbaijan also subscribed to the 3% of the
initial authorized share capital that remained unallocated, after the above mentioned participation reduction,
while Romania subscribed both to their allocation of new shares and to those that would have been
allocated to Georgia had it chosen to participate in the capital increase. This subscription process followed
a decision taken by the BoG in December 2007 to triple the Bank’s authorized capital to EUR 3.45 billion
and to double the subscribed capital to EUR 2.3 billion, while leaving authorized capital of EUR 1.15 billion
unallocated. On October 2011 the BoG approved the request from Moldova for a 50% reduction of its
portion of subscribed capital, from 1% to 0.5%, and those shares were released to unallocated share capital.
The above share capital is analyzed as follows:
At At
Authorized share capital 3,450,000 3,450,000
Less: unallocated share capital* (1,161,500) (1,161,500)
Subscribed share capital 2,288,500 2,288,500
Less: shares not yet called (1,601,950) (1,601,950)
Less: shares payable that are past due - (1,428)
Paid-up share capital 686,550 685,122
Advance against future call - -
Paid-in share capital 686,550 685,122
* Shares available to new or existing Member States.
Initial Capital
In accordance with paragraph 2 under Article 5 of the Establishing Agreement, the initially authorized capital
stock was subscribed by and issued to each Member as follows: 10% (EUR 115 million) fully paid and 20%
(EUR 230 million) payable by promissory notes or other obligations which were not negotiable and non-
interest bearing in eight equal successive annual installments in the years 1998 to 2005.
Capital Increase
The capital increase of EUR 1.15 billion is divided into EUR 345 million paid in capital and EUR 805 million
callable capital. Pursuant to the Board of Governors decision in October 2008, the EUR 345 million paid in
portion is divided into 10% (EUR 115 million) fully paid shares in 2010 and 20% (EUR 230 million) payable
shares by promissory notes or other obligation issued by members in eight equal successive annual
installments in the years 2011 to 2018. As of October 2011, the capital increase was reduced by EUR 11.5
million of the subscribed share capital, due to an approved reduction by the BoG in participation by Moldova.
58
The initial and capital increase that was issued is analyzed as follows:
At
31 December
2019
Initial Capital
Presented in EUR (000) capital increase Total
Authorized share capital 1,150,000 2,300,000 3,450,000
Less: unallocated share capital (34,500) (1,127,000) (1,161,500)
Subscribed share capital 1,115,500 1,173,000 2,288,500
Less: shares not yet called (780,850) (821,100) (1,601,950)
Paid-up share capital 334,650 351,900 686,550
Advance against future call 40 (40) -
Paid-in share capital 334,690 351,860 686,550
Statement of Subscriptions
A statement of capital subscriptions illustrating the number of shares and the amount subscribed by each
member is shown below, including their respective callable, payable and the amount paid. The capital
subscription status at the current financial position date is analyzed as follows:
Subscribed Callable Payable Paid
Member Shares Presented in EUR (000)
Albania 40,000 46,000 32,200 - 13,800

Armenia 20,000 23,000 16,100 - 6,900
Azerbaijan 100,000 115,000 80,500 - 34,500
Bulgaria 270,000 310,500 217,350 - 93,150
Georgia 10,000 11,500 8,050 - 3,450
Greece 330,000 379,500 265,650 - 113,850
Moldova 10,000 11,500 8,050 - 3,450
Romania 280,000 322,000 225,400 - 96,600
Russian Fed. 330,000 379,500 265,650 - 113,850
Turkey 330,000 379,500 265,650 - 113,850
Ukraine 270,000 310,500 217,350 - 93,150
Total 1,990,000 2,288,500 1,601,950 - 686,550
23. RESERVES
Reserves are analyzed as follows:
Other
comprehensive
Presented in EUR (000) General income Other Total
At 31 December 2017 60,875 (24,158) (3,134) 33,583
Gains (losses) on revaluation of investments - (8,216) - (8,216)
Remeasurements of defined benefit scheme - - 2,414 2,414
Transferred from retained earnings 5,176 - - 5,176
At 31 December 2018 66,051 (32,374) (720) 32,957
Gains (losses) on revaluation of investments - 16,737 - 16,737
Remeasurements of defined benefit scheme - - (3,020) (3,020)
Transferred from retained earnings 7,335 - - 7,335
At 31 December 2019 73,386 (15,637) (3,740) 54,009
The Bank’s general reserve is maintained for meeting any unforeseeable risks or contingencies that do not
qualify as provisions for impairment and is normally built-up from those released impairment charges during
the year.
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24. CASH AND CASH EQUIVALENTS
Cash and cash equivalents is analyzed as follows:
At At
Cash on hand 4 17
Investments maturing up to 1 month:

Cash deposits at banks 82,617 48,581
At fair value through other comprehensive income portfolio 147,917 78,655
Investment maturing from 1 month to 3 months:
At fair value through other comprehensive income portfolio 55,000 45,000
Cash and cash equivalents 285,538 172,253
The commercial papers held in the Bank’s portfolio were short term rated at a minimum of A2 by Standard
and Poor’s or P2 by Moody’s rating agencies, in accordance with the Bank’s internal financial policies.
60
25. EMPLOYEE BENEFITS
Under the Defined Benefit Scheme
If separated at or after the normal retirement age (60 years old), a staff member will be entitled to a full
immediate pension equal to 1% of his annual pensionable salary (i.e. average of the two best out of the last
five years) multiplied by his/her years of service at the Bank. If separated at or after the early retirement
age (55 years old), as staff member will be entitled to a reduced immediate pension, or deferred pension
payable from any month until the staff member’s normal retirement age. If separated before the early
retirement age, a staff member will be entitled to a deferred pension payable from any month between the
staff member’s early and normal retirement age. Upon separation at any age, a staff member will have a
choice between the appropriate type of pension and a lump sum termination benefit.
A qualified actuary performs an actuarial valuation of this scheme at each end of year using the projected
unit method, which is rolled forward to the following year accounts. The most recent valuation date was 31
December 2019. The present value of the defined benefit obligation and current service cost was calculated
using the projected unit credit method.
At At
Amounts recognized in the statement of financial position
Present value of the defined benefit obligations 30,736 24,445

Fair value of plan assets (23,200) (20,474)
Net liability at end of the year 7,536 3,971
Amounts recognized in the income statement
Service cost 1,752 2,095

Net interest on the net defined benefit liability/(asset) 70 81
Administration expense 49 48
Total included in personnel expenses 1,871 2,224
Remeasurements recognized in other comprehensive income
At 31 December (4,307) (6,721)

Liability gain (loss) due to changes in assumptions (4,745) 4,167
Liability experiences gain (loss) arising during the year (296) (359)
Return on plan assets excluding income statement amounts 2,021 (1,394)
Total amount recognized in OCI during the year (3,020) 2,414
Cumulative in other comprehensive income (expense) (7,327) (4,307)
Principal actuarial assumptions used
Discount rate 1.22% 2.04%

Expected return on plan assets 1.22% 2.04%
Future salary increase 1.50% 1.50%
Future pension increase 1.50% 1.50%
Average remaining working life of employees 11 years 11 years
The discount rate arises from the yield curves that use data from double A-rated iBoxx bond indices
produced by the International Index Company.
The expected return on assets as per provision of the revised IAS 19, has been set equal to the discount
rate assumption, i.e. at 1.22% pa.
61
The following table presents the major categories and reconciliation of the plan assets (the Fund):
At At
Major categories of plan assets
Cash instruments 17% 16%

Fixed interest 43% 47%
Equities 36% 33%
Other 4% 4%
Reconciliation of plan assets
Market value at 1 January 20,474 21,879

Expected return 426 401
Contributions paid 1,326 1,070
Benefit pensions and lump sum paid to pensioners (999) (1,434)
Expenses (48) (48)
Asset gain (loss) 2,021 (1,394)
Fair value of plan assets 23,200 20,474
The actual investment return on assets of the Fund for the year was 12.4%. The expected return on plan
assets has been based on asset structure allowed by the Fund as well as the yield of high quality corporate
bonds. The Bank estimate of contributions to be paid in 2020 will not materially differ from those paid in the
current year.
The funding status at year end and at the end of the last four years was as follows:
Presented in EUR (000) 2019 2018 2017 2016 2015

Defined benefit obligations 30,736 24,445 27,111 25,021 19,879
Plan assets (23,200) (20,474) (21,879) (20,373) (18,696)
Plan deficit (surplus) 7,536 3,971 5,232 4,648 1,183
Net experience adjustments on plan

liabilities (assets) 296 359 (419) 4,032 (1,822)
Sensitivity analysis
Reasonable possible changes at the financial position date to one of the relevant actuarial assumptions,
holding other assumptions constant, would have affected the defined benefit obligation by the amounts
shown below.
At At
2019 2018
Presented in EUR (000) Increase Decrease Increase Decrease

Discount rate (1% movement) (3,573) 3,573 (3,041) 3,041
Future salary growth (1% movement) 1,872 (1,872) 1,843 (1,843)
Although the analysis does not take account of the full distribution of cash flows expected under the plan,
it does provide an approximation of the sensitivity of the assumptions shown under the Defined Benefit
Scheme.
62
Under the Defined Contribution Scheme
Upon separation, a staff member will be entitled to receive in cash the full balance standing to the credit of
his/her individual account for the second and third pillars. The pension expense under this scheme was
EUR 1,050 thousand (2018: EUR 1,027 thousand) and is included in ‘Personnel expenses’.
Under the Greek State Social Insurance Fund
The pension expense of staff that is alternatively entitled to retirement benefits from this fund was EUR 18
thousand (2018: EUR 29 thousand) and is included in ‘Personnel expense’.
26. RELATED PARTIES
The Bank has the following related parties.
Key Management Personnel
Key management personnel comprise: the President, Vice Presidents and Secretary General. They are
entitled to a staff compensation package that includes a salary, medical insurance cover, participation in
the Bank’s retirement schemes and are eligible to receive other short-term benefits. The amounts paid to
key management personnel during the year were EUR 1,783 thousand (2018: EUR 1,600 thousand). Key
management personnel may receive post-employment benefits, other long-term benefits and termination
benefits, but do not receive any share-based payments.
The members of the BoD are not personnel of the Bank and do not receive any fixed term salaries nor any
staff benefits. The governments of the Member States are not related parties.
Special funds
Special funds are established in accordance with Article 16 of the Establishing Agreement and are
administered under the terms of rules and regulations adopted by the Bank. Special Funds are audited on
an annual basis and their assets and fund balances are not included in the Bank’s statement of financial
position. During 2019 the Bank administered one special fund. Extracts from the audited financial
statements are included under the ‘Summary of special funds’.
27. EVENTS AFTER THE REPORTING PERIOD
Covid-19 pandemic was announced by the World Health Organization (WHO) in March 2020 and is
expected to negatively impact the economies of the countries that the Bank works with. Following WHO
announcement as well as the measures taken by the respective governments as a response, the Bank has
proceeded with the following:
• The Bank has activated the internal Pandemic Response Plan, and most staff have moved to
'remote working', which will be extended further, according to how the situation unfolds in the host
country. In terms of its everyday operations, the Bank has taken all requisite steps to ensure
business continuity, the safety of its staff, and to comply with the emergency measures imposed by
the host country.
• The Bank monitors country by country measures taken by each government and their impact on its
loan portfolio. It will maintain contacts with clients and we will continue with preparation of projects,
but main focus will be the outstanding loan portfolio which is carefully analyzed and regularly
reviewed in light of the very rapid developments. It is not expected to have a significant impact on
the operations’ credit standing although monitoring may be temporarily hampered by travel
restrictions, if these would remain in place for an extended period of time.
63
• The Bank closely monitors its liquidity position and is prepared to extend short term measures as
required in order to safeguard its interests and maintain key ratios at comfortable levels. By
extending the slowdown in project development, the Bank will not undertake new commitments
temporarily and their levels should remain steady, or even temporarily decline as a result.
• Moreover, the Bank will monitor developments in the financial markets for assessing impact on its
investment portfolio as well as for suitable funding opportunities.
Overall, it is too early to assess how the virus pandemic will affect the Region the Bank operates in, and for
how long, however, the Bank has a robust mechanism and process in place to follow up developments and
adjust its operations accordingly in order to ensure effective and efficient management of this difficult
situation. Nonetheless, the effect on the Bank’s financial position and results cannot currently be estimated.
64
28. SUMMARY OF SPECIAL FUNDS
With the Hellenic Government
The Technical Cooperation Special Fund’s objective is to contribute to the economic development of the
Black Sea Region’s Member Countries. The Fund extends technical assistance grants for preparation of
high quality project documentation including business plans, feasibility studies and financial reporting
methods and standards. The movement in the Fund is shown below.
At At
Statement of movements
Balance brought forward 8 8

Net income (loss) for the year - -
Less: disbursements - -
Balance of available funds 8 8
Financial position
Placements with other financial institutions 8 8

Total Assets 8 8
Unallocated fund balance 8 8

Total Liabilities and Contributor Resources 8 8
65

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BLACK SEA TRADE AND DEVELOPMENT BANK

Financial Statements for the Year Ended

Together with Auditor’s Report

Tel: +30 210 6781 100

INDEPENDENT AUDITOR’S REPORT

Report on the Audit of the Financial Statements

Basis for Opinion

Key Audit Matters

Expected Credit Loss on Loans at amortized cost

Information Technology General Controls and controls over financial reporting

Auditor’s Responsibilities for the Audit of the Financial Statements

Athens, 7 May 2020

The Certified Public Accountant

Presented in thousands of EUR Note 2019 2018

Interest and similar income 7 93,969 78,717

Net fees and commissions 9 967 1,652

Personnel expenses 10,25 (15,758) (15,952)

Impairment (losses) on loans at amortized cost 11 (1,841) (6,292)

Presented in thousands of EUR Note 2019 2018

Net income for the year 13,664 5,176

Other comprehensive income (expense):

Presented in thousands of EUR Note 2019 2018

Debt investment securities at amortized cost 12,24 - 49,339

Derivative financial instruments – assets 13 3,128 662

Loans at amortized cost 14,5 1,808,187 1,318,418

Other assets 16 35,853 29,541

Reserves 23 54,009 32,957

Total comprehensive income - - - (5,802) 5,176 (626)

Total comprehensive income - - - 13,717 13,664 27,381

Presented in thousands of EUR Note 2019 2018

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Net increase in cash and cash equivalents 113,285 (24,228)

Cash and cash equivalents at beginning of year 24 172,253 196,481

Cash and cash equivalents at end of year 24 285,538 172,253

Agreement Establishing the Bank

Board of Governors and Board of Directors

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

2.1 Basis of Preparation

Functional and presentation currency

Judgments and assumptions

2.2 Going Concern

2.3 Adoption of New and Amended Standards (IFRS) EU

• Amendment to International Financial Reporting Standard 9 ’Financial Instruments':

On 12.10.2017 the International Accounting Standards Board issued an amendment to IFRS 9

• International Financial Reporting Standard 16 ’Leases’

• Amendments to International Accounting Standard 19 ‘Employee Benefits’: Plan Amendment,

• Amendment to International Accounting Standard 28 ’Investments in Associates’: Long-term

On 12.10.2017 the International Accounting Standards Board issued an amendment to IAS 28 to

• Improvements to International Accounting Standards – cycle 2015-2017.

• IFRIC Interpretation 23 ‘Uncertainty over Income Tax Treatments’.

• Amendment to International Financial Reporting Standard 9 “Financial Instruments’, to

Effective for annual periods beginning on or after 1.1.2020:

- The highly probable requirement in cash flow hedge,

• Amendments to International Accounting Standard 1 ’Presentation of Financial Statements’

Effective for annual periods beginning on or after 1.1.2020:

• Amendment to International Financial Reporting Standard 3 “Business Combinations”:

Effective for annual periods beginning on or after 1.1.2020: