Page 37 - GTBANK GAMNBIA 2021 ANNUAL REPORT

Quantitative criteria ✓ If the expected restructuring will result in
derecognition of the existing asset, then the
A modification would lead to derecognition of existing expected fair value of the new asset is treated as
financial asset and recognition of a new financial asset, the final cash flow from the existing financial
i.e. substantial modification, if: asset at the time of its derecognition.

•The discounted present value of the cash flows under Financial Liabilities

the new terms, including any fees received net
of any fees paid and discounted using the A financial liability is derecognised when the obligation
original effective interest rate, is at least 10 per under the liability is discharged, cancelled or expires.
cent different from the discounted present value The Bank derecognises a financial liability when its
of the remaining cash flows of the original terms are modified and the cash flows of the modified
financial asset. liability are substantially different. In this case, a new
financial liability based on the modified terms is
recognised at fair value. The difference between the
In addition to the above, the bank shall also consider carrying amount of the financial liability extinguished
qualitative factors as detailed below. and the new financial liability with modified terms is
recognised in profit or loss.
Qualitative criteria

Scenarios where modifications will lead to derecognition Derecognition of financial instruments
of existing loan and recognition of a new loan, i.e. The Bank derecognizes a financial asset only when the
substantial modification, are: contractual rights to the cash flows from the asset
expire or it transfers the financial asset and
✓ The exchange of a loan for another financial substantially all the risks and rewards of ownership of
asset with substantially different contractual the asset to another entity. If the Group neither
terms and conditions such as the restructuring of transfers nor retains substantially all the risks and
a loan to a bond; conversion of a loan to an equity rewards of ownership and continues to control the
instrument of the borrower transferred asset, the Bank recognises its retained
✓ Roll up of interest into a single bullet payment of interest in the asset and an associated liability for
interest and principal at the end of the loan term amounts it may have to pay. If the Bank retains
✓ Conversion of a loan from one currency to substantially all the risks and rewards of ownership of a
another currency transferred financial asset, the Bank continues to
recognise the financial asset and also recognises a
Other factor to be considered: collateralised borrowing for the proceeds received.

✓ Extension of maturity dates Financial assets that are transferred to a third party but
do not qualify for derecognition are presented in the
statement of financial position as ‘Assets pledged as
If the terms of a financial asset are renegotiated or collateral’, if the transferee has the right to sell or re-
modified or an existing financial asset is replaced with pledge them.
a new one due to financial difficulties of the borrower,
then an assessment is made of whether the financial On derecognition of a financial asset, the difference
asset should be derecognized (see above) and ECL between the carrying amount of the asset (or the
are measured as follows: carrying amount allocated to the portion of the asset
transferred), and the sum of (i) the consideration
✓ If the expected restructuring will not result in received (including any new asset obtained less any
derecognition of the existing asset, then the new liability assumed) and (ii) any cumulative gain or
expected cash flows arising from the modified loss that had been recognized in other comprehensive
financial asset are included in calculating the income is recognized in profit or loss.
cash shortfalls from the existing asset

Annual Report 2021

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