BANQUE SAUDI FRANSI
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2008 and 2007 _______________________________________________________________________________________________
Banque Saudi Fransi (the Bank) is a Saudi Joint Stock Company established by Royal Decree No. M/23 dated Jumada Al Thani 17, 1397H, corresponding to June 4, 1977. The Bank formally commenced its activities on Muharram 1, 1398H, corresponding to December 11, 1977, by taking over the branches of the Banque de l’Indochine et de Suez in the Kingdom of Saudi Arabia. The Bank operates under Commercial Registration Number. 1010073368 dated Safar 4, 1410H, corresponding to September 5, 1989, through its 75 branches (2007: 74 branches) in the Kingdom of Saudi Arabia, employing 2,345 people (2007: 2,266). The objective of the Bank is to provide a full range of banking services, including Islamic products, which are approved and supervised by an independent Shariah Board. The Bank’s Head Office is located at Al Maa’ther Street, P.O. Box 56006, Riyadh 11554, Kingdom of Saudi Arabia.
In accordance with the Capital Market Authority (CMA) directive, the Bank has established subsidiaries, Fransi Tadawul Company (99% direct and 1% indirect share in equity beneficially held by a director of the Bank) and CAAM Saudi Fransi (60% share in equity), associates Sofinco Saudi Fransi (50% share in equity) and CALYON Saudi Fransi (45% share in equity), which are incorporated in the Kingdom of Saudi Arabia. These companies have been established to comply with the CMA requirement of spinning off brokerage, asset management, consumer lease finance and corporate financial advisory activities from the Bank’s core business.
The subsidiaries commenced their commercial operations during 2008. Accordingly, effective 1 January 2008 the Bank started consolidating the financial statements of the aforementioned subsidiaries .
The Bank also holds 27% shareholding in an associate Banque BEMO Saudi Fransi, a bank incorporated in Syria, 50% shareholding in InSaudi Insurance Co., incorporated in Kingdom of Bahrain and 32.5% equity share in Saudi Fransi Corporative Insurance Co. (Allianz Saudi Fransi), an associate incorporated in the Kingdom of Saudi Arabia.
Basis of preparation
a) Statement of compliance
The consolidated financial statements are prepared in accordance with the Accounting Standards for Financial Institutions promulgated by the Saudi Arabian Monetary Agency (SAMA) and International Financial Reporting Standards (IFRS). The Bank prepares its consolidated financial statements to comply with the requirements of Banking Control Law and the Regulations for Companies in the Kingdom of Saudi Arabia.
b) Basis of measurement
The consolidated financial statements are prepared under the historical cost convention except for the measurement at fair value of derivatives, available for sale and Fair Value through Income Statement (FVIS) financial instruments. In addition, as explained fully in the related notes, assets and liabilities that are hedged (in a fair value hedging relationship) and otherwise carried at cost are carried at fair value to the extent of the risk being hedged.
c) Functional and presentation currency
The consolidated financial statements are presented in Saudi Arabian Riyals (SAR), which is the Bank’s functional currency. Except as indicated, financial information presented in SAR have been rounded off to the nearest thousands.