74 In the case of securities under reverse repurchase agreements, a receivable from the transferor is recorded on the transferee’s balance sheet against the amount paid. If the security is subsequently resold, the transferee records a liability equivalent to the fair valueof fulfilling their obligation to return the security received under the repurchase agreement. Revenue and expenses relating to such transactions are posted to profit and loss on a prorata temporis basis, except in the case of classification of assets and liabilities at fair value through profit or loss. Derecognition of financial assets A financial asset (or groupof financial assets) is derecognised in whole or in part: • when the contractual rights to the cash flows related to the asset expire; • or when they are transferred or considered as such because they have one or more beneficial owners and when substantially all the risks and benefits of the financial asset are transferred. In this case, any rights or obligations created or retained at the time of transfer are recognised separately as assets and liabilities. If the contractual rights to the cash flows are transferred but only some of the risks and rewards as well as control are retained, the entity continues to recognise the financial asset to the extent of the entity ’s continued involvement in this asset. Financial assets renegotiated for commercial reasonswithout any financial difficulties of the counterpart and with the aim of developing or keeping a commercial relationship are derecognised at the date of the renegotiation. The new loans granted to customers are recorded at this date at their fair value on the date of renegotiation. Subsequent accounting treatmentwill dependonthebusinessmodel andtheSPPI test. Financial liabilities Classification and valuation of financial liabilities On the balance sheet, financial liabilities are classified into two accounting categories: • financial liabilities at fair value through profit or loss, either by default or as an option; • financial liabilities at amortised cost. Financial liabilities at fair value through profit or loss, by default Financial instruments issued primarily with a view to being bought back in the short term, instruments forming part of an identified portfolio of financial instruments that are managed together and which show indications of a recent short-term profit-taking profile, and derivatives (with the exception of certain hedging derivatives) are measured at fair value by nature. Changes in the fair value of this portfolio are booked to the Income Statement. Financial liabilities valued at amortised cost All other liabilities matching the definition of a financial liability (excluding derivatives) are valued at amortised cost. These liabilities are initiallymeasured at fair value (including transaction income and costs) and subsequently recognised at amortised cost using the effective interest ratemethod. Deposits Theproceedsof thecollectionare recognisedunder "Financial liabilities at amortised cost - Customer deposits" despite the characteristics of the Crédit Agricole Group's collection channel,with theRegional Bankscentralising their collections at Crédit Agricole S.A. The final counterpart of these collection products for the Group remains the customers. They are initially measured at fair value and subsequently at amortised cost. Regulated savings products are by nature deemed to be at market rates. Reclassification of financial liabilities The initial classification of financial liabilities is irrevocable. No subsequent reclassification is allowed. Distinction between debt and equity The distinction between debt instruments and equity instruments is based on analysis of the economic substance of the contractual terms. A financial liability is a debt instrument if it includes a contractual obligation: • to provide another entity with cash, another financial asset or a variable number of equity instruments; or • to exchange financial assets and liabilities with another entity on potentially unfavourable terms. An equity instrument is a non-redeemable financial instrument which offers a discretionary return representing a residual interest in a business after deduction of all its financial liabilities (net assets) and which is not qualified as a debt instrument.
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