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Mega ICBC
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MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
(EXPRESSED IN THOUSANDS OF DOLLARS)
1.
ORGANIZATION AND OPERATIONS
(1)
Mega International Commercial Bank Co., Ltd. (the “Bank”; formerly The International Commercial Bank of China Co., Ltd.) was reorganized
on December 17, 1971 in accordance with the “Law for International Commercial Bank of China” as announced by the President of the
Republic of China (R.O.C.) (which was then abolished in December, 2005) and other related regulations. As of December 31, 2002, the Bank
became an unlisted wholly owned subsidiary of Mega Financial Holding Co. Ltd., through a share swap transaction. With the view to enlarging
business scale and increasing market share, the Bank entered into a merger agreement with Chiao Tung Bank Co., Ltd. on August 21, 2006,
the effective date of the merger. The Bank was later renamed Mega International Commercial Bank Co., Ltd. Mega Financial Holding Co.,
Ltd. holds 100% equity interest in the Bank and is the Bank’s ultimate parent company.
(2)
The Bank engages in the following operations: (a) commercial banking operations authorized by the R.O.C. Banking Law; (b) foreign
exchange and related operations; (c) import and export financing and guarantees; (d) financial operations related to international trade; (e)
trust operations; (f) investment services on consignments by clients; (g) loan operations, including mid-term to long-term development loan
and guarantee operations; (h) venture capital activities; and (i) other related operations approved by the R.O.C. government.
(3)
The Bank’s business and operations are widely managed by the head office. The Bank expands its network by opening branches at key
locations in both domestic and foreign markets. The Bank was incorporated as company limited by shares under the provisions of the Company
Law of the Republic of China (R.O.C.). As of December 31, 2015, the Bank had 107 domestic branches, 22 overseas branches, 5 overseas
sub-branches, and 4 overseas representative offices.
(4)
The Trust Department of the Bank is primarily responsible for planning, management and operation of trust investment businesses regulated
by the R.O.C. Banking Law.
(5)
As of December 31, 2015 and 2014, the Bank and its subsidiaries had 5,647and 5,600 employees, respectively.
2.
THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR
AUTHORIZATION
These consolidated financial statements were authorized for issuance by the Board of Directors on March 25 2016.
3.
APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1)
Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the
Financial Supervisory Commission (“FSC”)
According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued on April 3, 2014, commencing 2015, The Bank shall adopt
the 2013 version of IFRSs (not including IFRS 9, ‘Financial instruments’) as endorsed by the FSC and the "Regulations Governing the
Preparation of Financial Reports by Public Banks" effective January 1, 2015 (collectively referred herein as “the 2013 version of IFRSs”) in
preparing the consolidated financial statements. The impact of adopting the 2013 version of IFRSs is listed below:
A.
IAS 19 (revised), ‘Employee benefits’
The revised standard makes amendments that net interest amount, calculated by applying the discount rate to the net defined benefit asset
or liability, replaces the finance charge and expected return on plan assets. The revised standard eliminates the accounting policy choice
that the actuarial gains and losses could be recognised based on corridor approach or recognised in profit or loss. The revised standard
requires that the actuarial gains and losses can only be recognised immediately in other comprehensive income when incurred. Past service
cost will be recognised immediately in the period incurred and will no longer be amortised using straight-line basis over the average
period until the benefits become vested. An entity is required to recognise termination benefits at the earlier of when the entity can no
longer withdraw an offer of those benefits and when it recognises any related restructuring costs, rather than when the entity is
demonstrably committed to a termination. Additional disclosures are required for defined benefit plans.
The Bank recognised previously unrecognised past service cost by increasing provisions for employee benefits by NT$332,980 and
NT$353,922, increasing deferred income tax assets by NT$56,607 and NT$60,167, and decreasing retained earnings by NT$276,373 and
NT$293,755 at December 31 and January 1, 2014, respectively.
Operating expenses would be decreased by $20,942, income tax expense would be increased by NT $3,560 for the year ended December
31, 2014, respectively. The basic and dilutive earnings per share for the same period were not influenced.
B.
IAS 1, ‘Presentation of financial statements’
The amendment requires entities to separate items presented in OCI classified by nature into two groups on the basis of whether they are
potentially reclassifiable to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax
related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown
separately. Accordingly, the Bnak and its subsidiaries will adjust its presentation of the statement of comprehensive income.