10.3. Acquisition of subsidiaries (business combinations)

The acquisition of subsidiaries by the Group is accounted for under the acquisition method. As at the acquisition date, the acquirer recognises, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The acquirer measures the identifiable assets acquired and the liabilities assumed at their acquisition-date fair values. In each and every business combination, all non-controlling interests in the acquiree are designated at fair value or on a pro rata basis in respect of the share of the non-controlling interest in the identifiable net assets of the acquiree.

Goodwill is recognized as at the acquisition date and measured as the excess of the total of:

• the consideration provided, designated at fair value as at the date of the acquisition,
• value of all non-controlling interests in the acquiree, measured in accordance with the above rules and
• in the event of a business combination performed in stages, at fair value as at the date of acquiring interest in the capital of the acquiree, which had been previously owned by the Bank,

over the net amount of the value of identifiable assets and liabilities acquired, designated at fair value as at the acquisition date, determined as at the acquisition date.

If the net value, determined as at the acquisition date, of identifiable assets and liabilities acquired, designated at fair value as at the acquisition date is higher than the total of:

• the consideration provided, designated at fair value as at the date of the acquisition,
• value of all non-controlling interests in the acquiree, measured in accordance with the above rules and
• in the event of a business combination performed in stages, at fair value as at the date of acquiring interest in the capital of the acquiree, which had been previously owned by the Bank,

the difference is recognised directly in the income statement.

In respect of mergers of the Group companies, i.e. the so-called transactions under joint control, the predecessor accounting method is applied, i.e. the acquired subsidiary is recognized at the carrying amount of its assets and liabilities recognized in the Group’s consolidated financial statements in respect of the given subsidiary, including the goodwill arising from the acquisition of that subsidiary.