Reserve Bank of Australia Annual Report – 2013 Financial Statements Note 11 – Contingent Assets and Liabilities

The RBA has a contingent liability, amounting to $58.4 million at 30 June 2013 ($53.4 million at 30 June 2012), in respect of the uncalled portion of its shares held in the BIS.

In the course of providing services to its customers, the RBA provides performance guarantees to third parties in relation to customer activities. Such exposure is not material and has not given rise to losses in the past.

The RBA carries its own insurance risks except where external insurance cover is considered to be more cost-effective or required by legislation.

As outlined in Note 1, the RBA has accounted for the costs, and potential costs, to the consolidated entity associated with the charges laid against NPA, Securency and several former employees of these companies during 2011 and the charges against former employees in 2013. In light of the uncertainties, it is not possible to make reliable estimates of all of the potential costs associated with the charges, or potential claims in connection with them, at the date of preparing these accounts.

Regarding the sale of Securency, the RBA has provided the purchaser with a number of indemnities for the period during which Securency was jointly owned by the RBA and Innovia Films. It is not possible to reliably estimate the potential financial effect of these indemnities. The RBA, however, does not consider it probable at this time that it will have to make payments in terms of these indemnities. Accordingly, they are disclosed as contingent liabilities in accordance with AASB 137 – Provisions, Contingent Liabilities and Contingent Assets.

In addition, an amount covering 50 per cent of certain potential liabilities of Innovia Security relating to events prior to the sale has been placed in escrow. The RBA will receive the balance of the escrow funds after any relevant claims have been paid, settled or lapse. It is not possible to estimate the likelihood of the RBA receiving any payments from the amount held in escrow and they are disclosed as contingent assets.