32.2. Credit and default risk


The credit and default risk arising from financial assets involves the risk of default by counterparties, and therefore comprises at a maximum the amount of the claims under carrying amounts receivable from them and the irrevocable credit commitments. The risk arising from non-derivative financial instruments is accounted for by recognizing bad debt losses. Cash and capital investments and derivatives are only entered into with prime-rated national and international counterparties. Risk is additionally limited by a limit system based on credit assessments by the international rating agencies and on the equity base of the counterparties concerned.

There were no material concentrations of risk in fiscal year 2009 due to the global allocation of the Group’s business activities and the resulting diversification.

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CREDIT AND DEFAULT RISK RELATING TO FINANCIAL ASSETS
BY GROSS CARRYING AMOUNT

 

 

 

 

€ million

 

Neither  past due  nor  impaired

 

Past due  and not  impaired

 

Impaired

 

Dec. 31,  2009

 

Neither past due  nor  impaired

 

Past due  and not  impaired

 

Impaired

 

Dec. 31,  2008

Measured at amortized cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial services receivables

 

56,223

 

3,760

 

2,488

 

62,471

 

55,838

 

2,587

 

1,923

 

60,348

Trade receivables

 

4,466

 

1,104

 

321

 

5,891

 

4,724

 

1,136

 

388

 

6,248

Other receivables

 

3,249

 

101

 

326

 

3,677

 

11,158

 

161

 

242

 

11,561

 

 

63,938

 

4,966

 

3,135

 

72,039

 

71,720

 

3,884

 

2,553

 

78,157

There are no overdue financial instruments measured at fair value in the Volkswagen Group. In fiscal year 2009, marketable securities measured at fair value with a cost of €20 million (previous year: €363 million) were individually impaired.

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CREDIT RATING OF THE GROSS CARRYING AMOUNTS OF FINANCIAL ASSETS
THAT ARE NEITHER PAST DUE NOR IMPAIRED

 

 

€ million

 

Risk class 1

 

Risk class 2

 

Dec. 31,  2009

 

Risk class 1

 

Risk class 2

 

Dec. 31,  2008

Measured at amortized cost

 

 

 

 

 

 

 

 

 

 

 

 

Financial services receivables

 

48,221

 

8,002

 

56,223

 

47,651

 

8,187

 

55,838

Trade receivables

 

4,465

 

0

 

4,466

 

4,724

 

0

 

4,724

Other receivables

 

3,240

 

10

 

3,249

 

11,153

 

5

 

11,158

Measured at fair value

 

6,289

 

 

6,289

 

7,395

 

 

7,395

 

 

62,214

 

8,012

 

70,226

 

70,923

 

8,192

 

79,115

The Volkswagen Group performs a credit assessment of borrowers in all loan and lease agreements, using scoring systems for the high-volume business and rating systems for corporate customers and receivables from dealer financing. Receivables rated as good are contained in risk class 1. Receivables from customers whose credit rating is not good but have not yet defaulted are contained in risk class 2.

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MATURITY ANALYSIS OF THE GROSS CARRYING AMOUNTS
OF FINANCIAL ASSETS THAT ARE PAST DUE AND NOT IMPAIRED

 

 

 

 

past due by:

 

Gross carrying amount

€ million

 

up to 30 days

 

30 to 90 days

 

more than
90 days

 

Dec. 31, 2008

Measured at amortized cost

 

 

 

 

 

 

 

 

Financial services receivables

 

1,843

 

584

 

160

 

2,587

Trade receivables

 

668

 

278

 

190

 

1,136

Other receivables

 

74

 

29

 

58

 

161

Measured at fair value

 

 

 

 

 

 

2,585

 

891

 

408

 

3,884

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past due by:

 

Gross carrying amount

€ million

 

up to 30 days

 

30 to 90 days

 

more than
90 days

 

Dec. 31, 2009

Measured at amortized cost

 

 

 

 

 

 

 

 

Financial services receivables

 

2,339

 

1,110

 

312

 

3,760

Trade receivables

 

645

 

329

 

130

 

1,104

Other receivables

 

54

 

16

 

31

 

101

Measured at fair value

 

 

 

 

 

 

3,039

 

1,454

 

472

 

4,966

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CARRYING AMOUNTS OF FINANCIAL INSTRUMENTS THAT WOULD
OTHERWISE BE PAST DUE WHOSE TERMS HAVE BEEN RENEGOTIATED

 

 

€ million

 

Dec. 31, 2009

 

Dec. 31, 2008

Measured at amortized cost

 

 

 

 

Financial services receivables

 

1,330

 

849

Trade receivables

 

21

 

Other receivables

 

0

 

Measured at fair value

 

 

 

 

1,351

 

849

The collateral held by the Volkswagen Group relates mainly to financial services receivables and trade receivables. Collateral comprises vehicles and assets transferred as security, as well as guarantees and real property liens.

Collateral that was accepted in fiscal year 2009 for financial assets that are past due and not impaired and for financial assets that are individually impaired was recognized in the balance sheet in the amount of €276 million (previous year: €225 million). This mainly relates to vehicles.

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