FRANKFURT (MktNews) - The European Central Bank (ECB) announced Thursday that it posted a net profit of E1.99 billion last year, including net realized gains of E3.353 billion from sales of foreign currency due to official interventions, the disposal of foreign exchange interest income and portfolio management transactions.
The full text of the ECB's announcement follows:
"The Governing Council of the ECB today approved the audited annual accounts of the ECB for the year ending on 31 December 2000. They will also be included in the ECB's Annual Report to be published on 2 May 2001 and will be made available on the ECB's Website already today.
"The ECB made a net profit of EUR 1,990 million in the past year, after payment of remuneration of EUR 1,375 million to the national central banks (NCBs) on their claims in respect of the EUR 39.5 billion of foreign reserve assets, including gold, transferred by them to the ECB at the beginning of 1999.
"The regular income of the ECB is derived primarily from investment earnings on its holdings of foreign reserve assets and on its paid-up capital of EUR 3.9 billion. The ECB earned total net interest income of EUR 1,414 million from all sources. Sales of foreign currency due to official interventions, the disposal of foreign exchange interest income and portfolio management transactions gave rise to net realised gains amounting to EUR 3,353 million.
"The ECB's administrative expenses on salaries and related costs, rental of premises, and goods and services amounted to EUR 163 million, compared with EUR 122 million in 1999. Depreciation charges on fixed assets amounted to EUR 14 million. At the end of 2000, the ECB employed 941 staff (including 72 at managerial levels), compared with 732 one year earlier.
"The ECB recorded exchange rate and market price valuation gains totalling EUR 8 billion on its holdings of foreign currency assets and gold, compared with EUR 6.9 billion at the end of 1999. In accordance with the accounting principles of the Eurosystem, such unrealised gains are not recognised as profit, but are transferred directly to revaluation accounts.
"Taking into account the ECB's large exposure to exchange rate and interest rate risks, the Governing Council approved the setting-up of a special provision against such risks amounting to EUR 2,600 million. The provision is intended to cover future losses, in particular valuation losses, that may arise from market developments. The Governing Council will review the continuing requirement for this provision on an annual basis, to the extent that it is not used to cover such losses.
"At its meeting on 29 March 2001, the Governing Council decided that the ECB's net profit should be allocated as follows:
Transfer to the general reserve fund EUR 398 million
Transfer to national central banks EUR 1,592 million"