9.3 Reclassification between fair value hierarchy levels

If the method of measurement of assets or liabilities changes because of e.g. losing (or obtaining) access to quotations observed on an active market, such assets or liabilities are reclassified between Levels I and II.

Assets or liabilities are reclassified between Levels II and III (or accordingly between Levels III and II) when:

• there is a change in the measurement model resulting from the application of new unobservable factors (or accordingly observable ones); or
• previously used factors that had a significant impact on the measurement are no longer observable (or accordingly become observable) on the active market.

Reclassifications between different levels of the fair value hierarchy are effected on the date ending each quarter according to the value as at that date.

In 2017, PLN-denominated treasury bonds, for which active market quotations were available, were reclassified from Level II to Level I. As at 31 December 2017, the carrying amount of the reclassified bonds was PLN 612 million.

In 2016, the following reclassifications of assets between fair value levels were made:

• On 30 June 2016 some financial assets were reclassified from Level I to Level II; on the reclassification date, their fair value was PLN 2,600 million. Information on the reasons for reclassification is presented in item 9.2.1.1.
• On 30 September 2016 one bond classified in the portfolio of assets available for sale with a carrying amount of PLN 46 million was reclassified from Level III to Level I in connection with the appearance of available quotations on an active market.