Reserve Bank of Australia Annual Report – 2011 Financial Statements Note 16 – Subsequent Events

On 1 July 2011, charges were laid against Note Printing Australia Limited, a wholly owned subsidiary of the RBA, and Securency International Pty Ltd, in which the RBA holds a 50 per cent share. The charges, in summary, allege that between 1999 and 2003 the two companies and a number of individuals engaged in conspiracy to bribe foreign officials in Indonesia and Malaysia. In August 2011, a further two charges were laid against Securency for similar alleged conduct relating to Vietnam in the period between 2001 and 2004. A number of former employees of the companies, including two former chief executives, were also charged. The Australian Federal Police stated on 1 July 2011 that the charges against the companies are a result of alleged actions of former senior managers of the companies. In terms of AASB 137 – Provisions, Contingent Liabilities and Contingent Assets, the Bank has set aside certain provisions for the possible financial impact of the charges against NPA and Securency, based on information available at the time of preparing these accounts. Specific information relating to the charges and their financial consequences have not been disclosed in these accounts as the matters have not yet been finalised and are before the courts.

The Bank's foreign exchange holdings are invested mainly in securities issued by the governments of the United States, Germany, France, the Netherlands, Japan and Canada (see Note 15). In August 2011, Standard & Poor's lowered the long-term sovereign credit rating of the United States Government and related agencies' debt obligations from AAA to AA+. The value of these securities amounted to around 19 per cent of the Bank's foreign exchange holdings as at 30 June 2011. However, based on information currently available the credit downgrade has not had a material impact on the Bank's financial position.

There have been no other events since 30 June 2011 relevant to the financial statements.