Bank One Corporation - Page 30

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          office personnel costs to the management of its portfolio.  FNBC            
          also allocated to the management of its portfolio 8.33 percent of           
          the related direct costs.                                                   
               The swap department’s annual budget included as “indirect              
          costs” amounts that were charged to the swap department by other            
          areas of the bank.  The finance department conducted interviews             
          to determine what percentage of each item was attributable to the           
          management of the existing swap portfolio.  The percentages used            
          for 1993 were 62 percent of the credit department costs, 25                 
          percent of legal services, 50 percent of audit and finance, 0               
          percent of R&D, 0 percent of marketing, and 0 percent of                    
          corporate utilities.  FNBC also charged to the swaps department             
          the indirect costs of additional departments.                               
               The total of all of the expenses attributable to the                   
          management of FNBC’s existing swap portfolio represented FNBC’s             
          estimate of the total costs of administering its existing swap              
          portfolio for the upcoming year.                                            
               D.  Expenses Included in the Adjustment                                
                    1.  Direct and Indirect Budgeted Costs                            
               The direct and indirect costs of the swap front office used            
          to calculate the administrative costs adjustment included office            
          rent, traders’ salaries and bonuses, all front office expenses,             
          certain miscellaneous costs, costs connected with the Devon                 
          system, and retirement and other benefits for front office swap             






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Last modified: May 25, 2011