34 Guarantees and Commitments

In CHF million  
  31.12.2012 31.12.2011
Financial guarantees
  54 130
Loan commitments
  149 119
Private equity commitments
  161 266
Other capital commitments
  284 611
Operating lease commitments
  41 18
Contractual obligations to purchase or construct investment property
  173 329
Other contingent liabilities and commitments
  353 320
Total
  1 215 1 793


Future minimum lease payments under non-cancellable operating leases – lessee
In CHF million  
  31.12.2012 31.12.2011
Not later than 1 year
  8 1
Later than 1 year and not later than 5 years
  25 17
Later than 5 years
  8
Total
  41 18


Financial Guarantees
The Group has issued financial guarantees and transaction-related guarantees and similar instruments. Financial guarantees provide for specified payments to be made to reimburse the holder for a loss incurred in the event that a client fails to make payment when due.

Loan commitments
The Group has also entered into irrevocable commitments to extend credit in the form of loans and other instruments. They represent undrawn credit lines which are available to clients to secure their liquidity needs. With respect to credit risk, these commitments are contingent upon clients maintaining certain credit standards, and the Group monitors its exposure on a regular basis.

The total amount of credit commitments includes commitments to lend at fixed rates, which expose the Group to interest rate risk. These commitments are entered into for restricted periods of time. As at 31 December 2012, committed principal amounts stood at EUR 15 million and CHF 105 million (2011: EUR 13 million and CHF 68 million). The range of committed interest rates is 2.5% to 5.9% for commitments in euro and 1.0% to 2.4% for commitments in Swiss francs.

Private equity commitments
Private equity commitments represent unfunded commitments to make investments in direct private equity or private equity funds. Such commitments do not involve credit or market risk, as the Group purchases investments at market value at the time the commitments are invoked.

Other Capital commitments
Other capital commitments include commitments to make investments (capital calls) and agreements to provide liquidity to protection funds in the insurance industry.

Operating lease commitments
The Group has entered into various operating leases as a lessee. Rental expenses recognised in income for these items totalled CHF 40 million for the year ended 31 December 2012 (2011: CHF 42 million). Minimum lease payments totalled CHF 40 million in 2012 (2011: CHF 42 million).

Other contingent Liabilities and commitments
Contractual obligations for repairs and maintenance of investment property amounted to CHF 85 million as at 31 December 2012, which are included in this line item (2011: CHF 69 million).

Legal proceedings
The Group is involved in various legal proceedings, claims and litigation generally relating to its insurance operations. The outcome of such current legal proceedings, claims and litigation could have a material effect on operating results or cash flows when resolved in a future period. However, in the opinion of the management these matters are adequately provided for as at the balance sheet date.

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