Jean-Antoine Cramer 1931 - 2014e3b323fd-98de-4abf... · 2018. 4. 26. · BANQUE CRAMER GROUP |...

Annual Report 2014

Jean-Antoine Cramer1931 - 2014

Annual Report 2014

BANQUE CRAMER GROUP | ANNUAL REPORT 2014

Jean-Antoine Cramer 1931-2014

Partner since 1964 at Maison Messieurs Cramer & Cie, Gérants de Fortunes, which was founded in 1931 and became Banque Cramer & Cie SA in 2003

Geneva ( headquarter)Avenue de Miremont 22CH-1206 Geneva

Phone +41 (0)58 218 60 00Fax +41 (0)58 218 60 01

LausanneAvenue du Théâtre 14CH-1002 Lausanne

Phone +41 (0)21 341 85 11Fax +41 (0)21 341 85 07

LuganoRiva Caccia 1CH-6900 Lugano

Phone +41 (0)58 218 68 68Fax +41 (0)58 218 68 69

ZurichSihlstrasse 24CH-8001 Zurich

Phone +41 (0)43 336 81 11Fax +41 (0)43 336 81 10

[email protected]


4 Board of Directors and Management 5 Board of Directors’ Report 8 Consolidated balance sheet

10 Consolidated income statement

12 Consolidated cash flow statement

13 Notes to the consolidated financial statements

31 Report of the Statutory Auditor on the consolidated financial statements

32 Balance sheet

34 Income statement

36 Notes to the financial statements

44 Report of the Statutory Auditor on the financial statements

Contents

English translation. In case of discrepancy between the French original version and the English translation, the French original version shall prevail.


Board of Directors

Marco J. Netzer ChairmanRubino Mensch Honorary ChairmanMassimo Esposito Vice-ChairmanArthur Bolliger Member of the Board of DirectorsChristian Bühlmann Member of the Board of DirectorsChristian Mossaz Member of the Board of DirectorsVincenzo Di Pierri Member of the Board of Directors

General Management

Christian Grütter ChairmanPlacido Albanese Managing DirectorAlberto Bertini Managing DirectorAlberto Di Stefano Managing DirectorMatteo Maccio3 Managing DirectorAntonio Zarro2 Managing Director

Management - Geneva

Michel Arni Managing DirectorPierre Bezençon Managing DirectorNicholas Davies Managing DirectorRoland Woerndli Managing DirectorCharles Gutowski Executive DirectorPeter Halter Executive DirectorIsabelle Mach-Gosse Executive DirectorLuc Madelaine Executive DirectorJacques Micheloud Executive DirectorDavid Paglia Executive DirectorEric Vernet Executive DirectorNicolas Bader DirectorAlexandre Berger DirectorJean-Pierre Bitz DirectorChristophe Clabots DirectorSaid Fenani DirectorCarole Héritier DirectorOlivier Micheloud DirectorBruno Migliarini DirectorJean-Marc Robyr DirectorArmen Sahakyan Director

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As of 31 December 2014, the composition of the bodies of the company was as follow:

Management - Lausanne

Pascal H. Widmer1 Managing DirectorAndré Follonier DirectorFritz Jost DirectorClaude Miserez DirectorChristophe Naz Director

Management - Lugano

Giuseppe Ricciardi First Vice-PresidentFrancesca Barberis DirectorMassimo Bosia DirectorRiccardo Ferraresi DirectorMarco Vetter Director

Management - Zurich

Michael Bauer Managing DirectorRolf Burgi Managing DirectorJanna Cardinale Managing DirectorMarkus Huber Managing DirectorJonas Misteli Managing Director Valentin Röthlin Managing DirectorBéatrice Winkler Managing DirectorFranck Grundler Executive DirectorVito Lubreglia Executive DirectorChristian Scheer Executive DirectorKarin Sigel Executive DirectorLino Battistini DirectorUlrich Bender DirectorStefan Heinz DirectorDaniel Schutz Director

Audit comittee

Christian Mossaz ChairmanMarco J. Netzer4 Member

Internal Auditor

PricewaterhouseCoopers SA Geneva

External Auditor

KPMG SA Geneva

1) Head of Lausanne’s Branch2) Head of Lugano’s Branch3) Head of Zurich’s Branch4) Mr. Netzer’s membership of this committee is justified by his extensive expertise in the banking sector and thorough knowledge of the

Bank’s structure. This position, which he has held since 2006, has never given rise to any conflicts of interest.


5

Dear Shareholders,

The year 2014 proved to be a difficult one for the ma-jority of global financial markets, with the exception of assets invested in the United States. The highest re-turns in terms of asset class were recorded by long-dated US Treasury and real estate bonds, which both yielded around 27%, followed by medium-dated Treasuries and US equities, which posted returns of 14.5% and 13%, respectively. Equity returns varied sharply depending on size, region and sector. The MSCI All Country World Index – the largest index measuring the performance of US and global equities – returned just over 4% in 2014. At 14%, the total return of the S&P 500 in 2014 exceeded the annual average gain over 25 years by 40%. The index closed at a record high more than 50 times.

The markets were turbulent in the first quarter of 2014, shaken by a series of disappointing data in the first three months, fund outflows and exchange rate problems, af-fecting the emerging markets in particular. Weak mac-roeconomic data coming out of China and political tensions between Ukraine and Russia weighed on the emerging markets. Global equities posted modest gains in the first quarter. A further consequence of the weak data was that the bond markets performed surprisingly well, recording strongly positive yields in the first quar-ter. The US dollar depreciated against most major cur-rencies in the developed world.

The second quarter of 2014 proved favourable for in-vestors. US economic data, which were impacted by es-pecially harsh winter weather conditions, showed signs of growth; this was warmly welcomed by the stock mar-kets and the central banks. These developments, associ-ated with low volatility (revenue at the level seen before the crisis), led to hand-in-hand increases for almost all asset classes. At this stage, certain investors began talk-ing about a bubble of complacency, with the markets not having seen a substantial correction for more than two years. Bond instruments again defied the forecasts of several market analysts in the second quarter, mak-ing solid gains on top of the first-quarter rebound. The main driver of the bond market uptick was the general uncertainty surrounding the pace of economic growth. The discrepancy between market sentiment and eco-nomic reality seemed to worsen.

One of the main themes in the third quarter was the sharp appreciation of the US dollar. The US economy has emerged from the recession in a lot better shape than investors and the Fed had expected. The lion’s share of observers took this as a sign that the Fed would be the first central bank among the large industrialized nations to raise interest rates. At its September meeting, the ECB chose to lower its interest rate from 0.15% to

0.05% and reduced the overnight deposit rate to under 0.2%. Global equities posted negative returns linked to increasing geopolitical tensions. The instability in the Middle East depressed investor sentiment, as did the volatile situation in Ukraine. Commodities lost ground overall in the third quarter of 2014, especially in the en-ergy sector. Gold prices also slipped in the third quarter. Russian equities suffered in the wake of the escalating situation in Ukraine and the resulting sanctions im-posed by the West. Emerging markets underperformed the developed markets.

The economic landscape in the US again improved markedly in the fourth quarter, building on the gains made in the preceding quarter. The US jobless rate shrank to 5.8% – a new cyclical low. The Fed put an end to its quantitative easing programme. Oil prices fell further following the decision by OPEC to not scale back production. Macroeconomic data coming out of the eurozone disappointed once more, fuelling hopes that the ECB would buy up sovereign bonds. Japanese Prime Minister Shinzo Abe called an early election in December, which was subsequently won by his party. Japanese equities made additional gains as a result of a further easing in monetary policy by the Bank of Japan and the subsequent fall in the yen. Russia was especially lethargic in the fourth quarter owing to the deteriora-tion in economic data, the fall in the oil price, sanctions and the pressure exerted on the rouble.

2015 will likely be a key year for the financial markets, characterized by growing discrepancies between econo-mies and regions.

Within this context, BANQUE CRAMER & Cie SA continued to pursue its development strategy in 2014, supported by its shareholders.

Immediately following the successful integration of the former Banque de Dépôts et de Gestion SA at the end of 2013, the first step during the year under review was the acquisition and merger of Valartis Bank AG Swit-zerland (with head office in Zurich and branches in Geneva and Lugano), as well as its subsidiary Valartis Wealth Management SA, Switzerland. The transaction was concluded at the end of August with the purchase of all capital stock previously held by the Valartis Group.

The acquisition of this bank has enabled our Geneva-based company not only to have a presence in Zurich alongside our branches in Lausanne and Luga-no, but also to acquire and expand our competencies in the field of products and new markets.

All costs relating to the merger, restructuring and migration to Banque Cramer & Cie SA’s IT platform

Board of Directors’ Report for the financial year 2014


(Avaloq mastered by B-Source), as well as all severance schemes resulting from this major and complex trans-action, have been booked or provisioned in the 2014 financial year. Consequently, the financial results for the year under review have deteriorated.

At Private Investment Bank Limited (PIBL), our sub-sidiary in Nassau, commercial structures underwent significant strengthening, in particular in the client de-partment, operations and management.

These major transactions, which enabled our establish-ment to consolidate its positioning, its competencies and its commercial activities, required a considerable effort and very close monitoring. The assistance of shareholders, the Board of Directors and in particular the Executive Board and all employees of the Bank was vital in order to execute these transactions within such a short space of time. In the year under review, spe-cial attention was paid to activities linked to managing risks, on the one hand, and regulatory changes within the scope of cross-border and fiscal activities, on the other. A more significant presence on Swiss soil paved the way for pleasing business growth among institu-tional clients, third-party managers and private clients domiciled in Switzerland. The latter benefited from an extended range of services and products, most notably mortgages.

2014 results

The 2014 consolidated financial statements for the Banque Cramer Group are testament to the stability and strength of our Bank. Indeed, the Group’s gross result rose to CHF 3.3 million, compared with a loss of CHF 1.6 million in 2013.

Thanks to rigorous cost management, the 2014 result of Banque Cramer & Cie SA was well within budget until the merger with Valartis Bank AG at the end of August 2014. Following this merger, operating costs increased, largely due to the increase in personnel costs generated by the arrival of new staff. It should nonethe-less be remembered that the disciplined integration of Valartis Bank AG allowed the Bank to keep the rise in costs in check, which stayed below the rise in revenue. Thus, the acquisition of Valartis Bank AG supported the strengthening of operational profitability of Banque Cramer & Cie SA in Switzerland.

The Bank’s revenue in Switzerland was also impacted by the caution on the part of clients in response to the situation on the markets, which limited the volume of transactions throughout the financial year. This also weighed on the Bank’s results affected by extraordi-nary expenses linked to the costs associated with the acquisition, merger, restructuring, IT migration and social plan which followed the integration of Valartis Bank AG. These non-recurring costs were charged in

full to the 2014 financial year, making a significant dent in the statutory net result, amounting to a loss of CHF 9.3 million.

On a consolidated level, the Banque Cramer Group re-corded sizeable growth in terms of both client assets and revenue. The performance of the subsidiary Private Investment Bank Ltd, which was not impacted by ex-traordinary costs, enabled the net consolidated loss to be reduced to CHF 5.2 million.

By virtue of its new size and structure, Banque Cramer & Cie SA today finds itself in an excellent operation-al and financial position; this will allow it to face the challenges that will continue to affect all Swiss banks in 2015.

Changes at the level of the managing bodies

Following the acquisition of Valartis Bank AG, Swit-zerland, its former CEO Vincenzo Di Pierri joined the Board of Directors of BANQUE CRAMER & Cie SA, in the primary aim of facilitating the merger process between the two companies. Mr Di Pierri handed in his resignation on 24 March 2015. We would like to offer him our sincere thanks for his invaluable contribution.The composition of the delegations of the Board of Di-rectors, the Council Committee, the Audit Committee, and the Nomination and Remuneration Committee remained unchanged.

There were various changes at the level of the Executive Board:

On 1 May 2014, Alberto Bertini assumed the role of Head of Finances and Operations. Following the ac-quisition of Valartis Bank AG, Switzerland, the Exec-utive Board was reinforced by the inclusion of Matteo Maccio, Head of Business Development and the Zurich branch, and Placido Albanese, the new Head of Asset Management.

Jean-Antoine Cramer, founding member of our in-stitution and shareholder of Norinvest Holding SA sadly left us on 23 October 2014. Some months later, on 1 January 2015, Rubino Mensch, the first Chairman of BANQUE CRAMER & Cie SA and former Honorary Chairman of our Bank, also left us. These key figures in the history of our Group left a lasting impression on all those who had the pleasure of meeting them.

To conclude, it is important to bear in mind that Ban-que Cramer & Cie SA owes its credibility, its reputation and its growth not only to the discipline with which it manages its business and monitors its risk profile, but also – and in particular – to the trust placed in it each year by its clients, the support of its shareholder and the endeavours of each and every one of its staff members. Without this trust and support, the major and complex

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transactions undertaken in 2014 in particular would not have been possible.

The Board of Directors and Executive Board would like to take this opportunity to thank everyone for their un-ceasing and constant loyalty.

Geneva, 24 April 2015

On behalf of the Board of Directors.

Marco J. Netzer Christian GrütterChairman CEO


8

Consolidated balance sheet as at 31 December

ASSETS

2014CHF

2013CHF

Liquid assetsAmounts due arising from money-market instrumentsAmounts due from banksAmounts due from customersMortgages loansTrading portfolios of securitiesFinancial investmentsNon-consolidated participationsTangible fi xed assetsAccrued income and prepaid expensesOther assets

Total assets Total subordinated claimsTotal amounts due from non-consolidated participating interests and holders of qualifi ed shareholders

88,862,622175

420,565,635110,680,366193,919,985

219,71713,828,324

602,46036,328,254

1,836,6237,513,718

874,357,879

-

586,006

512,501,537 -

387,715,048 616,163,778 172,250,350

6,019,256 28,123,355

200,000 37,368,176

3,678,693 18,815,840

1,782,836,033

97,419

28,513,528


Consolidated balance sheet as at 31 December

LIABILITIES

2014CHF

2013CHF

Liabilities from money-market instrumentsAmounts due to banksAmounts due to customers in savings or deposit accountsOther amounts due to customersCash bondsAccrued expenses and deferred incomeOther liabilitiesValue adjustments and provisionsShare capitalCapital reservesProfi t reservesConsolidated lossof which minority interests in consolidated result

Total liabilities

Total amounts due to non-consolidated participatinginterests and holders of qualifi ed shareholders

OFF-BALANCE SHEET TRANSACTIONS

Contingent liabilities Irrevocable commitments Derivative fi nancial instruments - positive replacement values- negative replacement values- contract volumesFiduciary transactions

9

644,16534,543,340

122,309,814649,140,999

2,344,0009,784,0177,133,256

10,447,20225,000,00011,771,884

3,967,769-2,728,567

247,807

874,357,879

13,364,896

40,590,60318,494,205

4,608,2174,305,830

213,270,670158,339,724

1,829,946 8,340,666

82,492,352 1,591,159,203

1,410,000 12,843,487 18,289,479

7,500,003 50,000,000 11,771,884

2,429,237 -5,230,224

-

1,782,836,033

10,044,528

23,773,014 28,408,403

15,312,816 9,085,144

877,267,498 306,246,010


10

Consolidated income statement for the fi nancial year

INCOME AND EXPENSES FROM ORDINARY BANKING OPERATIONS*

Result from interest operationsInterest and discount incomeInterest and dividend income from trading portfoliosInterest and dividend income from fi nancial investmentsInterest expenses

Subtotal result from interest operations

Result from commission business and servicesCommission income from lending activitiesCommission income from securities and investment activitiesCommission income from other servicesCommission expenses

Subtotal result from commission business and services

Result from trading activities

Other result from ordinary activitiesResult from the disposal of fi nancial investmentsResult from real estateOther ordinary incomeOther ordinary expenses

Subtotal other result from ordinary activities

Operating expensesPersonnel expensesGeneral and administrative expenses

Subtotal operating expenses

Gross profi t

2014CHF

2013CHF

1,788,483

-38,517

-245,049

1,581,951

120,53222,900,849

969,062-4,333,659

19,656,784

1,727,952

10,78136,000

103,455-637,295

-487,059

-13,593,300-10,496,345

-24,089,645

-1,610,017

* Th e contribution to the result of the former Valartis Bank AG, which was acquired by and merged into BCC on 29 August 2014, has been included in the income statement since September 2014.

7,603,462 83,438

108,986 -2,342,738

5,453,148

493,101 33,696,016

2,268,434 -6,459,556

29,997,995

4,468,561

243,018 531,664

2,876 -172,938

604,620

-21,317,359 -15,910,432

-37,227,791

3,296,533


Consolidated income statement for the fi nancial year

CONSOLIDATED PROFIT / CONSOLIDATED LOSS

2014CHF

2013CHF

Gross profi t

Depreciation and amortization of fi xed assetsValue adjustments, provisions and losses

Result before extraordinary items and taxes

Extraordinary incomeExtraordinary expensesTaxes

Consolidated loss for the year

of which share of minority interests in consolidated result

-1,610,017

-1,154,937-1,507,659

-4,272,613

1,935,286-

-391,240

-2,728,567

247,807

11

3,296,533

-2,763,647 -5,565,864

-5,032,978

812,962 -496,868 -513,340

-5,230,224

-


12

Consolidated cash fl ow statement for the fi nancial year (in thousands of Swiss francs)

CASH FLOW STATEMENT

Cash fl ow from operating activities (internal fi nancing)Result for the yearDepreciation of fi xed assetsTranslation adjustment on fi xed assetsAdjustment to the value of long-term fi nancial investments Result on the sale of tangible fi xed assetsValue adjustments and provisionsAccrued income and prepaid expensesAccrued expenses and deferred incomePrevious year dividendSubtotalNet cash fl ow from operating activities

Cash fl ow from shareholders’ equity transactionsShare capitalForeign currency translationMinority interests in shareholders’ equitySubtotalNet cash fl ow from shareholders’ equity transactions

Cash fl ow from investment activitiesNon-consolidated participationsFinancial investmentsTangible fi xed assetsSubtotalNet cash fl ow from investment activities

Cash fl ow from banking operationsOther amounts due to customersCash bondsAmounts due from customersMortgage loansTotal medium and long-term operations (more than 1 year)Liabilities from money-market instrumentsAmounts due to banksAmounts due to customers in savings or deposit accountsOther amounts due to customersCash bondsOther liabilitiesValue adjustments and provisionsAmounts due from banksAmounts due from customersMortgage loansTrading porfolios of securitiesOther assetsTotal short-term operationsSubtotalNet cash fl ow from banking operations

Net cash fl ow from merger with the former VBAG

Liquid assets

Total

-1,155

-603

--

2,9015,808

-10,467

----

----

-1,580

--

1,580644

33,375122,310290,806

7644,771

10,826-----

463,496465,076

23,390

-

9,926

485,469

2,729-

56-

112,961

--

10,00015,757

5,290

-9

1,3761,3851,385

6025,028

21,01126,64126,641

--

4,05297,100

101,152-------

213,43339,31781,182

1696,433

340,534441,686

-

-

485,469

-2,764

-17

--

2,530--

5,311

25,0001,190

-26,19026,190

210,136

-10,138 8,750

5,182---

5,1821,186

--

99,130---

153,165-

39,304--

292,785297,967105,636

290,841

-

630,447

5,230-

75--

4,712-

3,072-

13,0897,778

----

--

1,3881,388

-775

9,87017,63528,280

-59,61539,817

-159195

--

51,797-

1,45511,013

164,051192,331

-

423,639

630,447

* Th e 2014 consolidated cash fl ow statement does not contain the amounts related to the acquisition of Valartis Bank AG eff ective 29 August 2014 at the level of each specifi c item, but on a separate line.

Sources of funds 2014

Use of funds 2014

Sources of funds 2013

Use of funds 2013


1. BUSINESS ACTIVITIES, NUMBER OF STAFF EMPLOYED

In the framework of its activity, the Group undertakes the following operations:

- Receipt of funds into current accounts;- Wealth management;- Any operations involving financial instruments, bills

or derivative securities and precious metals, togeth-er with any stock exchange operations, either on a proprietary basis or on behalf of third parties;

- The granting of Lombard and mortgage loans and fixed term or sight loans and advances;

- Spot or forward exchange operations;- Fiduciary operations;- Asset management and custody;- “Structured Finance” operations.

The Group may also acquire, manage and control equity investments in any companies operating in the same busi-ness sector, and may acquire real estate assets in Switzer-land or abroad. The Bank’s registered office is in Geneva and has a branch in Lausanne, Lugano and Zurich. The Bank also has subsidiaries in Nassau and in Geneva. In 2012, the Group has outsourced some activities such as back-office operations and IT maintenance, as defined by FINMA Circular 2008/7. As of 31 December 2014, the Group had 140 employees, for a full-time equivalent of 128 employees (31 December 2013: 117 and 114).

On 29 August 2014, the Bank acquired and merged the Valartis Bank AG (VBAG). The Bank also acquired Valartis Wealth Management SA, which was renamed Cramer Wealth Management SA as part of this transac-tion.

2. ACCOUNTING AND VALUATION POLICIES

The consolidated financial statements were established according to regulations applicable in Switzerland and are presented in accordance with the Swiss Code of Obli-gations in effect until 31 December 2013, according to transitional provisions of new accounting law, and the FINMA Circular 2008-2 (DEC-FINMA). The Group’s financial statements give a true and fair view of the assets, financial situation and results of the Group and comply with the provisions governing the preparation of financial statements of banks and securities dealers (DEC-FINMA).

The consolidated annual financial statements include the financial statements of the parent company and of the companies in which the parent company directly or indi-rectly holds more than 50% of the voting rights. The list of holdings is included as appendix 3.2.3. The companies directly or indirectly controlled by the Group are consoli-dated according to the full consolidation method. Invest-ments up to 50% held exclusively with a view to their

subsequent sale are excluded from the scope of consolida-tion. They are stated at their acquisition cost, net of the necessary amortization.

Capital is consolidated according to the purchase method. The subsidiaries are consolidated as of the date of effective transfer of control and are no longer consolidated as of the date when that control ends. Operations internal to the Group as well as intra-Group profits were eliminated when preparing the consolidated annual financial state-ments. The same principles were applied with each set of statements to enable a comparison over time.

The significant accounting and valuation principles applied when preparing the consolidated financial state-ments can be summarised as follows:

(a) Booking of transactionsTransactions are booked in the accounts on the date on which they are completed. The result of all completed transactions is booked in the Profit & Loss account on the date on which they are completed.

(b) Amounts due from banks and clientsAmounts due from banks and clients are booked in the accounts at their face value after deduction of any adjust-ments to value required in the circumstances.

(c) Portfolio of marketable securitiesMarketable securities are normally evaluated at balance sheet date, on the basis of “fair value”.

(d) Financial investmentsDebt securities held to maturity are valued and account-ed for at acquisition cost, taking into account over the term of the securities (“accrual method”) the premiums or discounts (interest component). Debt securities not held to maturity as well as other financial investments are recorded according to the principle of the lower of cost or market value. Precious metal positions held as financial investments and used for the purpose of hedging precious metal accounts are valued and reported in the balance sheet at market value.

(e) Tangible and intangible fixed assetsTangible and intangible fixed assets are valued at histor-ical cost less depreciation, calculated using the straight-line method over their estimated useful life.

The estimated useful life of the different categories of tangible fixed assets is as follows:- Bank Real Estate in Geneva and Lausanne 100 years- Bank Real Estate in Nassau 10 years- Real Estate renovation costs 10 years- Computer programs acquired 7 years- Other computer programs 3 years- Office equipment and furniture 5 years- Hardware servers 5 years- Computer hardware 3 years

Notes to the consolidated financial statements as at 31 December 2014

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- Leasehold improvements term of lease- Vehicle 8 years- Telephone equipment 3 years Intangible fixed assets are depreciated in accordance with the following expected useful lives:- Expenses for capital increase 5 years- Goodwill 7 years- Computer software 3 years

Fixed asset values are reviewed annually. If this review reveals any reduction in value or change in the expect-ed useful life, additional depreciation is charged and the residual value is written off over the new useful life.

(f ) Value adjustments and provisionsValue adjustments and provisions are established to cover all risks identified as at the balance sheet date. They are calculated by means of an individual assessment of the risks concerned. Non-performing loans are valued indi-vidually and any loss of value is covered by an individ-ual value adjustment. The corresponding interest and commissions considered as impaired are not booked as income. Value adjustments and provisions are reassessed at each accounting date.

(g) TaxesTaxes are calculated on the basis of the results achieved by the companies within the Group. The companies record the taxes on profits and on capital due at the balance sheet date under accrued expenses and deferred income.Deferred taxes resulting from value adjustments in accordance with the true and fair view principle are capi-talised and recognised in the income statement. Deferred tax assets on tax loss carryforwards are not capitalised; they are set out under Note 6.1.

(h) Pension fund commitmentsPension fund commitments are accounted for according to the Swiss GAAP RPC 16 norm. Under pension fund commitments one understands all commitments deriving from pension fund schemes providing retirement, inva-lidity and death benefits.

Following the acquisition and merger of Valartis Bank AG, the Bank had two occupational pension plans as of 31 December 2014. These were combined in a single plan with one foundation effective 1 January 2015. The Bank is responsible for the payment of all legally bind-ing pension fund contributions to the foundation. The constitution of reserves related to funding the inherent costs of growing life expectancy is set up within the foun-dation. The employees of the subsidiary in Nassau have voluntary membership of a pension fund operated by a private insurance company.

(i) Foreign currency conversionFor the purposes of consolidation, financial statements of the foreign companies of the Group are converted at the rate of the closing date. Income and expenses are convert-ed at the average annual exchange rate for the financial year. The differences resulting from the conversion of the

foreign companies are booked to shareholders’ equity. Positions in foreign currencies at the closing date are con-verted in Swiss francs at the rates in effect at the balance sheet date, to the extent that they are not valued at their historic rates. Exchange rates used for the main currencies were as follows:

31.12.2014 31.12.2013 Closing rate Closing rate USD 0.9943 USD 0.8932 EUR 1.2032 EUR 1.2277 GBP 1.5487 GBP 1.4789 Average annual Average annual rate 2014 rate 2013 USD 0.9191 USD 0.9244

Transactions in foreign currency are booked at the rate of exchange prevailing on the transaction date. Non- realized foreign exchange profits and losses are booked in the profit and loss account on the balance sheet date. Foreign exchange results in foreign currencies are con-verted in Swiss francs when they are booked.

(j) Stock lending and repurchase transactionsCash amounts received in exchange for securities on repurchase transactions are booked in the balance sheet under “amounts due to banks”. Interest income and expense on these assets and liabilities are booked in the profit and loss account using the accrual method. Income and expenses from stock lending operations are booked in “net profits/losses from interest-differential business” both for proprietary operations and for those undertaken for clients.

2.1 Risk managementThe Board of Directors has made an analysis of the prin-cipal risks to which the Bank is exposed. This analysis is based on the information and tools adopted by the Bank in its risk management. In its analysis of the risks, the Directors took into account the current system of control to manage and reduce risks.

The internal directive, “Risk policy – Risk manage-ment”, approved by the Bank’s Board of Directors, sets forth the guidelines defining risk policy and setting of the limits for own operations. The Bank has created different committees in order to safeguard the manage-ment of internal risks.

Interest rate riskIn view of the structure of its balance sheet activity, the Group is exposed to losses caused by fluctuations in market interest rates. Interest rate risk is limited by regular monitoring of the matching of maturities on assets and liabilities and by the use of hedging instru-ments as necessary. Interest rate risk analysis is the subject of a specific internal guideline approved by the Board of Directors which sets limits to be complied with


authority to incur interest rate risk and the controls to be carried out.

Market risksThe Group essentially takes operation on behalf of clients. Credit riskThe risk of default by banks and brokers is limited by the selection of counterparties and by the setting of limits by counterparty and by type of operation.

The Group’s strategy is to limit the granting of credits to those guaranteed by assets deposited with the Group. Client assets serving as collateral for lombard loans are calculated daily at market value, weighted by the secu-rity margin defined by type of investment and approved by the Bank’s Board of Directors. Following the acquisi-tion and merger with Banque de Dépôts et de Gestion SA (BDG) on 29 November 2013, the Bank took over a major portfolio of mortgage loans. These mortgage loans are granted on real estate property located in Switzerland. A review is conducted every five or ten years for residen-tial property and every three or five years for all other real estate on the basis of the market value.

The respect of credit margins is monitored regularly by the Credit Manager. A detailed report of credit risks is submitted to the General Management at each of its meetings. Overdrafts and advances granted without a signed deed of pledge are considered for accounting purposes as unsecured, even if the debtor has securities in deposit with the Bank.

Non-performing loans are classified into two categories, according to their degree of loss risk: non-performing loans and impaired loans. A loan is considered non-per-forming when one payment related to payment of interests, payment of commissions or to partial or total repayment of capital, has not been received in full more than 90 days after its due date. This requires no specific accounting entry.

A loan is considered impaired when conclusive indica-tions render improbable future contractual payments against the capital and/or interests, or, at the latest, when such payments are more than 180 days overdue. Such loans are assessed individually at their liquidation value and the related value depreciation is booked in to the value adjustments and provisions account.

When a loan is considered totally or partially irrecover-able or the Group renounces the recovery, it is written off by debiting the corresponding value adjustment. Amounts recovered from impaired loans are credited directly to “Extraordinary Income.”

The Group updates the list of impaired loans on a month-ly basis. A loan is no longer considered as impaired if late payments (capital and interests) have been settled and debt servicing has resumed normally. The Board of Direc-tors of the Bank has decided, in 2012, to stop the activi-ties of international trade finance for its clients’ accounts.

As of 31 December 2014, several operations are still open but meant to disappear on a short term horizon.

Following the acquisition and merger of Valartis Bank AG, the Group set up a team of staff specializing in “Structured Finance”. This activity focuses on developing, marketing and implementing complex, tailor-made investments for institutional clients and wealthy private clients. These operations comprise secured loans, for the most part.

Derivative instrumentsThe Group has become active in trading derivative finan-cial instruments for its own account, notably in the area of cash swaps to manage cash flow. Operations of this type on behalf of clients with sufficient assets are systemati-cally hedged. These consist essentially of forward foreign exchange contracts. The proprietary trading positions are taken primarily for the hedging of financial assets on the management of interest rate and treasury risk exposure on the balance sheet.

All the Group’s financial derivative instruments, except for those used in hedging transactions, are recorded at fair value. Positive and negative replacement values are booked in the balance sheet under “Other assets” and “Other liabilities”. The fair value is the price of the instrument assuming an efficient and liquid market or the price offered by the market makers.

Other risksAn amount of CHF 630,760 (end 2013: CHF 630,760) consists in clients’ assets deposits, related to real estate and for which no regular market exists. These invest-ments were initiated by the former Cramer & Cie on the basis of extended management mandates which were not limited to ordinary banking operations as defined in the directives concerning the portfolio management mandate published by the Swiss Bankers Association.

The Swiss government and the U.S. Department of Justice signed an agreement in August 2013 aiming to settle a tax dispute between the two countries. As a result, the Bank, like all other Swiss banks, is facing numerous uncertainties that hang over the legal and regulatory environment in which it operates.

15


LoansAmounts due from customersMortgage loans- residential properties- offi ce and business premises- commercial and industrial property- other

Total loans

Total previous year

Off -balance sheetContingent liabilitiesIrrevocable commitments

Total off -balance sheet

Total previous year

2,652

2,484

50

50

2,602

2,434

2,602

2,434

Impaired loans

Total previous year

2,558

142,9416,4599,391

13,459

174,808

193,920

-

564

564

-

590,597

----

590,597

100,917

22,52025,206

47,726

48,958

23,009

----

23,009

9,763

1,2532,638

3,891

10,127

616,164

142,9416,4599,391

13,459

788,414

304,600

23,77328,408

52,181

59,085

16

3.1 Summary of collateral for loans and off -balance sheet operations (in thousands of Swiss francs)

Type of collateral

3. INFORMATION ON THE CONSOLIDATED BALANCE SHEET

TotalMortgagesOther

collateralWithoutcollateral

Impaired loans

Grossamount

Estimatedliquidation

valueof collateral

Net amount

Individualvalue

adjustments


3.2 Securities trading portfolio, fi nancial investments and participating interests (in thousands of Swiss francs)

3.2.1 Trading portfolio

31.12.2014 31.12.2013

Debt securities- Listed- UnlistedEquity securities

Total trading portfolioof which securities acceptable to the Central Bank

-220

-

220-

3.2.2 Financial investments

Debt securities- Held to maturity- Accounted at the lower of cost or market value Equity securitiesPrecious metal

Total fi nancial investmentsof which securities acceptable to the Central Bank

-

13,828--

13,828-

17

31.12.2014 31.12.2013

603

05,416

6,019

49

-

14,765--

14,765-

--

5,03523,088

28,123-

--

5,12723,088

28,215-

Fair valueBook value Fair valueBook value

3.2.3 Company name, registered offi ce, activity, capital and equity share of signifi cant participating interests

Company name

Not quoted on stock exchanges

Fully consolidated participating interests

Private Investment Bank Limited

Cramer Wealth Management SA

Other non-consolidated participating interests

Sofi po SA

Sofi po UF Trustee Ltd

31.12.2014 31.12.2013

* Company sold on june 2014

Registered Activity Currency Paid-up Share Share offi ce capital and voting and voting rights rights in % in %

Nassau Wealth USD 7,000,000 100 100 management

Geneva Asset CHF 2,000,000 100 - management and fi nancial services

Lugano Fiduciary CHF 2,000,000 30 30

Limassol Trustee EUR 20,000 *- *28


Non-consolidated participations

Total non-consolidated participations

Land and buildings for Group useOther real estateOther tangible fi xed assetsComputer programs acquired

Total tangible fi xed assets

Fire insurance value of buildings : CHF 44,718,700 (2013 : CHF 44,116,150).

Fire insurance value of other tangible fi xed assets : CHF 22,317,000 (2013 : CHF 16,940,000).

Th e Group has concluded contracts representing future rentals for an amount of CHF 4,646,864 over the life of the renting period, with maturities until 31 March 2017.

3.3 Summary of fi xed assets (in thousands of Swiss francs)

18

602

602

41,1289,5773,397

14,070

68,172

-

-

-14,441-1,956-2,940

-12,507

-31,844

602

602

26,6877,621

4571,563

36,328

-2

-2

----

-

-400

-400

-1,503-76

-335-450

-2,364

-

-

60-

132

75

200

200

27,1977,545

8721,754

37,368

Due from banks- UBS AG, Zurich* - Banque Cantonale Vaudoise*- UBS SA, Londres**- Vontobel AG, Zurich**- ZKB***- Crédit Suisse SA**

Total

* Contingent commitments arising from guarantees issued by that Bank.** Margin account used for forward currency transactions and derivatives on behalf of clients.*** Collateral deposited to guarantee interest risk hedging transactions.

3.4 Assets pledged or assigned to secure the Group’s own commitments, and assets subject to ownership reservation (in thousands of Swiss francs)

31.12.2014 31.12.2013

103,0601,9936,2001,4001,500

14,163

103,0601,7476,2001,4001,500

13,917

-13,677

1,892-

1,4001,500

18,469

-13,677

1,897-

1,4001,500

18,474

-

-

16-

733639

1,388

-

-

1,937-40

1,941

Invest-ments

Dispo-sals

Deprecia-tion

Bookvalue

31.12.14

Histor-icalcost

Accu-mulated depreci-

ation

Bookvalue

31.12.13

Trans-lation adjust-ment

MergerVBAG

Pledgedassets

Eff ectivecommit-

mentsPledged

assets

Eff ectivecommit-

ments


3.5 Stock lending and securities repurchase agreements (in thousands of Swiss francs)

Book value of liabilities arising from cash received for stock lending or securities repurchasesEff ective commitments

3.6 Other assets (in thousands of Swiss francs)

Positive replacement values of outstanding fi nancial derivative instrumentsIndirect taxes recoverableBalance due from the sale of ex-BDG propertySundry

Total

3.7 Other liabilities (in thousands of Swiss francs)

Negative replacement values of outstanding fi nancial derivative instrumentsIndirect taxes payableBalance of the interest component on ex-VBAG bonds portfolioSundry

Total

31.12.2014 31.12.2013

31.12.2014

31.12.2014

31.12.2013

31.12.2013

--

--

15,313146

2,533824

18,816

9,0852,3955,7201,089

18,289

4,608166

2,531209

7,514

4,3061,999

-828

7,133

19


Pension schemes without a surplus or shortfall- Pension fund for founders and other voluntary members- Pension fund for all staff

Total

Th e cover ratios as of 31 December 2014 were superior or equal to 100% for both pension plans. According to the pension funds, there is no economic advantage / commitment as of 31 December 2014 (2013: none).

Th e Group is under no obligation to pay in additional contributions exceeding the mandatory contributions within the frame-work of both schemes. Th e Group has no contribution reserve as of 31 December 2014 (2013: none).

Th e Group had no commitment towards the pension funds as of 31 December 2014 (2013: none).

Pension schemesFollowing the acquisition and merger of Valartis Bank AG, the Bank had two occupational pension plans as of 31 December 2014. Th ese two plans were combined in a single plan with AXA Fondation de prévoyance eff ective 1 January 2015, a company legally independent of the Group, off ers a defi ned contribution plan. Its aim is to provide insurance coverage for all members against the economic consequences of retirement, invalidity and death by guaranteeing legally-binding benefi ts. It applies the obligatory insurance scheme introduced by the LPP law and fulfi ls the minimum requirements laid down. All staff members with more than 10 years seniority can become members upon request of the second pension fund scheme of which the founders are members. Th e retirement age is 64 for women and 65 for men. Th e insured salary for each employee is equivalent to his AVS salary without adjustment for coordination with 60% of premiums being charged to the Bank.

Th e employees of the subsidiary in Nassau have voluntary membership in Rofenberg, Welfare Foundation.

20

3.8 Commitments to own pension fund (in thousands of Swiss francs)

Economic surplus / Commitment and pension expenses

Surplus /Shortfall

Economic surplus / Economic commitment

Adjustedcontribu-tions for

the period

Contributions to pension fund in

“Personnel expenses”

31.12.2014 31.12.2014 31.12.2013 Variation 2014 2014 2013

--

-

--

-

--

-

--

-

3051,387

1,692

3051,387

1,692

264980

1,244

Economic surplus / Commitment and pension expenses


3.9 Value adjustments and provisions / fl uctuation reserves for credit risks / reserves for general banking risks (in thousands of Swiss francs)

Value adjustments and provisionsfor default and other risks- default risk (recovery risk)- other operational risks- restructuring provisions

Total value adjustments and provisions as per balance sheet

2,535

2,1465,766

10,447

-193

-557-9,024

-9,774

112

941,559

1,765

192

--

192

744

4434,286

5,473

-2

--601

-603

3,388

2,1261,986

7,500

21

Th e provision for the restructuring risk is linked to the takeover of Valartis Bank AG and to company restructuring measures, espe-cially in terms of logistics and staff . Provisions utilized are linked to recovery costs on the part of Banque de Dépôts et de Gestion SA and Valartis Bank AG.

Provisions for other operating risks are related in particular to the non-recoverability of the advance paid by the Swiss paying agents in accordance with the agreement with the United Kingdom. Th e Group is faced with other legal complaints and procedures for which it has analyzed potential fund outfl ows. Th e Group subsequently assessed these risks and created the provisions it deemed necessary to cover them.

Th e provisions for default risks were aligned to the economic risks identifi ed.

Balanceas at

31.12.2013

Used in confor-

mity with designated

purposeMergerVBAG

Recoveries,doubtful interest, exchange

diff erences

Newprovisions

charged to income statement

Reversals credited

to income statement

Balance as at

31.12.2014


22

3.10 Shareholders’ equity (in thousands of Swiss francs)

Shareholders’ equity at beginning of the current yearFully paid share capital Capital reservesProfi t reserves - of which foreign-currency translationConsolidated loss 2013- of which minority interests in consolidated result Total shareholders’ equity at beginning of the current year

Ordinary share capital increase January 2014Ordinary share capital increase September 2014Consolidated loss 2014Foreign-currency translationChange in minority interests

Total shareholders’ equity at end of the current year of which- fully paid share capitalcapital reservesprofi t reserves- of which foreign-currency translation- Consolidated loss 2014- of which minority interests in consolidated result

Total shareholders’ equity

25,00011,772

3,968-2,015-2,729

248

38,011

12,00013,000-5,2301,190

-

58,971

50,00011,772

2,429-825

-5,230-

58,971


23

31.12.2014 31.12.2013

-128

1,279-

As of 31 December 2014, the Group did not have any loans and commitments to associated companies. No loans had been granted to members of governing bodies. Th e amount reported above relates to a loan granted to a member of governing bodies.

As of 31 December 2014, the Group had amounts due from/to banks in which a majority stake is held by holders of qualifi ed participations of Norinvest Holding SA. Th ese are not classifi ed as associated companies as defi ned in no. 219 DEC-FINMA. Th e amounts due from/to holders of qualifi ed participations and companies of the Group, listed at the foot of the balance sheet, relate essentially to fully secured loans granted to holders of qualifi ed participations and to a subordinated loan granted by a holder of qualifed participations.

Transactions with related parties are carried out at market conditions.

Current assetsLiquid assetsAmounts due from banksAmounts due from customers Mortgages loans Trading portfolios of securities Financial investments

Total current assets Total previous year

Th ird-party liabilitiesLiabilities from money-marketinstrumentsAmounts due to banksAmounts due to customers in savings or deposit accounts Other amounts due to customersCash bonds Total third-party liabilities Total previous year

3.12 Amounts due from/to related companies and loans to members of governing bodies (in thousands of Swiss francs)

Amounts due from related companiesLoans to members of governing bodies

3.11 Maturity structure of current assets, fi nancial investments and third-party liabilities (in thousands of Swiss francs)

Residual maturity

At sight

Redeem-able bynotice

Within 3 months

From 3 to 12 months

From 1 to 5 years

Morethan 5 years

Without maturity Total

512,502322,838

--

6,01928,123

869,482

434,175

1,8308,341

82,4921,338,985

-

1,431,648

804,113

--

69,9637,286

--

77,249

57,898

--

-

-

-

853

-46,730

217,77533,690

--

298,195

166,537

--

-2,150

50

2,200

416

-18,047 63,18112,090

--

93,318

58,483

--

-28

555

583

2,020

-100

13,00579,066

--

92,171

71,582

--

--

775

775

1,250

--

252,24040,118

--

292,358

39,402

--

-249,996

30

250,026

330

------

-

-

--

---

-

-

512,502387,715616,164172,250

6,01928,123

1,722,773

828,077

1,8308,341

82,4921,591,159

1,410

1,685,232

808,982


ASSETS

Liquid assetsAmounts due arising from money-market instruments Amounts due from banksAmounts due from customersMortgages loans Trading portfolios of securitiesFinancial investmentsNon-consolidated participationsTangible fi xed assetsAccrued income and prepaid expenses Other assets

Total assets

LIABILITIES

Liabilities from money-market instrumentsAmounts due to banksAmounts due to customers in savings or deposit accountsOther amounts due to customersCash bonds Accrued expenses and deferred income Other liabilities Value adjustments and provisions Share capital Capital reservesProfi t reservesConsolidated lossof which minority interests in consolidated result Total liabilities

512,502 -

253,256 124,848 172,250

1,270 26,055

200 36,421

2,433 14,488

1,143,723

- -

134,459 491,316

- 4,749 2,068

- 947

1,246 4,328

639,113

88,8630

286,98455,619

193,9201

504600

35,5321,0976,960

670,080

--

133,58255,061

-219

13,3242

796740554

204,278

31.12.2014 31.12.2013

31.12.2014 31.12.2013

24

1,830 3,627

76,421 193,126

1,410 9,006

15,227 6,144

50,000 11,772

1,627 -9,208

-

360,982

-

4,714

6,071 1,398,033

- 3,838 3,062 1,356

- -

802 3,978

-

1,421,854

64429,619

114,254126,936

2,3447,8195,9999,320

25,00011,772

3,830-4,037

248

333,500

-4,924

8,056522,205

-1,9661,1341,127

--

1381,308

-

540,858

3.13 Presentation of domestic and foreign assets and liabilities (in thousands of Swiss francs)

Switzerland SwitzerlandAbroad Abroad



31.12.2014 31.12.2013

%%

1,143,723503,454

1,647,177

14,565105,397

2,2797,4006,018

1,782,836

64.1528.24

92.39

0.825.910.130.420.33

100.00

670,080140,324

810,404

9,66646,653

456,0451,545

874,358

76.6416.05

92.69

1.115.340.010.690.16

100.00

25

3.14 Asset distribution per country or group of countries (in thousands of Swiss francs)

ASSETS

Europe - Switzerland- Other

Subtotal Europe

North AmericaSouth AmericaAfricaAsiaOthers

Total assets

AmountsAmounts


510,121 26,913

110,120 172,250

1,966 12

200 36,421

2,272 16,899

877,174

148,509

1,025,683

296 97,136

174,460 -

2,008 12

- 864

1,077 738

276,591

345,204

621,795

1,951 219,462

50,907 -

1,981 5,010

- -

198 1,148

280,657

309,671

590,328

92 642

276,005 -

33 - - -

123 31

276,926

34,250

311,176

42 43,562

4,672 -

31 23,089

- 83

9 -

71,488

39,633

111,121

512,502 387,715 616,164 172,250

6,019 28,123

200 37,368

3,679 18,816

1,782,836

877,267

2,660,103

26

147 4,131

80,060

255,360 1,410 9,089

15,696 4,854

50,000 11,772

1,627 -9,208

424,938

609,927

1,034,865

-9,182

430 23

953 475,444

- 3,733

886 1,478

- -

802 3,978

487,727

126,504

614,231

7,564

1,230 1,649

1,255 489,666

- 19

1,506 1,167

- - - -

496,492

93,105

589,597

731

23

1,996

- 292,732

- 2

117 - - - - -

294,870

15,665

310,535

641

- 542

224 77,957

- 1

84 1 - - - -

78,809

32,066

110,875

246

1,830 8,341

82,492

1,591,159 1,410

12,844 18,289

7,500 50,000 11,772

2,429 -5,230

1,782,836

877,267

2,660,103

-

3.15 Balance sheet by currency (in thousands of Swiss francs)

ASSETS

Liquid assets Amounts due from banksAmounts due from customersMortgages loansTrading portfolios of securitiesFinancial investmentsNon-consolidated participationsTangible fi xed assets Accrued income and prepaid expensesOther assets

Total balance sheet assets

Delivery claims arising from spot exchange deals, forward exchange deals and currency options transactions

Total assets

LIABILITIES

Liabilities from money-market instrumentsAmounts due to banksAmounts due to customers in savings or deposit accounts Other amounts due to customersCash bondsAccrued expenses and deferred incomeOther liabilities Value adjustments and provisionsShare capitalCapital reservesProfi t reservesConsolidated loss

Total balance sheet liabilities

Delivery commitment arising from spot exchange deals, forward exchange deals and currency options transactions

Total liabilities Net position by currency

CHF USD EUR GBP Others Total

CHF USD EUR GBP Others Total


Currencies / precious metalsForward contracts Combined interest and currency swapsOptions (OTC)Fixed-income instruments IRS

Total

Total previous year

Issued guarantees Total commitments and contingent liabilities

4.2 Outstanding derivative fi nancial instruments at year-end with indication of their positive and negative replacement values and amounts of the underlying, broken down into interest-rate instruments, currencies, precious metals, shares/ indices and others (in thousands of Swiss francs)

27

31.12.2014 31.12.2013

306,246-

306,246

157,921419

158,340

31.12.2014 31.12.2013

23,773

23,773

40,591

40,591

2,5918,954

35

609

12,189

1,035

260,456469,528

28,853

30,435

789,272

156,431

---

3,124

3,124

3,573

---

3,831

3,831

3,573

---

87,995

87,995

56,840

2,7951,787

59

613

5,254

733

4. INFORMATION ON CONSOLIDATED OFF-BALANCE SHEET TRANSACTIONS

4.1 Commitments and contingent liabilities (in thousands of Swiss francs)

Positive replace-

mentvalues

Negative replace-

ment values

Contract volumes

Negative replace-

ment values

Contract volumes

Trading instruments Hedging instruments

Positive replace-

mentvalues

4.3 Fiduciary transactions (in thousands of Swiss francs)

Fiduciary deposits with other banksFiduciary loans

Total

No netting contract as at 31 December 2014 and 2013.


5.1 Result from trading operations (in thousands of Swiss francs)

Foreign exchange resultSecurities trading result Result from trading operations

4.4 Breakdown of client assets (in thousands of Swiss francs)

Types of client assets- assets in own administrated collective investment schemes - assets with discretionary management agreements - other managed assets Total client assets

Of which double counts

Net new money in/- out-fl ow(including double counts)

Th e Group does not hold “custody only” assets.

Th e calculation of the net new money in/- out-fl ow is performed on a monthly basis by adding inward and outward transfers, in-cluding securities-related transfers. When calculating the net new money in/out-fl ow, the eff ects of currency movement, variations in stock prices, lending operations and internal transfers between accounts are excluded. Interest on sight accounts, commission and charges are also excluded from the calculation.

Net new money in 2014 came primarily from the acquisition and merger of the former ex-VBAG.

5. INFORMATION ON THE CONSOLIDATED INCOME STATEMENT

31.12.2014 31.12.2013

49,338721,682

4,412,453

5,183,473

26,666

1,796,156

-716,042

2,075,760

2,791,802

-

1,140,679

3,910559

4,469

1,880-152

1,728

2014 2013

28


5.2 Personnel expenses (in thousands of Swiss francs)

Salaries and directors’ fees Social security employers’ contributions Contributions to pension fundsPersonnel insurancesTraining costsOther personnel expenses Total personnel expenses

5.3 General and administrative expenses (in thousands of Swiss francs)

Premises, rental and maintenance expensesExpenses for IT, equipment, furniture, vehicles and other equipmentOffi ce equipment, stationery, telephone, postage and publications,travelling expensesFees and legal expensesCosts related to the acquisition and merger of the ex-BDGCosts related to various projects (incl. costs relatedto the merger of ex-VBAG)Other Total general and administrative expenses

29

16,5441,2971,692

206623955

21,317

10,8771,0051,244

19848

221

13,593

1,994

7,476

1,9591,981

-

1,4561,044

15,910

989

3,850

1,3311,5802,089

64593

10,496

603-

210

813

350147

497

4711,197

267

1,935

--

-

2014 2013

2014 2013

2014 2013

5.4 Comments concerning material losses, extraordinary income and expenses as well as material releases of hidden reserves, reserves for general banking risks and value adjustments and provisions no longer required (in thousands of Swiss francs)

Extraordinary incomeReversal value adjustments and provisionsGains realised from the disposal of participating interestsOther extraordinary income

Total

Extraordinary expensesPurchase price adjustment ex-VBAGOther extraordinary expenses

Total


5.5 Income and expenses from ordinary banking operations broken down between Switzerland and abroad on the basis of the principle of permanent establishment (in thousands of Swiss francs)

Result from interest operationsResult from commission business and servicesResult from trading activitiesOther ordinary results from ordinary activitiesPersonnel expensesGeneral and administrative expenses Gross profi t


30

2014 2013

5,134

21,7203,913

614-18,691-13,639

-949

319

8,278556

-9-2,626-2,272

4,246

1,428

14,2441,506-568

-11,838-8,521

-3,749

154

5,413222

81-1,755-1,976

2,139

6.1 Deferred tax assets on tax loss carryforwards (in thousands of Swiss francs)

31.12.2014 31.12.2013

-25,366

-8,138

CapitalisedNon-capitalised

Consolidated fi gures as at(in thousands of Swiss francs) Approach

Eligible capitalRequired capital

of which for:Credit risks InternationalNon-counterparty related risks Market risks StandardOperational risks Basic indicator

6.3 Subsequent events occuring after the date of closing of the balance sheet

Th ere is no subsequent events after the date of closing of the balance sheet.

31.12.2014 31.12.2013

68,13835,897

20,2502,9891,943

10,715

37,89128,183

19,7572,906

2545,266

6. OTHER INFORMATION

6.2 Information about capital adequacy according to the FINMA 2008/22 circular Disclosure requirements in respect of capital adequacy


31

Report of the Statutory Auditor on the Consoli-dated Financial Statements to the General Meet-ing of Shareholders of BANQUE CRAMER & CIE SA, Geneva

As statutory auditor, we have audited the accompa-nying consolidated financial statements of BANQUE CRAMER & CIE SA, which comprise the balance sheet, income statement, cash flow statement and notes for the year ended 31 December 2014.

Board of Directors’ ResponsibilityThe Board of Directors is responsible for the prepara-tion and fair presentation of the consolidated financial statements in accordance with the provisions governing the preparation of financial statements for Banks and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an inter-nal control system relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these con-solidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable as-surance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the con-solidated financial statements. The procedures selected depend on the auditor’s judgment, including the assess-ment of the risks of material misstatement of the consoli-dated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s prepa-ration and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the enti-ty’s internal control system. An audit also includes evalu-ating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consoli-dated financial statements. We believe that the audit ev-idence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements for the year ended 31 December 2014 give a true and fair view of the financial position, the results of operations

and the cash flows in accordance with the provisions gov-erning the preparation of financial statements for Banks and comply with Swiss law.

Report on Other Legal Requirements

We confirm that we meet the legal requirements on li-censing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.

We recommend that the consolidated financial state-ments submitted to you be approved.

KPMG SA

Geneva, 24 April 2015

Enclosure:- Consolidated financial statements (balance sheet, income statement, cash flow statement and notes)

Yvan MermodLicensed Audit ExpertAuditor in Charge

Nicolas MoserLicensed Audit Expert

BANQUE CRAMER & CIE SA | ANNUAL REPORT 2014

32

Balance sheet as at December 31

ASSETS

2014CHF

2013CHF

Liquid assetsAmounts due arising from money-market instrumentsAmounts due from banksAmounts due from customersMortgages loansTrading portfolios of securitiesFinancial investmentsParticipationsTangible fi xed assetsAccrued income and prepaid expensesOther assets

Total assets

Total subordinated claimsTotal amounts due from Group companies and holdersof qualifi ed shareholders

88,862,622175

358,881,025105,577,101193,919,985

219,71713,817,238

8,643,45935,532,442

1,334,9117,307,135

814,095,810

-

5,023,510

88,862,622175

358,881,025105,577,101193,919,985

219,71713,817,238

8,643,45935,532,442

1,334,9117,307,135

814,095,810

-

5,023,510

512,501,537-

280,647,327591,382,701172,250,350

6,019,25628,111,01410,924,89836,308,834

3,468,29918,360,333

1,659,974,549

97,419

41,680,131


33

Balance sheet as at December 31

LIABILITIES

2014CHF

2013CHF

Liabilities from money-market instrumentsAmounts due to banks Amounts due to customers in savings or deposit accounts Other amounts due to customersCash bondsAccrued expenses and deferred income Other liabilities Value adjustments and provisions Share capitalStatutory capital reserve (agio)Statutory retained earnings reserveLoss carried forward Loss for the year

Total liabilities

Total amounts due to Group companies and holdersof qualifi ed shareholders

OFF-BALANCE SHEET TRANSACTIONS

Contingent liabilities Irrevocable commitments Derivative fi nancial instruments - positive replacement values- negative replacement values- contract volumesFiduciary transactions

644,165176,105,293122,309,814450,602,284

2,344,0007,867,4716,503,3099,320,304

25,000,00011,771,884

7,591,000-4,743,301-1,220,413

814,095,810

154,115,816

31,795,57718,494,205

4,608,2174,305,830

213,270,670125,602,800

644,165176,105,293122,309,814450,602,284

2,344,0007,867,4716,503,3099,320,304

25,000,00011,771,8847,591,000

-4,743,301-1,220,413

814,095,810

154,115,816

31,795,57718,494,205

4,608,2174,305,830

213,270,670125,602,800

1,829,946 282,155,538

82,492,3521,204,691,970

1,410,0009,204,574

17,899,0626,143,728

50,000,00011,771,884

7,591,000-5,963,714-9,251,791

1,659,974,549

286,593,678

23,347,86128,408,403

15,327,0219,115,303

877,267,498215,053,668


34

Income statement for the fi nancial year

INCOME AND EXPENSE FROM ORDINARY BANKING OPERATION*

Result from interest operationsInterest and discount incomeInterest and dividend income from trading portfoliosInterest and dividend income from fi nancial investmentsInterest expenses

Subtotal from interest operations

Result from commission business and servicesCommission income from lending activitiesCommission income from securities and investment transactionCommission income from other servicesCommission expenses

Subtotal from commission business and services

Result from trading activities

Other results from ordinary activitiesResult from the disposal of fi nancial investmentsIncome from participationsResult from real estateOther ordinary incomeOther ordinary expenses

Subtotal other result from ordinary activities

Operating expensesPersonnel expensesGeneral and administrative expenses

Subtotal operating expenses

Gross profi t

2014CHF

2013CHF

* Th e contribution to the result of the former Valartis Bank AG, which was acquired by and merged into BCC on 29 August 2014, has been included in the income statement since September 2014.

1,633,661-

35,112-244,057

1,424,716

118,36815,088,441

739,957-2,367,227

13,579,539

1,471,399

10,781

3,952,42536,000

270-603,282

3,396,194

-11,415,099-8,211,800

-19,626,899

244,949

7,283,88183,438

108,986-2,342,514

5,133,791

443,64523,002,216

2,015,710 -3,751,315

21,710,256

3,857,109

243,018-

531,6642,876

-163,401

614,157

-18,690,899-13,625,339

-32,316,238

-1,000,925


35

Income statement for the fi nancial year

RESULT FOR THE YEAR

2014CHF

2013CHF

Gross profi t

Depreciation and amortization of fi xed assetsValue adjustments, provisions and losses

Result before extraordinary items and taxes

Extraordinary incomeExtraordinary expensesTaxes

Loss for the year

244,949

-1,940,007-1,507,659

-3,202,717

2,246,813-

-264,509

-1,220,413

-1,000,925

-2,580,319-5,510,252

-9,091,496

812,962-468,178-505,079

-9,251,791


36

1. BUSINESS ACTIVITIES, NUMBER OF STAFF EMPLOYED

In the framework of its activity, the Group undertakes the following operations:- Receipt of funds into current accounts;- Wealth management;- Any operations involving financial instruments, bills

or derivative securities and precious metals, togeth-er with any stock exchange operations, either on a proprietary basis or on behalf of third parties;

- The granting of Lombard and mortgage loans and fixed term or sight loans and advances;

- Spot or forward exchange operations;- Fiduciary operations;- Asset management and custody.- “Structured Finance” operations.

The Bank may also acquire, manage and control equi-ty investments in any companies operating in the same business sector, and may acquire real estate assets in Swit-zerland or abroad. The Bank’s registered office is in Gene-va and has a branch in Lausanne, Lugano and Zurich. The Bank also has subsidiaries in Nassau and in Geneva. In 2012, the Bank has outsourced some activities such as back-office operations and IT maintenance, as defined by FINMA Circular 2008/7. As of 31 December 2014, the Bank had 119 employees, for a full-time equivalent of 112 employees (31 December 2013: 105 and 102).

On 29 August 2014, the Bank acquired and merged the Valartis Bank AG (VBAG). The Bank also acquired Valartis Wealth Management SA, which was renamed Cramer Wealth Management SA as part of this transaction.

2. ACCOUNTING AND VALUATION POLICIES

The annual accounts were established according to regu-lations applicable in Switzerland and are presented in accordance with the Swiss Code of Obligations in effect until 31 December 2013, according to transitional provi-sions of new accounting law, and the FINMA Circular 2008-2 (DEC-FINMA). The same principles have been applied to previous accounts in order to ensure compa-rability over time.

The significant accounting and valuation principles applied when preparing the annual accounts can be summarised as follows:

(a) Booking of transactionsTransactions are booked in the accounts on the date on which they are completed. The result of all completed transactions is booked in the Profit & Loss account on the date on which they are completed.

(b) Amounts due from banks and clientsAmounts due from banks and clients are booked in the accounts at their face value after deduction of any adjust-ments to value required in the circumstances.

(c) Portfolio of marketable securitiesMarketable securities are normally evaluated at balance sheet date, on the basis of “fair value.”

(d) Financial investmentsDebt securities held to maturity are valued and account-ed for at acquisition cost, taking into account over the term of the securities (“accrual method”) the premiums or discounts (interest component). Debt securities not held to maturity as well as other financial investments are recorded according to the principle of the lower of cost or market value. Precious metal positions held as financial assets and used for the purpose of hedging precious metal accounts are valued and reported in the balance sheet at market value.

(e) Tangible and intangible fixed assetsTangible and intangible fixed assets are valued at histor-ical cost less depreciation, calculated using the straight-line method over their estimated useful life.

The estimated useful life of the different categories of tangible fixed assets is as follows:- Bank Real Estate 100 years- Real Estate renovation costs 10 years- Computer programs acquired 7 years- Other computer programs 3 years- Office equipment and furniture 5 years- Hardware servers 5 years- Other hardwares 3 years- Leasehold improvements term of lease- Vehicle 8 years- Telephone equipment 3 years Intangible fixed assets are depreciated in accordance with the following expected useful lives:- Expenses for capital increase 5 years- Goodwill 7 years- Computer software 3 years

Fixed asset values are reviewed annually. If this review reveals any reduction in value or change in the expect-ed useful life, additional depreciation is charged and the residual value is written off over the new useful life.

(f) ParticipationsThe participations held by the Bank are valued at their historical value (acquisition value) deducted of the correc-tions of values necessary under the circumstances.

Notes in the statutory individual to the financial statements as at 31 December 2014


37

(g) Value adjustments and provisionsValue adjustments and provisions are established to cover all risks identified as at the balance sheet date. They are calculated by means of an individual assessment of the risks concerned. Non-performing loans are valued indi-vidually and any loss of value is covered by an individ-ual value adjustment. The corresponding interest and commissions considered as impaired are not booked as income. Value adjustments and provisions are reassessed at each accounting date.

(h) TaxesThe Bank books taxes on profits and on capital due at the balance sheet’s date in the accrued expenses accounts.

(i) Pension fund commitmentsPension fund commitments are accounted for according to the Swiss GAAP RPC 16 norm. Under pension fund commitments one understands all commitments deriv-ing from pension fund schemes providing retirement, invalidity and death benefits.

Following the acquisition and merger of Valartis Bank AG, the Bank had two occupational pension plans as of 31 December 2014. These were combined in a single plan with one foundation effective 1 January 2015. The Bank is responsible for the payment of all legally bind-ing pension fund contributions to the foundation. The constitution of reserves related to funding the inherent costs of growing life expectancy is set up within the foun-dation.

(j) Foreign currency conversionPositions in foreign currencies at the closing date are converted in Swiss francs at the rates in effect at the balance sheet date. Exchange rates used for the main currencies were as follows:

31.12.2014 31.12.2013 Closing rate Closing rate USD 0.9943 USD 0.8932 EUR 1.2032 EUR 1.2277 GBP 1.5487 GBP 1.4789

Transactions in foreign currency are booked at the rate of exchange prevailing on the transaction date. Non-real-ized foreign exchange profits and losses are booked in the profit and loss account on the balance sheet date. Foreign exchange results in foreign currencies are converted in Swiss francs when they are booked.

(k) Stock lending and repurchase transactionsCash amounts received in exchange for securities on repurchase transactions are booked in the balance sheet under “amounts due to banks”. Interest income and expense on these assets and liabilities are booked in the profit and loss account using the accrual method. Income and expenses from stock lending operations are booked

in “net profits/losses from interest-differential business” both for proprietary operations and for those undertaken for clients.

2.1 Risk managementThe Board of Directors has made an analysis of the prin-cipal risks to which the Bank is exposed. This analysis is based on the information and tools adopted by the Bank in its risk management. In its analysis of the risks, the Directors took into account the current system of control to manage and reduce risks.

The internal directive, “Risk policy – Risk management”, approved by the Bank’s Board of Directors, sets forth the guidelines defining risk policy and setting of the limits for own operations. The Bank has created different committees in order to safeguard the management of internal risks.

Interest rate riskIn view of the structure of its balance sheet activity, the Bank is exposed to losses caused by fluctuations in market interest rates. Interest rate risk is limited by regular moni-toring of the matching of maturities on assets and liabil-ities and by the use of hedging instruments as necessary. Interest rate risk analysis is the subject of a specific inter-nal guideline approved by the Board of Directors which sets limits to be complied with, authority to incur inter-est rate risk and the controls to be carried out.

Market risksThe Bank essentially trades operations on behalf of clients.

Credit riskThe risk of default by banks and brokers is limited by the selection of counterparties and by the setting of limits by counterparty and by type of operation.

The Bank’s strategy is to limit the granting of credits to those guaranteed by assets pledged in its favour and deposited with the Bank. Client assets serving as collater-al for lombard loans are calculated daily at market value, weighted by the security margin defined by type of investment and approved by the Bank’s Board of Direc-tors. Following the acquisition and merger with Banque de Dépôts et de Gestion SA (BDG) on 29 November 2013, the Bank took over a major portfolio of mortgage loans. These mortgage loans are granted on real estate property located in Switzerland. A review is conducted every five or ten years for residential property and every three or five years for all other real estate on the basis of the market value.

The respect of credit margins is monitored regularly by the Credit Manager. A detailed report of credit risks is submitted to the General Management at each of its meetings. Overdrafts and advances granted without a signed deed of pledge are considered for accounting


38

purposes as unsecured, even if the debtor has securities in deposit with the Bank.

Non-performing loans are classified into two categories, according to their degree of loss risk: non-performing loans and impaired loans. A loan is considered non-per-forming when one payment related to payment of interests, payment of commissions or to partial or total repayment of capital, has not been received in full more than 90 days after its due date. This requires no specific accounting entry.

A loan is considered impaired when conclusive indica-tions render improbable future contractual payments against the capital and/or interests, or, at the latest, when such payments are more than 180 days overdue. Such loans are assessed individually at their liquidation value and the related value depreciation is booked in to the value adjustments and provisions account.

When a loan is considered totally or partially irrecovera-ble or the Bank renounces the recovery, it is written off by debiting the corresponding value adjustment. Amounts recovered from impaired loans are credited directly to “Extraordinary Income.”

The Bank updates the list of impaired loans on a month-ly basis. A loan is no longer considered as impaired if late payments (capital and interests) have been settled and debt servicing has resumed normally. The Board of Directors of the Bank has decided, in 2012, to stop the activities of international trade finance for its clients’ accounts. As of 31 December 2014, several operations are still open but meant to disappear on a short term horizon.

Following the acquisition and merger of Valartis Bank AG, the Bank set up a team of staff specializing in structured finance. This activity focuses on developing, marketing and implementing complex, tailor-made investments for insti-tutional clients and wealthy private clients. These opera-tions comprise secured loans, for the most part.

Derivative instrumentsThe Bank has become active in trading derivative finan-cial instruments for its own account, notably in the area of cash swaps to manage cash flow. Operations of this type on behalf of clients with sufficient assets are systemati-cally hedged. These consist essentially of forward foreign exchange contracts. Operations for own account have taken primarily for hedging of financial investments and for the risk management of interest rate and treasury risk exposure on the balance sheet.

All the Bank’s financial derivative instruments, except for those used in hedging transactions, are recorded at fair value. Positive and negative replacement values are booked in the balance sheet under “Other assets” and “Other liabilities”. The fair value is the price of the

instrument assuming an efficient and liquid market or the price offered by the market makers.

Other risksAn amount of CHF 630,760 (end 2013: CHF 630,760) consists in clients’ assets deposits, related to real estate and for which no regular market exists. These invest-ments were initiated by the former Cramer & Cie on the basis of extended management mandates which were not limited to ordinary banking operations as defined in the directives concerning the portfolio management mandate published by the Swiss Bankers Association.

The Swiss government and the U.S. Department of Justice signed an agreement in August 2013 aiming to settle a tax dispute between the two countries. As a result, the Bank, like all other Swiss banks, is facing numerous uncertainties that hang over the legal and regulatory environment in which it operates.


3939

31.12.2014 31.12.2013

103,0601,9936,2001,4001,500

14,163

103,0601,7476,2001,4001,500

13,917

-13,677

1,892-

1,4001,500

18,469

-13,677

1,897-

1,4001,500

18,474

31.12.2014

31.12.2014

31.12.2013

31.12.2013

15,32717

2,533483

18,360

9,1152,3865,720

678

17,899

4,608166

2,5312

7,307

4,3061,999

-199

6,504

3. INFORMATION ON THE BALANCE SHEET

Due from banks- UBS AG, Zurich* - Banque Cantonale Vaudoise*- UBS SA, Londres**- Vontobel AG, Zurich**- ZKB***- Crédit Suisse SA**

Total

* Contingent commitments arising from guarantees issued by

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