NOTENSTEIN ANNUAL REPORT 2012

2012

Annual Report

Translation notice: this document is a translation of the German original which can be obtained from Notenstein Private Bank Ltd (“Notenstein”) at any time. While Notenstein makes every effort to ensure

translation accuracy, the German version prevails in the event of discrepancies in content or interpretation.

Contents

Introduction

Key figures

Organigram

Review of business results

Auditor’s report

Balance sheet

Income statement

Notes to the financial statements – explanatory notes on business activities

Notes to the financial statements – accounting and valuation principles

1. Information on the balance sheet

2. Information on off-balance-sheet transactions

3. Information on the income statement

Contact

Page 3

Page 5

Page 7

Page 9

Page 11

Page 13

Page 15

Page 17

Page 21

Page 27

Page 39

Page 43

Page 45

2

t o A l l o u r c l i e n t S A n d r e A d e r S ,

It is with some pride that we look back at Notenstein Private Bank’s fi rst business year. The kick-off was exception-

ally successful, thanks in no small part to the loyalty of our clients. In the course of the year, we were able to wel-

come over 1,500 new clients; a pleasing sign of confi dence in our asset management expertise. At the same time, we

believe that the stability and high credit rating of our parent company, Raiffeisen – Switzerland’s third-largest

banking group – is much appreciated by our clients. Stability and continuity in client relationships will remain the

cornerstone of our banking activities.

Notenstein’s roots go back to the 15th century, when the merchants of St.Gallen founded a guild under the

name of “Notenstein”. The proprietors of the city’s leading linen and trading companies met regularly at the

assembly house “zum Nothvestein”, be it to discuss their business concerns or simply enjoy good company. In 1555,

the Notenstein guild established its own residence in a castellated building next to the “Brühltor” gate of St.Gal-

len’s marketplace. The head offi ce of Notenstein Private Bank is found at this very location today.

The success of our bank has always been based on tradition and innovation: past experience is the foundation

of future progress. We believe that independent thought and entrepreneurial spirit are key success factors in as-

set management. Our scenario models, which depict both probable and possible developments, provide a framework

for this process.

In a challenging economic environment, we have proved particularly profi table. By focusing on our core com-

petencies in asset management, Notenstein Private Bank has achieved high business effi ciency. Our almost 700 staff

in 13 branches throughout Switzerland are highly committed to our clients’ interests.

We look forward to continuing our services to you throughout 2013.

d r p i e r i n v i n c e n Z

Chairman of the Board

Notenstein Private Bank Ltd

Introduction

d r p i e r i n v i n c e n Z


d r A d r i A n k Ü n Z i

CEO

Notenstein Private Bank Ltd

3

Dr Pierin Vincenz (Chairman of the Board) and Dr Adrian Künzi (CEO).

4

Key figures

NoteNsteiN at a glaNce

2012

Balance sheet total 3,872

Net interest income 37

Net commission income 100

Net trading income 36

Operating expenses –137

Profit for the year 30

Cost income ratio 74.9 %

Attributable equity capital 320

Core capital ratio in percent (tier I ratio) * 19.6 %

Assets under management ** 20,516

Employees (full-time equivalents) 588

* The disclosure of equity capital, as defined by FINMA Circular 08-22, is consolidated at the Raiffeisen Group level.

** Including 1741 Asset Management Ltd.

Amounts in CHF millions

All stated amounts are rounded, which may lead to minor discrepancies in the total amounts.

5

6

Organigram

Board of directors

executive Board

iNterNal audit

corporate ceNtre

Regulatory Affairs

Legal & Compliance

Risk Controlling

Communication

Private Banking

Switzerland

Eastern Switzerland

Zurich /

Central Switzerland

North-western

Switzerland

Western Switzerland

Southern

Switzerland

Portfolio

Management

Investment Centre

Institutional

Clients Switzerland

German-speaking

Switzerland

French-speaking

Switzerland

Services

Operations

Products & Trading

IT

IT Operations

Business Systems /

Insourcing

Finance

Finance and

Accounting

Credit

Reporting /

Controlling

Human Resources

Private Banking

International

fully-owNed suBsidiary: 1741 asset MaNageMeNt ltd

7

Board of directors

Dr Pierin Vincenz


Dr Patrik Gisel

Vice Chairman of the Board, Member of the Audit Committee

Günter Haag *

President of the Audit Committee

Heinz Karrer *

Maya Salzmann *

Member of the Audit Committee

Thomas C. Weissmann *

iNterNal audit

Internal auditors of the Raiffeisen Group

Prüfag

Wirtschaftsprüfungs- und Beratungs AG

* Independent members of the Board of Directors as defined by the

Swiss Financial Market Supervisory Authority (FINMA).

executive Board

Dr Adrian Künzi

Chief Executive Officer

Dr Basil Heeb

Chief Financial Officer

Martin Schenk

Head of Private Banking Switzerland

Dr Silvio Hutterli

Head of Regulatory Affairs

Dr Ivan Adamovich

Head of Private Banking International

Dr Hanspeter Wohlwend

Chief Operating Officer

Patrick Revey

Head of Institutional Clients Switzerland

Christoph Schwalm

Chief Information Officer

Tihomir Katulic

Chief Risk Officer

8

S u c c e S S f u l d e B u t i n A c h A l l e n G i n G m A r k e t

Banks are currently doing business in an environment

of increasing regulation, rising costs and mounting

pressure on margins. In addition, the financial market

situation remains challenging. While the equity mar-

kets performed surprisingly well in 2012, given enor-

mous political and economic uncertainties such as

the sovereign debt crisis, feeble growth in key devel-

oped markets and recession in some parts of Europe,

unsettled investors nonetheless kept trading volumes

low. An ongoing policy of low interest rates pursued

by central banks made fixed-income investments un-

attractive in 2012.

Despite these difficult market conditions, Notenstein

Private Bank made a successful debut. In its first year

of operations, the bank has already displayed impressive

stability and profitability. Although the financial year

2012 was marked by regulatory and structural changes

in Swiss private banking, low interest rates and generally

unsettled clients, Notenstein produced excellent results

with a gross profit of CHF 46.0 million at a cost income

ratio of 75 percent. Income of CHF 183.3 million in-

cluded commissions of CHF 99.9 million and a strong

trading result of CHF 35.6 million. Notenstein has a

profit margin of 93 basis points. Costs of CHF 137.3 mil-

lion were partly due to greater investment in risk man-

agement and controlling processes. Value adjustments

and provisions amounted to CHF 12.6 million, result-

ing in net profit of CHF 29.8 million for 2012.

Notenstein has a balance sheet of CHF 3.9 billion

and enjoys a solid capital base with an equity coverage

ratio of 245 percent and a tier 1 ratio of 19.6 percent.

These ratios would already satisfy the stricter require-

ments foreseen under Basel III.

c l i e n t lo yA lt y

Assets under management stood at CHF 20.5 billion

at year-end (including subsidiary 1741 Asset Manage-

ment). Notenstein not only stemmed the initial out-

flow of client assets, but also welcomed 1,500 new

clients to the bank. We attribute this positive response

to public awareness of our excellent services in wealth

management and investment advice, to the long-term

relationships between our clients and their advisors

and to organic growth in private banking. Thus we owe

our successful debut to our clients as well as to our

many long-term staff members who ensure the continu-

ity of our services.

Notenstein can be considered a very “Swiss” private

bank: some 70 percent of our clients (private and in-

stitutional) are domiciled in Switzerland. Our thirteen

branches across the country testify that we value close

proximity to our clients. Our services to foreign clients

are concentrated in selected key international markets.

Review of business results

9

f o c u S o n o u r c o r e B u S i n e S S

Notenstein seized the opportunity presented by the

change from a limited partnership to a limited company

to align its organisational structure more clearly with

its core business. The corporate structure was adjusted

to reflect its client orientation: the Private Banking

Switzerland division, which is divided into regional units,

has gained in importance, while cross-border business

with private clients (Private Banking International)

and services to institutional clients in Switzerland (In-

stitutional Clients Switzerland) are now independent

business units. A flat hierarchy promotes lean manage-

ment and swift decision-making.

In addition to our core business of personalised

wealth management and advisory services for private

and institutional clients, Notenstein continues to offer

financial and pension planning services. Notenstein is

also one of Switzerland’s most innovative participants

in the market for structured products.

t h i n k i n G i n S c e n A r i o S

In an environment beset with great political and eco-

nomic uncertainty, Notenstein Private Bank focuses on

forward-looking wealth management. Notenstein dis-

cusses potential positive and negative economic devel-

opments with clients within the context of various

scenarios, and incorporates the insights gained from

these scenarios into wealth management decisions.

Thinking in scenarios is based on a culture of dialogue

with our clients as well as empirically proven analysis.

In times like these, when wealth preservation is a key

concern, detailed scenarios – even threatening scenarios

– must be considered in any financial analysis. These

ideas, which we publicised in an advertising campaign

throughout Switzerland, are implemented in our clients’

portfolios according to individual client needs.

10

Auditor’s report

Report of the statutory auditor to the General Meeting of Notenstein Private Bank Ltd St. Gallen

Report of the statutory auditor on the financial statements

As statutory auditor, we have audited the financial statements of Notenstein Private Bank Ltd, which comprise the balance sheet, income statement and notes (pages 13 to 44), for the year ended 31 De-cember 2012.

The prior year figures were audited by another statutory auditor and an opinion without qualification was issued in their report dated 17 January 2012.

Board of Directors’ Responsibility

The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the prepara-tion of 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 poli-cies and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We con-ducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the 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 preparation of the financial statements in order to design audit procedures that are appro-priate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the account-ing policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements for the year ended 31 December 2012 comply with Swiss law and the company’s articles of incorporation.

PricewaterhouseCoopers AG, Birchstrasse 160, Postfach, 8050 Zürich Telephone: +41 58 792 44 00, facsimile: +41 58 792 44 10, www.pwc.ch PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

11

Report of the statutory auditor to the General Meeting of Notenstein Private Bank Ltd St. Gallen

Report of the statutory auditor on the financial statements

As statutory auditor, we have audited the financial statements of Notenstein Private Bank Ltd, which comprise the balance sheet, income statement and notes (pages 13 to 44), for the year ended 31 De-cember 2012.

The prior year figures were audited by another statutory auditor and an opinion without qualification was issued in their report dated 17 January 2012.

Board of Directors’ Responsibility

The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the prepara-tion of 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 poli-cies and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We con-ducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the 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 preparation of the financial statements in order to design audit procedures that are appro-priate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the account-ing policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements for the year ended 31 December 2012 comply with Swiss law and the company’s articles of incorporation.

PricewaterhouseCoopers Ltd, Birchstrasse 160, Postfach, CH-8050 Zürich, Switzerland Telephone: +41 58 792 44 00, Facsimile: +41 58 792 44 10, www.pwc.ch PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

1

Report on other legal requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (art. 728 CO and art. 11 AOA) and that there are no circumstances incompat-ible with our independence.

In accordance with art. 728a para. 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 financial statements according to the instructions of the Board of Directors.

We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

PricewaterhouseCoopers AG Roman Berlinger Armin Müller Audit expert Audit expert Auditor in charge Zurich, 25 February 2013

12

assets

Before appropriation of profit

31.12.2012 Previous year *

Liquid assets 408,341,152 607,128

Amounts due from money-market instruments 68,300,000 –

Amounts due from banks 2,039,452,465 6,124,046

Amounts due from customers 148,023,049 –

Mortgage loans 343,598,000 –

Trading portfolios of securities and precious metals 184,548,778 3,540

Financial investments 543,107,913 8,510,850

Participating interests 20,547,885 –

Tangible fixed assets 47,593,259 425,850

Accrued income and prepaid expenses 11,727,522 123,514

Other assets 56,942,060 110,755

Total assets 3,872,182,083 15,905,683

Total amounts due from group companies and holders of qualified participations 401,122,067 2,105,392

* Figures for the previous year as at 31.12.2011 are based on the former Nettobank AG.

liaBilities



Amounts due to banks 148,008,101 –

Amounts due to customers in savings or deposit accounts 2,417,198,188 112,870

Other amounts due to customers 891,770,603 1,489,805

Accrued expenses and deferred income 18,391,532 344,732

Other liabilities 19,152,593 36,165

Value adjustments and provisions 20,600,000 –

Reserves for general banking risks 176,000,000 –

Bank’s capital 20,000,000 20,000,000

General legal reserves 137,300,000 –

of which capital contribution reserves 137,300,000 –

Profit / loss carried forward – 6,077,889 –3,223,700

Profit / loss for the year 29,838,955 –2,854,189

Total liabilities 3,872,182,083 15,905,683

Total amounts due to group companies and holders of qualified participations 37,827,948 –


Balance sheet

Amounts in CHF

Amounts in CHF


13

off-BalaNce-sheet traNsactioNs



Contingent liabilities 90,036,396 –

Irrevocable commitments 20,867,260 10,000

Liabilities for calls on shares and other equities – –

Commitment credits – –

Derivative financial instruments

Positive replacement values 8,975,386 –

Negative replacement values 9,155,765 –

Contract volumes 961,579,582 –

Fiduciary transactions 280,714,963 –


Amounts in CHF


14

iNcoMe aNd expeNses froM ordiNary BaNkiNg operatioNs


2012 Previous year *

Result from interest operations

Interest and discount income 23,148,332 18,785

Interest and dividend income from trading positions 5,529,372 110

Interest and dividend income from financial investments 10,419,360 213,995

Interest expense –2,370,656 – 448

Subtotal for interest operations 36,726,408 232,442

Result from commission business and services

Commission income from lending activities 100,739 –

Commission income from securities trading and investment activities 115,001,123 68,098

Commission income from other services 604,979 –

Commission expense –15,792,021 –34,931

Subtotal for commission business and services 99,914,820 33,167

Result from trading activities 35,567,952 878

Other result from ordinary activities

Result from the disposal of financial investments 5,124,259 –

Income from participating interests 69,151 –

Result from real estate 2,360 –

Other ordinary income 6,796,853 203,704

Other ordinary expenses – 929,570 –133,921

Subtotal other result from ordinary activities 11,063,053 69,783

Operating expenses

Personnel expenses – 93,840,343 –1,579,362

General and administrative expenses – 43,453,891 –1,460,615

Subtotal operating expenses –137,294,233 –3,039,977

Gross profit 45,978,000 –2,703,707

* Figures for the year 2011 are based on the former Nettobank AG.

Income statement

Amounts in CHF


15

appropriatioN of profit


Profit for the year 29,838,955 –2,854,189

Profit carried forward – 6,077,889 –3,223,700

Distributable profit 23,761,066 –6,077,889

Appropriation of profit

Distributions to the bank’s capital –20,000,000 –

Profit carried forward 3,761,066 –6,077,889


profit for the year



Profit for the year

Gross profit 45,978,000 –2,703,707

Depreciation and amortisation of fixed assets – 985,645 –141,950

Value adjustments, provisions and losses –13,252,596 –

Result before extraordinary items and taxes 31,739,758 –2,845,657

Extraordinary income 58,000 –

Extraordinary expenses – –

Taxes –1,958,804 – 8,532

Profit for the year 29,838,955 –2,854,189


Amounts in CHF

Amounts in CHF


16

G e n e r A l

Raiffeisen Switzerland acquired 100 percent of Netto-

bank AG, previously a subsidiary of Wegelin & Co.

Private Bankers, on 27 January 2012. Prior to the trans-

action, Wegelin & Co. Private Bankers had transferred

its non-US business to Nettobank AG in a partial uni-

versal succession under the terms of Article 69 ff. of

the Swiss Merger Act. The transfer took place on 25 Jan-

uary 2012 with retroactive effect as from 1 January 2012.

Nettobank AG was subsequently renamed Notenstein

Private Bank Ltd. Results for the previous year are thus

the results of Nettobank AG. Since most of Wegelin’s

business activities were transferred to Nettobank AG,

subsequently Notenstein, a year-on-year comparison

is not meaningful and is not presented in the results.

Notenstein, with its 13 branches across Switzerland,

ranks among the country’s leading wealth management

banks.

Its subsidiary 1741 Asset Management Ltd develops

and manages quantitative investment strategies and

provides various services in the fund business. 1741 As-

set Management Ltd acts as investment manager for

the range of 1741 funds, including the Luxembourg fund

platforms “1741 Asset Management Funds SICAV”

and “1741 Specialised Investment Funds SICAV”.

B u S i n e S S A r e A S

The bank’s main activities fall into the following cate-

gories:

– Wealth management for private

and institutional clients

– Investment advisory services for

private and institutional clients

– Securities and currency trading

– Support services for external asset

managers

– Lending activities associated with

private banking

More than two-thirds of the bank’s clients are domi-

ciled in Switzerland. Services to foreign clients are con-

centrated in selected target markets.

c o m m i S S i o n B u S i n e S S A n d S e r v i c e S

Most activities in the commission business and services

fall under the wealth management and advisory ser-

vices categories. Other services include support for ex-

ternal asset managers and insourcing that Notenstein

provides to other banks.

t r A d i n G

Notenstein offers its clients execution and settlement

of all standard bank trading transactions. Moreover,

Notenstein trades on its own account with the usual fi-

nancial instruments. Proprietary debt trading mainly

involves bonds from first-class issuers, while equity trad-

ing principally involves Swiss and European shares.

The bank trades in foreign currencies on its own ac-

count mainly to ensure that transactions are carried

out smoothly. Such trading is limited to currencies for

which there is a liquid market.

Notes to the financial statementsExplanatory notes on business activities

17

l e n d i n G A c t i v i t i e S

Notenstein adheres to a restrictive credit policy, pro-

viding lombard loans against collateral of liquid secu-

rities in diversified portfolios. Accordingly, loan-to-value

ratios are conservative so as to minimise default risk.

Notenstein does not conduct its own mortgage business,

but does provide mortgage financing to major clients

and Notenstein staff members. The reported mortgage

loans are secured by Swiss real estate.

r i S k A S S e S S m e n t

A considered and careful approach to risk is key to

Notenstein’s long-term success. Notenstein aims for com-

prehensive risk management both for the bank and its

clients. Risk management is based on a risk policy de-

termined and periodically reviewed by the Board of

Directors. During the review, the board also defines the

bank’s risk capacity and sets overall limits.

The board monitors both the risk situation and

changes in risk-bearing capital on a quarterly basis, as

per the board’s risk report. This report provides com-

plete information on the risk situation, capitalisation,

adherence to overall limits and any measures necessary.

The Risk Controlling department provides inde-

pendent oversight of the bank’s risk exposure. It estab-

lishes and implements appropriate risk control systems

and provides the necessary information to set risk pol-

icy and risk limits. The risk assessment process focuses

on operational risk, market and credit risk in bank and

trading operations, as well as liquidity risk.

r i S k m A n A G e m e n t

The Board of Directors bears ultimate responsibility

for risk in its capacity of executive management, over-

sight and control. The board defines the bank’s risk

capacity and, based on this assessment, sets the bank’s

risk policy. This specifies the overall limits per risk cate-

gory and business activity and sets standards for risk

management and risk control processes.

The board is responsible for establishing, monitoring

and regularly reviewing suitable internal controls based

on documented, systematic risk analysis that is adapted

to the size, complexity, structure and risk profile of the

bank. The board ensures that all significant risks within

the bank are identified, limited and monitored.

The Executive Board is responsible for implement-

ing the risk policy set by the Board of Directors, setting

standards for risk management and risk control pro-

cesses and applying the board’s recommendations to

each risk category and business activity.

Risk management entails a systematic process with

several steps: identification, measurement and assess-

ment, management and monitoring. Risk management

guidelines and fundamentals are periodically reviewed

for their suitability and effectiveness, and adjusted as

necessary.

Notes to the financial statementsExplanatory notes on business activities

18

m A r k e t r i S k

Market risk is the risk that losses may be incurred due

to changes in the market price of positions held.

Market risk is assessed using methodologies such

as value at risk models, nominal exposure and sensitiv-

ity, as well as stress tests and interest rate sensitivity

under normal and stress scenarios. The bank manages

its own market risk within limits defined by the Board

of Directors, and the Executive Board then draws up

investment guidelines within these limits. The Risk Con-

trolling department monitors market risk.

Notenstein has no significant positions in deriva-

tive instruments on its own account, and none at all in

markets where liquidity is limited.

c r e d i t r i S k

Credit risk is the risk that losses may be incurred when

clients or other counterparties cannot fulfil their contrac-

tually agreed payment obligations.

Notenstein limits its credit risk by requiring ap-

proval of counterparties in the interbank market and of

indirect counterparties (brokers, clearing agents and de-

positories). Credit risk is measured and evaluated ac-

cording to appropriate and established procedures. The

risk measurement process and the applicable parame-

ters are binding. Credit risks are measured according to

value at risk. The Board of Directors sets counterparty

risk limits for the bank as a whole and for individual

business units, while the Executive Board formulates in-

dividual limits and investment guidelines. Risk man-

agement involves careful selection and detailed financial

evaluation of counterparties, prudent structuring of

business transactions and close monitoring. The Risk

Controlling department is responsible for such moni-

toring.

Credit is extended in cases where top quality collat-

eral is available and readily realisable, or against do-

mestic real estate. Unsecured loans or loans secured by

collateral that is not readily realisable are approved

in exceptional cases, if justified.

Notes to the financial statements – explanatory notes on business activities19

l i q u i d i t y r i S k

Liquidity risk is the risk that the bank will not be able

to fulfil its payment obligations.

Liquidity risk is measured, managed and monitored

by observing generally accepted ratios. The treasury

department manages the bank’s liquidity. The Board of

Directors sets the appropriate overall limits and No-

tenstein continuously monitors its exposure to liquid-

ity risk.

Notenstein maintains high levels of liquidity that

considerably exceed the minimum requirements as

defined by the Swiss Financial Market Supervisory

Authority (FINMA).

o p e r At i o n A l r i S k

Operational risk is the risk of financial losses, non-

compliance or damage to reputation stemming from in-

appropriate or failed internal processes, staff mem-

bers, IT systems, buildings and facilities, or as a result

of external incidents or the actions of third parties.

Risks are assessed according to the existing meas-

ures to reduce risk and the criteria defined by the Exec-

utive Board. Avoidance or reduction of operational

risk is primarily the responsibility of the unit where such

risks originate. Risk management also entails defining

and implementing controls, with an appropriate balance

between the anticipated risk-reducing effects of a meas-

ure and its cost. The most critical processes are identi-

fied and their continuation ensured with emergency

and contingency plans.

Notenstein has an internal regulatory framework

as well as an extensive system of controls to limit and

monitor operational risk.

o u t S o u r c i n G

Notenstein Private Bank Ltd does not outsource any

business operations.

e m p lo y e e S

At the end of 2012, Notenstein employed 663 staff (pre-

vious year: 9). Adjusted for part-time employees, the

figure corresponds to 588 full-time employees (previous

year: 7).

20

G e n e r A l p r i n c i p l e S

The book-keeping, accounting and valuation principles

are based on the provisions stipulated by the Swiss

Code of Obligations (CO) and banking legislation, and

on other statutory provisions together with the Guide-

lines issued by FINMA (the Swiss Financial Market Su-

pervisory Authority).

Raiffeisen Switzerland, Notenstein’s parent com-

pany, publishes the consolidated annual financial state-

ment of the Raiffeisen Group in a separate annual

report. Unlike statements prepared in accordance with

the “true and fair view” principle, the individual finan-

cial statement may be influenced by hidden reserves.

c o n S o l i d At i o n

Notenstein is fully consolidated with its subsidiary com-

pany, 1741 Asset Management Ltd, within the Raiffeisen

Group.

r e c o r d i n G o f B u S i n e S S t r A n S A c t i o n S

All transactions concluded as of the balance sheet date

are recorded on a day-end basis and are valued on the

balance sheet and the income statement in accordance

with the defined valuation principles. Spot transactions

entered into but not yet settled are recognised accord-

ing to the trade date accounting principle.

f o r e i G n c u r r e n c i e S

Receivables and liabilities as well as cash and cash

equivalents in foreign currencies are translated at the

rate prevailing on the balance sheet date. Price gains

and losses resulting from such valuations are recog-

nised in the “results from trading activities” position.

Transactions in foreign currencies during the year are

translated using the rate prevailing at the time of such

transactions.

The main foreign currencies for balance sheet

purposes were translated at the following rates on the

balance sheet date:

Currency 31.12.12 31.12.11

EUR 1.206 1.214

GBP 1.488 1.453

USD 0.915 0.935

l i q u i d A S S e t S , A m o u n t S d u e A r i S i n G f r o m

m o n e y - m A r k e t i n S t r u m e n t S , d e p o S i t S

These items are recognised on the balance sheet at

nominal or acquisition value. As yet unearned discounts

on money-market instruments, and premiums and dis-

counts on own borrowings, are allocated over the term

of the instrument.

Notes to the financial statementsAccounting and valuation principles

21

A m o u n t S d u e f r o m B A n k S A n d c u S t o m e r S ,

m o r t G A G e lo A n S

These items are recognised on the balance sheet at

nominal value. Proper accrual is applied in respect of

interest income. Receivables in cases where the bank

considers it unlikely that the debtor will be able to

meet its contractual obligations in full are deemed to

be impaired. Impaired receivables and collateral (if

any) are valued at liquidation value.

Individual value adjustments are applied for im-

paired receivables. Such adjustments are based on reg-

ular analyses of the individual credit exposures, taking

account of the debtor’s creditworthiness and/or the

counterparty risk, as well as the estimated net liquida-

tion value of the collateral. Where the recovery of the

receivable is dependent exclusively on the liquidation

proceeds value of the collateral, an allowance must be

established to cover the unsecured portion in full.

Interest and relevant commissions due for more

than 90 days are deemed to be overdue. In the case of

overdrafts, interest and commissions are considered

overdue where the assigned overdraft limit has been

exceeded for more than 90 days. Receivables are de-

recognised at the point when a legal title confirms the

conclusion of the liquidation process, if not before.

Impaired claims are again rated as fully recover-

able (i.e. the value adjustment is released) when the

outstanding capital sums and interest are again paid

promptly as per contractual agreements, and other

creditworthiness criteria are met.

All value adjustments are reported in the “value

adjustments and provisions” position.

S e c u r i t i e S l e n d i n G A n d B o r r o W i n G

t r A n S A c t i o n S

Securities lending and borrowing transactions are

reported at the value of the cash collateral received or

given, including accumulated interest.

Borrowed securities or securities obtained as col-

lateral are recognised on the balance sheet only if

Notenstein gains control over the contractual rights

which these securities contain. Securities lent or pro-

vided as collateral are taken off the balance sheet only

if Notenstein loses the contractual rights associated

with these securities. The market values of the securi-

ties borrowed and lent are monitored on a daily basis

so that additional collateral may be provided or re-

quested as necessary.

Fees received or paid in respect of securities borrow-

ing and lending transactions are recorded as commis-

sion income or commission expense in the correspond-

ing periods. Notenstein does not engage in securities

lending with instruments held in clients’ safekeeping

accounts.

22

r e p u r c h A S e A n d r e v e r S e r e p u r c h A S e

t r A n S A c t i o n S

Purchases of securities subject to an obligation to resell

(reverse repurchase transactions) and sales of securities

subject to an obligation to repurchase (repurchase trans-

actions) are treated as collateralised financing transac-

tions and are recognised at the value of the cash collat-

eral received or given, including accumulated interest.

Securities received and delivered are not recognised

or derecognised on the balance sheet unless control of

the contractual rights contained in such securities is re-

linquished. The market values of the securities re-

ceived or delivered are monitored on a daily basis so

that additional collateral may be provided or requested

as necessary.

Interest income from reverse repurchase transac-

tions and interest expense arising from repurchase

transactions is accrued in the corresponding periods

over the terms of the underlying transactions.

t r A d i n G p o r t f o l i o S o f S e c u r i t i e S A n d

p r e c i o u S m e tA l S

Trading portfolios are valued at fair value. Positions

for which there is no representative market are valued

according to the lower of cost or market principle.

Gains and losses resulting from this valuation, and gains

and losses realised during the period, are recognised

as “result from trading activities”. Interest on and div-

idends from trading positions are booked as “interest

and dividend income from trading positions”, under the

“result from interest operations” position.

Precious metal positions are valued at the market

values prevailing on the balance sheet date. If, in excep-

tional cases, no fair value is available, they are valued


f i n A n c i A l i n v e S t m e n t S

Investments outside of the trading portfolio are valued

according to the lower of cost or market principle. A

monthly market valuation is carried out, and the gains

or losses in value are booked as appropriate on the

income statement, in the “other ordinary expenses” or

“other ordinary income” positions.

Real estate and participating interests assumed

from lending activities and designated for resale are

recognised under financial investments and are valued


The lower value is deemed to be the lower of acquisi-

tion cost and liquidation value.

pA r t i c i pAt i n G i n t e r e S t S

All equities and other securities in companies held

with the intention of long-term investment, regardless

of the proportion of voting shares, are recognised as

participating interests. All participating interests in

communal facilities and institutions are also recognised

on the balance sheet in this position. The valuation is

effected in accordance with the acquisition value prin-

ciple, i.e. at purchase cost minus any writedowns re-

quired for operational purposes. Participating interests

may include hidden reserves.

Notes to the financial statements – accounting and valuation principles23

tA n G i B l e f i x e d A S S e t S

Tangible fixed assets are recognised at acquisition cost

plus any investment that increases the value of the as-

set, and are depreciated using the straight-line method

over their estimated useful life as follows:

Real estate Maximum: 66 years

Conversions of and installations in rented

premisesMaximum: 15 years

Software, EDP hardware Maximum: 3 years

Furnishings and fittings Maximum: 8 years

Other tangible fixed assets Maximum: 5 years

Minor investments are booked directly through business

expenditure. Comprehensive renovations which in-

crease the value of the property are capitalised, whereas

maintenance and repairs are reported as expenses.

Tangible fixed assets may include hidden reserves.

Properties and assets under construction are depreci-

ated only as from the date when they are brought into

use.

Tangible fixed assets are reviewed for impairment

losses whenever events or changes in circumstances

suggest that the carrying amount may not be recover-

able. Any impairment losses are recognised in the in-

come statement, under the “depreciation and amortisa-

tion of fixed assets” position. If the impairment review

of a tangible fixed asset reveals a change in useful life,

the residual book value is then depreciated as planned

over the revised useful life of the asset.

p e n S i o n B e n e f i t o B l i G At i o n S

The pension fund for Notenstein employees is accom-

modated within a specific foundation for this purpose

– “Katharinen Pensionskasse I”. The bank pays the costs

of occupational pension provision for all employees

and their survivors in accordance with statutory provi-

sions. The defined contribution system is in place. The

organisation, management and financing of the pension

plans is based on the statutory provisions, the Founda-

tion Deed and the pension rules that are in force. The

employer’s contributions are booked to personnel ex-

penses.

The “Katharinen Pensionskasse II”, a supplementary,

partially autonomous extra-mandatory pension fund,

was set up in 2009. This enables individual investment

of that portion of the annual salary which is to be insured

on an extra-mandatory basis, with no need to take ac-

count of a minimum interest rate. As well as generating

new options for purchase of benefits, this gives insured

persons the choice of a lump-sum payment or an an-

nuity on retirement.

Determination of the actual economic effects of

pension benefit obligations is based on the annual fi-

nancial statements of the employee benefit institu-

tions, which are drawn up in compliance with Swiss

GAAP FER 26. An assessment is made as to whether

any underfunding or overfunding of the pension funds

could entail economic risks or benefits from the bank’s

viewpoint.

Any economic benefit, or any employer’s contribu-

tion reserves in existence, are not capitalised; however,

provisions for economic risks are included on the bal-

ance sheet.

24

vA lu e A d j u S t m e n t S A n d p r o v i S i o n S

For all identifiable risks existing at the balance sheet

date, individual value adjustments and provisions are

established on a prudent basis. The other provisions

may include hidden reserves.

r e S e r v e S f o r G e n e r A l B A n k i n G r i S k S

Reserves may be formed for general banking risks. These

are prudent reserves formed in accordance with the

accounting rules, which are established to cover latent

risks in the operating activities of the bank. Pursuant

to article 18, letter b of the Swiss Capital Adequacy Or-

dinance (CAO), such reserves are counted as capital

and are not taxed (see the appended table: “value ad-

justments and provisions”).

c o n t i n G e n t l i A B i l i t i e S , i r r e v o c A B l e

c o m m i t m e n t S , l i A B i l i t i e S f o r c A l l S o n

S h A r e S A n d o t h e r e q u i t i e S

These items are recognised as off-balance-sheet trans-

actions at nominal value. Provisions are formed for

foreseeable risks.

d e r i vAt i v e f i n A n c i A l i n S t r u m e n t S

Trading transactions: all derivative financial instruments

are valued at fair value (except for derivatives used in

connection with hedging transactions). Such instruments

are recognised under “other assets” or “other liabilities”

with positive or negative replacement values. The fair

value is based on market prices, price quotations from

brokers, and on discounted cashflow and option price

models. For transactions involving derivative financial in-

struments entered into for trading purposes, the income

realised is booked under “result from trading activities”.

Income from the issuance of structured products on

a commission basis is recognised in the “result from

trading activities” position.

The bank also uses derivative financial instruments

in connection with asset and liability management in

order to control interest rate change risks.

tA x

Taxes are calculated and booked on the basis of the

result for the reporting year.

y e A r - o n - y e A r c h A n G e S

The current reporting year represents Notenstein’s

first financial year. The accounting and valuation prin-

ciples were adapted to the principles of the parent com-

pany (Raiffeisen Switzerland) in relation to the open-

ing balance sheet (previous year: Nettobank AG).

There is no material impact on the result for the period.

e v e n t S A f t e r t h e B A l A n c e S h e e t d At e

Up to the date when the annual financial statements

were drawn up, no material events occurred which

would require mandatory disclosure on the balance

sheet or in the notes as at 31 December 2012.

Notes to the financial statements – accounting and valuation principles25

2626


1.1 overview of collateral for loaNs aNd off-BalaNce-sheet traNsactioNs

1 . 1 . 1 o v e r v i e W A c c o r d i n G t o c o l l At e r A l – lo A n S A n d A d vA n c e S

Secured by

mortgage

Other

collateral Unsecured Total

Amounts due from customers – 112,601 35,422 148,023

Mortgage loans

Residential property 306,881 – 1,200 308,081

Office and business premises 10,880 – – 10,880

Trade and industry 24,637 – – 24,637

Other – – – –

Total loans and advances in current year 342,398 112,601 36,622 491,621

Total loans and advances in previous year – – – –

1 . 1 . 2 o v e r v i e W B y c o l l At e r A l t y p e – o f f - B A l A n c e - S h e e t

Secured by

mortgage

Other

collateral Unsecured Total

Contingent liabilities – 88,499 1,538 90,037

Irrevocable commitments – 10,849 10,018 20,867

Liabilities for calls on shares and other equities – – – –

Commitment credits – – – –

Total off-balance-sheet in current year – 99,348 11,556 110,904

Total off-balance-sheet in previous year – – 10 10

1 . 1 . 3 d i S c lo S u r e S o f i m pA i r e d lo A n S / r e c e i vA B l e S

Gross debt

amount

Estimated

liquidation

proceeds of

collateral

Net debt

amount

Individual

value

adjustments

Impaired loans/receivables in current year 2,456 1,256 1,200 1,200

Impaired loans / receivables in previous year – – – –

Amounts in CHF thousands


27


1.2 BreakdowN of tradiNg portfolios of securities aNd precious Metals, fiNaNcial iNvestMeNts aNd

participatiNg iNterests

1 . 2 . 1 t r A d i n G p o r t f o l i o S o f S e c u r i t i e S A n d p r e c i o u S m e tA l S

Current year Previous year

Debt securities 142,183 –

listed 133,188 –

unlisted 8,995 –

Equity securities 32,201 4

of which own equities shares – –

Precious metals 10,164 –

Total trading portfolios of securities and precious metals 184,548 4

of which securities eligible for repo transactions in accordance with liquidity regulations 23,810 –

1 . 2 . 2 f i n A n c i A l i n v e S t m e n t S

Book value Fair value

Current year Previous year Current year Previous year

Debt securities 529,745 8,511 535,768 8,511

of which held until maturity – – – –

of which recognised in accordance with the lower of cost or market principle 529,745 8,511 535,768 8,511

Equity securities 10,779 – 10,780 –

of which qualified participations – – – –

Precious metals 584 – 609 –

Real estate 2,000 – 2,000 –

Total financial investments 543,108 8,511 549,157 8,511

of which securities eligible for repo transactions in accordance with liquidity regulations 434,994 6,929 439,717 6,929


1 . 2 . 3 pA r t i c i pAt i n G i n t e r e S t S


Without listed value 20,548 –

Total participating interests 20,548 –

28

1.3 disclosures of sigNificaNt participatiNg iNterests


Company name, registered office Business activities Capital Share Capital Share

Recognised under participating interests:

1741 Asset Management Ltd, St. Gallen Asset management / fund business 5,000 100 % – –




1.4 stateMeNt of fixed asset additioNs aNd disposals

Current year

Cost value

Accumulated

depreciation

Book value

previous

year end Additions Disposals Depreciation

Book value

current year

end

Participating interests

Majority participations – – – 20,000 – – 20,000

Minority participations – – – 686 – –138 548

Total participating interests – – – 20,686 – –138 20,548

Tangible fixed assets

Real estate

Bank buildings * – – 46,000 – –173 45,828

Other real estate – – – – – – –

Other tangible fixed assets 100 – 40 60 2,014 – – 553 1,522

Finance lease assets – – – – – – –

Other 610 –244 366 – – –122 244

Total tangible fixed assets 710 –284 426 48,014 – –847 47,593

* Purchase of bank buildings from Wegelin & Co. in 4th quarter of 2012.

1 . 4 . 1 f i r e i n S u r A n c e vA lu e S

Current year

Fire insurance value of real estate 50,915

Fire insurance value of other fixed assets 27,245


29


1.5 other assets aNd other liaBilities


Other assets Other liabilities Other assets Other liabilities

Replacement value of derivative financial instruments

Contracts as principal

Trading portfolios – – – –

Asset and liability management – 250 – –

Contracts as commission agent 8,975 8,906 – –

Total derivative financial instruments 8,975 9,156 – –

Indirect taxes 748 9,400 111 –

Clearing accounts 32,162 550 – –

Unredeemed coupons, cash bonds and bonds 17 47 – –

Other assets and liabilities 15,040 – – 36

Total other assets and other liabilities 56,942 19,153 111 36



1.6 pledged or assigNed assets to secure owN coMMitMeNts aNd of assets suBject to reteNtioN of title

1 . 6 . 1 p l e d G e d o r A S S i G n e d A S S e t S A n d A S S e t S S u B j e c t t o r e t e n t i o n o f t i t l e , e x c lu d i n G l e n d i n G

t r A n S A c t i o n S A n d S e c u r i t i e S r e p u r c h A S e A G r e e m e n t S


Amount due /

book value

Of which

claimed

Amount due /

book value

Of which

claimed

Pledged assets

Amounts due from money-market instruments 10,000 –

Financial investments 275,949 3,573 – –

Tangible fixed assets / other assets (guarantees) 416 – – –

Total pledged assets 286,365 3,573 – –

30

1 . 6 . 2 d i S c lo S u r e o f S e c u r i t i e S l e n d i n G A n d r e p u r c h A S e t r A n S A c t i o n S


Book value of receivables from cash collateral in securities borrowing and reverse repurchase agreements 515,100 –

Book value of obligations from cash collateral in securities lending and repurchase agreements 30,360 –

Book value of securities lent in securities lending or delivered as collateral in securities borrowing as well as securities in own

portfolio transferred in repurchase agreements 30,383 –

of which with unrestricted right to resell or pledge 30,383 –

Fair value of securities received and serving as collateral in securities lending or securities borrowed in securities borrowing as

well as securities received in reverse-repurchase agreements with an unrestricted right to resell or repledge 515,330 –

fair value of associated resold or repledged securities 30,383 –


1.7 liaBilities relatiNg to owN peNsioN aNd welfare fuNds

1 . 7 . 1 G e n e r A l

The personnel of Notenstein Private Bank Ltd are insured in the “Katharinen Pensionenskasse I” and “Katharinen Pensionenskasse II” pension funds. The benefits paid

are calculated on the basis of contributions made (defined contribution plan). All employees are insured from the minimum annual wage defined in the Occupational

Pensions Act and therefore entitled to benefits. More than half of the occupational pension premiums are covered by the employer. The employer has no further obliga-

tions to provide benefits. The “Katharinen Pensionskasse II” fund provides for extra-mandatory pensions in which a personal investment strategy can be implemented.

1 . 7 . 2 l i A B i l i t i e S r e l At i n G t o o W n p e n S i o n A n d W e l fA r e f u n d S


Recognised under:

Other amounts due to customers 4,390 –


1. Information on the balance sheet31


1 . 7 . 3 e c o n o m i c B e n e f i t / e c o n o m i c o B l i G At i o n A n d p e n S i o n e x p e n S e S

According to the most recent audited annual financial statements (pursuant to Swiss GAAP FER 26) of the “Katharinen Pensionskasse”, the funding ratio is:

(no recognition of overfunding; underfunding, where applicable, is recognised in the balance sheet)

31.12.2011 31.12.2010

Pension fund “Katharinen Pensionskasse I” 102.3% 108.9 %

Pension fund “Katharinen Pensionskasse II” 107.5% 112.5%

1 . 7 . 4 e m p lo y e r c o n t r i B u t i o n r e S e r v e S o f t h e “ k At h A r i n e n p e n S i o n S k A S S e ”

As at 31.12.2012, Notenstein Private Bank Ltd holds no employer contribution reserves.

1.8 value adjustMeNts aNd provisioNs, fluctuatioN reserve for credit risks aNd reserves for geNeral

BaNkiNg risks

Balance at

previous

year end

Values

from take-

over **

Use in

conformity

with des-

ignated

purpose

Redesig-

nation of

purpose

(reclassifi-

cations)

Recoveries,

past due

interest,

currency

translation

differences

New

provisions

charged

to income

Releases to

income

Balance

at current

year end

Value adjustments and provisions for default

and other risks:

value adjustments and provisions for default risks

(collection and country risks) – 8,000 – – 6,800 – – – 1,200

value adjustments and provisions for other

business risks * – – – 6,800 – 12,600 – 19,400

other provisions – 146,000 – –146,000 – – – –

Total value adjustments and provisions – 154,000 – –146,000 – 12,600 – 20,600

Reserves for general banking risks (untaxed) – 30,000 – 146,000 – – – 176,000

* Provisions to a total of CHF 19.4 million have been created in relation to possible obligations arising from trailer fees as well as a pending law case. CHF 12.6 million of this amount has been booked

to the income statement and CHF 6.8 million transferred via a redesignation of purpose of provisions that are no longer necessary. The provisions that are no longer necessary pertain to general

provisions of Wegelin & Co. on collateralised loans that are not required under the accounting and valuation policies of Notenstein Private Bank.

** Integration in Notenstein Private Bank Ltd (transaction: take-over of non-US client business of Wegelin & Co.).


32

1 . 9 . 1 S i G n i f i c A n t S h A r e h o l d e r S A n d G r o u p S o f S h A r e h o l d e r S W i t h p o o l e d v o t i n G r i G h t S


Nominal % of equity Nominal % of equity

Raiffeisen Switzerland Cooperative 20,000 100 % – –

Wegelin & Co. Ltd – – 20,000 100 %

1.9 BaNk’s capital aNd shareholders of iNterests exceediNg 5% of all votiNg rights


Total par value

No. of shares /

interests

Capital eligible

for dividend Total par value

No. of shares /

interests

Capital eligible

for dividend

Bank’s capital

Share capital 20,000 20,000 20,000 20,000 20,000 20,000

Total bank’s capital 20,000 20,000 20,000 20,000 20,000 20,000

Participation capital – – – – – –

Total bank’s capital 20,000 20,000 20,000 20,000 20,000 20,000

Authorised capital – – – – – –

of which capital increases completed – – – – – –

Conditional capital – – – – – –

of which capital increases completed – – – – – –





1.10 stateMeNt of shareholders’ equity

Equity at beginning of current year

Paid-up capital 20,000

Distributable profit / accumulated loss – 6,078

Total equity at beginning of current year (before appropriation of profit) 13,922

+ Capital investment 137,300

+ Other transfers to / from reserves 176,000

+ Profit for the current year 29,839

Total equity at end of current year (before appropriation of profit) 357,061

Of which:

paid-up capital 20,000

General legal reserve 137,300

reserves for general banking risks 176,000

distributable profit 23,761


34


1.11 Maturity aNalysis of curreNt assets aNd third-party liaBilities

Due

At sight

Cancel-

lableWithin

3 months

Within 3 to

12 months

Within 12

months to

5 years

After 5

years

No

maturity Total

Current assets

Liquid assets 408,341 – – – – – – 408,341

Amounts due from money-market instruments – – – 68,300 – – – 68,300

Amounts due from banks 56,469 220,272 1,273,807 388,904 100,000 – – 2,039,452

Amounts due from customers – 17,798 57,110 70,492 2,623 – – 148,023

Mortgage loans – 8,362 90,127 45,703 182,629 16,778 – 343,599

Trading portfolios of securities and precious metals 184,549 – – – – – – 184,549

Financial investments 11,363 – 98,231 108,986 310,507 12,021 2,000 543,108

Total current assets in current year 660,722 246,432 1,519,275 682,385 595,759 28,799 2,000 3,735,372

Total current assets in previous year 2,716 4,018 2,009 1,519 4,983 – – 15,245

Third-party capital

Amounts due to banks 100,857 16,791 30,360 – – – – 148,008

Amounts due to customers in savings or deposit

accounts – 2,417,198 – – – – – 2,417,198

Other amounts due to customers 85,258 705,063 97,148 4,301 – – – 891,770

Total third-party capital in current year 186,115 3,139,052 127,508 4,301 – – – 3,456,976

Total third-party capital in previous year 113 1,490 – – – – – 1,603



1.12 aMouNts due froM / to related coMpaNies as well as loaNs to MeMBers of goverNiNg Bodies


Amounts due from related companies – 2,105

Amounts due to related companies – –

Loans to members of governing bodies 2,855 –


35


1 . 1 2 . 1 t r A n S A c t i o n S W i t h r e l At e d pA r t i e S

The extension of loans to members of governing bodies is subject to the usual banking assessment criteria that apply to third parties. Fee-based transactions (payment

services, stock transactions), loans and interest on bank accounts are provided to related parties at personnel rates.

1.13 aNalysis of assets aNd liaBilities By doMestic aNd foreigN origiN


Domestic Foreign Domestic Foreign

Assets

Liquid assets 408,341 – 607 –

Amounts due from money-market instruments – 68,300 – –

Amounts due from banks 1,024,659 1,014,794 6,124 –

Amounts due from customers 92,546 55,477 – –

Mortgage loans 343,598 – – –

Trading portfolios of securities and precious metals 74,513 110,036 3 –

Financial investments 155,575 387,533 8,511 –

Participating interests 20,539 8 – –

Tangible fixed assets 47,593 – 426 –

Accrued income and prepaid expenses 11,113 615 124 –

Other assets 56,887 55 111 –

Unpaid-up capital – – – –

Total assets 2,235,364 1,636,818 15,906 –


Liabilities

Amounts due to banks 138,485 9,523 – –

Amounts due to customers in savings or deposit accounts 1,391,993 1,025,205 113 –

Other amounts due to customers 297,897 593,874 1,490 –

Accrued expenses and deferred income 17,517 875 345 –

Other liabilities 18,978 174 36 –

Value adjustments and provisions 20,600 – – –

Reserves for general banking risks 176,000 – – –

Bank’s capital 20,000 – 20,000 –

General legal reserves 137,300 – – –

Profit / loss carried forward – 6,078 – –3,224 –

Profit / loss for the year 29,839 – –2,854 –

Total liabilities 2,242,531 1,629,651 15,906 –

36


1.14 aNalysis of assets By couNtry / group of couNtries


Share as % Share as %

Assets

Switzerland 2,303,301 59 % 15,906 100 %

Europe 1,438,531 37% – 0 %

North America 19,296 0 % – 0 %

Caribbean 18,864 0 % – 0 %

Asia 32,883 1% – 0 %

Other 59,307 2 % – 0 %

Total assets 3,872,182 100% 15,906 100%





1.15 aNalysis of assets aNd liaBilities accordiNg to curreNcy

CHF EUR USD Other

Assets

Liquid assets 392,846 13,906 998 591

Amounts due from money-market instruments 50,000 – 18,300 –

Amounts due from banks 584,392 527,409 822,225 105,427

Amounts due from customers 69,958 28,087 25,514 24,464

Mortgage loans 343,598 – – –

Trading portfolios of securities and precious metals 128,575 14,509 11,866 29,598

Financial investments 505,704 36,844 – 560

Participating interests 20,539 8 – –

Tangible fixed assets 47,593 – – –

Accrued income and prepaid expenses 10,264 472 590 402

Other assets 56,938 4 – –

Unpaid-up capital – – – –

Total assets shown in balance sheet 2,210,407 621,239 879,493 161,042

Delivery entitlements from spot exchange, forward forex and forex options transactions 351,909 115,758 300,662 50,429

Total assets 2,562,316 736,997 1,180,155 211,471

Liabilities

Amounts due to banks 49,537 44,900 38,802 14,769

Amounts due to customers in savings or deposit accounts 1,433,028 452,989 426,364 104,817

Other amounts due to customers 320,691 124,649 417,348 29,082

Accrued expenses and deferred income 18,374 8 2 7

Other liabilities 19,106 23 6 17

Value adjustments and provisions 20,600 – – –

Reserves for general banking risks 176,000 – – –

Bank’s capital 20,000 – – –

General legal reserves 137,300 – – –

Profit / loss carried forward 29,839 – – –

Profit / loss for the year – 6,078 – – –

Total liabilities shown in balance sheet 2,218,397 622,569 882,522 148,692

Delivery entitlements from spot exchange, forward forex and forex options transactions 351,775 115,871 300,638 50,404

Total liabilities 2,570,172 738,440 1,183,160 199,096

Net position per currency –7,856 –1,443 –3,005 12,375

38


2.1 coNtiNgeNt liaBilities


Guarantees to secure credits 3,210 –

Other contingent liabilities 86,826 –

Total contingent liabilities 90,036 –



2.2 outstaNdiNg derivative fiNaNcial iNstruMeNts

Trading instruments Hedging instruments

Positive

replacement

values

Negative

replacement

values

Contract

volumes

Positive

replacement

values

Negative

replacement

values

Contract

volumes

Interest-rate-related instruments

Forward contracts (including FRAs) – – – – – –

Swaps – 250 99,750 – – –

Futures – – – – – –

Options (OTC) – – – – – –

Options (exchange-traded) – – – – – –

Total – 250 99,750 – – –

Foreign exchange

Forward contracts (including FRAs) 7,364 7,354 607,460 – – –

Combined interest / currency swaps 1,524 1,464 207,382 – – –

Futures – – – – – –

Options (OTC) 68 68 11,518 – – –


Total 8,956 8,886 826,361 – – –

Precious metals

Forward contracts – – – – – –

Swaps – – – – – –

Futures – – 10,857 – – –

Options (OTC) 6 6 645 – – –


Total 6 6 11,502 – – –

All stated amounts are rounded, which may lead to minor discrepancies in the total amounts.All stated amounts are rounded, which may lead to minor discrepancies in the total amounts.

39

Trading instruments Hedging instruments

Positive

replacement

values

Negative

replacement

values

Contract

volumes

Positive

replacement

values

Negative

replacement

values

Contract

volumes

Equity securities/ indices

Forward contracts – – – – – –

Swaps – – – – – –

Futures – – 22,786 – – –

Options (OTC) 14 14 1,181 – – –


Total 14 14 23,967 – – –

Total before netting contracts in current year 8,975 9,156 961,580 – – –

Total before netting contracts in previous year – – – – – –

2 . 2 . 1 t o tA l A f t e r n e t t i n G c o n t r A c t S

Positive

replacement

values

(cumulative)

Negative

replacement

values

(cumulative)

Total in current year 8,975 9,156

Total in previous year – –

2.3 fiduciary traNsactioNs


Fiduciary deposits at third-party banks 250,888 –

Fiduciary lending 29,827 –

Total fiduciary transactions 280,715 –



40


2.4 clieNt assets


Type of client assets

Assets in funds managed by the bank – –

Assets under discretionary asset management agreements 7,830,310 19,107

Other client assets 11,808,081 –

Total client assets (including double-counting) * 19,638,391 19,107

Of which double-counted items 228,305 –

Net new money inflow / outflow ** –1,874,234 3,128

Client assets includes all assets managed or held for investment purposes of private, business and institutional clients as well as assets in funds managed by the bank. Essentially, it includes all amounts

due to customers, time deposits and fiduciary investments as well as all valued assets including net values from outstanding derivative financial instruments. Client assets as well as assets in investment

funds deposited with third parties are also included on the condition that they are managed by the bank. Assets of other banks that are deposited at Notenstein (custody only) are not included in the

client assets. Fund units of funds managed by the bank that are held in client safekeeping accounts, and client safekeeping accounts managed by the bank but held at third-party banks are reported

under double-counting.

* Excluding 1741 Asset Management Ltd.

** Excluding inflows from the transfer of clients of Wegelin & Co. Private Bankers to Notenstein Private Bank Ltd (CHF 21,960 million).



41

42

3. Information on the income statement

3.1 result froM tradiNg activities


Foreign exchange trading and trading in foreign notes and coins 17,951 –

Precious metals trading 3,635 –

Securities trading 13,982 1

Total result from trading activities 35,568 1



3.2 persoNNel expeNses


Bank authorities, meeting attendance fees and other retainers 191 –

Salaries and benefits 77,925 1,158

AHV, IV, ALV (old age, survivors, invalidity and unemployment insurance) and other statutory contributions 7,175 159

Contributions to employee benefit schemes 4,284 259

Ancillary personnel expenses 4,265 3

Total personnel expenses 93,840 1,579

3.3 geNeral aNd adMiNistrative expeNses


Office space expenses 10,229 70

IT expenses, machinery, furniture, motor vehicles, and other equipment and fixtures 9,481 705

Other business expenses 23,744 686

Total general and administrative expenses 43,454 1,461



43

3.4 explaNatory Notes oN extraordiNary iNcoMe aNd expeNses, sigNificaNt releases of hiddeN reserves,

reserves for geNeral BaNkiNg risks, aNd value adjustMeNts aNd provisioNs No loNger required

In the current year, operationally essential provisions of CHF 19.4 million were created. These were established through a redesignation of purpose of provisions

that are no longer necessary totalling CHF 6.8 million and a further CHF 12.6 million that is reflected in the income statement position “value adjustments, provisions

and losses”.


44

n o t e n S t e i n p r i vAt e B A n k lt d

Bohl 17, 9004 St.Gallen, telephone +41 (0)71 242 50 00, fax +41 (0)71 242 50 50

[email protected], www.notenstein.ch

B A S e l , 4 0 5 1

Holbeinstrasse 102

Telephone +41 (0)61 201 17 17

[email protected]

B e r n e , 3 0 1 1

Spitalgasse 3

Telephone +41 (0)31 321 14 14

[email protected]

c h i A S S o, 6 8 3 0

Corso San Gottardo 44

Telephone +41 (0)91 696 19 19

[email protected]

c h u r , 7 0 0 2

Aquasanastrasse 8

Telephone +41 (0)81 287 15 15

[email protected]

G e n e vA , 1 2 1 1

Bd Georges-Favon 5

Telephone +41 (0)22 307 21 21

[email protected]

l A u S A n n e , 1 0 0 1

Av. du Théâtre 1

Telephone +41 (0)21 313 26 26

[email protected]

lo c A r n o, 6 6 0 0

Lungolago Motta 2

Telephone +41 (0)91 756 12 12

[email protected]

lu G A n o, 6 9 0 0

Via Canova 12

Telephone +41 (0)91 912 11 11

[email protected]

lu c e r n e , 6 0 0 4

Mühlenplatz 9

Telephone +41 (0)41 227 16 16

[email protected]

S c h A f f h A u S e n , 8 2 0 1

Fronwagplatz 22

Telephone +41 (0)52 630 18 18

[email protected]

W i n t e r t h u r , 8 4 0 1

Turnerstrasse 1

Telephone +41 (0)52 742 24 24

[email protected]

Z u r i c h , 8 0 2 2

Rennweg 57/Fraumünsterstrasse 27

Telephone +41 (0)44 218 13 13

[email protected]

Contact

45

N O T E N S T E I N P R I VAT E B A N K LT D

S T. G A L L E N B A S E L B E R N E C H I A S S O C H U R G E N E VA L A U S A N N E L O C A R N O L U C E R N E

L U G A N O S C H A F F H A U S E N W I N T E R T H U R Z U R I C H

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NOTENSTEIN ANNUAL REPORT 2012

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