NOTENSTEIN LA ROCHE ANNUAL REPORT 2015
-
Upload
notenstein-la-roche-privatbank-ag -
Category
Documents
-
view
240 -
download
3
description
Transcript of NOTENSTEIN LA ROCHE ANNUAL REPORT 2015
2015
Annual Report
Translation notice: this document is a translation of the German original which can be obtained from Notenstein La Roche Private Bank Ltd at any time. While Notenstein La Roche 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
Statement of changes in equity
Notes to the financial statements – part one
Notes to the financial statements – part two
1. Information on the balance sheet
2. Information on off-balance-sheet transactions
3. Information on the income statement
Contact
Page 2
Page 4
Page 6
Page 8
Page 10
Page 12
Page 14
Page 16
Page 18
Page 26
Page 34
Page 46
Page 48
Page 52
1
Introduction
Key figures
Organigram
Review of business results
Auditor’s report
Balance sheet
Income statement
Statement of changes in equity
Notes to the financial statements – part one
Notes to the financial statements – part two
1. Information on the balance sheet
2. Information on off-balance-sheet transactions
3. Information on the income statement
Contact
D E A R C L I E N T S
D E A R R E A D E R S
In 2015, economic conditions were once again very challenging, with expansive monetary policies from the cen-
tral banks, weak economic growth and major (geo)political uncertainty fuelling substantial volatility on the
fi nancial markets and making a combination of dexterity, expertise and prudence indispensable in wealth man-
agement. Switzerland’s fi nancial centre, too, continued to face a major process of adjustment, having to contend
with margins under pressure at the same time as increases in costs due to the growing complexity of regulatory
requirements. Many establishments are being forced to completely rethink their business models.
For Notenstein La Roche, 2015 was a very eventful year, and one in which the two themes of “focus” and
“growth” were very much in evidence. The spin-off of the asset management business into Vescore Ltd allowed
us to focus fully on our core competence, private banking. With regard to growth, the merger with La Roche &
Co Ltd, a Basel-based private bank with a long and rich history, was completed with effect from 1 November
2015. The increase in client assets resulting from this merger represents a signifi cant step in the expansion of our
bank.
The positive effect from these strategic initiatives is already making itself felt in our balance sheet. With a
broad earnings base of CHF 172 million and a cost-income ratio of 79.7 percent, we were able to signifi cant-
ly exceed the results achieved in the prior business period. Against this backdrop, we see ourselves as ideally
equipped for the future and look to the year ahead with confi dence.
D R PAT R I K G I S E L
Chairman of the Board
Notenstein La Roche Private Bank Ltd
Introduction
D R A D R I A N K Ü N Z I
CEO
Notenstein La Roche Private Bank Ltd
2
Dr Patrik Gisel (Chairman of the Board of Directors) and Dr Adrian Künzi (CEO)
3
Key figures
Amounts in CHF millions
NoteNsteiN La Roche at a gLaNce
1.1. – 31.12.2015 1.1. – 31.12.2014 1.1. – 31.12.2013
Income statement
Operating income 172 160 148
Operating expenses 137 154 135
Gross profit 35 7 14
Cost-income ratio 79.7% 95.7% 90.8%
31.12.2015 31.12.2014 31.12.2013
Balance sheet
Balance sheet total 6,804 5,218 4,324
Equity capital 481 417 395
Client assets
Assets under management 21,981 21,182 19,782
Custody assets 4,483 0 0
Total client assets 26,464 21,182 19,782
Resources
Number of staff 539 694 698
Number of full-time positions 478 629 628
Number of locations 13 12 12
Disclosure of capital adequacy and liquidity
Common equity tier 1 ratio 14.4% 8.5% 13.8%
Tier 1 ratio 19.0% 13.5% 13.8%
Total capital ratio 19.0% 13.7% 14.0%
Minimum total capital ratio target in accordance with FINMA Circular 11/2 plus requirement in respect of
anti-cyclical buffer 11.3% 11.3% 11.3%
Leverage ratio 6.0% 5.3%
Short-term liquidity coverage ratio (LCR) 114.5% 101.7%
The values for 2014 have been restated in line with the new accounting rules; key figures for 2013 are based on the former accounting rules.
4
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
Organigram
Private Banking
Switzerland *
* Excluding Basel
Private Banking
International
Investment
House Finance
Private Banking
Basel
BoaRd of diRectoRs
executive BoaRd
Audit Committee
Legal & Compliance
Communication
Corporate Development
Auditors
Internal Audit
6
executive BoaRd
Dr Adrian Künzi
Chief Executive Officer
Dr Ivan Adamovich
Head of Private Banking International
Deputy Chief Executive Officer
Fabian Dori
Head of Investment House
Christoph Gloor
Head of Private Banking Basel
Dr Basil Heeb
Chief Financial Officer
Dr Silvio Hutterli
General Counsel
Martin Liebi
Head of Private Banking Switzerland
Patrick Revey
Deputy Chief Executive Officer
BoaRd of diRectoRs
Dr Patrik Gisel
Chair of the Board of Directors
Michael Auer
Deputy-Chair of the Board of Directors, Member of the Audit Committee
Günter Haag *
President of the Audit Committee Heinz Karrer *
Maya Salzmann *
Member of the Audit Committee Thomas C. Weissmann *
* Independent members of the Board of Directors as defined by the provisions of the Swiss Financial Market Supervisory Authority (FINMA).
7
F O C U S O N P R I VAT E B A N K I N G
Notenstein La Roche can look back on a good year in
2015 – a year that saw the successful implementation
of the focus-and-grow strategy. With a view to sharp-
ening the focus on private banking, institutional client
business was integrated into sister company Vescore
Ltd. In addition, areas such as IT and parts of Services
were reassigned to the Raiffeisen Group. This enables
Notenstein La Roche to concentrate fully on its core
business, that of wealth management and investment
advisory services for the sophisticated client base with-
in private banking. The various steps were completed
on schedule and Notenstein La Roche thus achieved
the target set for 2015, that of securing a sharper pro-
file as private bank together with enhanced flexibility.
G R O W T H T H R O U G H M E R G E R W I T H B A N K L A R O C H E
The next important step in the development of our
bank was the merger with Bank La Roche, which was
successfully completed on 1 November 2015. Around
60 members of staff and just under CHF 6 billion in
client assets were taken over as a result of the merger .
In addition, our bank adopted the new name of
Notenstein La Roche. Thanks to the merger, which
is extremely promising thanks also to the common
values and shared traditions of the two predecessor
banks, we have been able to significantly expand our
position within the Swiss market.
P R O F I TA B I L I T Y E N H A N C E D B Y I N C R E A S I N G
E A R N I N G S A N D LO W E R C O S T S
The strategic focus and the merger with Bank La
Roche had a positive impact on client assets and prof-
it, with assets under management in private banking
business increasing to CHF 22.0 billion. Overall client
assets, which also include the assets held in custody for
Vescore Ltd, rose to CHF 26.5 billion.
Operating income was up 7.4 percent on the pre-
vious year, at CHF 172 million, despite the spin-off of
the asset management business. The contribution from
the merger with La Roche is still minimal here, and
will not work through fully to results until 2016. The
strength of Notenstein La Roche’s earnings power is
reflected in commission income, which was up 7.5 per-
cent year on year at CHF 121.5 million, as well as in
trading income (primarily foreign currency income
from client transactions), which increased by 22 per-
cent. In contrast, despite growth in lending business,
revenue from interest operations was significantly
lower year on year. This is attributable to the introduc-
tion of negative interest rates in January 2015 as well
as to the ongoing environment of low interest rates
and the related difficult situation for investments in
the bond market. Other ordinary income increased by
78 percent to CHF 16.4 million, due to a positive ef-
fect from the change in accounting method for finan-
cial investments as well as a high level of dividend in-
come from participating interests.
The positive impact from the reassignments is
clearly visible in operating expenses, which were down
almost 11 percent at CHF 137 million. Personnel ex-
penses were 18.5 percent lower due to the significant
reduction in staffing levels to 478 FTEs. General and
administrative expenses were slightly higher due to
the charging of costs for the contracted services.
As a direct consequence of the successful focus-
and-grow strategy, gross profit increased significantly
to CHF 35 million. Enhanced productivity is also re-
flected in the cost-income ratio, which – at 79.7 per-
cent – is substantially lower than in the previous year.
Review of business results
8
Notenstein La Roche’s profit for the year increased to
over CHF 80 million. This increase is attributable for
the most part to a gain on the realisation of the partial
sale of the participating interest in Leonteq Securities
Ltd. Thus, as at end-2015 and even after the acquisi-
tion of Bank La Roche, Notenstein La Roche had an
extremely solid core capital ratio (tier 1) of 19 percent.
S U C C E S S F U L I S S U I N G O F S T R U C T U R E D
I N V E S T M E N T P R O D U C T S
The issuance of the bank’s own structured investment
products, launched in 2013 and reinforced through the
foundation of Notenstein Finance (Guernsey) Limit-
ed, was expanded further in 2015. As at the end of the
year, there were over 2,600 structured products out-
standing, with a volume in excess of CHF 2 billion.
This development confirms that Notenstein La Roche
has established itself as an important contender in the
market and is attracting considerable interest thanks
to its innovative products.
LO O K I N G T O T H E F U T U R E W I T H C O N F I D E N C E
The 2015 business year was a year which confirmed
Notenstein La Roche’s focus-and-grow strategy: the
strategic initiatives launched over the past few years
are paying off. Our bank aims for organic growth,
but will also continue to consider select acquisitions
as and when suitable opportunities arise. Notenstein
La Roche is ideally equipped to remain successful
in the challenging private banking market and secure
further growth in earnings in the future.
9
Auditor’s report
10
11
Balance sheet
Amounts in CHF
Amounts in CHF
assets
Before appropriation of profit
31.12.2015 31.12.2014
Liquid assets 520,740,108 295,510,026
Amounts due from banks 3,412,625,371 2,349,253,316
Amounts due from securities financing transactions 389,663,000 215,400,000
Amounts due from customers 321,045,502 224,914,695
Mortgage loans 473,216,800 421,597,900
Trading portfolio assets 26,059,716 233,013,466
Positive replacement values of derivative financial instruments 154,251,030 130,603,418
Financial investments 1,250,911,615 1,018,049,428
Accrued income and prepaid expenses 34,793,982 41,300,134
Participating interests 76,116,108 217,826,031
Tangible fixed assets 60,327,193 46,980,509
Intangible assets 66,095,534 1,763,034
Other assets 17,797,090 21,622,993
Total assets 6,803,643,048 5,217,834,950
Total subordinated claims 5,354,384 –
of which subject to mandatory conversion and/or debt waiver 1,814,654 –
LiaBiLities
Before appropriation of profit
31.12.2015 31.12.2014
Amounts due to banks 129,706,085 157,332,625
Liabilities from securities financing transactions 82,012,000 104,823,000
Amounts due in respect of customer deposits 4,602,855,221 3,235,824,623
Negative replacement values of derivative financial instruments 158,576,116 134,390,208
Bond issues and central mortgage institution loans 1,275,710,226 1,113,687,846
Accrued expenses and deferred income 31,228,970 23,589,315
Other liabilities 26,453,638 6,901,786
Provisions 16,575,733 23,921,442
Reserves for general banking risks 196,000,000 196,000,000
Bank’s capital 22,200,000 22,200,000
share capital 20,000,000 20,000,000
participation capital 2,200,000 2,200,000
Continued on page 13
12
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
31.12.2015 31.12.2014
Statutory capital reserves 56,787,474 56,787,474
of which tax-exempt capital contribution reserve 18,260,000 18,260,000
of which premium reserve from participation capital increase 38,527,474 38,527,474
Statutory retained earnings reserves 4,000,000 4,000,000
Voluntary retained earnings reserves 115,450,692 115,450,692
Profit carried forward 5,165,939 4,695,664
Profit for the year 80,920,954 18,230,275
Total liabilities 6,803,643,048 5,217,834,950
Total subordinated liabilities 101,577,778 100,000,000
of which subject to mandatory conversion and/or debt waiver 101,577,778 100,000,000
off-BaLaNce-sheet tRaNsactioNs
Before appropriation of profit
31.12.2015 31.12.2014
Contingent liabilities 24,093,664 37,695,904
Irrevocable commitments 64,982,080 34,683,240
Amounts in CHF
Before appropriation of profit
13
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
iNcome aNd expeNses fRom oRdiNaRy BaNkiNg opeRatioNs
Before appropriation of profit
2015 2014
Result from interest operations
Interest and discount income 16,201,698 19,153,852
Interest and dividend income from trading positions 2,732,873 3,069,496
Interest and dividend income from financial investments 3,737,666 7,275,918
Interest expense –3,018,805 –3,103,154
Gross result from interest operations 19,653,432 26,396,112
Changes in value adjustments for default risks and losses from interest operations 15,011 –402,141
Subtotal net result from interest operations 19,668,443 25,993,972
Result from commission business and services
Commission income from securities trading and investment activities 125,302,333 119,033,533
Commission income from lending activities 72,576 59,107
Commission income from other services 6,852,875 4,152,141
Commission expense –10,767,928 –10,223,860
Subtotal result from commission business and services 121,459,856 113,020,922
Result from trading activities and fair value option 14,408,180 11,810,235
Other result from ordinary activities
Result from the disposal of financial investments 11,319,209 –3,264,641
Income from participating interests 6,522,570 11,155,259
Result from real estate 95,997 45,581
Other ordinary income – 1,312,319
Other ordinary expenses –1,504,541 –
Subtotal other result from ordinary activities 16,433,235 9,248,518
Operating expenses
Personnel expenses –88,445,689 –108,514,355
General and administrative expenses –48,663,993 –45,029,263
Subtotal operating expenses –137,109,682 –153,543,618
Value adjustments on participating interests, and depreciation and amortisation of tangible fixed assets and intangible assets –4,048,252 –2,524,334
Changes to provisions and other value adjustments, and losses –853,315 –818,203
Operating result 29,958,464 3,187,492
Continued on page 15
Income statement
Amounts in CHF
14
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
2015 2014
Extraordinary income 62,609,750 35,148,151
Extraordinary expenses –852,190 –
Changes in reserves for general banking risks – –20,000,000
Taxes –10,795,070 –105,368
Profit for the year 80,920,954 18,230,275
Amounts in CHF
appRopRiatioN of pRofit
2015 2014
Proposed appropriation of profit
Profit for the year 80,920,954 18,230,275
Profit carried forward 5,165,939 4,695,664
Distributable profit 86,086,893 22,925,939
Appropriation of profit
Dividend distribution from distributable profit –19,980,000 –17,760,000
New amount carried forward 66,106,893 5,165,939
Amounts in CHF
15
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
statemeNt of chaNges iN equity
Bank’s capital
Capital
reserves
Retained
earnings
reserves
Reserves
for general
banking risks
Voluntary
retained earn-
ings reserves
and profit
carried forward
Result of the
period
Total
Equity capital at 1 January 2015 22,200 56,787 4,000 196,000 120,146 18,230 417,364
Appropriation of profit 2015
Dividend – – – – – –17,760 –17,760
Net change in profit carried
forward – – – – 470 –470 –
Profit 2015 – – – – – 80,921 80,921
Equity capital at
31 December 2015 22,200 56,787 4,000 196,000 120,616 80,921 480,525
Statement of changes in equity
Amounts in CHF thousands
16
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
expLaNatoRy Notes oN BusiNess activities
G E N E R A L
Notenstein La Roche Private Bank Ltd (hereinafter
“Notenstein La Roche”), a subsidiary of Raiffeisen
Switzerland Cooperative, specialises in investment
advisory and wealth management services for high-
net-worth private clients. Notenstein La Roche offers
its services at thirteen locations across Switzerland,
with around 540 members of staff. Notenstein La
Roche focuses on private banking services for private
investors in Switzerland and clients in other selected
international target markets.
Vescore Ltd (formerly Notenstein Asset Manage-
ment Ltd) commenced operations on 1 July 2015.
The spin-off of the former Notenstein Asset Manage-
ment Ltd into the newly founded Vescore Ltd was
implemented retroactively from 1 January 2015. This
new company combines Notenstein La Roche’s Insti-
tutional Clients and Asset Management divisions with
the boutiques of TCMG Asset Management AG, fo-
cusing the Raiffeisen Group’s expertise in sustainable
and quantitative investment strategies. The formation
of companies specialising in private banking and asset
management enhances strategic flexibility in both
these segments within the Raiffeisen Group.
Since March 2013, Notenstein La Roche has been
issuing a broad range of structured investment prod-
ucts in cooperation with Raiffeisen Switzerland Co-
operative as guarantor and Leonteq Securities Ltd.
as service provider. Since September 2014, the bank
has also been issuing withholding-tax-exempt struc-
tured investment products through the subsidiary
Notenstein Finance (Guernsey) Limited.
On 1 September 2015, Notenstein La Roche re-
assigned its IT division and large parts of its Services
division, including Facility Management, to companies
within the Raiffeisen Group. This enables Notenstein
La Roche to concentrate fully on its core business,
that of wealth management and investment advisory
services for the sophisticated private client segment.
E M P LO Y E E S
At the end of 2015, Notenstein La Roche employed
539 members of staff (previous year: 694). Adjusted
for part-time employees, this corresponds to 478 full-
time employees (previous year: 629).
E M P LO Y E E PA R T I C I PAT I O N P R O G R A M M E
In order to safeguard all eligible interests involved,
the employee participation programme was dissolved
in 2015, within the framework of the repositioning
of a strategic participating interest with Raiffeisen
Switzer land Cooperative.
B U S I N E S S D I V I S I O N S
The bank’s main activities fall into the following
categories:
– wealth management and investment advisory
services for private clients
– comprehensive financial planning for private
clients
– lending activities associated with private banking
– securities and currency trading
– support services for external asset managers
– issuing of structured products
– custodian bank services for private and institu-
tional clients
Two-thirds of the bank’s clients are domiciled in
Switzer land. Services to foreign clients are concentrat-
ed in selected target markets.
Notes to the financial statements – part one
18
C O M M I S S I O N A N D S E R V I C E S B U S I N E S S
Our core activities in the commission and services
business fall under wealth management and advisory
services. Other components of our services business
include revenues from the issuing of structured prod-
ucts, support services for external asset managers and
custodian bank activities for institutional clients.
T R A D I N G
Notenstein La Roche offers its clients execution and
settlement of all standard bank trading transactions.
Moreover, Notenstein La Roche trades on its own ac-
count with the usual financial instruments. Pro-
prietary debt trading mainly involves bonds from first-
class issuers, while equity trading principally involves
Swiss and European shares. The bank trades in foreign
currencies on its own account mainly to ensure the
smooth functioning of its business activities. Such trad-
ing is limited to currencies for which there is a liquid
market. Proprietary trading was scaled back substan-
tially in the course of 2015 and is now limited to the
provision of support for client business.
L E N D I N G A C T I V I T I E S
Notenstein La Roche adheres to a restrictive credit
policy, providing lombard loans against liquid securi-
ties in diversified portfolios. Loan-to-value ratios are
conservative so as to minimise default risk. In addi-
tion, Notenstein La Roche grants mortgage loans to
clients in the wealth management and investment ad-
visory segment and to staff members. The loans dis-
closed as mortgage loans are secured exclusively by
Swiss real estate.
R I S K P O L I C Y
In the same way as other financial institutions, our
bank is exposed to various banking-specific risks: cred-
it, market and liquidity risks, as well as operational
and legal risks. A considered and careful approach to
such risks is key to the long-term success of a bank.
Notenstein La Roche attaches considerable value to
comprehensive risk management, for both the bank
itself and for the client assets entrusted to it. The risk
policy aims to limit the potential negative impact on
earnings, protect the bank against substantial extra-
ordinary losses and safeguard and strengthen the bank’s
good name. The Risk Controlling unit ensures com-
pliance with and the implementation of risk policy,
while Legal & Compliance ensures compliance with
regulatory requirements.
R I S K M A N A G E M E N T A N D C O N T R O L
The Board of Directors is the supreme body with-
in the risk management structure. It defines the risk
policy, setting out the information pertaining to risk
philosophy, risk measurement and risk management,
which it subjects to an annual review. Likewise on
an annual basis, it defines the level of willingness to
take risks, risk tolerance and overall limits in keeping
with risk capacity, and monitors compliance with such
as well as the implementation of risk policy. It deter-
mines the overall limits per risk category and business
activity and sets standards for risk management and
risk control processes.
To enable it to carry out its monitoring function,
the Board of Directors receives a comprehensive risk
report. This report provides information on the risk
situation, capitalisation, adherence to overall limits
and any measures necessary.
19
The Executive Board is responsible for implement-
ing the risk policy set by the Board of Directors and
ensures the establishment of an appropriate risk man-
agement structure as well as the implementation of
adequate risk monitoring systems. It gives concrete
form to the Board of Directors’ requirements for each
risk category and business activity.
Risk Controlling provides independent oversight
of the bank’s risk exposure. This department struc-
tures and implements appropriate risk monitoring sys-
tems, and supplies the information needed to monitor
risk policy, appetite and limits. Monitoring focuses pri-
marily on operational risks, market and credit risks,
as well as liquidity risks.
Notenstein La Roche Risk Controlling is incorpo-
rated in consolidated group risk management within
the Raiffeisen Group.
R I S K M A N A G E M E N T P R O C E S S
The risk management process applies to all risk cate-
gories; namely credit, market, operational and liqui-
dity risks. It comprises the following elements:
– risk identification
– risk measurement and assessment
– risk management
– risk limitation by means of appropriate limits
– risk monitoring
The aim of the bank’s risk management is:
– to guarantee effective controls at all levels and
ensure that any risks entered are in line with the
corresponding level of willingness to take on
risks;
– to establish the prerequisites for risks being en-
tered into consciously and in a targeted, con-
trolled manner and managed systematically;
– to ensure optimum use of risk appetite and
ensure that risks are only entered if suitable
returns are available.
C R E D I T R I S K
Credit risk refers to the risk that losses may be in-
curred when clients or other counterparties cannot ful-
fil their contractually agreed payment obligations to
the extent agreed. Loans, irrevocable credit commit-
ments and contingent liabilities entail credit risks, as
do instruments used for balance sheet management.
Notenstein La Roche identifies, assesses, manages
and monitors the following risk categories in lending
business:
– counterparty risks
– country risks
– collateral risks
– concentration risks
M A N A G E M E N T O F T H E B A N K ’ S B A L A N C E S H E E T
Notenstein La Roche accepts credit risks in particular
as consequential risks of business activities with coun-
terparties and in order to manage the balance sheet
within the framework of limits laid down by the Board
of Directors. The bank manages its own counterparty
and country risks within the centralised limit manage-
ment structure of the Raiffeisen Group.
Before entering into a business relationship with
a counterparty in interbank business, the bank carries
out a comprehensive assessment of the counterparty
risk. The Raiffeisen Group must also have issued prior
approval for the counterparty.
Notenstein La Roche restricts credit risk by setting
limits and through the approval required for counter-
parties and indirect counterparties (brokers, clearing
Notes to the financial statements – part one20
houses and custodians). Credit risk is measured and
evaluated according to appropriate and established
procedures. The risk measurement process and the
applicable parameters are binding. Credit risks are
measured according to value at risk. For the bank as
a whole and for individual business units, the Board
of Directors sets global or individual limits for coun-
terparty risk exposure.
The Executive Board is responsible for the more
detailed formulation of individual limits and invest-
ment guidelines.
Risk Controlling monitors credit risks on a daily
basis. In addition, the development of counterparty
ratings and CDS levels is monitored regularly. If ex-
treme market events occur, the situation is assessed
daily in order to allow the bank to react promptly to
any increases in risk levels.
LO A N S T O C L I E N T S
The bank grants loans to clients where top quality,
easily realisable collateral is available and against do-
mestic real estate. Unsecured loans or loans secured
by collateral that is not readily realisable are approved
in exceptional cases, if justified. The bank primarily
extends lombard loans (secured by account balances
and securities eligible for use as collateral in lombard
loans and deposited with the bank) and mortgage
loans (mortgage assignments or mortgage notes serv-
ing as collateral).
Notenstein La Roche grants lombard loans against
liquid securities in diversified portfolios as collateral.
Loan-to-value ratios are conservative so as to minimise
default risk. In addition, Notenstein La Roche grants
mortgage loans to clients in the wealth management
and investment advisory segment and to staff mem-
bers. The loans disclosed as mortgage loans are se-
cured exclusively by Swiss real estate.
Risk management involves careful selection, de-
tailed financial assessment and a close relationship
with our clients as well as prudence in structuring
business transactions and the close monitoring of
loans. In this regard, the bank does not enter into any
credit risk without first having subjected the transac-
tion to a thorough loan review. Mandatory elements of
this review are:
– creditworthiness; this involves an assessment of
the integrity, business sense, business conduct
and pasts of the parties involved in a transaction.
– solvency; this involves the financial situation, busi-
ness potential and overall economic environment.
– transaction structure; the structure and business
purpose of a transaction must be transparent
and in line with legal requirements; similarly, the
collateral must be able to retain its value and
be realised.
– repayment; the sources of repayments and the
possibilities for withdrawing from a credit com-
mitment must be ascertained when a transaction
is concluded.
The Credit unit is responsible for monitoring the cred-
it risks arising from loans to clients on a daily basis.
I N T E R E S T R AT E R I S K
The risk of a change in interest rates is of central im-
portance to Notenstein La Roche. Such risk arises pri-
marily through maturity mismatches on the asset and
liability sides of the balance sheet. Active manage-
ment is carried out by the bank’s Asset and Liability
Committee (ALCO), which is made up of an Execu-
tive Board committee and the head of Treasury.
21
Measurement is based on standard ALM systems
used within the industry. Value at risk, sensitivity and
gap data are used to determine the potential impact
of interest rate risk on the bank’s earnings and equity
capital situation. Positions with variable interest rates
are mapped using a replication model. The result-
ing data is reviewed at least once a year and adapted
where necessary.
Analysis of the economic environment and the for-
mulation of interest rate forecasts derived on the basis
of this analysis make regular analysis of the effects on
income and value possible. Depending on the assess-
ment of how interest rates will develop, ALCO puts in
place appropriate hedging measures within predefined
risk limits and defined hedging strategies. Derivative
financial instruments may be used to this end.
Risk Controlling monitors interest rate risks on a
daily basis.
C U R R E N C Y R I S K
Through its currency risk measures, the bank aims to
minimise the potentially negative impact of changes
in foreign currencies on its earnings situation. Essen-
tially, it seeks to offset liabilities in a foreign curren-
cy with assets in the same currency. Currency risks are
contained in the value at risk calculation and restrict-
ed with nominal exposure.
Proprietary trading in foreign currencies is primar-
ily to ensure the smooth functioning of business activ-
ities with clients and is limited to currencies for which
there is a liquid market.
R I S K S I N T R A D I N G B U S I N E S S
The bank does not undertake any active trading busi-
ness with a view to benefiting from short-term market
fluctuations. For accounting purposes, items are dis-
closed as trading positions for the settlement of indi-
vidual transactions or the hedging of balance sheet
items.
Trading in derivative financial instruments is car-
ried out primarily for clients; the bank limits its pro-
prietary activities to hedging transactions in connec-
tion with nostro positions and to transactions relating
to the management of the balance sheet structure. The
bank has no market maker activities. Trading is carried
out via standardised and OTC instruments.
Monitoring of the market risks that arise in trad-
ing business is carried out by Risk Controlling on a
daily basis.
L I Q U I D I T Y R I S K
Liquidity risks are administered using operational cri-
teria, managed by Treasury in accordance with the re-
quirements under banking law and monitored by Risk
Controlling. As part of the management of liquidity
risks, inflows and outflows of liquidity in particular are
simulated against the backdrop of various scenarios
and using different timeframes. These scenarios en-
compass, inter alia, the repercussions of refinancing
risks as well as general liquidity risks.
A solid liquidity position is targeted through li-
quidity management, so as to allow the bank to fulfil
its payment obligations on schedule at all times.
The basis for monitoring is formed by the statu-
tory limits as well as the limits defined by the bank’s
Board of Directors, which are based on the scenario
analyses.
Risk Controlling monitors liquidity risks on a daily
basis.
Notes to the financial statements – part one22
O P E R AT I O N A L R I S K
Operational risks refer to the the danger of losses
occurring due to the inadequacy or failure of internal
processes, employees, IT systems, buildings and instal-
lations, or due to external events or the effects of ac-
tions by third parties. This definition includes IT risks
and security risks. These comprise, in particular, IT
and security systems as well as their infrastructures.
Operational risks are accepted as consequential
risks of business activity and are avoided, mitigated,
transferred or borne by the bank on the basis of cost/
benefit considerations. The potential impact on com-
pliance and the bank’s reputation is also taken into
account here.
When the Board of Directors defines the business
strategy and business activities, it also determines the
appetite for operational risks. Risk tolerance is de-
fined in quantitative terms (value at risk limits) as part
of the risk budgeting process; the qualitative definition
of risk tolerance is based on the internal documents
that govern business activities (regulations, policies
and guidelines).
Action to avoid or mitigate operational risks must
primarily be taken wherever such risks arise, with the
objective of reducing risks to a manageable level. The
most critical processes are identified and their contin-
uation ensured with emergency and contingency plans.
Operational risks are identified and assessed annu-
ally by means of a top-down assessment by the Exec-
utive Board and a bottom-up assessment by line man-
agement process supervisors.
Risks are assessed before and after taking account
of risk-mitigation measures already in place as speci-
fied by the Executive Board and the group risk man-
agement structure. Risks are assigned to the various
risk assessment categories according to specific crite-
ria (threshold values) and submitted to the Board of
Directors each year for review and approval.
Operational risks are monitored both at individu-
al risk level and at corporate level. Line management
is responsible for monitoring at individual risk level,
while Risk Controlling handles risk monitoring at the
corporate level and is responsible for the bank-wide
register of operational risks as well as the analysis and
evaluation of operational risk data.
The results of risk assessments, material internal
operational risk events, relevant external events and
the development of the risk situation are reported
to the Executive Board and the Board of Directors
on a quarterly basis, together with information on
the implementation status of measures aimed at re-
ducing risk.
In addition to the standard risk management pro-
cess, Risk Controlling also conducts ad hoc risk ana-
lyses as required, analyses any loss events that have
arisen and maintains close links with other organi-
sational units that, as a result of their function, come
into contact with information on operational risks
within the Raiffeisen Group.
All measures to control operational risks are ele-
ments of the Internal Control System (ICS). The ICS
comprises all controlling structures and processes,
procedures, methods and measures at all levels of the
bank that provide the basis for the attainment of the
business policy objectives and for the proper opera-
tion of the bank’s business.
A review of the entire ICS is carried out each
year. The ICS is assessed at both corporate and pro-
cess level to determine the adequacy and effectiveness
of the risk management measures implemented. The
23
results of the ICS review are submitted to the Execu-
tive Board and Board of Directors quarterly.
M E T H O D S U S E D T O I D E N T I F Y D E FA U LT R I S K S
A N D D E F I N E T H E N E E D F O R VA LU E A D J U S T M E N T S
Loans secured by mortgage
The property value of owner-occupied residential
property is determined on the basis of real value or
a hedonic estimation. Where a hedonic estimation is
carried out, the bank proceeds on the basis of real es-
tate price information specific to the region in ques-
tion. This information is supplied by an external pro-
vider and validated by the bank.
The bank updates the property values periodical-
ly using these valuations. In addition, arrears on pay-
ments of interest or principal are monitored on an
ongoing basis. The bank uses this to identify any mort-
gage loans that are associated with higher risk. Such
loans are then subject to a more detailed review by
credit specialists. Where necessary, further security is
requested or a corresponding value adjustment creat-
ed based on the collateral shortfall.
For multi-family units, commercial real estate and
special properties, the property value is determined
using the income method, which is based on the in-
come produced over the long term. The rental income
generated by investment properties is reviewed pe-
riodically and if there are any indications of material
changes to the level of rental income or vacancy rates.
Loans with securities as collateral
Exposure to loans with securities as collateral and the
value of the collateral attached to such loans are mon-
itored daily. Should the lending value of the securi-
ties provided as collateral fall below the amount of the
credit exposure, a possible reduction of the lending
amount is reviewed or additional collateral requested.
If the collateral shortfall increases or exceptional mar-
ket events occur, the collateral is realised and the loan
closed out.
Unsecured loans
Unsecured loans and loans secured by collateral that
is not readily realisable where it is not possible to
value the collateral are granted purely on an excep-
tional basis and must be approved by the Executive
Board.
Unsecured loans are reviewed, recorded and sub-
mitted to the Executive Board for approval annually,
or at shorter intervals where necessary.
If a higher level of risk is involved, the bank con-
ducts a more detailed assessment and defines appro-
priate measures together with the client. If it must be
assumed, at this stage, that the credit exposure is im-
paired, a corresponding value adjustment is carried out.
Procedure for determining value adjustments and
provisions
New requirements for value adjustments and/or pro-
visions are identified on the basis of the procedure
defined. In addition, known risk positions where im-
pairment has been identified previously are reassessed
quarterly and the correction in value adjusted as re-
quired.
VA LU AT I O N O F C O L L AT E R A L
Loans secured by mortgage
In the mortgage lending segment, a current valua-
tion of the collateral is carried out each time a mort-
gage loan is granted. The valuation method applied
Notes to the financial statements – part one24
depends on the type of property involved and how it
is used. Residential property is valued using a hedon-
ic valuation model, which analyses the price of the
property based on the internal characteristics of that
property in comparison with similar real estate trans-
actions. The bank applies the income method in val-
uations of multi-family units, commercial real estate
and special properties. If it is not possible to estimate
the value of a property, valuation reports are obtained
from external experts such as architects, building en-
gineers and property surveyors. A liquidation value
is also determined if there is a marked deterioration
in the credit rating and the exposure threatens to be-
come non-performing.
Loans with securities as collateral or other readily
realisable collateral
For lombard loans and other types of loans with se-
curities as collateral, it is primarily transferable finan-
cial instruments, such as bonds and equities, which are
liquid and actively traded that are accepted. Whether
and the extent to which a portfolio can serve as col-
lateral is geared to the investment method applied by
Notenstein La Roche. Discount factors (haircuts) ap-
plied in respect of lending values are generally applied
on the basis of the assignment of the instruments to
the defined risk/return classes. Other factors, such as
the ratings and terms of debt securities, are also con-
sidered. Lending against investment funds and struc-
tured products is governed by special rules.
The bank applies discounts to market values in
order to hedge the market risk associated with mar-
ketable and liquid securities and determine lend-
ing values. Highly diversified portfolios are awarded
add-ons in respect of lending values.
With life insurance policies and guarantees, discounts
are defined at product level.
B U S I N E S S P O L I C Y G O V E R N I N G T H E U S E
O F 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 A N D
H E D G E A C C O U N T I N G
Business policy governing the use of derivative
financial instruments
Derivative financial instruments are used for trading
and hedging purposes.
The bank has no market-maker activities. The
bank carries out trading for its own account and for
the account of its clients using both standardised and
OTC instruments, primarily instruments for interest
rates, currencies, equity securities/indices and, to a
lesser extent, commodities.
Derivative financial instruments are used by the
bank within the framework of risk management main-
ly in order to hedge interest rate and currency risks, as
well as the market risks arising in connection with the
issuing of structured products.
Hedging transactions are carried out solely with
external counterparties.
Use of hedge accounting
The bank does not use hedge accounting within the
framework of its financial statements.
25
compaNy, LegaL foRm aNd headquaRteRs of
the BaNk
Notenstein La Roche Private Bank Ltd is a limit-
ed company (“Aktiengesellschaft”) under Swiss law.
It offers services from its headquarters in St. Gallen
as well as from its branches in Basel, Berne, Chur,
Geneva, Lausanne, Locarno, Lucerne, Lugano, Olten,
Schaffhausen, Winterthur and Zurich. It has no offices
outside Switzerland.
accouNtiNg aNd vaLuatioN pRiNcipLes
G E N E R A L P R I N C I P L E S
The bookkeeping, accounting and valuation princi-
ples are based on the provisions stipulated by the
Swiss Code of Obligations, Swiss banking legislation
and other statutory provisions, as well as on the ac-
counting rules issued by the Swiss Financial Market
Supervisory Authority FINMA. These reliable assess-
ment statutory single-entity financial statements pres-
ent the bank’s economic situation in such a manner
as to allow third parties to form a reliable opinion.
Raiffeisen Switzerland, parent company of Noten-
stein La Roche, publishes the consolidated annual
financial statements of the Raiffeisen Group in a sep-
arate annual report. Unlike statements prepared in
accordance with the true and fair view principle, these
single-entity statements may be influenced by hidden
reserves.
G E N E R A L VA LU AT I O N P R I N C I P L E S
The annual financial statements are drawn up on the
assumption that the bank will continue as a going con-
cern. Items are recognised on a going-concern basis.
Items are recognised on the balance sheet as assets
if, due to past events, they may be disposed of, a cash
inflow is probable and their value can be reliably es-
timated. If no reliable estimate is possible, the item is
considered to be a contingent asset requiring explana-
tion in the notes. Items are recognised on the balance
sheet as liabilities if they have been caused by past
events, a cash outflow is probable and their value can
be reliably estimated. If no reliable estimate is possi-
ble, the item is considered to be a contingent liability
requiring explanation in the notes.
The positions stated within a balance sheet item
are valued individually.
There is no offsetting of assets and liabilities or of
income and expense items. Receivables and payables
are offset only in the following instances:
– Receivables and liabilities are offset where they
arise from transactions of the same type with the
same counterparty, in the same currency, with the
same maturity or earlier maturity of the receiva-
ble and cannot give rise to counterparty risks.
– Deduction of value adjustments from the corre-
sponding asset item.
– Offsetting of positive and negative changes in
book value with no income effect in the current
period in the compensation account.
The positive and negative replacement values of de-
rivative financial instruments with the same counter-
party may be offset where recognised and legally en-
forceable netting agreements are in place.
C O N S O L I D AT I O N
Notenstein La Roche is fully consolidated within
the Raiffeisen Group with the subsidiary companies,
Notenstein Finance (Guernsey) Limited, Notenstein
Financial Services GmbH and TCMG Asset Manage-
ment AG.
Notes to the financial statements – part two
26
R E C O G N I T I O N O F B U S I N E S S T R A N S A C T I O N S
All business transactions concluded as of the balance
sheet date are recorded on a day-end basis and valued on
the balance sheet and in the income statement in accord-
ance with the defined valuation principles. Spot transac-
tions entered into but not yet settled are recognised in
accordance with the trade date accounting principle.
F O R E I G N C U R R E N C I E S
Receivables and payables as well as cash and cash
equivalents in foreign currencies are translated at the
exchange rate prevailing on the balance sheet date.
Price gains and losses resulting from such valuations
are recognised in “Result from trading activities”.
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:
L I Q U I D A S S E 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/discounts
on own bond issues, are accrued over the term.
A M O U N T S D U E F R O M A N D L I A B I L I T I E S F R O M
S E C U R I T I E S F I N A N C I N G T R A N S A C T I O N S
Securities lending and borrowing transactions are rec-
ognised at the value of the cash collateral received or
given, including accrued interest. Borrowed securities
or securities obtained as collateral are recognised on
the balance sheet only if Notenstein La Roche gains
control over the contractual rights encompassed with-
in these securities. Securities lent or provided as col-
lateral are derecognised from the balance sheet only if
Notenstein La Roche loses the contractual rights asso-
ciated with these securities. The market values of the
securities borrowed and lent are monitored on a daily
basis so that additional collateral may be provided or
requested as necessary. Fees received or paid in re-
spect of securities borrowing and lending transactions
are recognised as commission income or commission
expense on an accrual basis. Notenstein La Roche
does not engage in securities lending with instruments
held in clients’ safekeeping accounts.
Purchases of securities subject to an obligation
to resell (reverse repurchase transactions) and sales
of securities subject to an obligation to repurchase
(repurchase transactions) are treated as collateralised
financing transactions and are recognised at the value
of the cash collateral received or given, including ac-
cumulated interest. Securities received and delivered
are not recognised on/derecognised from the balance
sheet unless control of the contractual rights encom-
passed within such securities is relinquished. The mar-
ket values of the securities received or delivered are
monitored on a daily basis so that additional collateral
may be provided or requested as necessary. Interest
income from reverse repurchase transactions and in-
terest expense arising from repurchase transactions is
accrued in the corresponding periods over the terms
of the underlying transactions.
Currencies 31.12.15 31.12.14
EUR 1.0875 1.2024
GBP 1.4765 1.5482
USD 1.0012 0.9934
27
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 at nominal value, less any
value adjustments necessary. Interest income is ac-
crued in the corresponding period. Receivables are
deemed to be impaired where the bank considers it
unlikely that the debtor will be able to meet the con-
tractual obligations involved in full. Impaired receiv-
ables and collateral (if any) are valued at liquidation
value. Individual value adjustments are created for
impaired receivables. Such adjustments are based on
regular analyses of the individual credit exposures,
taking account of the debtor’s creditworthiness and/
or the counterparty risk, as well as the estimated net
realisable disposal value of the collateral. Where the
recovery of the receivable is dependent exclusively
on the realisation of the collateral, a value adjustment
must be created to cover the unsecured portion in full.
Interest and corresponding commissions that are
more than 90 days overdue are deemed to be past
due. In the case of current account overdrafts, interest
and commissions are considered past due where the
assigned overdraft limit has been exceeded for more
than 90 days. Receivables are derecognised at the lat-
est when a legal title confirms the conclusion of the
realisation process.
Impaired receivables are reinstated as fully per-
forming (i.e. the value adjustment is released) when
the outstanding principal amounts and interest are
again paid promptly as per contractual agreements,
and other creditworthiness criteria are met.
Individual value adjustments, collective individu-
al value adjustments and value adjustments for latent
default risks are deducted from the corresponding
asset items in the balance sheet.
A M O U N T S D U E T O B A N K S A N D A M O U N T S D U E I N
R E S P E C T O F C U S T O M E R D E P O S I T S
These items are recognised at nominal value. Amounts
due in respect of precious metals in metal accounts are
valued at fair value if the metals concerned are traded
on a price-efficient and liquid market.
T R A D I N G P O R T F O L I O A S S E T S A N D T R A D I N G
P O R T F O L I O L I A B I L I T I E S
Trading portfolio assets and trading portfolio liabili-
ties are valued and recognised at fair value. Positions
for which there is no representative market are valued
at the lower of cost or market. If, in exceptional cases,
no fair value is available, the principle of lower of cost
or market is applied to valuation.
Gains and losses resulting from this valuation, and
gains and losses realised during the period, are dis-
closed in “Result from trading activities and the fair
value option”. Interest on and dividends from trading
positions are booked to “Interest and dividend income
from trading portfolios”, in the item “Result from in-
terest operations”.
There is no offsetting of the refinancing result and
trading positions.
P O S I T I V E A N D N E G AT I V E R E P L A C E M E N T VA LU E S
O F 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
All derivative financial instruments are valued at fair
value. Such instruments are recognised as positive
or negative replacement values in the corresponding
items. 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 result
Notes to the financial statements – part two28
realised is recognised in “Result from trading activ-
ities and the fair value option”. The bank also uses
derivative financial instruments in connection with
asset and liability management in order to control in-
terest rate risks.
Hedging transactions for the Treasury division are
carried out via client trading. The Treasury division is
not itself active in the markets. Assets and liabilities as
well as income and expenses arising as a result of in-
ternal transactions are eliminated.
The bank may offset positive and negative replace-
ment values with the same counterparty within the
framework of recognised and legally enforceable net-
ting agreements.
O T H E R F I N A N C I A L I N S T R U M E N T S AT FA I R VA LU E
A N D L I A B I L I T I E S F R O M F I N A N C I A L I N S T R U M E N T S
AT FA I R VA LU E ( FA I R VA LU E O P T I O N )
Financial instruments that are not part of trading ac-
tivities are disclosed under these items and valued at
fair value if all of the following conditions are met:
– The financial instruments are valued at fair value
and are in line with the documented risk man-
agement and investment strategy, ensuring cor-
rect reporting, measurement and limitation of
the various risks.
– There is an economic hedging relationship between
the financial instruments on the asset side and
those on the liability side that is largely neutralised
in terms of income by the fair value valuation.
– Any impact of a change in own creditworthiness
on the fair value following first-time recogni-
tion is neutralised in the income statement and
booked via the compensation account.
S T R U C T U R E D P R O D U C T S I S S U E D B Y
N O T E N S T E I N L A R O C H E
Where structured products issued by Notenstein La
Roche comprise a debt instrument, the derivative com-
ponent is separated from the basic contract, and val-
ued and recognised separately. Debt instruments (basic
contracts) are recognised under “Bond issues and
central mortgage institution loans” at nominal value.
Discounts and premiums are recognised in “Accrued
expenses and deferred income” and “Accrued income
and prepaid expenses” and realised against the inter-
est result over the remaining maturity. Such structured
products without a debenture com ponent and deriva-
tive components of structured products with their own
debenture component are recognised in “Positive re-
placement values of derivative financial instruments”
and “Negative replacement values of derivative finan-
cial instruments” at fair value.
Income from the structuring of self-issued struc-
tured products is recognised in “Commission income
from securities trading and investment activities”.
Redemption of the structured products is guaranteed
by Raiffeisen Switzerland.
S T RU C T U R E D P R O D U C T S O F T H I R D - PA R T Y I S S U E R S
Income from the issuance of structured products on a
commission basis is recognised in “Commission income
from securities trading and investment activities”.
F I N A N C I A L I N V E S T M E N T S
Debt securities intended to be held to maturity are
valued at acquisition cost and the premium/discount
accrued over the remaining term (accrual method).
Discounts and premiums are accrued in “Accrued ex-
penses and deferred income” and “Accrued income
29
and prepaid expenses” over the remaining term to
maturity . Default-risk-related changes in book value
are recognised immediately by means of a charge to
“Changes in value adjustments for default risks and
losses from interest operations”. If financial invest-
ments intended to be held until maturity are sold or
repaid prior to maturity, the gains and losses realised
that correspond to the interest component are accrued
over the remaining term to maturity via “Other as-
sets” and “Other liabilities”.
Debt securities not intended to be held until ma-
turity are valued at lower of cost or market. Changes
in book value resulting from a subsequent valuation
are recognised net via “Other ordinary expenses”
or “Other ordinary income”, as appropriate. De-
fault-risk-related changes in book value are recog-
nised via “Changes in value adjustments for default
risks and losses from interest operations”.
Real estate and participating interests acquired
through lending activities and designated for resale
are recognised in financial investments and valued
at lower of cost or market. The lower of cost or mar-
ket value is deemed to be the lower of the acquisition
value or the liquidation value.
PA R T I C I PAT I N G I N T E R E S T S
Participating interests are equity securities owned by
the bank in companies, where those securities are held
with the intention of a permanent investment irrespec-
tive of the percentage of voting shares held.
Participating interests are valued individually
at acquisition cost, less any economically necessary
value adjustments. Testing is carried out on each bal-
ance sheet date to ascertain whether the value of indi-
vidual participating interests is impaired. This impair-
ment test is based on indications that could suggest
that individual assets have been affected by such im-
pairment. Recoverable amounts are determined in
the event of any such indications and are determined
for each individual asset. The recoverable amount is
the higher of the net market value and the value-in-
use. An asset is impaired if its book value exceeds its
recoverable amount. Where an impairment is present,
the book value is reduced to the recoverable value
and the impairment charged to “Value adjustments
on participating interests, and deprecia tion and am-
ortisation of tangible fixed assets and intangible as-
sets”.
Gains realised on the disposal of participating
interests are recognised via “Extraordinary income”;
realised losses via “Extraordinary expenses”.
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
asset, and depreciated using the straight-line method
over their estimated useful life as follows:
Minor investments are booked directly to operating
expenses. Comprehensive renovations which increase
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 only
Bank properties, other real estate maximum 66 years
Conversions of and installations in rented premises maximum 15 years
Furnishings and fittings maximum 8 years
Other tangible fixed assets maximum 5 years
IT systems and other software maximum 3 years
Notes to the financial statements – part two30
depreciated from the date when they are brought
into use. Tangible fixed assets are reviewed for impair-
ment losses whenever events or changes in circum-
stances suggest that the book value may not be recov-
erable. Any impairments are charged to the income
statement, via “Value adjustments on participating in-
terests, and depreciation and amortisation of tangible
fixed assets and intangible assets”. If impairment test-
ing of a tangible fixed asset reveals a change in useful
life, the residual book value is depreciated as sched-
uled over the revised useful life of the asset.
Gains realised on the disposal of tangible fixed
assets are recognised via “Extraordinary income”;
realised losses via “Extraordinary expenses”.
I N TA N G I B L E A S S E T S
Acquired intangible assets are recognised in the bal-
ance sheet where they provide a measurable benefit
to the bank over several years. Intangible assets de-
veloped in-house are not recognised. Intangible assets
are valued and recognised at acquisition cost. Intan-
gible assets are amortised over a prudently estimated
useful life, on a straight-line basis, via “Value adjust-
ments on participating interests, and depreciation and
amortisation of tangible fixed assets and intangible
assets”. The estimated useful life for each individual
category of intangible asset amounts to:
Testing is carried out on each balance sheet date to
ascertain whether the value of intangible assets is
impaired. This impairment test is based on indications
that could suggest that individual assets have been
affected by such impairment. Recoverable amounts
are determined in the event of any such indications
and are determined for each in dividual asset. An asset
is impaired if its book value exceeds its recoverable
amount.
Where an impairment is present, the book value
is reduced to the recoverable value and the impair-
ment charged to “Value adjustments on participating
interests, and depreciation and amortisation of tangi-
ble fixed assets and intangible assets”. If impairment
testing of an intangible asset reveals a change in useful
life, the residual book value is depreciated as scheduled
over the revised useful life of the asset. Gains realised
on the disposal of intangible assets are recognised via
“Extraordinary income”; realised losses via “Extraor-
dinary expenses”.
P R O V I S I O N S
Legal and factual obligations are valued on a regu-
lar basis. Where a cash outflow is probable and can be
reliably estimated, a provision in the corresponding
amount is created.
Existing provisions are reassessed on each balance
sheet date, and subsequently either increased, left un-
changed or released. Provisions are recognised via the
individual items in the income statement as follows:
– Provisions for deferred taxes: “Taxes”
– Provisions for pension benefit obligations:
“Personnel expenses”
– Other provisions: “Changes to provisions and
other value adjustments, and losses”, with the
exception of any restructuring provisions
Provisions are released to income if they are no longer
economically necessary and cannot be simultaneously
used for other requirements of the same type.
Goodwill maximum 10 years
Other intangible assets maximum 3 years
31
TA X E S
Taxes are calculated and booked on the basis of the
result for the reporting year.
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 , O B L I G AT I O N S T O PAY U P S H A R E S
A N D M A K E F U R T H E R C O N T R I B U T I O N S
These items are recognised as off-balance-sheet trans-
actions at nominal value. Provisions are formed for
foreseeable risks.
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 for general banking risks are reserves that
are established as a precaution to cover the bank’s
business risks. They are created and released via the
income statement item “Changes in reserves for gen-
eral banking risks”. The reserves for general banking
risks are not taxed in the main tax domicile.
O W N D E B T A N D E Q U I T I E S S E C U R I T I E S
The bank’s holdings of its own bonds and cash bonds
are offset with the corresponding liability items. Own
shares that have been acquired are recognised at ac-
quisition cost at the time of acquisition and deducted
from equity capital in “Own shares”. No subsequent
valuation is carried out. The result from the disposal of
own shares is booked via “Statutory retained earnings
reserves”. A reduction in the amount of the acquisi-
tion value corresponding to the disposal is made in the
item “Own shares”.
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 La Roche employ-
ees is accommodated within a specific foundation
for this purpose – “Katharinen Pensionskasse I”. The
bank pays the costs of occupational pension provi-
sion for all employees and their survivors in accord-
ance with statutory provisions. The system in place is
a defined contribution system. The organisation, man-
agement and financing of the pension plans is based
on the statutory provisions, the foundation deed and
the pension rules that are in force. The employer’s
contributions are booked to personnel expenses. The
“Katharinen Pensionskasse II”, a supplementary, par-
tially 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 in-
sured on an extra-mandatory basis, with no need to
take account 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 pay-
ment or an annuity on retirement. Determination of
the actual economic effects of pension benefit obliga-
tions is based on the annual financial statements of the
employee benefit institutions, which are drawn up in
compliance with Swiss GAAP FER 26. An assessment
is made as to whether any underfunding or overfund-
ing of the pension funds could entail economic risks
or benefits from the bank’s viewpoint. Any econom-
ic benefit, or any employer’s contribution reserves in
existence, are not capitalised; however, provisions for
economic risks are included on the balance sheet.
C H A N G E S V E R S U S T H E P R E V I O U S Y E A R
Switzerland’s Federal Council changed the basis for
the accounting rules for banks with the revision of
the Banking Ordinance of 30 April 2014. FINMA set
out the accounting requirements in detail in its Cir-
cular 2015/1 Accounting – banks (ARB). Notenstein
La Roche’s annual financial statements as at
Notes to the financial statements – part two32
31 December 2015 are based, for the first time, on the
new accounting requirements. The following chang-
es apply in respect of the accounting and valuation
principles:
Changes in the balance sheet: Value adjustments
for default risks are deducted directly from loans to
customers and no longer recognised as liability items
in value adjustments and provisions. Repurchase
and reverse repurchase transactions with securities
(securities financing transactions) are disclosed in a
separate balance sheet item. Formerly, they were in-
cluded in amounts due from/to banks or customers.
The item “Amounts due arising from money market
instruments” no longer exists. Transactions are recog-
nised in financial investments. The replacement val-
ues of derivative financial instruments are disclosed
in a separate balance sheet item. Formerly, they were
contained in “Other assets” or “Other liabilities”.
The item “Liabilities from money market instru-
ments” no longer exists; the debenture components
(underlying contracts) from structured products are
now recognised in “Bond issues and central mort-
gage institution loans”. The former items “Amounts
due to customers in savings or deposit accounts” and
“Other amounts due to customers” are now grouped
together in the new item “Amounts due in respect
of customer deposits”. The new item “Trading port-
folio liabilities” includes short positions from trad-
ing portfolio transactions (formerly “Amounts due
to banks”). Amounts due from/to social insurance
and occupational pension contributions are now dis-
closed in “Accrued expenses and deferred income”
and “Accrued income and prepaid expenses”, as
appropriate (formerly “Other assets” and “Other
liabilities”).
Changes in the income statement: The result from
interest operations is disclosed on a gross and a net
basis. The net result from interest operations takes
account of changes in value adjustments for default
risks and losses from interest operations. The creation
and release of reserves for general banking risks are
disclosed in a separate item. The former operating in-
come and gross profit sub-totals are no longer used.
A new sub-total, the operating result, is disclosed. Pri-
or-year figures in the balance sheet and income state-
ment have been restated in line with the new account-
ing requirements.
In addition to these restatements, the valuation
principles underlying the balance sheet item “Finan-
cial investments” have also been amended. These have
been extended for debt securities intended to be held
to maturity so as to allow for recognition in accord-
ance with the accrual method. This change in valua-
tion method applied resulted in the realisation of a re-
valuation gain in the amount of CHF 12 million. This
amendment also brings the valuation methodology
we apply into line with the valuation principles of our
parent company, Raiffeisen Switzerland.
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 2015.
33
1. Information on the balance sheet
1.1. BReakdowN of secuRities fiNaNciNg tRaNsactioNs (assets aNd LiaBiLities)
Current year Previous year
Book value of receivables from cash collateral delivered in connection with securities borrowing and reverse repurchase
transactions*
389,663
215,400
Book value of obligations from cash collateral received in connection with securities lending and repurchase transactions* 82,012 104,823
Book value of securities lent in connection with securities lending or delivered as collateral in connection with securities borrowing
as well as securities in own portfolio transferred in connection with repurchase agreements 1,244 32,470
of which with unrestricted right to resell or pledge 1,244 32,470
Fair value of securities received and serving as collateral in connection with securities lending or securities borrowed in connection
with securities borrowing as well as securities received in connection with reverse repurchase agreements with an unrestricted
right to sell or repledge 388,981 215,179
of which repledged securities 82,865 72,419
of which resold securities – –
* before consideration of any netting agreements
Amounts in CHF thousands
Amounts in CHF thousands
1.2. oveRview of coLLateRaL foR LoaNs/ReceivaBLes aNd off-BaLaNce-sheet tRaNsactioNs, as weLL as
impaiRed LoaNs/ReceivaBLes
1 . 2 . 1 . O V E R V I E W B Y T Y P E O F C O L L AT E R A L
Collateral type
Secured by
mortgage
Other
collateral
Unsecured Total
Loans (before and after netting with value adjustments)
Amounts due from customers – 312,169 10,146 322,315
Mortgage loans
Residential property 409,095 – – 409,095
Office and business premises 5,270 – – 5,270
Commercial and industrial premises 25,102 – – 25,102
Other 33,750 – – 33,750
Total loans in current year (before netting with value adjustments) 473,217 312,169 10,146 795,532
Total loans in previous year (before netting with value adjustments) 421,598 202,854 23,325 647,777
Total loans in current year (after netting with value adjustments) 473,217 312,169 8,876 794,262
Total loans in previous year (after netting with value adjustments) 421,598 202,854 22,060 646,513
Continued on page 35
34
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
Collateral type
Secured by
mortgage
Other
collateral
Unsecured Total
Off-balance-sheet
Contingent liabilities – 23,226 868 24,094
Irrevocable commitments 23,763 32,717 8,502 64,982
Total off-balance-sheet in current year 23,763 55,943 9,370 89,076
Total off-balance-sheet in previous year 20,845 41,832 9,702 72,379
1 . 2 . 2 . D E TA I L 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
value
of collateral
Net
debt amount
Individual value
adjustment
Impaired loans/receivables in current year 1,270 – 1,270 1,270
Impaired loans/receivables in previous year 1,265 1 1,264 1,264
Amounts in CHF thousands
Amounts in CHF thousands
1.3. BReakdowN of tRadiNg poRtfoLios aNd otheR fiNaNciaL iNstRumeNts at faiR vaLue (assets aNd
LiaBiLities)
1.3.1. B R E A K D O W N O F T R A D I N G P O R T F O L I O P O S I T I O N S A N D OT H E R F I N A N C I A L I N S T RU M E N T S AT FA I R VA LU E ( A S S E T S )
Current year Previous year
Trading portfolio assets
Debt securities, money market securities/transactions 26,036 136,359
of which listed (traded on a recognised exchange) – 75,977
of which traded on a representative market 26,036 60,382
Equity securities – 90,689
Precious metals and commodities 10 5,965
Other trading portfolio assets 13 –
Total trading portfolios 26,060 233,013
Continued on page 36
35
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
Amounts in CHF thousands
Amounts in CHF thousands
Current year Previous year
Total assets 26,060 233,013
of which determined using a valuation model – –
of which securities eligible for repo transactions in accordance with liquidity requirements – 10,826
1 . 3 . 2 . B R E A K D O W N O F T R A D I N G P O R T F O L I O P O S I T I O N S A N D O T H E R F I N A N C I A L I N S T R U M E N T S AT FA I R VA LU E
( L I A B I L I T I E S )
As at the balance sheet date, there were no liabilities from trading portfolio positions or other financial instruments at fair value.
1.4. pReseNtatioN of deRivative fiNaNciaL iNstRumeNts (assets aNd LiaBiLities)
1 . 4 . 1 . O U T S TA N D I N G 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 B Y C O N T R A C T T Y P E
Trading instruments Hedging instruments
Positive
replacement
values
Negative
replacement
values
Contract
volume
Positive
replacement
values
Negative
replacement
values
Contract
volume
Interest rate instruments
Forward contracts including FRAs – – – – – –
Swaps 932 5,560 140,800 – – –
Futures – – 8,069 – – –
Options (OTC) 3,436 3,436 50,565 – – –
Options (exchange-traded) – – – – – –
Total interest rate instruments 4,368 8,995 199,434 – – –
Foreign exchange/precious metals
Forward contracts 9,333 9,408 691,450 – – –
Swaps 2,929 2,555 166,595 – – –
Futures – – 1,508 – – –
Options (OTC) 339 339 5,390 – – –
Options (exchange-traded) – – – – – –
Total foreign exchange/precious metals 12,601 12,301 864,943 – – –
Continued on page 37
1. Information on the balance sheet36
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
Amounts in CHF thousands
Trading instruments Hedging instruments
Positive
replacement
values
Negative
replacement
values
Contract
volume
Positive
replacement
values
Negative
replacement
values
Contract
volume
Equity securities/indices
Forward contracts – – – – – –
Swaps – – – – – –
Futures – – 28,590 – – –
Options (OTC) 127,337 127,335 2,107,706 – – –
Options (exchange-traded) – – – – – –
Total equity securities/indices 127,337 127,335 2,136,296 – – –
Credit derivatives
Credit default swaps 8,531 8,531 231,646 – – –
Total return swaps – – – – – –
First-to-default swaps – – – – – –
Other credit derivatives – – – – – –
Total credit derivatives 8,531 8,531 231,646 – – –
Other
Forward contracts – – – – – –
Swaps – – – – – –
Futures – – 217 – – –
Options (OTC) 1,414 1,414 3,716 – – –
Options (exchange-traded) – – – – – –
Total Other 1,414 1,414 3,933 – – –
Total before consideration of netting agreements 154,251 158,576 3,436,252 – – –
of which determined using a valuation model 140,833 145,458 2,396,181 – – –
Previous year 130,603 134,390 3,220,276 – – –
of which determined using a valuation model 112,071 114,999 2,188,467 – – –
37
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
1.5. BReakdowN of fiNaNciaL iNvestmeNts
1 . 5 . 1 . B R E A K D O W N O F 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 1,239,649 968,756 1,238,643 975,179
of which intended to be held until maturity 1,090,659 165,856 1,089,390 165,812
of which not intended to be held to maturity (available for sale) 148,990 802,900 149,253 809,367
Equity securities 10,858 48,846 10,985 52,085
of which qualified participating interests (at least 10% of capital or votes) – – – –
Precious metals 405 448 405 448
Total financial investments 1,250,912 1,018,049 1,250,033 1,027,712
of which securities eligible for repo transactions in accordance with liquidity requirements 689,813 513,566 688,462 519,678
1 . 4 . 2 . O U T S TA N D I N G 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 B Y C O U N T E R PA R T Y A N D A F T E R C O N S I D E R AT I O N O F
N E T T I N G A G R E E M E N T S
Positive
replacement
values
Negative
replacement
values
Banks/securities dealers 6,270 n.a.
Central clearing houses – n.a.
Other counterparties/clients 107,575 n.a.
Total after consideration of netting agreements 113,845 118,170
Previous year 83,832 87,619
Amounts in CHF thousands
Amounts in CHF thousands
1. Information on the balance sheet38
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
1 . 5 . 2 . B R E A K D O W N O F D E B T S E C U R I T I E S B Y R AT I N G
Book value
AAA to AA3 A1 to A3 Baa1 to Baa3 Ba1 to Ba3 Below Ba3 Unrated
Current year 773,249 191,425 50,662 14,594 – 209,719
Previous year 517,225 203,973 15,945 14,412 – 217,201
In the year under review, Notenstein La Roche adjusted the valuation guidelines for “Financial investments” in line with the accounting and valuation principles applied
by the parent company. Debt securities with a book value of CHF 828.3 million were reclassified to the category “intended to be held to maturity” from the category “not
intended to be held to maturity”. This led to the realisation of compulsory reserves in the amount of CHF 12 million in “Result from the disposal of financial investments”.
Ratings assigned on the basis of the rating classes applied by Moody’s and Standard & Poor’s.
Amounts in CHF thousands
Amounts in CHF thousands
1.6. BReakdowN of otheR assets aNd otheR LiaBiLities
Current year Previous year
Other assets
Indirect taxes 1,492 2,122
Clearing accounts 15,425 18,617
Remaining other assets 880 884
Total Other assets 17,797 21,623
Other liabilities
Indirect taxes 3,861 4,770
Clearing accounts 22,490 2,028
Remaining other liabilities 103 104
Total Other liabilities 26,454 6,902
39
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
1.7. discLosuRe of assets pLedged oR assigNed to secuRe owN commitmeNts aNd of assets uNdeR
ReseRvatioN of owNeRship
Current year Previous year
Book value
Effective
commitments Book value
Effective
commitments
Pledged or assigned assets
Amounts due from banks 2,200,047 60,283 1,718,340 90,889
Trading portfolios 25,278 – 22,684 –
Financial investments 362,474 – 418,117 –
Other assets (guarantees) 880 – 884 –
Total pledged or assigned assets 2,588,680 60,283 2,160,026 90,889
of which assets under reservation of ownership – – – –
1.8. discLosuRe of LiaBiLities ReLatiNg to owN peNsioN schemes, aNd NumBeR aNd NatuRe
of equity iNstRumeNts of the BaNk heLd By owN peNsioN schemes
General: The personnel of Notenstein La Roche 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
Swiss federal law on occupational pension schemes and therefore entitled to benefits. More than half of the occupational pension premiums are covered by the employer.
The employer has no further obligations to provide benefits. The “Katharinen Pensionskasse II” fund provides for extra-mandatory pensions in which a personal investment
strategy can be implemented. The former staff of Bank La Roche & Co. Ltd who transferred to Notenstein La Roche on 1 November 2015 were insured under their former
pension scheme for the full twelve months of 2015 and were incorporated into the “Katharinen Pensionskasse I”/“Katharinen Pensionskasse II” as of 1 January 2016.
Equity capital instruments of the bank: As in the previous year, “Katharinen Pensionskasse I” and “Katharinen Pensionskasse II” continue to hold no equity instruments
of the bank.
Current year Previous year
Liabilities relating to own pension schemes
Amounts due in respect of customer deposits 9,253 8,596
Economic benefit/economic obligation and pension expenses: According to the provisional annual financial statements (under 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)
31.12.2015
(provisional) 31.12.2014
Pension fund “Katharinen Pensionskasse I” 111.2% 116.9%
Pension fund “Katharinen Pensionskasse II” 118.8% 121.7%
Continued on page 41
Amounts in CHF thousands
Amounts in CHF thousands
1. Information on the balance sheet40
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
Employer contribution reserves for “Katharinen Pensionskasse I” and “Katharinen Pensionskasse II”: As at 31.12.2015, Notenstein La Roche Private Bank Ltd held no
employer contribution reserves.
1.9. stRuctuRed pRoducts issued
Book value
Total
Valued as a whole Valued separately
Booked in trading
portfolio
Booked in
other financial
instruments at
fair value
Value of the host
instrument
Value of the
derivative
Underlying risk of the embedded derivative – – – – –
Interest rate instruments – – 99,464 –8,571 90,893
With own debenture component – – 99,464 –8,571 90,893
Without own debenture component – – – – –
Equity securities – – 1,171,154 –49,699 1,121,455
With own debenture component – 1,171,154 –73,139 1,098,015
Without own debenture component – 23,440 23,440
Foreign currencies – – 2,350 –337 2,013
With own debenture component – 2,350 –337 2,013
Without own debenture component – – – – –
Commodities/precious metals – – 2,742 –1,414 1,329
With own debenture component – 2,742 –1,414 1,329
Without own debenture component – – – – –
Total – – 1,275,710 –60,021 1,215,690
In the case of issued structured products containing a debenture component, the derivative is separated from the structured product and valued and disclosed
separately. The host instruments are recognised at nominal value in “Bond issues and central mortgage institution loans”. The derivative components of the products are
disclosed at market value in “Positive replacement values of derivative financial instruments” and “Negative replacement values of derivative financial instruments”.
Amounts in CHF thousands
41
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
1.10. vaLue adjustmeNts, pRovisioNs aNd ReseRves foR geNeRaL BaNkiNg Risks
As at end of
previous year
2015
Balance at
current year
end
Use in confor-
mity with
designated
purpose
Reclassifi-
cations
Currency
differences
Past due
interest,
recoveries
New creations
charged to
income
Releases to
income
Provisions
Provisions for other business
risks
23,921
–7,763
–
–
–
418 –
16’576
Total provisions 23,921 –7,763 – – – 418 – 16’576
Reserves for general
banking risks (untaxed)
196,000 – – – – 196’000
Value adjustments
Value adjustments for
default risks in respect of
impaired loans/receivables 1,264 – – – 21 5 –20 1’270
Total value adjustments
for default risks and
country risks 1,264 – – – 21 5 –20 1’270
Amounts in CHF thousands
Amounts in CHF thousands
1.11. BaNk’s capitaL
Current year Previous year
Total
par value No. of shares
Capital
eligible for
dividend
Total
par value No. of shares
Capital
eligible for
dividend
Share capital 20,000 20,000,000 20,000 20,000 20,000,000 20,000
of which paid up 20,000 20,000,000 20,000 20,000 20,000,000 20,000
Participation capital 2,200 22,000,000 2,200 2,200 22,000,000 2,200
of which paid up 2,200 22,000,000 2,200 2,200 22,000,000 2,200
Total bank’s capital 22,200 42,000,000 22,200 22,200 42,000,000 22,200
All components of the bank’s capital are fully paid up. There are no restrictions in respect of shareholders’ voting rights.
1. Information on the balance sheet42
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
Amounts in CHF thousands
Amounts in CHF thousands
1.12. ReLated paRties
Amounts due from Amounts due to
Current year Previous year Current year Previous year
Holders of qualified participating interests 2,760,324 1,722,647 125,584 105,168
Group companies 132,256 22,501 204,638 20,364
Linked companies 452 – 2,225 10,000
Transactions with members of governing bodies 5,242 6,625 7,905 2,360
Transactions with related parties: The same standard banking assessment criteria as for third parties apply to loans to members of governing bodies. For related parties and
members of the Board of Directors, the same conditions are applied as for other clients. For Executive Board members, the same preferential conditions as are applied to other
staff apply for standard transactions.
1.13. hoLdeRs of sigNificaNt paRticipatiNg iNteRests aNd gRoups of hoLdeRs of paRticipatiNg iNteRests
with pooLed votiNg Rights
The following holders of participating interests have interests with more than 5% of voting rights
Current year Previous year
Nominal
Percentage of
equity
Nominal
Percentage of
equity
With voting rights
Raiffeisen Switzerland Cooperative 20,000 100.0% 20,000 100.0%
Without voting rights
Raiffeisen Switzerland Cooperative 2,200 100.0% 1,800 81.8%
43
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
Amounts in CHF thousands
1.14. owN shaRes aNd compositioN of equity capitaL
Equity capital at beginning of current year
Paid-up capital 22,200
Distributable profit/accumulated loss 22,926
Capital reserves 56,787
Retained earnings reserves 119,451
Reserves for general banking risks 196,000
Total equity capital at beginning of current year (before appropriation of profit) 417,364
Dividend 2014 –17,760
Profit for the current year 80,921
Total equity capital at end of current year (before appropriation of profit) 480,525
Own shares: As in the previous year, the bank did not hold any of its own shares in the year under review.
Current year Previous year
Non-distributable reserves
Non-distributable statutory capital reserves 56,787 56,787
Non-distributable statutory retained earnings reserves 4,000 4,000
Total non-distributable reserves 60,787 60,787
The rights and restrictions relating to the holdings of the bank’s capital are set out in Note 1.11 Bank’s capital.
1. Information on the balance sheet44
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
1.15. assets By cRedit RatiNg of couNtRy gRoups
Net foreign exposure
Current year Previous year
Bank’s own country rating Standard & Poor’s Moody’s Amount Share Amount Share
1 – first-class AAA to AA– Aaa – Aa3 1,681,793 93.6% 1 ,665,812 92.9%
2 – good A+ to A– A1 – A3 16,405 0.9% 61,921 3.5%
3 – medium BBB+ to BBB– Baa1 – Baa3 79,029 4.4% 27,663 1.5%
4 – speculative BB+ to B– Ba1 – B3 7,428 0.4% 11,318 0.6%
5 – risk CCC+ and below Caa1 – C 3,851 0.2% 304 0.0%
6 – unrated No rating No rating 8,722 0.5% 27,063 1.5%
1,797,227 100.0% 1,794,081 100%
The statement of net foreign exposure is carried out on the basis of the risk of the underlying position and not based on the domicile of the borrower. With secured
receivables, the security involved is taken into account when the risk domicile is defined.
Notenstein La Roche bases its ratings on those of Standard & Poor’s and Moody’s.
Amounts in CHF thousands
45
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
2. Information on off-balance-sheet transactions
2.1. fiduciaRy tRaNsactioNs
Current year Previous year
Fiduciary investments with third-party banks 130,828 119,836
Fiduciary loans 900 –
Total fiduciary transactions 131,728 119,836
Amounts in CHF thousands
2.2. assets uNdeR maNagemeNt
2 . 2 . 1 . B R E A K D O W N O F A S S E T S U N D E R M A N A G E M E N T
Current year Previous year
Type of assets under management
Assets in collective investment schemes managed by the bank 509,826 336,884
Assets under discretionary asset management agreements 7,366,845 8,058,111
Other client assets under management 14,104,152 12,787,172
Total assets under management (including double counting) * 21,980,823 21,182,166
of which double-counted 507,322 548,431
* excluding subsidiaries
2 . 2 . 2 . P R E S E N TAT I O N O F D E V E LO P M E N T O F A S S E T S U N D E R M A N A G E M E N T
Current year Previous year
Total assets under management (including double counting) at beginning 21,182,166 19,781,865
Net new money inflow/outflow –428,357 –70,061
Price gains/losses, interest, dividends and currency gains/losses 104,138 1,261,106
Other effects 1,122,876 209,256
of which acquisitions1 5,967,362 209,256
of which spin-offs2 –4,336,497 –
of which reclassifications3 –507,989 –
Total assets under management (including double counting) at end 21,980,823 21,182,166
1 Year under review: the bank acquired the business activities of Bank La Roche & Co Ltd with effect from 1 November 2015.
Previous year: the bank acquired the business activities of LBBW (Switzerland) Ltd. with effect from 1 December 2014.2 On 1 July 2015, the bank spun off business activities to sister company Vescore Ltd. From the assets spun off, CHF 3.182 billion continues to be counted among client assets in the form of custody assets.3 Reclassification of assets not held for investment purposes in custody assets.
Amounts in CHF thousands
46
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
Amounts in CHF thousands
2 . 2 . 3 . B R E A K D O W N O F C L I E N T A S S E T S
Current year Previous year
Assets under management 21,980,823 21,182,166
Custody assets 4,483,017 –
Total client assets 26,463,841 21,182,166
Assets under management include all assets of private, corporate and institutional clients managed or held for investment purposes as well as assets in funds managed
by the bank. This essentially includes all amounts due to customers, fixed-term deposits and fiduciary deposits, as well as all valued assets including net values from
outstanding derivative financial instruments. Assets deposited with third parties are included in so far as they are managed by the bank.
Client assets are defined more broadly than assets under management and also include assets held solely for transaction and safekeeping purposes (custody assets).
Other banks’ assets deposited with Notenstein La Roche Private Bank (on a “custody-only” basis) are not included in client assets.
Fund units of funds managed by the bank in clients’ safekeeping accounts held with the bank and in clients’ safekeeping accounts with third parties managed by the
bank are recognised under “double counting”. Each of these services generates added value and, hence, additional income for the bank.
Net new money is calculated on the basis of new clients acquired, existing clients’ inflows or outflows and the outflow of assets due to the termination of client rela-
tionships; this figure indicates the result from the acquisition of assets under management. The volume of net new money is determined at client level using the direct
method, on the basis of cash payments and deliveries of securities, and of cash flows related to loans taken out and repaid. Interest and dividend income from assets
under management, interest charged to clients, fees, commissions and market or exchange rate fluctuations are not regarded as net new money.
47
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
3. Information on the income statement
3.1. ResuLt fRom tRadiNg activities
3 . 1 . 1 . B R E A K D O W N B Y B U S I N E S S A R E A
Current year Previous year
Trading activities with clients (foreign currency income) 14,762 12,922
Proprietary trading –354 –1,112
Total result from trading activities 14,408 11,810
3 . 1 . 2 . B R E A K D O W N B Y R I S K A N D B A S E D O N T H E U S E O F T H E FA I R VA LU E O P T I O N
Current year Previous year
Interest rate instruments (including funds) –158 –1,950
Equity instruments (including funds) –34 –383
Foreign currencies 14,762 12,922
Commodities/precious metals –162 1,221
Total result from trading activities 14,408 11,810
of which from fair value option – –
3.2. iNcome fRom RefiNaNciNg of tRadiNg positioNs aNd fRom Negative iNteRest
3 . 2 . 1 . R E F I N A N C I N G I N C O M E I N I N T E R E S T A N D D I S C O U N T I N C O M E
No refinancing costs for trading positions are credited to interest and discount income.
3 . 2 . 2 . N E G AT I V E I N T E R E S T
Current year Previous year
Negative interest on lending business (reduction of interest and discount income) 1,962 –
Negative interest on borrowing business (reduction of interest expense) 1,680 –
Amounts in CHF thousands
Amounts in CHF thousands
48
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
3.3. peRsoNNeL expeNses
Current year Previous year
Salaries (meeting attendance fees and fixed compensation for the members of the bank’s governing bodies, salaries and benefits) 69,830 88,762
Social insurance benefits 12,668 14,752
Other personnel expenses 5,948 5,000
Total personnel expenses 88,446 108,514
3.4. geNeRaL aNd admiNistRative expeNses
Current year Previous year
Office space expenses 4,245 9,302
Expenses for information and communications technology 6,546 11,082
Expenses for vehicles, equipment, furniture and other fixtures, as well as operating lease expenses 434 523
Fees of audit firms 529 543
of which for financial and regulatory audits 423 413
of which for other services 106 130
Other operating expenses 36,910 23,578
Total general and administrative expenses 48,664 45,029
Amounts in CHF thousands
Amounts in CHF thousands
Amounts in CHF thousands
3.5. cuRReNt aNd defeRRed taxes
Current year Previous year
Expenses for current capital and income taxes 10,795 105
Creation of provisions for deferred taxes – –
Total taxes 10,795 105
Weighted average tax rate based on operating result 36.0% 3.3%
There are no tax loss carryforwards that impact income taxes. The weighted average tax rate based on the operating result is not representative to the extent that, in the
year under review as in the previous year, actual taxable profit contains certain tax corrections.
49
All listed amounts are rounded. This can lead to a minimal difference in the total amounts.
Amounts in CHF thousands
3. Information on the income statement
3.6. 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
Current year: Extraordinary income includes the realisation of a gain of CHF 62.5 million from the partial disposal to a third party of the participating interest in Leonteq Securi-
ties Ltd. Extraordinary expenses includes a charge of CHF 0.85 million in the form of a restructuring subsidy for our subsidiary Notenstein Financial Services GmbH in Munich.
Previous year: Extraordinary income includes the realisation of a gain of CHF 15 million from the sale of 1741 Asset Management Ltd to TCMG AG. Further, shares in a participat-
ing interest were sold to our parent company, Raiffeisen Switzerland Cooperative. A sum of approximately CHF 20 million was realised from this sale, in “Extraordinary income –
profit from sale of participating interests”. Reserves for general banking risks in an amount of CHF 20 million were created against “Changes in reserves for general banking risks”.
50
B A S E L , 4 0 0 1
Rittergasse 25
Telephone +41 (0)61 976 62 62
B E R N E , 3 0 0 1
Spitalgasse 3
Telephone +41 (0)31 321 14 14
C H U R , 7 0 0 1
Aquasanastrasse 8
Telephone +41 (0)81 287 15 15
G E N E VA , 1 2 1 1
Bd. Georges-Favon 5
Telephone +41 (0)22 307 21 21
L A U S A N N E , 1 0 0 1
Av. du Théâtre 1
Telephone +41 (0)21 313 26 26
LO C A R N O, 6 6 0 0
Lungolago Motta 2
Telephone +41 (0)91 756 12 12
N O T E N S T E I N L A R O C H E 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-laroche.ch
LU G A N O, 6 9 0 0
Via Canova 12
Telephone +41 (0)91 912 11 11
LU C E R N E , 6 0 0 4
Mühlenplatz 9
Telephone +41 (0)41 227 16 16
O LT E N , 4 6 0 0
Baslerstrasse 30
Telephone +41 (0)62 211 28 28
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
W I N T E R T H U R , 8 4 0 1
Turnerstrasse 1
Telephone +41 (0)52 742 24 24
Z U R I C H , 8 0 2 2
Rennweg 57 / Fraumünsterstrasse 27
Telephone +41 (0)44 218 13 13
Contact
52