Quirin Privatbank AG€¦ · consulting in the future – and founded our subsidiary quirion. Now...

Ann ual Report2019

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Quirin Privatbank AGWKN: 520230 / ISIN: DE 0005202303

31 December 2019

Subscribed capital €43,412,923

Shareholders

Berliner Effektengesellschaft AG 25.3%

Riedel Gruppe 14.9%

Management Board of Quirin Privatbank AG 19.0%

Diversified holdings 40.8%

Balance sheet total assets €609 m

Equity capital €57 m

Share price on 31.12.2019 €1.55

Annual net profit €5.9 m

Number of employees 235

Key figures

1

Balance sheet 60

Profit and loss account 64

Annex 68

Foreword by the Management Board 8

We have embarked on a journey 12

1 Journey into a New World

2 Management Report

3 Annual Financial Statements 2019

1. Underlying economic conditions 34

2. Positioning of the bank 35

3. Business development 38

4. Risk report 44

5. Opportunities and forecast report 54

4 Additional InformationAuditor’s report 88

Report of the Supervisory Board 96

Locations/Contact/Imprint 100

Contents

1 2 3 4

Journey into a New World

Annual Report 2019

4 5

2019Journey into a

new world

1


Annual Report 2019

6 7

1Foreword by the Management Board 8

We have embarked on a journey 12


1

In 2019 we embarked on a thrilling journey, a journey into a new dimen-

sion in financial consulting. As a modern private bank, more than six years

ago we realised the key role that digitalisation was going to play in financial

consulting in the future – and founded our subsidiary quirion. Now we

have set another milestone. As a private bank for affluent private clients,

we will grow even closer together with quirion in the future. We consist-

ently combine online investing services and personal consulting to meet

the changing needs of our clients. This is the prerequisite for sustaining our

success of recent years well into the future.

In practical terms, this means that we will not only personally advise our

clients of Quirin Privatbank in our 13 branches nationwide, but also those

of our subsidiary quirion, should they opt for our premium quality services.

The financial advisors at our branches can also explain the services quirion

offers to new prospective clients.

This step focuses our business activities even more strongly on the needs of

our clients. A growing number of people wish to manage their investments

online. At the same time, many studies show how indispensable personal

advice continues to be, also for younger clients. In addition, we make the

most of quirion’s potential as a motor of growth for the Bank as a whole,

and attract new target audiences to our private bank. A quirion client to-

day may well be one of the private bank tomorrow. In 2019 we set further

milestones to ensure that our innovative business model enjoys success in

practice.

One of the most successful years in its history

Initial experience in day to day business and the Bank’s 2019 growth figures

clearly indicate that we are on the right track and we closed the financial

year with a record result of €5.9 million, significantly surpassing the ex-

pected result of €2.9 to €3.4 million and the previous year’s result of €3.9

million. This encouraging development is accounted for by the private cli-

ent business and, in particular, the capital markets business. The segment

results for both business areas far exceeded expectations.

Private client business: strong growth in net cash inflows and

managed assets

In the private client business of Quirin Privatbank including quirion the num-

ber of clients rose by 66% to a total of 24,200. Assets under man agement at

the end of the 2018 financial year totalled €3.4 billion; this figure had risen

to €4.4 billion as at the end of 2019, with the inclusion of corporate clients

and quirion. At €350 million, net cash inflows at Quirin Privatbank alone

were up 60% on the very good previous year.

Compared to the previous year, equity initially decreased due to the divi-

dend payment and was then increased to €57 million by the profit for the

year and transfer to reserves. Compared to the previous year this represents

an increase of €4.6 million. From a regulatory perspective, the total capital

ratio at balance sheet date was a comfortable 22.6% (previous year 22%).

The pre-tax return on equity for the bank as a whole was 13.8%.

New sustainable asset management highly popular

The majority of Quirin Privatbank’s client funds – 74 % or €2.9 billion – is

managed in our in-house asset management “Market – Opinion – Knowl-

Dear shareholders, clients,

business partners and

friends of Quirin Privatbank,

million profit

billion assets under management

€5.9

€4.4


Annual Report 2019

8 9

A new dimension in financial consulting

2019

KARL MATTHÄUS SCHMIDT

Chairman of the Management Board, Quirin Privatbank AG and founder of quirion

JOHANNES EISMANN

CFO/Board Member, Capital Markets

1

edge”. The strategic target for this rate was raised from 75% to 90%. Aimed

at achieving a positive contribution to the United Nations’ climate goals

(Agenda 2030) and at addressing growing demand for sustainable invest-

ments, in 2019 we established our in-house asset management “Respon-

sibility”. This has proved to be very popular with our clients, with €88 mil-

lion under management by the year end. This makes it Quirin Privatbank’s

most successful product launch to date.

Online subsidiary trebles client base

In 2019 the bank’s online subsidiary quirion accelerated its growth and

shored up its position as one of the top three robo-advisors in Germany. At

the end of the financial year quirion served around 14,400 clients – a tre-

bling of the number of clients compared to the same period in 2018. Assets

under management were more than doubled to €370 million at balance

sheet date (end of 2018: €160 million).

Positive contribution of the capital markets business

In our second business area, the capital market business, companies and

the entrepreneurs behind them are supported in their business ventures. In

recent years, more than 300 transactions with a volume of over €13 billion

have been conducted successfully.

Conditions for capital markets in 2019 remained challenging in view of Mi-

FID II and the persistently low interest rate environment. Despite this, busi-

ness in our Institutional Client area stabilised at a low level and the trading

result improved moderately. In view of renewed positive developments in

Corporate Finance’s project business and in the capital markets service

area, the capital markets business as a whole achieved an improvement in

earnings compared to the previous year.

Higher dividend payment to shareholders

We are generally very satisfied with the development of business in 2019 –

it was one of the most successful financial years in the Bank’s history. The

result enables us to strengthen the Bank’s equity base by increasing reve-

nue reserves.

At the Annual General Meeting the Management Board and the Supervisory

Board of Quirin Privatbank will propose that a dividend again be paid to the

shareholders. However, at 7 cents per share, in total €3 million, it will be

appreciably higher than in the previous year (2018: 3 cents). It is particularly

satisfying that the bank was able to refinance past growth investments from

sustainable business performance.

In normal circumstances, we would expect a very good business perfor-

mance again for 2020 – for both our private clients business and our cap-

ital markets business. However, no-one can foresee how the current Cov-

id-19 crisis will develop and what specific consequences it will spawn. One

thing is certain, though: we will weather this crisis together – together with

you, dear shareholders, clients and employees of Quirin Privatbank.

This is why I am closing with an unusual wish. Please stay healthy.

quirion clients

million in our asset management

“Responsibility”

million dividend planned

14,400

€88

€3.0


Annual Report 2019

10 11

Karl Matthäus SchmidtChairman of the Management Board

Johannes EismannCFO/Board Member, Capital Markets

1


Annual Report 2019

12 13

Inspired by an ambitious aim, in 2019 we

embarked on a journey – a journey into

a new world of financial consulting.

Our aim, now and in the future, is to make

Germany a better place for investors. We

achieve this by rolling out a new model in

financial consulting.

Why did we take this step?

We wanted to address the changed needs

of our clients. Today, private bank clients are

receptive to online solutions – and occa-

sionally discover that an online investment

offers a better option for their investment

needs. Vice-versa, many online investors

would like a personal advisor. This was en-

dorsed by more than half of the 1,000 inter-

viewees in February 2019.¹

We haveembarked

on ajourney

“Our new business model is one of its kind in Germany: no other robo-

advisor offers personal qualified local consulting across the country and no

other bank provides its affluent clients with transparent advice on inexpensive

online investment opportunities.”

KARL MATTHÄUS SCHMIDT

Chairman of the Management Board, Quirin Privatbank AG and founder of quirion

What is new about this banking model?

Quirin Privatbank and its subsidiary quirion

unite the hitherto separate worlds of online

investment and personal consulting. quiri-

on clients can seek advice from the private

bank’s advisors and prospective customers

of Quirin Privatbank can take advantage of

quirion’s online services.

¹ Source: Representative survey by puls market research institute in February 2019 on behalf of quirion.

1


Annual Report 2019

14 15

uirin Privatbank

Ihr persönlicher Berater

Online

Hybrid

Personal

0.48%

0.88%

1.28%

uirin Privatbank

Online investing without

consulting support¹

Online investing

with personal

consulting support¹

Personal investment

advice with a compre-

hensive asset analysis

uirin PrivatbankIhr persönlicher Berater

We did

our

homeworkOur new

service packages

¹This product is provided by quirion AG.

²Conditions on the volume, complexity and individual requirements of the investment.

Doing our homework was impor-

tant to roll out the new business

model successfully. This primarily

consisted of a lot of internal evangelising.

1

We devoted much passion and commit-

ment to establishing new job profiles and

team roles at the bank. Our aim was to as-

sign specific tasks, targets and responsibili-

ties to various sales roles in order to lay the

foundation for a fair, motivating and mod-

ern remuneration system.

2

The contracts of our colleagues in the

branches had to be amended for the pur-

pose. At this point I’d again like to thank all

our Quirinians for their trust and commit-

ment to the Bank.

3

We also introduced new service packages

– which means that Quirin Privatbank and

quirion clients get exactly what suits them.

Our consulting services will henceforth fo-

cus even more strongly on their needs.

p. a.

p. a.

p. a.²

1


Annual Report 2019

16 17

4

We streamlined our portfolio and parted

company with real estate consulting and in-

surances. This will let us focus more strong-

ly in the future on our core competence of

advising affluent private clients as part of

our high quality asset management.

5

We created a new fully fledged technical

set-up for our online subsidiary quirion.

This included a new front end, new prod-

ucts and the transition to a cloud-based

application. At this point, I’d like to warmly

thank all the colleagues who played a part

in this important project and made it pos-

sible with untiring patience, passion and

burning of the midnight oil.

1


Annual Report 2019

18 19

Wedid it!

The new business model is popular –

we see it on a daily basis as we ad-

vise our clients.

Many quirion clients have already opted for

a package that includes personal advice. By

the end of 2019 around 8.3% of all quirion

clients were using the premium package –

and thus the personal consulting service of

Quirin Privatbank.

Both companies benefit from the new busi-

ness model – the growth figures for 2019

speak for themselves.

With a profit of €5.9 million Quirin Privat-

bank can be proud of one of its most suc-

cessful business results since the Bank’s

foundation in 2006. It has recorded the best

client growth since 2009 and at €760 mil-

lion the steepest growth in total assets un-

der management since 2010. At €350 mil-

lion, net cash inflows were 60% up on the

previous year. At the end of 2019 the Bank

held assets under management totalling €4

billion. Its client base has increased to 9,800,

representing a rise of 7%.

Our online subsidiary quirion continued its

success of recent years and even accelerat-

ed its pace – doubling the amount of assets

under management and almost trebling the

number of clients.

million assets

under management

(+130 %)

clients

(+170 %)

billion total assets

under management

million more assets

under management

clients

€370

14,400

€4.0

€760

9,800

uirin Privatbank

uirin Privatbank

1


Annual Report 2019

20 21

We have also made key personnel changes:

In Dr Christian Ohswald we have acquired

a competent and committed Head of Pri-

vate Banking Business for Quirin Privatbank

AG and in Martin Daut an experienced and

motivated digital and financial expert as

CEO for quirion AG.

“In the current low interest rate environment savers cannot afford to ignore capital markets. quirion will continue to invest in technology, new products and market access to increase our appeal to clients and to make Germany a better place for investors.”

“With intelligent concepts and its committed competent consulting

team Quirin Privatbank provides its clients with solid added value.

Capitalising on new growth stimuli in the private banking

business my team and I will further strengthen and extend the

Bank’s position in the market.”

DR CHRISTIAN OHSWALD

Head of Private Banking Business, Quirin Privatbank AG

MARTIN DAUT

CEO of quirion AG

1


Annual Report 2019

22 23

In order to further improve awareness

of the Bank, we have refined estab-

lished products and services and ex-

plored new avenues.

Investors are increasingly inquiring about

sustainable investment opportunities and

since May 2019 we have been able to meet

this demand. Our “Responsibility” asset

management is an intelligent investment

option for our clients that is both sound and

ethical and provides a return on their invest-

ment without having to take more risks.

We have presented the Bank at key trade

fairs and events including:

� The Wirtschaftstag, organised by the

Economic Council of the CDU

� The DKM – the leading trade fair for the

German finance and insurance industry

� The Börsentag Berlin and concurrent

Frauenfinanzforum

� The “Grünes Geld” trade fair for sustaina-

ble investments in Freiburg

Last, but not least: a significant internal

milestone was also the introduction of a

new CRM (customer relations management

software). It was successfully implemented

in autumn 2019 and offers many important

tools to better serve our existing and pro-

spective clients.

Newand

provenproducts

1


Annual Report 2019

24 25

Satisfied

successful

clients,Bank

That we have struck the right chord

with our clients is illustrated in di-

verse ways.

For one, our internal client survey has once

more yielded outstanding results, evidenc-

ing client satisfaction with us. Secondly,

users of the independent financial portal

WhoFinance have again rated us as Ger-

many’s best investment bank.

On WhoFinance clients say Quirin Privatbank is

Germany’s best bank.¹

Thank you to all the Quirinians who have

contributed to this superb result.

Marc BACHHUBER

Colin BINNENBRUCK

Christine BLANK

Gerd BÖCK

Christian FISCHER

Dennis FISCHER

Klaus FISCHER

Pascal FRANKEN

Johannes FÜHREN

Kurt FUHRMANN

Heiko HALBERSTADT

Jörg HALLERBACH

Ljubisa LUKIC

Joachim MERTENS

Michael RAITH

Michael RÄMISCH

Harry RICHTER

Frank SCHMIDT

Karsten SCHOLVIN

Richard STANGL

Susanne STEINMANN

Martin WIRTHS

Ralf WUNDERLICH

Thomas ZIESMANN

¹ Source: WhoFinance evaluation of 300,000 client ratings, February 2020.

out of 5 and thus better than

other banks

top investment advisors

in 9 branches nationwide

4.7

24

Geprüfte KundenbewertungenFebruar 2020 - www.who�nance.de

BESTE BANKFÜR GELDANLAGE

VON KUNDEN EMPFOHLEN

SCAN MICH

1


Annual Report 2019

26 27

Private bank quality

best of the testwith multiple-times

quirion

The Bank’s online subsidiary quirion

impresses with quality of service and

accessibility to small-scale investors.

The online subsidiary of Quirin Privatbank,

quirion, has drastically reduced the mini-

mum investment amount to €1,000 in order

to give all investors access to high quality

investment options. quirion also offers new

products such as saving plans (also for chil-

dren), pension plans and sustainable port-

folios.

Following its previous year’s winning test

results from Stiftung Warentest (Finance test

08/2018), in 2019 quirion again achieved

excellent ratings in many important tests

including those of Extra-Magazin, Finanztip,

Finanz-Award, brokervergleich.de, and DKI.

“The quality of quirion’s portfolio matches that of prestigious, award-winning private banks as confirmed by a current survey on behalf of the Institut für Vermögensaufbau (IVA).¹ Therefore Quirin Privatbank clients need not fear any loss of quality when they switch to less expensive online products while quirion clients enjoy genuine private bank quality at an attractive price.”

PROF STEFAN MAY

Head of Investment Management, Quirin Privatbank AG

¹ Source: “Digital versus classic asset management: quality and costs based on the example of quirion”; IVA, December 2019.

1


Annual Report 2019

28 29

We aspire togreatthings

Establishing genuine hybrid financial consulting as a new banking model:

every client gets exactly what suits them.

The year 2019 rang in a new era of financial

consulting. We are best equipped for the

future with a portfolio ranging from “online

investing only” and “online investing with

personal advice” to our “all-in no-worries

package with bespoke personal advice”.

Keenly aware of the needs of our clients and

German investors, we have taken appropri-

ate steps.

Sustainable investments encourage acceptance of shares.

Many people still shy away from holding

shares. Sustainable investments may well

prompt a sea change and inspire greater

acceptance of investing in shares. ESG (en-

vironment, social, governance) investments

offer people the opportunity to invest their

money while at the same time keeping the

interests of their grandchildren at heart.

This way we may succeed in moving at least

some of the €2,400 billion currently losing

value in current and instant access savings

accounts into profitable and thus future-fo-

cused investment options. We are well po-

sitioned to do so with our “Responsibility”

asset management.

Attracting more “savings book” savers to capital markets.

We aim to devote all our energies to our

next mission: showing Germans how to

be better investors. Assets are being eaten

away by inflation and negative interest rates.

But it need not be so – the capital market

offers all investors good opportunities to

increase their assets over appropriate peri-

ods – regardless of whether for retirement

provision or to achieve personal goals and

wishes. We want to do our part in doubling

the number of shareholders in Germany by

2030 – to around 25% of the population.

1

2

3

We have accomplished much – but

the journey still stretches out be-

fore us. We aspire to great things

– and we aim to give everything to achieve

them.

1


30 31

Annual Report 2019

“The future success of a bank hinges on the fusion of digital and analogue worlds. Anyone who ignores this and focuses instead on short-term profit and fails to attract and serve clients on the right channels – personally, online or a combination of both – will not have any clients in the future.”

Karl Matthäus Schmidt

Chairman of the Management Board,

Quirin Privatbank AG

2

2Underlying economic conditions 34

Positioning of the Bank 35

Business development 38

Risk report 44

Opportunities and forecast report 54

Management Report

Annual Report 2019

Management Report

32 33

2

1. Underlying economic conditions

In Germany macroeconomic growth declined in 2019 and according to

initial figures from the Federal Statistical Office, after 1.5% in 2018 will peg in

at an average of 0.6% in 2019. The Federal Statistical Office reports that the

average inflation rate for the year has increased slightly to 1.4%. According

to Federal Employment Agency data only an average of 5% of the working

population were registered as unemployed in 2019.

Global capital markets recorded significant gains in the 2019 financial year.

Stock markets in particular experienced a sharp rise. The German DAX in-

dex gained approximately 25% in value. The US stock market rose in US dol-

lars, the representative S&P 500 Index even measuring an increase of 29%.

Measured by the MSCI World Index (in US dollars), global stock market in-

vestment in industrialised countries rose by around 25%. An increase in the

value of many bond segments was also recorded for the year. Thus, from

the beginning to the end of 2019, due to currency rate rises and despite

low coupon yields, an increase in value of 4% was achieved with ten-year

Federal bonds, and 9% with ten-year US government bonds.

Having reined in their monetary policy in 2018, the main central banks

loosened it slightly again in the 2019 financial year. The Fed even resumed

liquidity measures towards the end of the year, the ECB dropped its deposit

interest rates during the year, which tended to support capital markets.

Management report for the 2019 financial year

2. Positioning of the Bank

Quirin Privatbank (hereinafter referred to as “Quirin Privatbank” or “the Bank”)

operates three strategic business areas through private banking, capital

markets and its subsidiary, quirion AG (hereinafter referred to as “quirion").

The focus of activities in all three business areas is to provide appropriate

services and to thereby generate commission income.

In private banking and with quirion, the bank adheres to the principle of

providing fully independent investment advice (“fee-based advice”), which

means that financial advice and services are paid for exclusively and directly

by the client. Independent advice means both product and provider-neu-

tral consulting focused entirely on the client’s interests and hence not on

selling specific products. Private banking and quirion have different target

groups and therefore the needs of the clients and scope of advisory servic-

es differ, as does the range of products and services offered.

In private banking, we offer our wealthy private clients a personal and holis-

tic service at 13 branches throughout Germany. We provide financial advice

and assistance in terms of asset management and investment advice.

quirion is part of the Bank’s digital strategy, in which the investment con-

cept of Quirin Privatbank has been transferred to the digital world to make

it accessible to all investors (so-called robo-advice).

In the capital markets business, the Bank supports and advises companies

on equity and debt capital financing measures.

As part of its business strategy, Quirin Privatbank pursues the following

overarching objectives:

♦ To further raise its public profile

♦ To become “the” bank/brand in Germany for independent investment

advice

♦ To increase client assets under management in private banking

♦ To establish quirion in the top 5 for digital investment advice (so-called

robo-advisor)

Annual Report 2019

Management Report

34 35

2

Based on its business policy objectives, the Bank pursues company-fo-

cused aims of increasing company value, consolidating the ability to pay

dividends while taking sustainable aspects into greater account.

In addition to the three strategic business areas mentioned above, the Bank

operates the so-called BPO business (Business Process Outsourcing) in the

context of its remaining contractual obligations. The Bank has transferred

these activities to Avaloq Sourcing (Europe) AG. It is only involved in the

BPO business to the extent that it functions as a banking partner for Avaloq

Sourcing (Europe) AG for services that require a banking licence (e.g. the

custody of securities by other securities clearing and deposit banks).

The Bank manages its business activities and business development ac-

cording to financial and non-financial performance indicators, the amount

and development of which are reported in the annual financial statements

and management report. Net income and total capital ratio are among the

most important financial performance indicators. Other financial perfor-

mance indicators are the commission surplus and cost/income ratio (CIR).

The CIR is calculated before the allocation of overhead costs and is defined

as the ratio of operating costs to operating income. The most significant

non-financial performance indicator is the amount of assets under man-

agement (AuM). Other non-financial performance indicators are customer

figures and customer satisfaction.

Private banking business area

The private banking business area provides services to clients with liquid

assets of €200,000 and above. The Bank offers its private banking services

in branches nationwide and thus ensures locally based personal consulting

for clients. Client services are provided exclusively by financial advisors who

are permanent employees of the Bank. Financial advice is offered in the

form of investment advice and asset management, with the Bank focusing

especially on asset management.

The core element in the private banking business and basis for the current

growth strategy is the asset management concept, which underpins the

management of client assets as part of the Bank’s services in this area.

The Bank’s in-house asset management comprises three major building

blocks bearing the title “Market – Opinion – Knowledge”, which can be

combined individually. Various investment strategies are possible within

the blocks depending on the client’s risk-bearing capacity. What is special

about the concept is the combination of different, clearly defined sources

of returns, each of which is subject to different fluctuation margins and

risks. In 2019 an asset management strategy focusing on sustainability was

added under the title “Responsibility”.

quirion

As a 100% subsidiary of Quirin Privatbank, quirion AG operates an online

platform through which private clients with a minimum investment amount

of €1,000 are offered various forms of online asset management (known as

“robo-advice”). Based on the “Market” and “Responsibility” components in

Quirin Privatbank’s asset management, quirion investors have ten different

investment strategies at their disposal, with the difference depending on

the client’s risk tolerance level in the share quota. quirion’s services, which

are directed at digitally, or at least online savvy clients, are flanked by a sus-

tainable investment strategy and pension plan management.

Capital markets business sector

In the capital markets business sector, companies and the entrepreneurs

behind them are supported in their business ventures. The capital markets

business offers access to national and international investors in the Euro-

pean financial centres. In recent years, more than 300 transactions with a

volume of more than €13 billion have been successfully carried out.

In order to best meet the demanding requirements of its clients, the capital

markets business is divided into four areas, each with its own specialists.

Corporate Finance develops and implements customised financing con-

cepts for its clients that reflect the client’s objectives, whether it be equity,

debt or hybrid financing, secondary placements, takeover bids, squeeze-

outs, share and bond buyback programmes or stock market approvals and

listings.

Our Institutional Client service offers a wide range of investment options,

which are developed and organised with and for the clients, from trading

in equities and ETFs to government and corporate bonds. It is specialised

in the implementation of trading strategies under a best execution policy,

and offers order routing to all major international stock exchanges. In this

connection, it also regularly and successfully provides support to Corpo-

rate Finance with its capital market transactions.

Annual Report 2019

Management Report

36 37

2

Institutional Research prepares fundamental company analyses, company

studies, market analyses and industry reports, with the focus on selected

German small and mid-caps. Corporate Finance’s capital market transac-

tions are supported by the aforementioned research findings.

Capital Markets encompasses the procedural and technical processing of

capital market transactions and other related services.

3. Business development

Overview

Quirin Privatbank looks back on a highly successful business year. With

profit after taxes of €5.9 million, the net result has improved by 50% com-

pared to the previous year (€3.9 million). It must be noted that the previous

year’s result included quirion’s earnings contributions prior to the spin-off

as of 1 July 2018. The planned earnings corridor of €2.9 to €3.4 million was

thus significantly exceeded. This encouraging development is accounted

for by both the private client and, in particular, the capital markets business.

The segment results for both business areas far exceeded expectations. The

pre-tax return on equity for the Bank as a whole was 13.8%.

Private banking was able to continue its strong performance of the previous

years and ratchet up growth of its clients and client assets. At around €350

million in 2019, net cash inflows from the 13 branches nationwide were up

60% compared to the net cash inflows of €220 million in 2018. Assets under

management in private banking amounted to €3.9 billion as of 31 Decem-

ber 2019. Together with corporate clients and quirion, Quirin Privatbank

thus manages a total of €4.4 billion.

Some €2.9 billion of the client assets managed in private banking now fall

within the scope of asset management. This corresponds to a share of 74%,

an increase of three percentage points on the previous year. The strategic

target for this rate has been raised from 75% to 90%.

Compared with the previous year, income from private banking was ramped

up by 29% due to high net cash inflows and the positive performance of cli-

ent portfolios. Since at the same time administrative expenses rose by only

12%, the contribution to earnings by the business sector in 2019 has im-

proved significantly and is above the level expected. The CIR of the private

banking business has thus improved from 85% to 75%.

quirion AG, which is included in the consolidated financial statements and

whose client accounts and deposits are managed by Quirin Privatbank, has

also continued to develop positively. At the end of the financial year, quiri-

on managed around 14,400 clients and €370 million worth of client assets.

With a growth of 170%, the number of clients almost trebled compared to

the previous year.

Conditions for capital markets in 2019 remained challenging in view of Mi-

FID II and the persistently low interest rate environment. Despite this, busi-

ness in our Institutional Client service was stabilised at a low level and the

trading result somewhat improved. In view of renewed positive develop-

ments in the project business of Corporate Finance and in Capital Markets,

overall the capital markets business achieved an improvement in earnings

in 2019 compared to the previous year. On this basis, the CIR has decreased

from 48% to 42%.

The encouraging development in business was used to form a contingency

reserve in accordance with section 340g HGB (German commercial code)

and thus also to strengthen the bank’s own regulatory capital.

Income

The bank’s earnings are primarily determined by commission surplus, which

increased for the bank as a whole by 25% from €42.7 million in the previ-

ous year to €53.3 million. Both business areas contributed to the significant

improvement of the Bank’s key earning component, especially the private

banking business due to the positive development in client asset manage-

ment.

Net interest income (including current income from equities and other var-

iable-yield securities) is mainly generated by cash and cash equivalents in-

vested predominantly in securities and, at €2.1 million, was approximately

22% lower than the previous year’s figure of €2.7 million. The decline is due

to both the significantly higher negative interest income on balances with

banks, especially the Deutsche Bundesbank, and to the higher average cash

reserve for the year. On the other hand, interest income from fixed-interest

securities has also dropped as the result of maturities and fundamentally

lower interest rates.

Annual Report 2019

Management Report

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2

Following a weak 2018 the net trading income has increased a little and

amounted to €2.2 million (previous year €1.3 million) in the year under re-

view. Net trading income includes income from the reversal of the fund for

general banking risks in accordance with section 340e paragraph 4 HGB

amounting to €10,000 (previous year an expense of €1,000 from additions

to the fund).

Other operating income amounted to €3.4 million and is thus close to the

previous year’s figure of €3.2 million. It includes income from the reim-

bursement of third-party costs passed on and from agency services in con-

nection with the remaining BPO activities (€1.5 million), as well as income

from the reversal of provisions (€0.5 million) and currency translation (€1.1

million).

Administrative expenses amounted to €46.5 million in the year under re-

view and rose by 6 % compared with the previous year. This is due in par-

ticular to a rise in personnel costs entailed by the growth-induced increase

in the number of employees and an earnings-related increase in variable

remuneration components. Other administrative costs declined by 6%,

although it must be taken into account that quirion was proportionately

included in the previous year’s figure up to the spin-off. These and other

overheads are charged to the business areas according to their utilisation

of the regulatory capitals.

Depreciation and amortisation rose from €0.8 million in the previous year

to €0.9 million. The rise is largely due to unscheduled write-downs in the

year under review.

Risk provisioning resulted in a charge against earnings of -€0.7 million for

the 2019 financial year (previous year -€0.5 million). Besides loan loss pro-

visions this figure also includes negative valuation effects for securities in

the liquidity reserve.

Net income from financial assets amounted to €0.0 million compared to

-€0.1 million in the previous year.

In accordance with section 340g HGB the Bank increased the fund for gen-

eral banking risks by €5 million in the financial year under review. Together

with the mandatory reserve pursuant to section 340e (4) HGB the fund

amounted to €7.4 million as of the reporting date.

After taxes of €2 million (previous year €0.7 million), Quirin Privatbank gen-

erated a net profit of €5.9 million for the 2019 financial year, thus signifi-

cantly exceeding expectations.

In addition to the two members of the Management Board, the annual av-

erage number of employees for 2019 was 229 (previous year 218), with 235

employees (previous year 215) as of the balance sheet date.

Financial position

In addition to equity, the Bank finances the business in particular through

overnight client deposits. The Bank’s solvency was maintained at all times

during the reporting period. For further details of the solvency situation and

risks, please refer to the risk report.

The share capital of the Company amounts to €43,412,923 and is divided

into 43,412,923 no-par value bearer shares with dividend entitlement. At

the balance sheet date the share capital was held by the following share-

holders:

The shares of Quirin Privatbank are listed in the Basic Board, a segment of

the Open Market of the Frankfurt Stock Exchange.

In accordance with the Articles of Association, as of the reporting date the

Company also had unutilised share capital of €21,706,000 ("authorised

share capital 2018“) and up to €17 million ("contingent capital 2018“) to

service financing instruments.

For further details regarding authorised and contingent capital, please refer

to the notes to the annual financial statements.

Asset status

Total assets amounted to €609 million as of the reporting date, an increase

of €123 million compared with the end of 2018. The balance sheet struc-

ture has changed moderately. The asset side of the balance sheet contin-

Shareholders % of share capital

Berliner Effektengesellschaft AG 25.3

Management Board of Quirin Privatbank AG 19.0

Riedel Gruppe 14.9

Diversified holdings 40.7

Annual Report 2019

Management Report

40 41

2

ues to be dominated by the investment of client deposits. However, this is

due to security maturities, which were only reinvested to a modest extent

in 2019, and higher client deposits at balance sheet date, mainly comprising

credit balances with the Deutsche Bundesbank, which rose by €241 mil-

lion to €400 million as per the balance sheet date. By contrast, liabilities to

banks decreased to €31 million (previous year €132 million). Compared to

the previous year’s balance sheet date, debt and other fixed-interest secu-

rities as well as shares and other variable-yield securities declined by a total

of €28 million to €132 million. In the course of the year, interests in affiliated

companies rose from €3 million to €7 million and loans and advances to

customers, mainly resulting from client lending, increased slightly to €33

million.

The liabilities side of the balance sheet changed only marginally compared

with the previous year. At €439 million, the main item is client deposits,

which are €178 million higher than in the previous year (€261 million) at bal-

ance sheet date. By contrast, liabilities to banks decreased by €58 million to

€68 million. Provisions increased by €4 million year-on-year to €16 million,

while the fund for general banking risks rose from €5 million to €7 million.

Other liabilities amount to €21 million (previous year €33 million).

Equity initially decreased by €1.3 million compared with year-end 2018 as

a result of the dividend payment in June 2019 and increased to €57 million

as a result of the profit for the year of €5.9 million and the revenue reserves

allocated from it. This corresponds to an increase in equity of €4.6 million

compared to the previous year.

In accordance with regulatory requirements, the Bank’s core capital ratio

remained comfortable at 22.6% (previous year 22.0%) at the balance sheet

date (prior to the approval of the annual financial statements).

Overall statement on the economic situation

The Bank was able to continue its steady development of recent years in

2019. Since 2013, Quirin Privatbank has consistently reported positive op-

erating results. As a consequence of the Bank’s gratifying business perfor-

mance, a dividend was paid to the shareholders for the first time in the 2017

financial year and in all subsequent years. At the Annual General Meeting in

June 2020, the distribution of a dividend for the 2019 financial year should

also be proposed in parallel with the strengthening of revenue reserves

from profit shown on the balance sheet.

A positive aspect is that the Bank can continue to refinance both past and

future investments in growth from its sustained profitability. It should be

mentioned that doing this (still) requires a fundamentally stable capital mar-

ket environment.

Main features of the remuneration system

The remuneration of the employees is determined individually by the Ex-

ecutive Board, taking into account their performance and position. The

remuneration of the Management Board is determined by the Supervisory

Board. The remuneration systems of Quirin Privatbank consist of fixed and

variable components. The variable remuneration components are contrac-

tually regulated, dependent on the achievement of certain corporate and/

or business area targets, or subject to other discretionary components.

Details of advances and loans granted, and contingent liabilities

At year end, there were no lines of credit for members of the Management

Board or the Supervisory Board.

Annual Report 2019

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2

4. Risk report

Safeguarding the Bank’s assets and securing long-term earnings requires

a balance between the level of risk and earnings potential. To this end, the

Bank has established a risk management system that is integrated into the

Bank’s strategy development process. This process is not solely geared to

the business strategy, but also includes an assessment of the risk-bearing

capacity of the Bank. It is forward-looking and has far-reaching implica-

tions for the commitment of resources. The Management Board is respon-

sible for the strategy process and has defined the scope of action for the

level of risk in its risk strategy. Bank-specific risk indicators are defined and

included in regular reporting.

The Management Board has laid down guidelines regarding the Bank’s risk

culture. They are intended to improve the identification and management

of risks, and ensure that decision-making processes deliver results that are

balanced from a risk perspective.

Risk management is an overall Bank responsibility and follows the principle

of the three lines of defence. This model ensures that risk management

is firmly ensconced throughout the Bank. It includes the clear allocation

of tasks, competences and responsibilities and forms the framework for

a functioning control and monitoring system. Irrespective of the internal

rules governing responsibility, the Management Board is responsible for the

proper organisation of business and its further development. This includes

responsibility for all material elements of risk management and the internal

control system. Each specialist department (first line of defence) bears the

prime responsibility for risks arising from operations. It ensures that oper-

ating activities are in line with business principles and internal guidelines. In

coordination with the second line of defence, it develops an appropriate

control environment to identify and monitor the risks associated with busi-

ness processes.

The second line of defence is understood to mean the risk management

functions and the control areas used to control and monitor the first line

of defence. This includes the definition of methods and procedures for risk

management, legal requirements and guidelines, the monitoring of risks

and controls, and reporting to the Bank’s executive bodies. A distinction is

made between risk management and financial control. The risk manage-

ment process involves monitoring and reporting on market price, counter-

party, liquidity, operational and other risks. Financial control is responsible

for monitoring and reporting business risks. In addition, the Processes &

Projects department is responsible for managing and monitoring outsourc-

ing management, and the IT security officer is responsible for IT risks. The

appropriate regulations to counter risks arising from advisory errors, money

laundering and fraud issued by the compliance department and the money

laundering and fraud commissioners are regularly checked to ensure ad-

herence. In addition, the compliance function, while considering the risks

involved, is responsible for identifying the main legal regulations and re-

quirements as well as the risks that may arise from non-compliance that

could jeopardise the assets of the institution.

Internal audit (the third line of defence) has an independent monitoring

function within the Bank. Among other things, it monitors the adequacy

and effectiveness of risk management and the internal control system.

From the risk culture and principle of the three lines of defence, it follows

that each employee of the Bank also has an individual responsibility for risk

management.

The risk strategy is based on a risk inventory that is updated regularly in

which the risks are defined, recorded and evaluated, and assigned to risk

categories. The inventory also includes an assessment of the materiality of

the risks affecting the Bank, taking into account relevant risk factors and its

risk-bearing capital. For all material risks identified, the Bank stipulates the

methods required to manage these risks. The entire risk is managed in such

a way that the Bank’s risk-bearing capacity is guaranteed at all times under

the going concern approach.

The limit system is based on the upper loss limits decided by the Manage-

ment Board. It is based on the risk appetite with due consideration being

given to the Bank’s risk-bearing capacity.

Through the established risk management and risk control, the Bank en-

sures that the main risks included in the risk-bearing capacity concept are

covered at all times by the risk cover fund and that risk-bearing capacity is

thus assured.

The Risk Committee of the Supervisory Board meets regularly and reports

to the Supervisory Board meetings.

Annual Report 2019

Management Report

44 45

2

Compared to the previous year, the utilisation of the overall risk in the

standard scenario has risen by €0.8 million as of the reporting date. In the

risk inventory, the level of liquidity risks was still deemed immaterial due to

the Bank’s adequate liquidity resources.

The stress scenario identified as relevant for the Bank captures historical pe-

riods of stress and models the potential consequences observed during the

global financial crisis of 2007/2008, and covers the impact of market develop-

ments in the aftermath of Fukushima (2011) and from mid-2015 to early 2016.

In order to monitor susceptibility to losses, stress tests for the main risks of

the Bank as well as sensitivity analyses are carried out on a quarterly basis

and reported to the Bank’s executive bodies.

The total utilisation rate for the stress scenario on the quarterly reporting

dates was a maximum 56 %. Limit excesses due to warehouse items com-

missioned by clients were approved by the Management Board; the overall

limit for the stress scenario was complied with in the reporting period.

For the risk-bearing capacity, the risk coverage potential is determined on

the basis of actual values at the balance sheet date. Equity is supplemented

by the fund for general banking risks and reduced by intangible assets and

the amount of regulatory capital requirements (Pillar 1). In determining risk

types, the Bank distinguishes between a standard scenario based on fore-

casts and stress tests that reflect the adverse development of risk positions.

Own funds amounted to €51.3 million as of the reporting date; after de-

duction of the regulatory own funds requirements of €226.8 million for risk

positions under Pillar 1, a free risk coverage potential of €25 million remains.

The total capital ratio was not less than 17.3% on the monthly reporting dates

of the financial year and amounted to 22.6% on the balance sheet date.

The new BaFin circular (06/2019) must be observed to determine the ratio

for sudden and unexpected interest rate changes in the banking book as at

31 December 2019. Under consideration of the new materiality thresholds

for foreign currency items, transactions hitherto deemed negligible are

now included in the determination of the interest rate change risk. Com-

parison with the previous determination of interest coefficients (previous

year 2.4%) is only possible to a limited extent. As at 31 December 2019 the

higher interest rate coefficient in the standard test was 0.43%.

Counterparty default risk

In addition to traditional credit and creditworthiness risks, counterparty de-

fault risk includes issuer, country, structural and investment risks as well as

disposal, migration and foreign currency risks.

Credit and creditworthy risks include the risk of a borrower or issuer failing

to meet its contractual obligations or failing to meet them on time.

Counterparty default risk is defined as the risk of financial loss that can

occur if the counterparty fails to meet contractual payment obligations.

Settlement itself may fail if the Bank has already made an advance payment

on delivery (reinstatement and settlement risks). Stock exchange, spot and

cash transactions are excluded. The Bank does not carry out so-called free

transactions.

At the Bank, country risks also covers country transfer risk.

Structural risks arise from the composition of the loan portfolio: cluster risks

can arise from certain industry, sector or regional concentrations, such as

the real estate sector or issues by the Federal Republic of Germany.

31 December 2019

Limit Utilisation Limit Utilisation

Default scenario in €’000Control scenario in €’000 Stress test in €’000

Counterparty risk 2,800 2,820 6,500 2,970

Market risk 1,000 882 5,000 2,212

Operational risk 1,300 416 3,500 1,248

Business risk 0 0 2,000 1,997

Overall risk 5,100 4,118 17,000 8,427

The Bank distinguishes between the following risk categories:

♦ Counterparty default risk

♦ Market risk

♦ Liquidity risk

♦ Operational risk

♦ Business risk

♦ Other risk

The following overview shows the limit structure and utilisation of risks de-

fined as material:

Annual Report 2019

Management Report

46 47

2

Credit decisions are made in accordance with the Bank’s current deci-

sion-making processes.

Loans are granted mainly in the form of securities-backed loans to pri-

vate individuals and sole proprietorships. The lending business is primarily

geared towards the national market.

The counterparty default risks for clients, counterparties, issuers and share-

holdings, taking into account collateral and country risks, are measured by a

Monte Carlo simulation (VaR) with a confidence level of 99% and 250 days

of historical data using the zeb risk software zeb.controirisk. For the proba-

bility of default (PD), the Bank uses the corresponding historical default rates

of Standard & Poor’s (S&P) for counterparties and issuers for the respective

risk classifications (assuming a probability of default of at least 0.03%) and

the default probabilities of Schufa Holding AG, Wiesbaden, and Creditreform

for private and corporate clients. Based on a loss given default (LGD) of 39 %

(45% up to 30 September 2019), one million default scenarios are calculated.

In the results, open lines are offset at 10% against the unsecured expo-

sure. Forward transactions are included at their credit equivalent value in

accordance with the regulatory market valuation method. The Bank does

not currently grant any foreign currency loans or hold any of its own invest-

ments in foreign currencies.

Of the gross exposure (market value or utilisation plus open lines) of €316

million (previous year € 357 million), an unsecured exposure of €167 million

(previous year €259 million) remains after deduction of collateral. The col-

lateral is valued at market value.

The Bank uses the expected and unexpected loss indicators for risk manage-

ment.

The assumed probabilities of default are regularly reviewed in relation to the

assumptions made.

Due to their insignificance, counterparty risks that may stem from unlisted

(OTC) derivatives are currently only taken into account within the scope of

regulatory capital adequacy.

The stress scenario takes into account the downgrading of the borrower’s

credit rating by one notch and the effects of reductions in the value of col-

lateral (realisation risks).

Furthermore, sensitivity analyses are used to determine the expected short-

fall and concentration risk ratios as well as S&P’s one-year migration rates

for European companies.

Breakdown of loan portfolio based on internal credit ratings as at balance

sheet date:

The internal credit ratings from 1 to 3 include investment grade shares.

The Bank has created risk provisions for defaulted loans in the amount of

the respective unsecured exposure. No significant change in risk provisions

is expected for the coming financial year.

Risk concentrations in currency loans, credit ratings, sectors or regions are

currently considered immaterial in terms of risk for the Bank.

Market risk

Market risk takes account of interest risk in the banking book, exchange risk,

foreign currency risk and credit spread risk (for securities holdings in the

trading and investment portfolios).

Generally the Bank does not trade on its own account (nostro) in shares,

derivatives or foreign currencies with the aim of generating short-term

profits. Furthermore, the Bank does not carry out currency options or

transactions in real estate and commodities. These activities are therefore

excluded from the comments on market risks.

The Bank executes securities orders and forward exchange transactions on

behalf of clients as commission transactions. Consequently, these are not

taken into account when measuring market risks.

The currency, value and maturity-matched valuation units (micro hedges)

of forward exchange transactions are valued in terms of risk on an indi-

Unsecured exposure in €’000 Unsecured exposure in %

Credit rating 1 20 12




Total 167 100

Annual Report 2019

Management Report

48 49

2

vidual transaction basis by using the mark-to-market accounting principle

and fully included in the risk. These transactions relate to clients and their

hedging activities and are of minor importance.

Risk utilisation is calculated daily based on the closing balances of the pre-

vious day. Limit excesses require the separate approval of the relevant au-

thorised representative.

Market risks are calculated by the zeb.control.risk–Trading system using the

historical simulation approach (VaR) with a 99% confidence level, a ten-day

holding period for the trading and banking book and a 250-day observation

period. The credit spreads are part of the VaR risk measure. The Bank uses

the daily and sector-specific credit spread curves (annual yield curves) of an

external market data provider.

The VaR contains the following individual results for interest rate risks, price,

currency and credit spread risks (in €’000) as at 31 December 2019:

For the stress scenario, the holding period is increased to 30 days, the in-

terest rate and credit spread curves are increased, and fluctuations in ex-

change rates are included. The sensitivity analyses show the impact of shifts

in the interest yield curve on net present value.

Liquidity risk

The Bank must always ensure that it is able to meet its payment obligations

at all times (insolvency risk). Liquidity risks include the risk of incurring high-

er refinancing costs resulting from a downgrade of its own credit rating or

due to general increases of funding spreads in the market (funding costs

risk) as well as market liquidity, call and maturity risks.

The Bank’s refinancing is predominantly via client deposits and, to a lesser

extent, via equity. In addition, the Bank can draw on the marginal lending

facility or open market operations of the European Central Bank (ECB) and

term deposits from institutional investors.

Call risks are managed by means of matching maturity liquid assets and by

investing in short-term realisable assets.

The Bank uses the zeb/integrated.treasury-manager system to measure li-

quidity risks. The individual payment cash flows are assigned to maturity

bands according to their (remaining) term. Liquidity gaps are previewed in

a liquidity gap analysis. The system compares these gaps with hypothetical

congruent refinancing at current market conditions. This is used to calcu-

late a theoretical present value refinancing loss, the effects of which are

simulated for sensitivity analyses in the event of a change in the refinancing

curve. The market liquidity risk (risk of a more difficult short-term realisa-

tion of assets due to a lack of sufficient market liquidity) is taken into ac-

count by different recovery rates for securities.

The Bank has put in place contingency plans to counter potential liquidity

crises.

The respective liquidity costs, benefits and risks are taken into account in

the Bank’s planning and are offset internally according to the source (inter-

nal transfer pricing system).

Treasury is responsible for operational liquidity management. Its decision is

based on the forecast refinancing requirement for the different time hori-

zons.

The Bank’s liquidity position was stable in the past financial year due to the

high level of client deposits. As at 31 December 2019, the LCR ratio was 2.47

(regulatory minimum 1.0). For the 2019 financial year as a whole, the ratio

was between 1.63 and 4.77.

The Bank also uses a liquidity at risk (LaR) approach to monitor liquidity

risks. The LaR refers to the payout surplus that is not exceeded during a

business day with a certain probability on the basis of historical data. With

the LaR, the bank determines how much liquidity it should hold in order to

meet its daily obligations. The calculated LaR for the period from 1 January

to 31 December 2019 at a 99% confidence level was around €86 million (at

a 95% confidence level around €66 million) and was secured by balances

due on demand and the Lombard lending facility at the European Central

Bank (ECB).

Quirin Privatbank is a member of the Compensation Scheme of German

Private Banks (EdB).

Price risk Currency risk Interest risk Credit spread risk

738 45 49 177

Annual Report 2019

Management Report

50 51

2

Operational risk

The Bank defines operational risk as the risk of loss resulting from inadequate

or failed internal processes, people and systems or from external events.

The Bank has created an organisational framework for systematically re-

cording operational risks throughout the Bank. Loss incidents are promptly

tracked and evaluated in a loss database.

Operational risk in the stress scenario is measured by using at least three

times the gross average of the last three years, and for additional stress

tests or sensitivity analyses, by trebling the Bank’s highest historical loss in

the loss database.

The Bank also uses an analytical self-assessment approach for the risk in-

ventory, with which potential new risks can be identified. This indicator for

operational risks is designed to highlight changes in measured risks against

the previous year and identify new weaknesses in the organisation and in

the processes and systems. Self-assessments are used to demand and fol-

low up on risk reduction measures from the relevant areas.

These measures are accompanied by systematic reviews and enhance-

ments to the internal control system, and by compliance regulations and

through appropriate monitoring measures in the areas affected (e.g. legal

department and HR).

Operational risks also include legal risks, which are managed by the legal

department. Appropriate provisions have been set aside for open legal pro-

ceedings.

The Bank’s success depends to a large extent on committed employees.

Regular analyses are therefore carried out on staff turnover, absenteeism

and personnel development measures with a view to creating appropriate

management controls.

The Bank has adopted an IT strategy including security guidelines. The se-

curity objectives are managed and monitored by the Information Security

Officer.

The operational risks in the past financial year were consistently in line with

the Bank’s risk-bearing capacity. Looking ahead, no operational risks are

expected to jeopardise the continued existence of the Bank as a going con-

cern.

Business risk

Cost risks, sales/revenue risks and strategic risks are grouped together un-

der business risks.

Cost risks are calculated as variances of actual costs from targeted costs

as a percentage of capacity utilisation. Variance and key ratio analyses are

carried out for planning purposes and as part of the regular target/actual

analyses.

Cost increases are contained within budget controls and budget account-

ability. As part of the target/actual analyses, budget overruns are promptly

discussed and approved.

In the case of sales/revenue risks, it is assumed that budgeted income will

not be exceeded if budgeted expenses remain constant. A slump in turn-

over/sales is also contained in alignment with the cost risks through in-

come monitoring and by those responsible for income. The sales/reve-

nue risk is classified as significant in private banking, in particular due to

the dependency on income from the performance of the equity and bond

markets, which in turn have a direct impact on the level of assets under

management.

The strategic risk of misjudging market potentials and trends is measured

and analysed by means of deviations from key factors relevant to sales and

turnover. As part of the strategy process, these analyses are incorporated

into the strategic considerations and lead accordingly to possible changes

and corrections.

Risk reporting includes the timely communication of risk-relevant informa-

tion to the relevant decision makers in compliance with the requirements

of BaFin’s Minimum Requirements for Risk Management (MaRisk). In addi-

tion to daily reporting on the limit utilisation of market price risks and coun-

terparty risks to the treasury, finance, front office and back office and the

Management Board, supplemental in-depth monthly reports are issued to

the same recipients, and a quarterly report is prepared for the Bank’s execu-

tive bodies, which also receive a monthly report on business developments.

Other risks

Other risks deemed as immaterial for the Bank include the pension pro-

vision risk and the securitisation risk, which does not apply to the Bank.

Accordingly, no effects are expected to jeopardise the continued existence

of the Bank as a going concern.

Annual Report 2019

Management Report

52 53

2

Summary and outlook for risk management

The Management Board has defined the Bank’s risks in the risk strategy tak-

ing into account the business strategy and the risk-bearing capacity. Based

on this, appropriate analyses, methods and performance indicators for

measuring and monitoring risks have been developed and implemented.

Risks in the standard scenario are identified on a daily basis, and the risks in

the stress scenario are identified and monitored regularly.

The main risks of the Bank are covered by the risk coverage potential. The Bank’s

risk ratios were well regulated during the financial year 2019 and at the balance

sheet date, and thus its risk-bearing capacity was assured (going concern).

At the beginning of 2020, the Bank adopted the new approach of the BaFin

risk-bearing capacity guidelines of May 2018. Aside from the regulatory

perspective, the Bank will also apply the cash value risk-bearing capacity

approach from the economic perspective.

5. Opportunities and forecast report

Outlook on future conditions

Based on currently available initial indicators for industrialised countries

overall and thus also for Germany, the economic prospects for 2020 look

fairly subdued. Although the data do not reveal any signs of a recession in

2020, with regard to the development of capital markets little support may

therefore be expected given the economic situation. By contrast, capital

markets may hope to benefit from the anticipated monetary policy of key

central banks, for a further loosening or at least not a tightening of mone-

tary policy is also assumed for 2020. The US Federal Reserve, for instance,

has announced that it will probably not raise interest rates in 2020.

Opportunities and risks

With the combination of an independent approach and asset management

based on investment theories, Quirin Privatbank occupies a truly unique

position among private banks in Germany. Our business model thus offers

potential for further client growth, as well as an increase in the volume of

assets under management and associated growth in earnings.

The earnings potential depends to a certain extent on how the capital mar-

kets develop. The risk is that strong market volatility or prolonged periods

of weakness may lead to a lower assessment basis for determining and

settling advisory fees, and the return on investment expected by our clients

may not be met. At the same time, the intense competition in the German

banking sector must be seen as a risk with regard to the development of

margins.

We base our growth opportunities on the Bank’s growing reputation, high

level of client satisfaction and the willingness of clients to recommend our

Bank. The low and negative interest rate environment is also prompting

many people to review the structure of their investments. Against this back-

drop, the Bank will continue its targeted expansion of advisory and sales

capacities in 2020 and subsequent years.

However, the planned increase in advisory and sales capacities also entails

associated cost risks – especially if client and/or volume growth cannot be

generated at the expected level or speed.

We also anticipate client and volume growth for quirion AG in 2020. The

market for so-called robo-advisors grew strongly again in 2019. According

to all forecasts, this dynamic growth, in which quirion AG as a subsidiary of

Quirin Privatbank will participate, will continue in the upcoming years. With

regard to the increasing market and intensity of competition and high client

acquisition costs, there are risk factors for the business risks of the subsidi-

ary, which can be transferred to the Bank via the provision of the necessary

regulatory capital or valuation of the investment book value.

In the capital market business, the Bank continues to be exposed to strong-

er competition, which has put margins under sustained pressure in recent

years. Opportunities in this business area lie in banks’ continuing funda-

mental reluctance to engage in traditional lending business with SME cor-

porate clients and the high corporate valuations currently prevailing on the

capital market. Both on the debt and equity side, success in this respect

however depends strongly on the performance and absorption capacities

of issues on the capital markets. The new provisions in MiFID II regarding

the separate billing of research services continue to be viewed as critical for

business development in the capital market business.

The protracted phase of low interest rates continues to weigh on the Bank’s

earnings. On the one hand, average interest margins are declining, espe-

cially from the reinvestment of matured securities, and on the other, nega-

Annual Report 2019

Management Report

54 55

2

tive interest rates for credit balances with the central and other banks com-

promise interest results.

Ultimately, the development of the regulatory environment must also be

taken into account as a potential risk. This development affects the bank-

ing sector in general and Quirin Privatbank in particular. New regulatory

requirements, which have already come into force or are foreseeable, are

increasingly driving up costs, increasing complexity and tying up resources.

Forecast

We expect the positive developments of previous years to continue into the

2020 financial year and therefore anticipate positive marginal returns from

the operative business across all business areas. Due to the planned con-

tinued growth investments the total capital ratio will likely decline slightly.

In the private banking business we have also set ourselves ambitious growth

goals for 2020. We consequently base our assumptions on a significant rise

in assets under management and, in turn, an increase in net commission

income. As we plan administration costs on approximately the same level

as in 2019, we expect an improvement in marginal returns for the business

area overall in 2020.

The capital markets business is particularly difficult to predict due to the de-

pendence on deal flow and the capital market environment. On the basis of

conservative budget estimates, the Bank expects this business area to make

a positive contribution to earnings in 2020, albeit significantly lower than in

the current 2019 financial year.

Although we anticipate that treasury, which is primarily responsible for gen-

erating and managing the Bank’s net interest income, will continue to make

a positive contribution to the overall earnings of the Bank, it will not match

the level of the previous financial year due to the persistence of low and

negative interest rates.

On the whole, assuming that there are no major or prolonged upheavals

in the capital markets, we expect the Bank’s individual financial statements

for 2020 to show a profit after tax of between €5.7 million and €6.2 million.

Summary statement

Quirin Privatbank continues to face fierce competition, both in the high net

worth market and in the capital markets business. Overall, we have set the

course for the Bank’s continued positive development by positioning and

focusing the Bank and laying the foundation for future growth investments.

We are very satisfied with the business performance in 2019 and believe

that the very good financial result and positive feedback from our clients

reaffirm that our chosen course is correct. Against this backdrop, we have

been able once again to strengthen the Bank’s capital base by making al-

locations to statutory reserves and other reserves. In addition, we intend

to propose to the Annual General Meeting that a dividend increased from

3 cents to 7 cents per dividend-bearing share be distributed again with the

remaining balance sheet profit of €3.0 million. Furthermore, we are still

able to finance investments to fuel future growth from the profitability of

the Bank.

All in all, Quirin Privatbank’s continued solid performance of the past years

confirms that we have a sustainable business model with sound earnings

potential.

However, the overall conditions look set to remain demanding. The pro-

longed low interest rates and the emerging economic risks combined with

heightened geopolitical tensions and increasing regulatory requirements

represent a challenging environment for the Bank.

Berlin, 26 February 2020


The Management Board

Karl Matthäus SchmidtChairman of the Management Board


Annual Report 2019

Management Report

56 57

3

3Balance sheet 60

Profit and loss account 64

Annex 68

Annual Financial Statements 2019

Annual Report 2019

Annual Financial Statements

58 59

3

Assets 31/12/2019 31/12/2018

€ € € €

1. Cash funds

a) cash on hand 104,958.52 120,198.34

b) balances with central banks 400,389,131.05 159,175,551.44

of which: with the Deutsche Bundesbank: €400,389,131.05 (159,175,551.44)

400,494,089.57 159,295,749.78

3. Loans and advances to banks

a) payable on demand 30,200,239.21 122,286,923.05

b) other loans and advances 599,383.33 9,551,505.11

30,799,622.54 131,838,428.16

4. Loans and advances to clients 33,219,416.13 28,037,513.92

5. Debt and other fixed-income securities

b) bonds and notes

ba) public-sector issuers 20,433,850.70 31,188,443.27

of which: eligible as collateral with the Deutsche Bundesbank: €20,162,763.47 (28,609,677.13)

bb) other issuers 73,611,191.09 103,263,291.70

of which: eligible as collateral with the Deutsche Bundesbank: €57,397,279.79 (65,891,709.06)

94,045,041.79 134,451,734.97

94,045,041.79 134,451,734.97

6. Equities and other variable-yield securities 37,508,977.52 25,583,020.58

6a. Trading portfolio 2,739,007.92 847,814.84

7. Participating interests 1,323.00 1,323.00

8. Interests in affiliated companies, of which: 7,300,000.00 3,300,000.00

in financial service providers €7,300,000.00 (3,300,000.00)

11. Intangible assets

b) purchased concessions, industrial property rights and similar rights and assets 761,212.00 732,676.00

d) advance payments made 0.00 30,819.00

761,212.00 763,495.00

12. Tangible fixed assets 666,435.38 861,059.59

14. Other assets 668,339.23 691,148.26

15. Deferred expenses 520,172.82 370,906.97

Total assets 608,723,637.90 486,042,195.07

Balance as at 31 December 2019of Quirin Privatbank AG

Annual Report 2019


60 61

3

Liabilities 31/12/2019 31/12/2018

€ € € €

1. Liabilities to banks

a) payable on demand 68,065,332.96 125,676,090.09

68,065,332.96 125,676,090.09

2. Liabilities to customers

b) other liabilities

ba) payable on demand 438,514,573.77 258,661,672.17

bb) with agreed maturity or period of notice 169,922.87 2,174,757.98

438,684,496.64 260,836,430.15

438,684,496.64 260,836,430.15

3a. Trading portfolio 14,538.79 3,923.67

5. Other liabilities 20,741,732.84 32,594,205.72

6. Deferred expenses 749,866.61 3,241.76

7. Provisions

b) tax provisions 1,426,000.00 580,436.68

c) other provisions 14,883,531.37 11,731,904.01

16,309,531.37 12,312,340.69

11. Fund for general banking risks 7,367,122.08 2,377,369.60

12. Equity capital

a) subscribed capital 43,412,923.00 43,412,923.00

b) capital reserve 164,351.98 164,351.98

c) retained earnings

ca) statutory reserves 898,692.07 605,951.52

cd) other retained earnings 9,276,144.95 6,752,979.20

10,174,837.02 7,358,930.72

d) net retained profit 3,038,904.61 1,302,387.69

56,791,016.61 52,238,593.39

Total liabilities 608,723,637.90 486,042,195.07

1. Contingent liabilities

b) liabilities from guarantees and indemnity agreements 1,353,968.69 1,014,479.60

Balance as at 31 December 2019of Quirin Privatbank AG

Annual Report 2019


62 63

3

Profit and loss accountof Quirin Privatbank AG

for the period from 1 January to 31 December 2019 01.01.–31.12.2018

€ € € €

1. Interest income from

a) lending and money market transactions

aa) interest income without negative interest 495,876.96 473,890.89

ab) negative interest on credit balances -1,249,577.66 -738,020.46

-753,700.70 -264,129.57

b) fixed-interest securities and debt register claims 1,086,654.38 1,552,847.85

332,953.68 1,288,718.28

2. 2. Interest expenses

a) interest expenses without positive interest 71,761.38 166,079.53

b) positive interest on liabilities -174,655.40 -232,222.77

-102,894.02 -66,143.24

435,847.70 1,354,861.52

3. Current income from

a) equities and other variable-yield securities 1,681,354.29 1,376,813.04

1,681,354.29 1,376,813.04

5. Commission income 65,001,142.61 53,123,605.22

6. Commission expenses 11,692,997.39 10,414,329.40

53,308,145.22 42,709,275.82

7. Net income from trading portfolio 2,200,813.15 1,310,293.39

8. Other operating income 4,072,693.40 3,427,288.23

10. General administrative expenses

a) staff expenses

aa) wages and salaries 24,580,054.42 21,176,755.87

ab) social security, pension and other benefit costs 2,949,564.95 2,472,904.47

of which: for pensions €122,578.64 (93,438.79)

27,529,619.37 23,649,660.34

b) other administrative expenses 18,973,723.67 20,241,212.59

46,503,343.04 43,890,872.93

11. Depreciation, amortisation and write-downs of intangible and tangible assets 941,955.64 770,129.23

12. Other operating expenses 690,313.67 234,030.27

13. Write-downs and valuation allowances of loans and advances and specific securities, as well asadditions to loan loss provisions 727,043.56 506,417.81

-727,043.56 -506,417.81

Annual Report 2019


64 65

3

for the period from 1 January to 31 December 2019 01.01.–31.12.2018

€ € € €

15. Write-downs and valuation allowances of equity investments, interests in affiliated companies, and securities held as fixed assets0.00 131,750.00

0.00 -131,750.00

18. Income (-) from amounts released from the fund for general banking risks -5,000,000.00 0.00

19. Results from normal business activities 7,836,197.85 4,645,331.76

23. Taxes on income and earnings 1,741,316.44 676,974.97

24. Other taxes not reported under item 12 240,070.50 70,977.00

1,981,386.94 747,951.97

27. Annual net profit 5,854,810.91 3,897,379.79

32. Transfers to revenue reserves

a) to statutory reserves 292,740.55 194,868.99

d) to other reserves 2,523,165.75 2,400,123.11

2,815,906.30 2,594,992.10

34. Retained earnings/accumulated deficit 3,038,904.61 1,302,387.69

Profit and loss accountof Quirin Privatbank AG

Annual Report 2019


66 67

3

A. General information on the preparation of the annual finan-

cial statements to 31 December 2019 and on the accounting and

valuation methods

Preparation of the annual financial statements

Quirin Privatbank AG, based in Berlin, is registered in Section B of the Char-

lottenburg District Court Commercial Register under the number HRB

87859 B.

The financial statements of Quirin Privatbank AG as at 31 December 2019

were prepared in accordance with the provisions laid down in the German

Commercial Code (HGB) in conjunction with the relevant regulations of the

Stock Corporation Act (AktG) and the Regulation on Accounting for Credit

and Financial Service Institutions (RechKredV).

The structure of the balance sheet and the profit and loss account complies

with section 2 of RechKredV, forms 1 and 3. The profit and loss account was

prepared in vertical format. For reasons of transparency, the option pursu-

ant to section 265 (8) HGB was applied. This option is similarly used for the

“of which” items on the forms.

Accounting and valuation methods

The accounting and valuation methods applied to the items of the balance

sheet and the profit and loss calculations correspond to sections 242 et seq.

and 340 et seq. HGB as well as RechKredV in its current version. With the

exception of low-value assets, the presentation, structure, method and val-

uation of the annual financial statements are consistent with the principles

applied in the previous year. Loans and advances to customers and liabili-

ties to customers include all loans and advances to clients and liabilities to

clients with whom a direct relationship exists.

Assets and liabilities denoted in a foreign currency are translated in accord-

ance with section 256a HGB in conjunction with section 340h HGB at the

Annex to Quirin Privatbank AG for the financial year 2019

spot middle rate as at the reporting date. As a result, these financial state-

ments include unrealised gains and losses from currency translation. These

are reported under other operating income and expenses. If the residual

term is more than one year, the amounts are translated using the mean

spot rate at the time they arise. In the case of changes in exchange rates up

to the balance sheet date, the valuation is generally based on the average

spot exchange rate at balance sheet date, applying the lower of cost or

market principle on the assets side and the highest value principle on the

liabilities side.

Forward transactions are translated at the applicable forward rates on the

balance sheet date.

Foreign exchange transactions are assigned to the trading book unless the

valuation units fall under section 254 HGB. The valuation results of forward

transactions are reported under net trading income. Split forward rates are

used to value currency swaps. The accrual of swap positions is also includ-

ed in the net trading income.

Cash funds and loans and advances to banks are shown at nominal value.

Loans and advances to banks and liabilities to banks are partially offset un-

der compensating balance agreements.

Loans and advances to customers are shown at nominal value. Specific

provisions are set up that adequately provide for foreseeable risks. General

provisions are created for latent risks relating to accounts receivable.

Debt and other fixed-income securities are recognised at cost and val-

ued at the moderated lower of cost or market principle. Premiums and

discounts from fixed-income securities acquired above or below par are

amortised over the period. Debt and other fixed-income securities in the

liquidity reserve are recognised at cost or valued at the lower of cost value

at balance sheet date.

Equities and other variable-yield securities in the liquidity reserve are valued

on the basis of market price at balance sheet date in accordance with the

strict lower of cost or market principle. Equities and other variable-yield

securities held as fixed assets are treated in accordance with the moderated

lower of cost or market principle.

Financial instruments in the trading portfolio are valued in accordance with

section 340e (3) sentence 1 HGB at their fair value as at balance sheet date

Annual Report 2019


68 69

3

after deducting a risk discount. The risk discount is calculated using the

value-at-risk method and deducted from unrealised valuation gains in the

trading portfolio. This is based on a ten-day holding period, an observation

period of one year and a confidence level of 99.0%. In accordance with

section 340c (1) HGB, the risk discount is recognised as an expense in the

net income from the trading portfolio. In addition, part of the net income

from the trading portfolio is allocated to the fund for general banking risks

in accordance with section 340e (4) HGB. The criteria laid down by the

Bank for the inclusion of financial instruments in the trading portfolio did

not change in the financial year.

Accrued interest on loans and advances, liabilities and securities is added to

the corresponding nominal amounts and shown in the respective balance

sheet items.

Participating interests and interests in affiliated companies are valued at

cost or at the lower of cost value.

Purchased intangible assets and the tangible fixed assets are capitalised at

acquisition cost less scheduled depreciation. Depreciation is calculated us-

ing the straight-line method over the respective useful life. Standard soft-

ware is reported under intangible assets. Fixed assets with an acquisition

value of less than €250 are immediately booked as expenses. As of 2019,

independently usable fixed assets with an acquisition value of more than

€250, but less than €800 are immediately booked as expenses. Up to 2018

low-value assets were posted as a collective item and depreciated over five

years using the straight-line method.

Anticipated long-term impairments in the value of fixed assets are accounted

for by unscheduled depreciation. If the reasons for these lower valuations no

longer apply, the assets are written back to a maximum of the amortised cost.

Other assets are generally stated at nominal value.

Liabilities are included in the balance sheet at their settlement value.

Provisions take into account all foreseeable risks and uncertain contin-

gent liabilities and are recognised in the amount of the required settlement

amount, as determined based on prudent commercial judgement. Future

price and cost increases are taken into account if there is sufficient objec-

tive evidence that they will occur. Provisions with a remaining term of more

than one year are discounted using the average market interest rate of the

past seven financial years corresponding to their remaining term as at the

balance sheet date, as disclosed by the Deutsche Bundesbank.

Provisions for pension obligations are determined based on actuarial prin-

ciples and are offset against assets that serve exclusively to settle pension

obligations and similar obligations (cover assets) and are not accessible to

all other creditors. The cover assets held to meet the obligations from pen-

sion plans are measured at fair value. If the amount of the obligations ex-

ceeds the fair value of the cover assets, an appropriate provision is set aside.

To hedge against general banking risks, a fund for general banking risks pursu-

ant to section 340g HGB is shown on the liabilities side of the balance sheet.

This fund includes mandatory sums set aside in accordance with section 340e

(4) HGB to offset the risk of future net expenses of the trading portfolio.

Formulation of valuation units

Valuation units within the meaning of section 254 HGB are set up for for-

ward exchange transactions which the Bank concludes as part of its cli-

ent business, and are hedged against the currency risks contained in these

transactions by means of corresponding offsetting transactions. The valu-

ation units are set up at micro level, i.e. the changes in value attributable

to the hedged portion of the underlying transaction are offset by individual

hedging instruments. The critical terms match method is used to demon-

strate that the offsetting changes in value from the hedged item and the

hedging instrument have been offset. This documents that the key param-

eters of the underlying transaction and the hedged item match. For this

reason, it can be assumed that the changes in value relating to the hedged

risk from the hedged item and the hedging transaction will fully offset each

other until final maturity. The effective portion of a valuation unit is shown

in the balance sheet using the net hedge presentation method (“Einfrie-

rungsmethode”). In addition, any ineffectiveness based on the unhedged

risk is treated in accordance with general accounting regulations.

Valuation of interest rate instruments of the banking book

For the purpose of ensuring a loss-free valuation of the banking book or

any excess liability, the future cash flows of all interest-bearing transac-

tions with fixed interest rates are included in the evaluation. The cash values

determined as of the balance sheet date are compared with the corre-

sponding book values. In addition, appropriate pro rata risk and administra-

tive costs are taken into account and are reported on the basis of the IDW

Annual Report 2019


70 71

3

statement on the loss-free valuation of interest-bearing transactions in the

banking book (BFA 3). As at reporting date, there was no excess liability and

therefore no requirement to create a provision.

B. Notes to the balance sheet

I. Assets

Debt and other fixed-income securities

As of the reporting date, the balance sheet item debt and other fixed-in-

come securities includes €14,807,000 in securities from the liquidity re-

serve and €79,238,000 in securities held as fixed assets. Securities maturing

in the past financial year amounted to €38,817,000. Equities and other var-

iable-yield securities were partly purchased with the funds released. Debt

and other fixed-income securities include securities with a book value of

€36,499,000 that will mature in the following year.

Equities and other variable-yield securities

Of the securities reported under equities and other variable-yield securities,

securities amounting to €8,149,000 are allocated to the liquidity reserve

and €29,360,000 to fixed assets.

Trading assets

Trading assets and the risk premiums retained from the unrealised valuation

advantages of these financial instruments can be broken down as follows

as of the balance sheet date:

In €’000 31/12/2019 31/12/2018

Book value VaR included Book value VaR included

Derivatives 0 2 0 4

Debt and other fixed-income securities 151 0 125 0

Equities and other variable-yield securities 2,588 51 723 0

Total 2,739 53 848 4

The derivatives relate to positive market values of pending forward foreign

exchange transactions held for trading. The nominal amount of these for-

ward exchange transactions converted at the forward rate at transaction

closing amounted to €1.723 million as of balance sheet date (previous year

€2.4 million).

Breakdown of marketable securities

In €’000 31/12/2019 31/12/2018

Debt and other fixed-income secu-rities

marketable 94,045 134,452

of which listed 75,026 106,810

of which unlisted 19,019 27,642

Equities and other variable-yield securities

marketable 6,785 4,858

of which listed 6,153 3,092

of which unlisted 632 1,766

Financial assets

Interests in RIVA DI MORCOTE FINE ARTS GmbH, Berlin, are reported un-

der participating interests. The share capital of the company amounts to

€25,000. The Bank’s interest in the share capital amounts to 5.288% and

shown with an investment value of €1,000.

Interests in affiliated companies

The Bank holds 100% of the shares in quirion AG. The Bank is a financial

service company with permission to provide financial services pursuant to

section 32 (1) of the German Banking Act (KWG). It therefore qualifies as a

large corporation within the meaning of section 340a (1) in conjunction

with 340 (4) HGB. The share capital of the company amounts to €501,000

and the book value of the shareholding to €3,300,000.

Securities held as fixed assets

Securities allocated to fixed assets with a book value of €79,238,000 relate

to bonds that serve the business in the long term and for which there is

a general intention to hold them until maturity. In addition, shares in an

investment fund with a book value of €29,360,000 are held as fixed assets.

Annual Report 2019


72 73

3

The €183,000 (previous year €62,000) in write-downs on intangible assets

in the financial year relate to unscheduled write-downs. In connection with

the amendment to the accounting option for low-value assets as of 2019

the remaining collective items from 2016 to 2018 amounting to a value of

€122,000 were posted as unscheduled write-downs.

Assets analysis

In €’000Securities held as fixed assets

Partic-ipating

interestsin affiliated companies Intangible assets

Tangible assets Total

Historic costs 126,550 426 3,305 5,347 5,022 140,650

Additions during financial year 20,000 0 4,000 558 221 24,779

Disposals during financial year 39,000 0 0 0 3 39,003

Total depreciation 640 425 5 5,144 4,573 10,787

Depreciation for financial year 0 0 0 561 381 942

Residual book value 31.12.2019

106,910 1 7,300 761 667 115,639

Residual book value previous year

125,910 1 3,300 764 861 130,836

Other assets

In €’000 31/12/2019 31/12/2018

Outstanding settlements from pending securities transactions 7 0

Trade receivables 391 412

Tax receivables 3 0

Capitalised current assets 267 279

Cheques and items received for collection 0 0

Total 668 691

Deferred expenses

Deferred expenses include accruals for deliveries and services with terms

of up to one year amounting to €500,000 and for up to five years in the

amount of €20,000.

Deferred taxes

Quirin Privatbank AG exercised the option under section 274 (1) sentence 2

HGB to omit surplus deferred tax assets amounting to €13,353,000 in the

balance sheet.

Surplus deferred tax assets amounting to €1,944,000 are due to recogni-

tion and measurement differences between the commercial balance sheet

and the tax balance sheet in provisions (€958,000), the fund for general

banking risks (€2,296,000), securities (€517,000) and the company pension

scheme (€397,000). In addition, there are surplus deferred tax assets result-

ing from tax losses carried forward (€11,410,000) pursuant to section 274 (1)

sentence 4 HGB. These surplus deferred tax assets are based on an average

tax rate of 31.2%.

Foreign currencies

The total volume of assets denominated in foreign currency amounts to the

equivalent of €17,647,000.

II. Liabilities

Affiliated companies

Under other liabilities to clients, €1,980,000 (previous year €2,142,000) re-

lates to non-securitised liabilities from the investment of free cash and cash

equivalents in affiliated companies.

There were no shares in domestic investment funds or comparable foreign

investment shares of more than 10% as of the balance sheet date (previous

year €0).

For securities with a book value of €1,400,000 (previous year €31,328,000),

taking into account deferred premiums, the application of the moderated

lower of cost or market principle resulted in a waiver of write-downs of

€100 (previous year €254,000) to the lower fair value as the write-downs

are not considered to be permanent.

Annual Report 2019


74 75

3

Trading liabilities

As at balance sheet date, trading liabilities included the following financial

instruments:

In €’000 31/12/2019 31/12/2018

Derivatives 2 4

Debt and other fixed-income securities 0 0

Equities and other variable-yield securities 12 0

Total 14 4

The sub-group “Other liabilities” mainly comprises endowment funds re-

ceived but not yet passed on.

Liabilities from pension provisions were offset against securities acquired to

cover these liabilities (cover assets) pursuant to section 246 (2) HGB. As of

balance sheet date, the settlement amount of the offset liabilities amount-

ing to €2,525,000 was offset by cover assets with a market value of the

same amount (acquisition costs €2,315,000).

Provisions

As of balance sheet date, the breakdown of provisions is as follows:

Other liabilities

In €’000 31/12/2019 31/12/2018

Liabilities from securities transactions not yet settled 0 0

Tax liabilities 4,517 1,952

Trade accounts payable 319 161

Other liabilities 15,906 30,481

Total 20,742 32,594

Provisions

In €’000 31/12/2019 31/12/2018

Deliveries and services rendered 5,565 5,230

Staff provisions 7,906 5,606

Tax provisions 1,426 580

Other provisions 1,413 896

Total 16,310 12,312

Other provisions primarily relate to pending claims, reinstatement costs for

leasehold improvements and archiving costs.

Fund for general banking risks

The fund for general banking risks in accordance with section 340g HGB

amounts to €7,367,000 and includes the mandatory reserve of €1,367,000

pursuant to section 340e (4) HGB to offset the risk of future net expenses

in the trading portfolio and €6 million to hedge against general banking

risks. Since the portion of the fund for general banking risks relating to the

allocation in accordance with section 340e HGB was slightly above 50% of

the average of the last five annual net incomes from the trading portfolio in

the year under review, an amount of €10,000 was added to the net income

of the trading portfolio.

Equity capital

The share capital of the Company amounts to €43,412,923 and is divided

into 43,412,923 no-par value bearer shares with dividend entitlement.

As of the reporting date, the (not utilised) authorisation under the Articles

of Association to increase the share capital by up to €21,706,000 by issuing

up to 21,706,000 no-par value shares against cash and/or non-cash con-

tributions ("authorised capital 2018") exists until 14 June 2023. Shareholders

are to be offered subscription rights. Subject to certain conditions and with

the approval of the Supervisory Board, the Management Board is entitled to

exclude shareholders’ subscription rights. The approval of the Supervisory

Board is required for the implementation of the capital increases by the

Management Board.

In addition, there is up to €17,000,000 unutilised contingent capital to service

convertible bonds and/or bonds with warrants, profit participation rights and/

or participating bonds, or combinations of these instruments (“contingent

capital 2018"). The contingent capital increase will only be carried out to the

extent that the option and/or conversion rights from bonds are exercised or

option/conversion obligations from bonds are fulfilled, and to the extent that

no cash settlement is granted or treasury shares or shares of another listed

company or shares from an authorised capital are used for servicing.

Both the authorised capital and the contingent capital carry the same vot-

ing and profit rights from the date of their possible issue as the share capital

issued to date.

Annual Report 2019


76 77

3

As the main shareholder, Berliner Effektengesellschaft AG, Berlin, holds a

25.3% stake in the share capital of Quirin Privatbank AG. ODDO BHF Bel-

gium S.A., Brussels, sold its stake in Quirin Privatbank in July 2019.

Foreign currencies

Liabilities denominated in foreign currencies had an equivalent value of

€17,724,000.

Breakdown by residual term

In €’000 31/12/2019 31/12/2018

Other loans and advances to banks 599 9,552

a) up to three months 599 553

b) three months to 1 year 0 8,999

Loans and advances to clients 21,171 21,465

a) up to three months 4,855 6,853

b) three months to 1 year 11,937 12,503

c) 1 year to 5 years 4,379 2,109

Liabilities to banks with agreed maturity or period of notice 0 0

a) up to three months 0 0

b) three months to 1 year 0 0

Other liabilities to clients with agreed maturity or period of notice 170 2,175

a) up to three months 87 2,078

b) three months to 1 year 83 97

c) 1 year to 5 years 0 0

Loans and advances to clients with no specified maturity date

Loans and advances to clients with no specified maturity date amounted to

€12,048,000 (previous year €6,573,000).

C. Notes to the profit and loss account

Net commission income

The Bank’s fee and net commission income includes fees from custody and

asset management in private banking. In addition, fees from accompanying

and implementing capital measures for clients of the capital markets busi-

ness division are also shown here.

Commission income includes income of €367,000 and expenses of

-€656,000 relating to other periods.

Other operating profit/loss

Other operating profit/loss includes the following items:

Other operating income

In €’000 31/12/2019 31/12/2018

Reimbursement of expenses by clients, customers and employees 892 999

Agency management for third parties 1,145 1,110

Reversal of provisions 531 440

Currency conversion 1,154 478

Income related to other periods 98 168

Other 253 232

Total 4,073 3,427

Other operating expenses

In €’000 31/12/2019 31/12/2018

Reimbursements -528 -39

Expenses related to other periods -49 -92

Other -113 -103

Total -690 -234

Other expenses include an amount of -€4,000 (previous year -€6,000)

from reversing the discount of long-term provisions.

Annual Report 2019


78 79

3

Nominal amount Hedged risk

In €’000at the

business priceat the forward exchange

rate at balance sheet date

Hedged item 13,181 13,278 88

Hedging instrument 13,181 13,278 -88

Total 26,362 26,556 0

Administrative expenses

Other administrative expenses include income from refunds of €19,000 re-

lated to other periods.

Taxes on income and earnings

The reported income tax expense of €1,741,000 was significantly higher

compared with the previous year (€677,000). In addition to advance tax

payments made on the basis of advance payment notices for corporate

income tax and trade tax, it relates to tax provisions of €1,426,000. In deter-

mining the tax expense, the Bank accordingly took into account its losses

carried forward.

D. Other information

Derivative transactions

Derivative transactions relate to forward exchange transactions and cur-

rency swaps at the balance sheet date. Derivatives are only concluded on

behalf of customers or clients. The risk positions are closed out by counter

transactions with banks. Since hedging is generally carried out at micro lev-

el, the hedged item and the hedging instrument combined into valuation

units in accordance with section 254 HGB are predominantly allocated to

the banking book.

The nominal amounts of the hedged items and hedging instruments in-

cluded in the valuation units and the hedged risks were as follows as at 31

December 2019: The values stated represent fair values based on the prices on the balance

sheet date and exclude transaction costs. Risks arising from negative mar-

ket values are covered by appropriate provisions to the extent required by

commercial law. The derivatives allocated to the trading portfolio are re-

ported at their positive or negative market values under trading assets and

trading liabilities. There is nothing to indicate that the contractually agreed

cash flows of these derivatives are affected in terms of amount, timing and

security.

Trading book

Residual term

In €’000Under 1

year1 to

5 yearsOver 5

years Nominal

Positive market values

Negative market values

Currency risks 1,723 - - 1,723 - -2

Share and other price risks - - - - - -

Interest risks - - - - - -

Total 1,723 - - 1,723 - -2

Counterparty structure

In €’000 31/12/2019 31/12/2018

Asset class institutions 28,086 10,359

Other asset classes - -

Total 28,086 10,359

Banking book

Residual term

In €’000Under 1

year1 to

5 yearsOver 5

years Nominal

Positive market values

Negative market values

Currency risks 26,362 - - 26,362 72 -72

Share and other price risks - - - - - -

Interest risks - - - - - -

Total 26,362 - - 26,362 72 -72

Annual Report 2019


80 81

3

Members of the Management Board

Karl Matthäus Schmidt

Chairman

Responsibilities

Private banking

Asset management

Risk management including legal affairs, compliance and lending back office

Marketing, HR, auditing

Banking, data protection

Memberships in other supervisory bodies

Member of the Supervisory Board of quirion AG, Berlin(as of 10/9/2019)

Johannes Eismann

CFO

Responsibilities

Capital markets business

Treasury

Lending market

Finance

Memberships in other supervisory bodies

Member of the Supervisory Board of quirion AG, Berlin

Members of the Supervisory Board

Holger Timm

Chairman

Chairman of the Board Tradegate AG Wertpapierhandelsbank, Berlin

Chairman of the Board Berliner Effektengesellschaft AG, Berlin

Klaus-Gerd Kleversaat

Member of the Board Tradegate AG Wertpapierhandelsbank, Berlin

Anke Dassler (as of 14.06.2019)

Head of Accounting Evonik Industries AG, Essen

Carsten Bing

(as of 14.06.2019, Deputy Chairman)

Chief Executive Officer Riedel Holding GmbH & Co. KG, Nuremberg

Dr Andreas Neuner and Mr Werner Karl-Wilhelm Taiber stepped down from

the Supervisory Board of Quirin Privatbank with effect from 14 June and 31

July 2019 respectively. Ms Anke Dassler and Mr Carsten Bing were newly

elected to the Supervisory Board of the Bank at the Annual General Meeting

in 2019.

Matthias Baller

In-house lawyer Berliner Effektengesellschaft AG, Berlin

Annual Report 2019


82 83

3

Number of employees as of 31.12.2019 Annual average

Male 145 142

Female 90 87

Total 235 229

Auditor’s fee pursuant to section 285 No. 17 HGB

In €’000 31/12/2019 31/12/2018

Audit services 181 159

Other audit services 66 113

Tax consultancy services 0 0

Other services 12 28

Total 259 300

Remuneration of executive bodies

Remuneration of €100,000 was paid to the members of the Supervisory

Board in the financial year. The Bank exercises its right under section 286

(4) HGB not to disclose the total remuneration of the members of the Man-

agement Board.

Details of advances and loans granted, and contingent liabilities pursuant

to section 34(2) no. 2 of the German Accounting Directive for Banks and

Financial Services Providers (RechKredV)

At year end, there were no lines of credit for members of the Management

Board or the Supervisory Board.

Disclosure pursuant to section 34 (2) no. 4 and section 35 (4) and (6) RechKredV

As of balance sheet date, liabilities from guarantees and indemnity agree-

ments amounted to €1,354,000 (previous year €1,014,000) and there were

no irrevocable loan commitments (previous year €0). As of balance sheet

date, there were no indications that the Bank would be called upon from

contingent liabilities or guarantees assumed.

Employees

The number of employees is made up as follows:

E. Additional information

Disclosure pursuant to Article 434 (1) of the Capital Requirements Regu-

lation (CRR II)

The disclosure information pursuant to Article 434 (1) CRR II can be found

in the disclosure report published on the Bank’s website.

Total other financial commitments

Future charges of €20,869,000 will result from rental, leasing, management

and maintenance agreements over the remaining term of the major indi-

vidual contracts, of which €13,480,000 relate to a residual term of between

one and a maximum of nine years. In addition, there are €534,000 in rental

guarantees assumed for the Bank as of 31 December 2019.

Significant events after the balance sheet date

No significant events occurred after the close of the financial year.

Appropriation of profits

The annual financial statements were prepared with partial appropriation

of profits. Pursuant to section 150 of the Stock Corporation Act (AktG), an

amount of €293,000 was transferred to statutory reserves. Furthermore, in

accordance with the Bank’s Articles of Association, the Management Board

and Supervisory Board transferred €2,523,000 to other reserves. With re-

gard to the remaining balance sheet profit of €3,039,000, the Management

Board and the Supervisory Board will propose to the Annual General Meet-

ing that a dividend of €0.07 per dividend-bearing share be paid.

Berlin, 26 February 2020


The Management Board

The other audit services relate to the audit of the securities services busi-

ness in accordance with section 89 WpHG (section 36 WpHG old version).

Other non-audit services include general advisory services as part of pro-

ject-related quality assurance.Karl Matthäus SchmidtChairman of the Management Board


Annual Report 2019


84 85

4

4Additional Information

Auditor’s report 88

Report of the Supervisory Board 96

Locations/Contact/Imprint 100

Annual Report 2019

Additional Information

86 87

4

Auditor’s report

We conducted our audit of the annual financial statements of Quirin Privat-

bank AG, Berlin – consisting of the balance sheet as at 31 December 2019

and the profit and loss account for the financial year from 1 January to 31

December 2019, as well as the notes and the information relating to the

accounting and valuation methods applied. In addition, we have audited

the management report of Quirin Privatbank AG for the business year from

1 January to 31 December 2019.

In our opinion, based on the findings of our audit:

♦ these annual financial statements, in all material respects, give a true

and fair view of the assets, financial position and financial performance

of the Company as at 31 December 2019 as well as its financial perfor-

mance for the financial year from 1 January to 31 December 2019 in

accordance with German Legally Required Accounting Principles, and

♦ the accompanying management report as a whole provides a suitable

view of the Company’s position. In all material respects, this manage-

ment report is consistent with the annual financial statements, complies

with German legal requirements and suitably presents the opportunities

and risks of future development.

In accordance with section 322 (3) sentence 1 of the German Commercial

Code (HGB), we declare that our audit has not led to any reservations re-

garding the regularity of the annual financial statements and of the man-

agement report.

Basis of audit opinions

We conducted our audit of the annual financial statements and the man-

agement report in accordance with section 317 HGB and the EU Audit

Regulation (No. 537/2014; hereinafter "EU-APrVO") and in compliance

with German Generally Accepted Standards for Financial Statement Au-

dits promulgated by the Institute of Public Auditors in Germany (IDW). Our

responsibilities under those requirements and principles are further de-

scribed in the “Auditor’s responsibility for the audit of the annual financial

statements and the management report" section of our auditor’s report.

We are independent of the Company in accordance with the requirements

of European law and German commercial and professional law, and we

have fulfilled our other German professional responsibilities in accordance

with these requirements. Furthermore, in accordance with Article 10 (2) (f)

EU-APrVO, we declare that we have not provided non-audit services pro-

hibited under Article 5 (1) EU-APrVO. We believe that the audit evidence we

have obtained is sufficient and appropriate to provide a basis for our audit

opinions on the annual financial statements and the management report.

Key audit matters in the audit of the annual financial statements

Key audit matters are those matters that, in our professional judgement,

were of most significance in our audit of the financial statements for the

financial year from 1 January to 31 December 2019. These matters were

addressed in the context of our audit of the annual financial statements

as a whole and in forming our audit opinion thereon; we do not provide a

separate opinion on these matters.

Determining and recording of commission income

Information on commission income is contained in the explanations on

commission income in the notes as well as in the "Positioning of the Bank“

and "Business Development“ sections of the management report.

The financial statement risk

The amount of commission income is a key element of the profitability of

Quirin Privatbank. Quirin Privatbank reports commission income of €65.0

million (previous year: €53.1 million) in its annual financial statements for

the 2019 financial year.

Commission income from private banking results from fees for investment

advice and asset management. In the capital markets business, the Bank

mainly generates commission income from corporate finance business.

The risk for the financial statement lies in particular in the incorrect record-

ing of the contract master data, such as fee rates or accounting periods,

leading to the miscalculation of individual commission-relevant transac-

tions and of commissions.

Annual Report 2019


88 89

4

Our audit approach

Based on our risk assessment and assessment of the risks of error, we have

based our opinion on the results of key controls testing and substantive

audit procedures. Our audit procedures included, but were not limited to,

the following:

In our controls testing, we evaluated the implementation and effectiveness

of the manual and IT application controls established by the Company to

ensure the correct recording of billing-relevant contract and transaction

data for the commission business.

For the IT systems to be used, with our IT specialists we examined in ad-

vance the effectiveness of the general IT controls that relate to the IT appli-

cation controls and support their effectiveness.

As part of our substantive audit procedures, we used random examples to

verify the proper calculation and accounting treatment of the commission

income from individual transactions. We also reconciled the accounts with

the documents underlying the calculation and recording of commission

income.

Our conclusions

The manual and IT application controls that have been set up are suitable

for ensuring the proper recording of contract master and transaction data

in commission business and that commission income is calculated appro-

priately.

Other information

Management is responsible for the other information. The other informa-

tion comprises the annual report expected to be made available to us after

the date of this audit opinion with the exception of the audited financial

statements and management report and our audit opinion.

Our audit opinions on the annual financial statements and on the manage-

ment report do not extend to the other information and, accordingly, we

do not express an audit opinion or any other form of assurance conclusion

thereon.

In connection with our audit, our responsibility is to read the other informa-

tion and, in so doing, to consider whether the other information:

♦ is materially inconsistent with the annual financial statements, with the

management report or our knowledge obtained in the audit, or

♦ otherwise appears to be materially misstated.

Responsibilities of management and the supervisory board for the annual

financial statements and the management report

Management are responsible for the preparation of the annual financial

statements that comply, in all material respects, with the requirements of

German commercial law, and that the annual financial statements give a

true and fair view of the assets, liabilities, financial position and financial

performance of the Company in compliance with German Legally Required

Accounting Principles. In addition, management are responsible for such

internal control as they, in accordance with German Legally Required Ac-

counting Principles, have determined necessary to enable the preparation

of annual financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the annual financial statements, management are responsible

for assessing the Company’s ability to continue as a going concern. They

also have the responsibility for disclosing, as applicable, matters related

to going concern. In addition, they are responsible for financial reporting

based on the going concern basis of accounting, provided no actual or

legal circumstances conflict therewith.

In addition, management are responsible for the preparation of the man-

agement report, that as a whole provides an appropriate view of the Com-

pany’s position and is, in all material respects, consistent with the annual

financial statements, complies with German legal requirements, and appro-

priately presents the opportunities and risks of future development. In ad-

dition, management are responsible for such arrangements and measures

(systems) as they have considered necessary to enable the preparation of a

management report that is in accordance with the applicable German legal

requirements, and to be able to provide sufficient appropriate evidence for

the assertions in the management report.

The supervisory board is responsible for overseeing the Company’s finan-

cial reporting process for the preparation of the annual financial statements

and of the management report.

Annual Report 2019


90 91

4

Auditor’s responsibilities for the audit of the annual financial statements

and of the management report

Our objectives are to obtain reasonable assurance whether the annual fi-

nancial statements as a whole are free from material misstatement, wheth-

er due to fraud or error, and whether the management report as a whole

provides an appropriate view of the Company’s position and, in all material

respects, is consistent with the annual financial statements and the knowl-

edge obtained in the audit, complies with the German legal requirements

and appropriately presents the opportunities and risks of future develop-

ment, as well as to issue an auditor’s report that includes our audit opinions

on the annual financial statements and on the management report.

Reasonable assurance is a high level of assurance, but is not a guarantee that

an audit conducted in accordance with section 317 HGB and the EU Audit

Regulation and in compliance with German Generally Accepted Standards

for Financial Statement Audits promulgated by the Institut der Wirtschafts-

prufer (IDW) will always detect a material misstatement. Misstatements can

arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these annual financial statements

and this management report.

We exercise professional judgement and maintain professional scepticism

throughout the audit. We also:

♦ Identify and assess the risks of material misstatement of the annual

financial statements and of the management report, whether due to

fraud or error, design and perform audit procedures responsive to those

risks, and obtain audit evidence that is sufficient and appropriate to pro-

vide a basis for our audit opinions. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from

error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal controls.

♦ Obtain an understanding of internal control relevant to the audit of the

annual financial statements and of arrangements and measures relevant

to the audit of the management report in order to design audit proce-

dures that are appropriate in the circumstances, but not for the purpose

of expressing an opinion on the effectiveness of these systems of the

Company.

♦ Evaluate the appropriateness of accounting policies used by manage-

ment and the reasonableness of estimates made by management and

related disclosures.

♦ Conclude on the appropriateness of the management’s use of the going

concern basis of accounting and, based on the audit evidence obtained,

whether a material uncertainty exists related to events or conditions

that may cast significant doubt on the Company’s ability to continue

as a going concern. If we conclude that a material uncertainty exists,

we are required to draw attention in the auditor’s report to the related

disclosures in the annual financial statements and in the management

report or, if such disclosures are inadequate, to modify our respective

audit opinions. Our conclusions are based on the audit evidence ob-

tained up to the date of our auditor’s report. However, future events or

conditions may cause the Company to cease to be able to continue as

a going concern.

♦ Evaluate the overall presentation, structure and content of the annual

financial statements, including the disclosures, and whether the annual

financial statements present the underlying transactions and events in a

manner that the annual financial statements give a true and fair view of

the assets, financial position and financial performance of the Company

in accordance with German Legally Required Accounting Principles.

♦ Evaluate the consistency of the management report with the annual

financial statements, its conformity with German law, and the view of

the Company’s position it provides.

♦ Perform audit procedures on the prospective informa-

tion presented by management in the management report.

On the basis of sufficient appropriate audit evidence we evaluate, in par-

ticular, the significant assumptions used by management as a basis for the

prospective information, and evaluate the proper derivation of the pro-

spective information from these assumptions. We do not express a sepa-

rate audit opinion on the prospective information and on the assumptions

used as a basis. There is a substantial unavoidable risk that future events will

differ materially from the prospective information.

We communicate with those charged with governance regarding, among

other matters, the planned scope and timing of the audit and significant

audit findings, including any significant shortcomings in the internal control

system that we identify during our audit.

Annual Report 2019


92 93

4

We also provide those charged with governance with a statement that we

have complied with the relevant independence requirements, and commu-

nicate to them all relationships and other matters that may reasonably be

thought to bear on our independence, and where applicable, the related

safeguards.

From the matters communicated with those charged with governance, we

determine those matters that were of most significance in the audit of the

annual financial statements of the current period and are therefore the key

audit matters. We describe these matters in our auditor’s report unless law

or regulation precludes public disclosure about the matter.

Other legal and regulatory requirements

Further information pursuant to Article 10 of the EU Audit Regulation.

We were elected as auditor by the Annual General Meeting on 14 June

2019. We were engaged by the Supervisory Board on 20 November 2019.

We have been the auditor of Quirin Privatbank AG since the financial year

2018.

We declare that the audit opinions expressed in this auditor’s report are

consistent with the additional report to the Audit Committee pursuant to

Article 11 of the EU Audit Regulation (long-form audit report).

German public auditor responsible for the engagement

The German public auditor responsible for the engagement is Lars Protze.

Berlin, 3 March 2020

KPMG AG

Wirtschaftsprüfungsgesellschaft

Lars Protze

Wirtschaftsprufer

(German Public Auditor)

Christian Ginzinger

Wirtschaftsprufer

(German Public Auditor)

In the event of publication or distribution of the annual financial statements

and/or the management report in any version that deviates from the audit-

ed version (including translation into other languages), our prior approval

is again required before reference can be made to our certification or our

audit; please refer to section 328 of the German Commercial Code (HGB).

Annual Report 2019


94 95

4

During the 2019 financial year, the Supervisory Board again performed its

duties required of it by law and the Articles of Association, and regularly

advised and supervised the Management Board of Quirin Privatbank AG on

its activities. The Supervisory Board was directly and promptly involved in

every decision of fundamental importance to the Company. It received in-

formation from the Management Board, in a timely manner and extensively,

on all the major business developments at the Company, both orally and

in writing.

The Management Board kept the Supervisory Board regularly informed of

the business position and economic situation of its individual business ar-

eas, and on its corporate planning, the risk situation and strategic orienta-

tion of the Bank. The Supervisory Board and the Management Board of the

Company interacted closely on fundamental matters relating to manage-

ment, the economic position and important business transactions. Outside

the regular Supervisory Board meetings, the Management Board also kept

the Chairman of the Supervisory Board and his two deputies informed on

current business progress and key transactions. The Supervisory Board was

involved in all decisions of major importance for the Bank and, to the extent

required by legal or statutory requirements, giving its approval after exten-

sive consultation and examination wherever required.

In the year under review the Supervisory Board held four regular meetings

on 19 March, 14 June, 20 September and 12 December 2019. The meetings

of the Supervisory Board were also attended by the Management Board

and senior management. There is a Presiding Committee, an Audit Com-

mittee and a Risk Committee. Dr Andreas Neuner stepped down from the

Supervisory Board of Quirin Privatbank effective of 14 June 2019. Ms Anke

Dassler and Mr Carsten Bing were newly elected to the Supervisory Board

of the Bank at the Annual General Meeting on 14 June 2019. At the Super-

visory Board meeting also held on 14 June 2019, Ms Dassler was elected

as a member and Chairman of the Audit Committee. Mr Bing was newly

elected as a member of the Risk Committee. Mr Werner Karl-Wilhelm Taiber

stepped down from the Supervisory Board of Quirin Privatbank effective 31

July 2019. At the Supervisory Board meeting held on 12 December 2019, Ms

Dassler was elected as a member and Chairman of the Audit Committee.

Apart from this, the composition of the committees has not changed. The

Report of the Supervisory Board

Audit Committee met twice in the year under review and the Risk Commit-

tee once. The meetings of the Supervisory Board, the Risk Committee and

the Audit Committee were also attended, as required, by employees from

the Finance, Audit and Compliance departments as well as by the auditors.

In 2019, the focus of the Supervisory Board was again the strategic orienta-

tion of the Bank and driving forward the objective of further developing pri-

vate banking, the capital markets business and the Bank’s subsidiary quirion

AG. In this context, the Supervisory Board devoted particular attention to

the implementation of the growth strategy of private banking and the in-

troduction of a new salary model for this business area. Additional focuses

included the business performance of quirion AG, implementation of the

growth strategy and its refinancing by the Bank. In addition, the Supervisory

Board was kept informed on the implementation of regulatory adjustments

with the monthly information from the Finance department on business

development.

The Bank’s business and risk strategy and risk-bearing capacity for the fi-

nancial year were discussed with the Supervisory Board at the meeting of

20 September 2019 and IT strategy at the meeting of 12 December 2019.

The compliance report, the MaRisk compliance function report and the

central office report pursuant to section 25h (4) in conjunction with sec-

tion 25h (1) of the German Banking Act (KWG) ("fraud") for the financial year

were submitted to the Supervisory Board by the Compliance Officer and

discussed at the meeting on 19 March 2019.

The Supervisory Board received detailed reports from the Management

Board at each meeting on the results of internal audits and on the Bank’s

current risk position.

The audit pursuant to section 89 (1) of the German Securities Trading Act

(WpHG) for the financial year 2019 covering the period from 1 January

2019 to 31 March 2020 was conducted by KPMG AG Wirtschaftsprufungs-

gesellschaft, Hamburg, as instructed by the Management Board. The audit

report will be circulated to the members of the Supervisory Board upon

completion of the audit.

Annual Report 2019


96 97

4

Annual financial statements

The annual financial statements and consolidated financial statements for

the financial year 2019, drawn up by the Management Board in accordance

with the provisions of the German Commercial Code (HGB) and the Ger-

man Stock Corporation Act (AktG), including the management report and

the accounting records, were audited by KPMG AG Wirtschaftsprufungs-

gesellschaft, Berlin, as elected at the Annual General Meeting on 14 June

2019 and appointed by the Supervisory Board, and issued with an unquali-

fied audit opinion on 3 March 2020. The auditor’s report was signed jointly

by Lars Protze and Christian Ginzinger.

At its meeting on 20 March 2020, the Audit Committee dealt intensively

with the documents for the 2019 annual and consolidated financial state-

ments including the audit report, which were made available to the Super-

visory Board and the Audit Committee in a timely manner. The auditors

attended the aforementioned meeting of the Audit Committee, explained

the key audit findings and audit matters of particular relevance, and were

available to answer questions. The Chairman of the Supervisory Board re-

ported on this in the subsequent plenary meeting of the Supervisory Board.

At its meeting on 20 March 2020, the Supervisory Board also worked hard

on the annual and consolidated financial statements 2019 of Quirin Privat-

bank AG prepared by the Management, by closely examining them and dis-

cussing them with the Management Board and members of the extended

Management Board.

Following the final examination by the Audit Committee and its own review,

the Supervisory Board raised no objections and approved the annual and

consolidated financial statements for 2019, which were thus adopted. The

Supervisory Board approved the Management Board’s proposals to transfer

€2,523,165.75 of the net profit for the year of €5,562,070.36 in the individual

financial statements of the Company in accordance with section 24 (1) of

the Articles of Association to other reserves, and to use the remaining un-

appropriated surplus to pay a dividend of €0.07 per dividend-bearing share.

The Supervisory Board would like to thank the members of the Manage-

ment Board and all employees for their great commitment and achieve-

ments in the 2019 financial year.

Berlin, 20 March 2020

Holger TimmChairman of the Supervisory Board

Annual Report 2019


98 99

4

Hamburg

Mittelweg 161

20148 Hamburg

Bremen

Bürgermeister-Schmidt-Straße 76

28195 Bremen

Berlin

Kurfürstendamm 119

10711 Berlin

Hannover

Theaterstraße 3

30159 Hannover

Bautzen

Postplatz 3

02625 Bautzen

Düsseldorf

Königsallee 11

40212 Düsseldorf

Cologne

Spichernstraße 6

50672 Cologne

Frankfurt am Main

Schillerstraße 20

60313 Frankfurt am Main

1

4

2

5

3

6

7

8

Wiesbaden

Paulinenstraße 4

65189 Wiesbaden

Hof

Lindenstraße 37

95028 Hof

Darmstadt

Friedensplatz 12

64283 Darmstadt

Nuremberg, WirtschaftsRathaus

Theresienstraße 9

90403 Nuremberg

Stuttgart

Theodor-Heuss-Straße 9

70174 Stuttgart

Munich

Karlstraße 10

80333 Munich

Freiburg

Bismarckallee 9

79098 Freiburg

9

12

10

13

11

14

15

1

4

2

3

56

7

98

11

10

12

13

14

15

Our locations

Annual Report 2019

100 101

Locations

4

Contact


Kurfürstendamm 119

10711 Berlin

T +49 (0)30 8902 1300

F +49 (0)30 8902 1301

quirinprivatbank.de

[email protected]

Imprint

Editor

Janine Pentzold

Corporate Communication


Design

Jonas Villmow

Corporate Communication & Marketing


Photographs

Sven Serkis, Lennard Pagel,

Adobe Stock, Unsplash

Annual Report 2019

102 103

ContactImprint

Ann ual Report2019

quirinprivatbank.de An

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ep

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