ANNUAL REPORT 08 - eurobankpb.lueurobankpb.lu/IMG/pdf/EUROBANK_RA08.pdf · Eurobank EFG Private...
Transcript of ANNUAL REPORT 08 - eurobankpb.lueurobankpb.lu/IMG/pdf/EUROBANK_RA08.pdf · Eurobank EFG Private...
Eurobank EFG Private Bank Luxembourg S.A. 5, rue Jean Monnet – L-2180 Luxembourg — P.O. Box 897 L-2018 Luxembourg
Telephone (+352) 42 07 24-1 — Facsimile (+352) 42 07 24-650www.eurobankefg.lu
R.C. B 24724 registered office as above Eu
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2 - 3 Introduction
4 Board of Directors
5 - 9 Directors’ report
10 - 11 Independent auditor’s report
12 - 13 Balance Sheet
14 Off Balance Sheet
15 Profit and Loss Account
16 - 40 Notes to the annual accounts
42 - 43 Principal Offices
contents
1eurobank eFG Private Bank Luxembourg s.A.
3eurobank eFG Private Bank Luxembourg s.A.
Eurobank EFG Private Bank Luxembourg S.A. (formerly EFG Private
Bank (Luxembourg) S.A.) is engaged in the business of providing
private banking and investment advisory services for corporate and
private clients as well as administration and custody of investment
funds. The Bank is active in the money market (both deposit taking
and lending), spot and forward foreign exchange business, securities
transactions and off balance sheet instruments, both on its own account
and on behalf of customers.
The Bank is a subsidiary of EFG Eurobank Ergasias S.A., one of
Greece’s leading banking and financial institutions, and a member of
the Geneva-based EFG Group.
The EFG Group has expanded rapidly over the years to become the
third largest Swiss-based banking group with, as at 31 December 2008,
shareholders’ equity amounting to CHF 8.7 billion, customers’ assets
under management and administration in excess of CHF 167 billion
and around 27,000 employees in 40 countries.
EFG Eurobank Ergasias S.A., Athens, the 100% shareholder of the
Bank, is 43.6% controlled by EFG Bank European Financial Group S.A.,
the parent bank of the EFG Group based in Geneva, Switzerland. The
profit and loss account and balance sheet of the Bank are included in
the consolidated financial statements of EFG Bank European Financial
Group S.A. and EFG Eurobank Ergasias S.A.
intRoduction
3eurobank eFG Private Bank Luxembourg s.A.
4 --- Annual Report 08
Board of directors
Mr. François RIES Chairman
Mrs. Lena LASCARI Managing Director
Mr. Dimosthenis ARCHONTIDIS Director
Mr. René FALTZ Director
Mr. Nicholas KARAMOUZIS Director
Mr. Nicholas NANOPOULOS Director
Mr. Périclès PETALAS Director
Mr. Jean-Louis de POTESTA Director
Mr. Giorgio PRADELLI Director
Mrs. Yasmine RALLI Director
Mr. Vincenzo LOMONACO Secretary to the Board
and General Manager
Management
Mrs. Lena LASCARI Managing Director, CEO
Mr. Vincenzo LOMONACO General Manager, COO
senior officers
Mr. Robert BERBEE First Vice-President
Mr. Ioannis SAKIOTIS First Vice-President
Mrs. Helen FOTINEAS Vice-President
Mr. Markos FOURMOUZIS Vice-President
Mr. Christophe LANGUE Vice-President
Mr. Fabio MACCHINI Vice-President
Auditors
PricewaterhouseCoopers, Luxembourg
introduction ( continued )
5eurobank eFG Private Bank Luxembourg s.A.
We are pleased to present our report for the year
ended December 31, 2008.
In October 2008 our company name and corporate
identity was changed to Eurobank EFG Private Bank
Luxembourg S.A. in order to illustrate our current
growth and international position and at the same time
assuring our Greek identity and our Swiss roots.
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2008 overview
The deterioration in the US economic trajectory,
which emanated from its subprime sector, accelerated
in 2008 instigating a further massive sell-off in credit
markets and sharp decline in government bond
yields. After expanding by 2.0% in 2007, US real
GDP growth decelerated to 1.3%, on the back of a
further significant correction in the housing market,
tightening lending standards and persisting credit
jitters. Market optimism that the negative effects from
the global credit crunch were confined mainly to the
US and other major industrialized countries and that
the big emerging economies would be able to decouple
finally proved unfounded. Following positive real GDP
reading in Q1, the Euro zone economy contracted in
both Q2 and Q3 with Germany and Spain the most
hit. The EU Commission estimates that the Euro
zone economy has grown by a meager 0.9% in 2008
following hefty growth rates of 2.7% and 2.9% in 2007
and 2006 respectively. On the same gloomy note, the
rapidly slowing US economy and the global crunch
took their toll on the export-driven Japanese economy,
with a substantial real effective appreciation of the JPY
exerting a substantial drag on economic activity.
With regard to price developments, US inflation
dropped sharply reaching a nearly 50-yr low of 0.1%yoy
in December from a peak of 4.3%yoy early last year
mainly on the back of lower oil and commodity prices.
The noteworthy easing in price pressures and the
risk of a deep economic downturn allowed the Fed to
pursue additional rate easing in 2008. The committee
trimmed the Fed Funds target rate to a target range
of 0.0-0.25% in December from 4.25% in early 2008
having delivered more than 500bps of cumulative rate
easing since September 2007, when the global financial
crisis began to flare up.
Convincing signs of abating price pressures were also
evident in the Eurozone economy with the headline
CPI dropping to a multi-year low of 1.6%yoy in late
2008 following a peak of 4.0% last July. This along with
mounting worries over Eurozone’s growth outlook
since late summer saw the ECB embarking upon an
easing cycle in October in a coordinated move.
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Key Financials Review of financial statements 2008
a) Balance Sheet Total Assets at the end of 2008 have increased by
45% to a figure of EUR 19,076 million versus EUR
13,174 million at the end of 2007, an increase due to
the cooperation with Eurobank Group and the strong
evolution of the business.
diRectoRs’ RePoRt
6 --- Annual Report 08
Our Loans and advances to customers have also
increased by 45% to record EUR 12,654.0 million from
EUR 8,726.5 million at the end of 2007. The majority of
the Loans and Advances EUR 10,039.2 million (79%)
versus EUR 7,015.4 million (80%) in 2007 are with
intra-group entities and are fully cash collateralized.
The remaining of the Loans and Advances are to third
party clients and are either fully collateralized or fully
guaranteed. It should be noted that it is the Bank’s
objective that strong growth comes along with further
improvement of loan portfolio quality, which is ensured
through strict controls and an effective streamlined
credit risk management policy.
Customer deposits increased by 68.6% and amounted
to EUR 2,633.8 million from EUR 1,562.1 million.
Shareholder funds amount to EUR 70 million Tier one
capital and EUR 116.7 million subordinated loan of
Tier two capital. Therefore, total own funds including
subscribed capital, subordinated liabilities, reserves,
profit for the financial year and profit brought forward
reached EUR 271.1 million which reflects a strong
capital position and allows for a high rate of growth
in the foreseeable future.
b) Income StatementThe net interest income between the two years 2008
and 2007 has remained stable. The net interest income
for the year ending 2008 amounted to EUR 17.8 million
in comparison to EUR 17.9 million in 2007.
Net commission income decreased from EUR 5.9
million in 2007 to EUR 5.3 million in 2008 due to the
increase in commissions paid for the issuance of L/G’s
by our Parent Group as a result of the increase in the
number of loans.
Net profit on Financial Operations increased by EUR
16.9 million from 2007 to EUR 21.5 million in 2008
and this is due to the increase in income deriving
from treasury transactions.
Hence, in 2008 the total net operating income increased
by 57% versus 2007.
Total operating expenses between the two years
increased by only 3%. This led to a significant
decrease in the cost to income ratio falling to 25%
vis-à-vis 40% last year.
The Bank’s net profits after taxation for the year 2008
amounted to EUR 22.604 million.
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distribution of Profits
The Board of Directors proposes that the 2008 annual
accounts be approved, and that the Total Net Profit
available for distribution be appropriated as follows:
Profit for the financial year EUR 22,604,230
Profit brought forward EUR 44,019,891
Total net profit available
for distribution EUR 66,624,121
Allocation to Legal Reserve EUR 1,130,212
Allocation to Net Wealth Tax Special Reserve EUR 2,143,340
Profit carried forward EUR 63,350,569
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Risk Management overview
The strategy of the Bank is based on its core
activities: Private Banking, General Banking and
Fund Administration.
In the year 2008 the Internal Control procedures and
controls in operation within the Bank ensured:
X the attainment of the objectives set by the Bank;
X the effective and efficient use of resources;
directors’ Report ( continued )
7eurobank eFG Private Bank Luxembourg s.A.
X the proper control of risks and safeguarding
of assets; and
X the compliance with the legislation
and regulations.
Management has ensured that all resources (human
and technical) are used efficiently and effectively.
They have placed on site a sufficient number of
competent staff to take decisions in line with the
policies defined and based on the powers delegated
to them, and to execute the decisions taken.
The general framework of the organisational
responsibilities, monitoring and control for each
department of the Bank is further defined by the
relevant procedures manuals.
During 2008, the Board of Directors approved the
Bank’s Risk Management and Capital Management
Policy. During 2009 the first yearly review of the
Internal Capital Adequacy Assessment Process –
ICAAP will be submitted to the Board for their
validation. The ICAAP will be evaluated by the
Luxembourg Banks regulatory authority on a yearly
basis in the context of their supervisory review
process. The Bank during the year 2008 achieved
the targets of its capital management policy that is,
to maintain a strong capital base in order to support
business development and to meet regulatory capital
requirements at all times.
The Risk Policy of the Bank describes in detail the
risk appetite, which is determined by the Board of
Directors and Senior Management of the Bank. The
aim of the Bank’s risk appetite is to balance risk and
return on available capital.
The Bank’s risk management function covers the
measures for early identification of risk, risk control
and risk monitoring with regard to banking risks,
which include but are not limited to:
X credit risk;
X market risk for trading book;
X operational risk;
X business risk;
X interest rate risk for banking book;
X liquidity risk;
X compliance risk; and
X reputation risk.
In addition to the local risk management function there
is also periodic monitoring by the Group of various
risks on a daily, weekly, monthly, and quarterly basis
thus enhancing the Bank’s risk monitoring process.
The risk management policies are re-examined
annually by the Board of Directors. All risks are
subject to detailed limits, which are monitored on an
ongoing basis. The Board of Directors also sets limits
to control market risk on a value at risk basis.
Exposure to credit risk is managed through regular
analysis of the ability of borrowers and potential
borrowers to meet interest and capital repayment
obligations and by regularly reviewing these limits
where appropriate. Exposure to credit risk is primarily
managed by obtaining eligible collateral, as well as
corporate and personal guarantees.
The interest rate risk of the Bank remains relatively
low. The volume of assets and liabilities with a
maturity of more than one year remains low. Interest
rate risk is monitored daily and reported to local
Management and the Group Treasurer.
Controls over market risks arising from open positions
in interest rate, currency and equity positions all of
which are exposed to general and specific market
movements are in place.
The Bank has decided to invest in government
securities or securities issued by high rated corporates.
The very prudent principles which we have always
used for credit assessment have continued to be
applied and the general credit exposure for the Bank
8 --- Annual Report 08
has even been improved. The Bank’s investments
have mainly focused on the purchase of government
securities and securities issued by first-rate
companies.
Liquidity risk is closely monitored. The majority
of assets (77%) and liabilities (79%) reach maturity
within 3 months.
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economic outlook for 2009
As we enter the second year of the global financial
crisis, real activity data and sentiment surveys
continue to deteriorate sharply while the deleveraging
process is still under way, aggravating market worries
over a deep and prolonged world recession. According
to most recent IMF forecasts, world real GDP growth
will decelerate to 0.5% in 2009, the lowest rate since
World War II, from 3.3% in 2008 despite repeated
attempts from CBs and international organizations
(through aggressive interest rate cuts and/or massive
stimulus packages) to support sentiment and address
ongoing disfunctionalities in financial and credit
markets.
The US economy is projected to contract by 1.6% this
year following a growth rate of 1.2% in 2008 with the
unemployment rate expected to rise well above 8%
from 4.9% early last year. Meanwhile, after FOMC
monetary policy has been eased aggressively since
August 2007, the committee has now shifted its focus
to quantitative easing measures and has emphasized
its commitment to continue to increase the size of
its balance sheet in order to support credit markets
and economic activity. On the same gloomy note, the
EU Commission projects the Eurozone economy to
contract by 1.9% in 2009 after growing by 0.9% last
year with the economic downturn expected to be more
pronounced in Spain. The EU Commission has already
proposed a 1.5% of GDP stimulus package while
individual countries may need to act more forcefully
to support their economies in an environment where
several EU members expected to breach the 3% of
GDP fiscal-deficit threshold this year.
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Business outlook 2009
Our Parent Bank, Eurobank EFG today is a large and
strong, capital-wise, international banking Group,
with over 1,700 branches in Greece and abroad. It
is the second largest bank in Greece. Eurobank EFG
is a member of EFG Group, which is the 3rd biggest
Geneva-based banking group in Switzerland. It is
worth pointing out that only in September (2007) a
timely share capital increase by 1.25 billion euro was
completed and thus capital sufficiency for the Bank
is very strong. We follow a consistent credit policy
which accounts for our optimum credit ratings by
international firms.
In the last twelve months Eurobank EFG has
intensified its efforts in deposit gathering and has
managed to grow its deposit base at a faster pace than
its loans. Moving forward, the Group aims to be self-
funded both in Greece and New Europe.
The Bank’s priority in today's environment lies
with the selective growth of its activities, an even
more effective exploitation of its capital and further
enhancing its liquidity. Most importantly, the first
priority of our Group is to encourage the deepening of
a relationship of trust and creative cooperation with
our customers and to provide real and qualitative
service to jointly overcome the impact of the crisis in
the financial sphere as smoothly as possible.
In Luxembourg, our Bank’s strategy for the current
year will continue to focus on the Bank’s core activities:
Wealth Management and Private Banking, Fund
Administration and General Banking. In particular
we will focus on growth and business development
directors’ Report ( continued )
9eurobank eFG Private Bank Luxembourg s.A.
to expand our customer base in the Private Banking
area and will further exploit the synergies and expand
our cross selling potential within the Group’s enlarged
network. Furthermore, our Bank will endeavour to
further expand the offering of its high quality services
to Third Party Funds. On the Loan business side
the lending will continue to be granted on a fully
guaranteed and / or collateralized basis.
Our parent bank, Eurobank EFG, in 2008 once
again secured international and local distinctions.
Specifically:
It was selected as the “Bank of the Year in Greece”
for 2008 by the internationally acclaimed journal
“The Banker”, which is owned by the Financial
Times publishing Group. This distinction has been
awarded in terms of the annual institution, which the
authoritative journal has instituted in order to select
the most successful and effective banking institution
in each country.
This distinction has been awarded to Eurobank
EFG further to an evaluation by the journal of
its performance and development in the current
environment which has been defined by restlessness
and challenges. This distinction has been accompanied
by the pointing out that: “After five years of strong
development in the credit financial sector the
international crises has been manifested with an
exceptional intensity and the banks throughout the
world have felt the consequences. However, despite
the credit financial crisis, many organizations have
achieved noteworthy performances and excellent
results. The award by the journal for the ‘Bank of
the Year’ reflects the success and the financial credit
performance by the leading banks internationally.”
It is reminded that Eurobank EFG has also been
proclaimed as the “Best Bank in Greece” for 2008 by
the internationally acclaimed “Euromoney” journal.
There has been no significant subsequent event as of
the date of this report which could have a material
impact on the 2008 Annual Accounts.
On behalf of the Board of Directors, we would like
to express our deep appreciation to our customers
for their loyalty to the Bank and our gratitude to the
management and personnel for their enthusiasm,
consistency and dedication.
24th February, 2009
François ries Lena Lascari
Chairman Managing Director
10 --- Annual Report 08
Report on the annual accounts
We have audited the accompanying annual accounts of Eurobank EFG Private Bank Luxembourg S.A., which
comprise the balance sheet as at December 31, 2008, the profit and loss account for the year then ended and a
summary of significant accounting policies and other explanatory notes.
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Board of directors’ responsibility for the annual accounts
The Board of Directors is responsible for the preparation and fair presentation of these annual accounts in
accordance with Luxembourg legal and regulatory requirements relating to the preparation of the annual
accounts. This responsibility includes: designing, implementing and maintaining internal control relevant to
the preparation and fair presentation of annual accounts that are free from material misstatement, whether due
to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that
are reasonable in the circumstances.
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Auditor’s responsibility
Our responsibility is to express an opinion on these annual accounts based on our audit. We conducted our audit
in accordance with International Standards on Auditing as adopted by the “Institut des Réviseurs d’Entreprises”.
Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the annual accounts are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
annual accounts. The procedures selected depend on the Auditor’s judgment, including the assessment of the
risks of material misstatement of the annual accounts, whether due to fraud or error. In making those risk
To the Board of Directors of Eurobank EFG Private Bank Luxembourg S.A.
indePendentAuditoR’s RePoRt
11eurobank eFG Private Bank Luxembourg s.A.
assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of
the annual accounts in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the Board of Directors, as well as evaluating the overall presentation of the annual accounts.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
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opinion
In our opinion, these annual accounts give a true and fair view of the financial position of Eurobank EFG
Private Bank Luxembourg S.A. as of December 31, 2008, and of the results of its operations for the year then
ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the
annual accounts.
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Report on other legal and regulatory requirements
The Director’s report, which is the responsibility of the Board of Directors, is in accordance with the annual
accounts.
PricewaterhouseCoopers S.à r.l. Luxembourg, February 24, 2009
Réviseur d’entreprises
Represented by
Pierre Krier
12 --- Annual Report 08
Assets
Cash in hand, balances with central banks and post office banks 3.2, 4 94,336,114 21,356,413
Loans and advances to credit institutions
X repayable on demand 3.2, 6.2 169,783,853 404,847,567
X other loans and advances 3.2, 6.2 5,615,476,547 3,490,280,566
5,785,260,400 3,895,128,133
Loans and advances to customers 3.2, 6.2 12,653,527,611 8,726,490,599
Bonds and other fixed-income
transferable securities
X issued by public bodies 3.2, 5.1, 5.3, 5.4 242,864,111 195,199,276
X issued by other borrowers 3.2, 5.1, 5.3, 5.4 142,033,268 150,085,189
384,897,379 345,284,465
Shares and other variable-yield securities 3.2, 5.2 83,619 87,022
Participating interests 5.2, 6.1, 7 9,058 8,723
Shares in affiliated undertakings 5.2, 6.1, 7 23,420 126,418,960
Intangible assets 7 209,433 28,058
Tangible assets 7 651,444 458,346
Other assets 7,687,077 7,312,437
Prepayments and accrued income 149,511,617 51,847,439
Total assets 19,076,197,172 13,174,420,595
Note(s) 2008 2007 EUR EUR
BALAnce sheet As At deceMBeR 31, 2008(expressed in euros)
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The accompanying notes form an integral part of these annual accounts.
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13eurobank eFG Private Bank Luxembourg s.A.
LiABiLities
Amounts owed to credit institutions
X repayable on demand 3.2, 6.2 223,164,987 29,481,503
X with agreed maturity dates or periods of notice 3.2, 6.2 15,789,160,910 11,282,837,125
16,012,325,897 11,312,318,628
Amounts owed to customers
other debts
X repayable on demand 3.2, 6.2 144,192,607 149,552,376
X with agreed maturity dates or periods of notice 3.2, 6.2 2,489,599,317 1,412,576,967
2,633,791,924 1,562,129,343
Other liabilities 756,019 2,401,725
Accruals and deferred income 151,302,723 44,571,711
Provisions
X provisions for taxation 3,676,399 1,619,915
X other provisions 3,243,846 2,883,139
6,920,245 4,503,054
Subordinated liabilities 8, 6.2 116,752,491 116,752,491
Subscribed capital 9, 11 70,000,000 70,000,000
Reserves 10, 11 17,723,752 16,018,083
Profit brought forward 11 44,019,891 30,734,406
Profit for the financial year 22,604,230 14,991,154
Total liabilities 19,076,197,172 13,174,420,595
Note(s) 2008 2007 EUR EUR
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The accompanying notes form an integral part of these annual accounts.
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14 --- Annual Report 08
Contingent liabilities
of which: 13.1 16,603,089 36,321,445
X guarantees and assets pledged as collateral security 16,603,089 36,321,445
Commitments 13.2 1,336,340,086 1,373,977,261
Fiduciary transactions 13.2 72,601,773 49,353,181
Note(s) 2008 2007 EUR EUR
oFF BALAnce sheet As At deceMBeR 31, 2008(expressed in euros)
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The accompanying notes form an integral part of these annual accounts.
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15eurobank eFG Private Bank Luxembourg s.A.
Interest receivable and similar income 840,594,634 225,653,855
of which: arising from bonds and other fixed-income transferable securities 14,642,444 17,052,902
Interest payable and similar charges 14.3 (822,781,077) (207,701,505)
Commissions receivable 10,933,977 9,882,349
Commissions payable (5,677,240) (3,934,640)
Net profit on financial operations 14.3 21,455,384 4,561,895
Other operating income 14.2 464,716 236,748
General administrative expenses
X staff costs (5,734,411) (5,204,013) of which:
— wages and salaries (4,893,364) (4,638,091)
— social security costs (526,975) (489,800)
— of which: pension costs (399,719) (374,169)
X other administrative expenses 14.5 (4,020,790) (4,282,353)
Value adjustments in respect of intangible and tangible assets 7 (276,492) (204,783)
Other operating charges 14.3 (1,644,534) (2,076,767)
Value adjustments in respect of loans and advances and provisions for contingent liabilities and commitments (8,590,610) (1,592,226)
Value re-adjustments in respect of loans/advances and provisions for contingent liabilities and commitments 394,517 459,106
Value adjustments in respect of transferablesecurities held as financial fixed assets, participatinginterests and shares in affiliated undertakings (3,609) (8,949)
Tax on profit on ordinary activities 14.4 (2,510,235) (797,563)
Profit on ordinary activities after tax 22,604,230 14,991,154
Profit for the financial year 22,604,230 14,991,154
Note(s) 2008 2007 EUR EUR
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PRoFit And Loss Account FoR the yeAR ended deceMBeR 31, 2008(expressed in euros)
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The accompanying notes form an integral part of these annual accounts.
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17eurobank eFG Private Bank Luxembourg s.A.
note 1 – General
Eurobank EFG Private Bank Luxembourg S.A.
(the “Bank”) was incorporated in Luxembourg on
August 26, 1986, as a “Société Anonyme” under the
name of Banque de Dépôts (Luxembourg) S.A. The
Extraordinary General Meeting of Shareholders held
on August 6, 1997 resolved to change the name of the
Bank to EFG Private Bank (Luxembourg) S.A. with
effect from September 10, 1997.
The Extraordinary General Meeting of Shareholders
held on 17th September, 2008 resolved to change the
name of the Bank to Eurobank EFG Private Bank
Luxembourg S.A. with effect from October 1, 2008.
The Bank is engaged in the business of providing
private banking, investment and advisory services for
corporate and private clients as well as administrative
and custody services for investment funds. The Bank
is active in the money markets, deposit taking and
lending and engages in spot and forward foreign
exchange business as well as undertaking transactions
in securities and off balance sheet instruments, both
for its own account and on behalf of customers.
Eurobank EFG Private Bank Luxembourg S.A. is
included in the consolidated annual accounts of EFG
Bank European Financial Group, whose registered
office is in Geneva, where the consolidated annual
accounts are available. These annual accounts
represent the biggest group of companies, which the
Bank belongs to as a subsidiary.
Eurobank EFG Private Bank Luxembourg S.A. is
also included in the consolidated annual accounts
of its Mother Company, EFG Eurobank Ergasias
S.A., whose registered office is in Athens, where the
consolidated annual accounts are available. These
annual accounts represent the smallest group of
companies, which the Bank belongs to as a subsidiary.
EFG Eurobank Ergasias S.A. is listed on the Athens
Stock Exchange.
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note 2 – summary of significant accounting policies
2.1 – Basis of presentation These annual accounts have been prepared in
conformity with accounting principles generally
accepted in the banking sector in the Grand Duchy
of Luxembourg. The accounting policies and the
principles of valuation are determined and applied
by the Board of Directors, except those, which are
defined by Luxembourg law and regulations.
On the bases of the criteria set out by the Luxembourg
law, the Bank is exempted from preparing consolidated
annual accounts. In accordance with the amended
as at December 31, 2008
notes to the AnnuAL Accounts
17eurobank eFG Private Bank Luxembourg s.A.
18 --- Annual Report 08
law of June 17, 1992, the present annual accounts
are consequently prepared on an unconsolidated
basis for approval by the Annual General Meeting of
Shareholders.
2.2 – Foreign currenciesThe Bank has adopted a multicurrency accounting
system, as a result of which assets and liabilities
are recorded in the currencies in which they have
occurred. For the preparation of the annual accounts,
amounts in foreign currencies are translated into euro
(EUR) on the following bases:
2.2.1 Spot transactionsAssets and liabilities in foreign currencies are
translated into euro at exchange rates applicable at
the balance sheet date.
Income, charges and purchases of fixed assets are
recorded in the currency in which they are collected or
disbursed and are translated into euro at rates approx-
imating those ruling at the time of the transaction.
Exchange gains and losses arising from the Bank’s net
open currency spot position are taken to the profit
and loss account in the current year.
Unsettled spot foreign exchange transactions are
translated into euro at the spot rate of exchange
prevailing on the balance sheet date.
Foreign exchange gains and losses resulting from
spot transactions hedged by forward transactions
are neutralised through “prepayments and accrued
income” and “accruals and deferred income” accounts.
Premiums or discounts arising due to the difference
between spot and forward exchange rates are amortised
in the profit and loss account on a pro-rata basis.
2.2.2 Forward transactionsUnsettled forward exchange transactions are
translated into euro at the forward rate prevailing on
the balance sheet date for the remaining maturity.
Unrealised exchange losses on un-hedged forward
exchange contracts are recognised in the profit and
loss account at the forward rate prevailing on the
balance sheet date for the remaining term of the
contract. Unrealised exchange gains on forward
exchange contracts are not included, and are only
recognised when ultimately realised, except when
such contracts form an economic unit with offsetting
foreign exchange transactions.
2.2.3 SwapsGains and losses on currency swap transactions are
accrued on the straight-line basis over the period of the
swap contract and are included in interest receivable or
payable in the profit and loss account, as appropriate.
2.3 – Loans and advancesLoans and advances are stated at disbursement value
less repayments made and any value adjustments
required. Accrued interest are recorded in balance
sheet caption “prepayments and accrued income”.
The policy of the Bank is to establish specific value
adjustments for doubtful debts in accordance with the
circumstances and for amounts specified by the Board
of Directors. These value adjustments are deducted
from the appropriate asset account balances.
2.4 – Valuation of fixed-income transferable securities The Bank has divided its portfolio of fixed-income
transferable securities into three categories for
valuation purposes:
2.4.1 Investment portfolio of financial fixed assetsThis portfolio comprises fixed-income transferable
securities, which are intended to be held on a long-
term basis.
notes to the annual accounts ( continued )
19eurobank eFG Private Bank Luxembourg s.A.
X Principle of valuation at acquisition cost
Fixed-income transferable securities are recorded at
historical acquisition cost in their original currency.
The acquisition cost includes the costs to purchase
the asset. A value adjustment is made where the
market value at the balance sheet date is lower than
the acquisition cost and when the Board of Directors
considers the depreciation to be permanent.
The premium resulting from the purchase of bonds
and other fixed-income transferable securities having
the characteristics of financial fixed assets, at a
price exceeding the amount repayable at maturity,
is amortised in the profit and loss account over the
period remaining until final repayment.
The discount resulting from the acquisition of bonds
and other fixed-income transferable securities having
the characteristics of financial fixed assets, at a price
less than the amount repayable at maturity, is released
to income in instalments over the period remaining
until repayment.
X Principle of valuation at “lower of cost or market”
Fixed-income transferable securities having the charac-
teristics of financial fixed assets are valued at lower of
their amortised acquisition cost and their market value.
The value adjustment, corresponding to the negative
difference between the market value and the acquisi-
tion cost, is not maintained if the reasons for which the
value adjustment was made no longer exist.
During the year, the Bank did not hold fixed-income
transferable securities in its investment portfolio.
2.4.2 Trading portfolioThis portfolio comprises fixed-income transferable
securities purchased with the intention of selling
them in the immediate short term. These securities
are traded on a market whose liquidity can be
assumed to be certain and their market price is at all
times available to third parties. These securities are
valued at the lower of their acquisition cost and their
market value.
During the year, the Bank did not hold any trading
portfolio.
2.4.3 Structural portfolioThis portfolio comprises fixed-income transferable
securities and asset swaps purchased for their
investment return or yield or held to establish a
particular asset structure or a secondary source of
liquidity. It also includes fixed-income transferable
securities not contained in the other two categories.
Securities in this portfolio are valued at the lower
of their amortised acquisition cost and their market
value. The value adjustments, corresponding to the
negative difference between the market value and the
amortised acquisition cost, are not maintained if the
reasons for which the value adjustments were made
no longer exist.
Premiums included in the acquisition cost and
resulting from the purchase of bonds and other
fixed-income transferable securities included in this
portfolio at a price exceeding the amount repayable at
maturity are amortised in the profit and loss account
over the period remaining until repayment.
Asset swaps held in this portfolio are packaged deals
made of a fixed income transferable security and
a perfect cash flow swap, swapping the fixed rate
received on the fixed income transferable security for
a short term floating rate. Consequently, asset swaps
held in the structural portfolio are booked at their
par value and maintained at their par value.
20 --- Annual Report 08
2.5 – Valuation of variable-yield transferable securitiesParticipating interests and shares in affiliated
undertakings are recorded in the balance sheet at
their acquisition cost in their original currency. The
acquisition cost includes the costs to purchase the
assets. A value adjustment is made if the Board of
Directors considers that a permanent impairment exists
in their carrying value at the balance sheet date.
Companies in which the Bank directly and indirectly
exercises a significant influence are considered to
be affiliated undertakings. Participating interests
comprise rights in the capital of other undertakings,
the purpose of which is to contribute to the activity of
the company through a durable link.
In 2006 and 2007, the Bank participated in the
proportion of the capital held for two affiliated banks
in Serbia and Ukraine respectively. These share
participation however were totally controlled and
monitored by the Mother Company, EFG Eurobank
Ergasias S.A., and did not have the characteristics of
financial fixed assets and did not need impairment,
as the sale of these shares was already scheduled
with a predefined price. These participations were
not consolidated at the Bank level but at the Mother
Company level. In 2008, the participations held
in Serbia and Ukraine were sold at the scheduled
predefined price.
2.6 – Intangible and tangible fixed assetsIntangible and tangible fixed assets are valued at
cost less accumulated amortisation/depreciation.
Amortisation/depreciation is calculated on a straight-
line basis over the estimated useful life of individual
fixed assets.
2.6.1 Intangible assetsIntangible assets are represented by formation
expenses which are amortised on a straight-line basis
over 5 years and intangible assets in the form of
software and consultancy.
2.6.2 Tangible assetsTangible assets are used by the Bank for its own
operations. Tangible assets are valued at cost less
depreciation to date. Depreciation is calculated on a
straight-line basis over the life of the assets concerned.
The rates used for this purpose are:
2008 2007
% %
Furniture 18.0 18.0
Machinery and equipment 25.0 25.0
Vehicles 20.0 20.0
Hardware and software 25.0 25.0
Premises fixtures 10.0 10.0
Premises fixtures in leased offices are amortised over
the remaining lease period but not over more than
10 years.
2.7 – Derivative instruments2.7.1 Interest rate swapsInterest on interest rate swaps is included in the
balance sheet captions “Prepayments and accrued
income” and “Accruals and deferred income”. It is
credited or charged to interest receivable or payable
in the profit and loss account.
Interest rate swaps, which are not held for hedging
purposes, are marked to market. Provisions are made
for unrealised valuation losses whereas unrealised
valuation gains are not taken into account until
maturity. Interest rate swaps entered into for hedging
purposes are not valued.
2.7.2 Cross currency interest rate swaps (CCIRS)The currency element in a CCIRS is recorded as
explained in note 2.2.3 and the interest element as
stated in note 2.7.1 above.
notes to the annual accounts ( continued )
21eurobank eFG Private Bank Luxembourg s.A.
2.8 – Lump-sum provisionA general provision for potential losses on assets and
off balance sheet items is recorded on a risk weighted
basis. This provision, which is tax deductible, is
compensated with the related assets; the portion
of the provision relating to the off balance sheet
items is included in the provision for liabilities and
charges.
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note 3 – use of financial instruments
3.1 – Strategy in using financial instruments The Bank’s treasury activities are primarily related to
the use of financial instruments including derivatives.
Since 2006 all treasury activities of the Bank are
carried out with the Treasury Department of the
Bank’s parent company in Athens, EFG Eurobank
Ergasias S.A.
Asset/Liability Management of the Bank is taking
into account other banking activities including private
banking client accounts, investment funds and inter-
bank activity mainly with EFG Eurobank Ergasias
S.A., Athens.
The Bank aims to use funds from customer operations,
investment funds operations and other market deposits
that have been raised at fixed and floating rates and
for various periods seeking to earn profitable margins
by investing these funds in high quality assets. Such
operations are only executed following the limits, as
well as defined products determined with the approval
of the Board of Directors. Limits are currently set in
such a way that restricts the Treasury and Foreign
Exchange Department of the Bank from taking large
exposures.
During periods of falling interest rates, the Bank
seeks to increase its margins by favouring short-term
funding and lending for longer periods at higher
rates whilst maintaining sufficient liquidity to meet
all claims that might fall due. During periods of
increasing interest rates, the Bank aims to increase
these margins by lending and borrowing in the short
term and by hedging its assets and liabilities.
Related issues and decisions are taken by the Asset
and Liability Management Committee of the Bank.
The Bank also raises its interest margin by obtaining
profitable margins through lending to business and
retail borrowers with a good credit standing. Loans
are given only when adequate collateral exists and
after the approval by the Credit Committee of the
Bank. The Bank also enters into guarantees and other
commitments such as letters of credit and letters of
guarantee.
The monitoring of limits and margins is carried out by
the Middle Office of the Bank on the basis of the daily
positions provided by the IT department. Middle
Office reports are communicated daily amongst
others to Local Management and the Head of Group
Treasury in Athens.
When limits are exceeded and margins not respected,
Local Management as well as the responsible Manager
are informed immediately. The excesses are also
reported to the Board of Directors on a quarterly basis.
HedgingThe Bank hedges part of its existing interest rate
risk resulting from any potential decrease in the fair
value of fixed rate assets denominated both in local
and foreign currencies using interest rate and cross
currency interest rate swaps.
The Bank hedges a proportion of foreign exchange
risk it expects to assume as a result of cash flows from
debt securities using currency swaps.
22 --- Annual Report 08
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3.2 – Analysis of financial instruments3.2.1 Information on primary financial instrumentsThe table below analyses the level of primary financial
instruments (primary non-trading instruments and
primary trading instruments) of the Bank, in terms of
carrying amounts, into relevant maturity groupings
based on the remaining period at balance sheet date to
the contractual maturity date. Additional indication of
aggregate fair values of trading instruments is disclosed
where they differ materially from the amounts at which
they are included in the accounts.
“Fair value” is understood as being the amount at
which an asset could be exchanged or a liability settled
as part of an ordinary transaction entered into under
normal terms and conditions between independent,
informed and willing parties, other than in a forced or
liquidation sale.
notes to the annual accounts ( continued )
23eurobank eFG Private Bank Luxembourg s.A.
3.2.1.1 Analysis of financial instruments – Primary non-trading instruments (at carrying amount - EUR)
Figures as at December 31,2008
Less than 3 months
> 3 months to 1 year
> 1 year to 5 years > 5 years
No maturity Total
Instrument class (financial assets)
Cash in hand, balances with central banks and post office banks - - - - 94,336,114 94,336,114
Loans & advances to credit institutions 4,875,810,479 780,937,091 - - 128,512,830 5,785,260,400
Loans & advances to customers 9,740,452,594 1,633,289,343 906,747,955 322,548,748 50,488,971 12,653,527,611
Bonds 25,100,817 61,508,429 199,877,630 98,410,503 - 384,897,379
Shares - - - - 116,097 116,097
Total Financial assets 14,641,363,890 2,475,734,863 1,106,625,585 420,959,251 273,454,012 18,918,137,601
Non financial assets - - - - 158,059,571 158,059,571
Total Assets 14,641,363,890 2,475,734,863 1,106,625,585 420,959,251 431,513,583 19,076,197,172
Instrument class (financial liabilities)
Amounts owed to credit
institutions:
Repayable on demand 223,164,987 - - - - 223,164,987
With agreed maturity dates or periods of notice 13,025,590,809 1,523,452,493 908,323,737 308,113,756 23,680,115 15,789,160,910
Amounts owed to customers:
Repayable on demand 144,192,607 - - - - 144,192,607
Repayable at term or with notice 1,661,727,122 715,782,031 - - 112,090,164 2,489,599,317
Total Financial liabilities 15,054,675,525 2,239,234,524 908,323,737 308,113,756 135,770,279 18,646,117,821
Non financial liabilities - - - - 430 079 351 430 079 351
Total Liabilities 15,054,675,525 2,239,234,524 908,323,737 308,113,756 565,849,630 19,076,197,172
As at December 31, 2008, the Bank held no primary trading financial instruments.
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24 --- Annual Report 08
3.2.1.1 Analysis of financial instruments – Primary non-trading instruments (at carrying amount - EUR) (cont.)
Figures as at December 31,2007
Less than 3 months
> 3 months to 1 year
> 1 year to 5 years
> 5 years No maturity Total
Instrument class (financial assets)
Cash in hand, balances with central banks and post office banks - - - - 21,356,413 21,356,413
Loans & advances to credit institutions 3,696,083,290 71,357,896 - - 127,686,947 3,895,128,133
Loans & advances to customers 7,595,457,506 641,517,854 205,652,771 242,991,884 40,870,584 8,726,490,599
Bonds 50,936,488 7,454,874 221,814,465 65,078,638 - 345,284,465
Shares - - - - 87,022 87,022
Total Financial assets 11,342,477,284 720,330,624 427,467,236 308,070,522 190,000,966 12,988,346,632
Non financial assets - - - - 186,073,963 186,073,963
Total Assets 11,342,477,284 720,330,624 427,467,236 308,070,522 376,074,929 13,174,420,595
Instrument class (financial liabilities)
Amounts owed to credit institutions:
Repayable on demand 1,177,085 - - - 28,304,418 29,481,503
With agreed maturity dates or periods of notice 10,128,398,002 571,414,338 340,032,900 242,991,885 - 11,282,837,125
Amounts owed to customers:
Repayable on demand 25,198,532 - - - 124,353,844 149,552,376
Repayable at term or with notice 1,315,247,500 97,329,467 - - - 1,412,576,967
Total Financial liabilities 11,470,021,119 668,743,805 340,032,900 242,991,885 152,658,262 12,874,447,971
Non financial liabilities - - - - 299,972,624 299,972,624
Total Liabilities 11,470,021,119 668,743,805 340,032,900 242,991,885 452,630,886 13,174,420,595
As at December 31, 2007, the Bank held no primary trading financial instruments.
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notes to the annual accounts ( continued )
25Eurobank EFG Private Bank Luxembourg S.A.
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3.2.1.2 Description of derivative financial instruments used The Bank enters into the following derivative financial
instruments:
Currency forwards represent commitments to
purchase foreign and domestic currency, including
undelivered spot transactions.
Currency and interest rate swaps are commitments
to exchange one set of cash flows for another. Swaps
result in an economic exchange of currencies or
interest rates (for example, fixed rate for floating
rate) or a combination of all these (i.e. cross-currency
interest rate swaps). Except for certain currency
swaps, no exchange of principal takes place.
3.2.1.3 Analysis of derivative financial instrumentsThe table below analyses the level of derivative
financial instruments (trading and non-trading) of the
Bank, broken down in terms of notional amount, into
relevant maturity groupings based on the remaining
period at balance sheet date to the contractual
maturity date. The Bank held only OTC derivative
financial instruments as at December 31, 2008.
The notional amounts of certain types of financial
instruments provide a basis for comparison with
instruments recognised on the balance sheet but
do not necessarily indicate the amounts of future
cash flows involved or the current fair value of the
instruments and, therefore, do not indicate the Bank’s
exposure to credit or price risks. The derivative
instruments become favourable or unfavourable as
a result of fluctuations in market interest rates or
foreign exchange rates relative to their terms. The
aggregate contractual or notional amount of derivative
financial instruments on hand, the extent to which
instruments are favourable or unfavourable and, thus
the aggregate fair values of derivative financial assets
and liabilities can fluctuate significantly from time
to time.
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Derivative non-trading instruments OTC as at December 31, 2008
Nominal amounts Net fair value
Figures as at December 31,2008
Less than 3 months
> 3 months to 1 year
> 1 year to 5 years > 5 years Total Total
Interest rates
Swaps (1) 22,107,117 - 117,029,820 - 139,136,937 (11,794,173)
Foreign exchange
Forwards 171,464,234 1,215,528 6,626,487 - 179,306,249 -
Swaps 198,658,523 - - 198,658,523 -
Total 392,229,874 1,215,528 123,656,307 - 517,101,709 (11,794,173)
(1) These correspond to the package deals mentioned in the note 2.4.3. The net fair value of the underlying securities amounts to EUR 111.5 mios.
The Bank held no exchange-traded derivative financial instrument and no trading OTC derivative financial
instrument as at December 31, 2008.
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26 --- Annual Report 08
derivative non-trading instruments otc as at december 31, 2007
Nominal amounts Net fair value
Figures as at December 31, 2007
Less than 3 months
> 3 months to 1 year
> 1 year to 5 years > 5 years Total Total
Interest rates
Swaps (1) 23,893,257 - 84,862,228 - 108,755,485 (5,579,787)
Foreign exchange
Forwards 17,991,678 21,785,519 - - 39,777,197 3,104
Swaps 114,884,873 100,000 - - 114,984,873 (624,374)
Total 156,769,808 21,885,519 84,862,228 - 263,517,555 (6,201,057)
(1) These correspond to the package deals mentioned in the note 2.4.3. The net fair value of the underlying securities amounts to EUR 111.5 mios.
The Bank held no exchange-traded derivative financial instrument and no trading OTC derivative financial
instrument as at December 31, 2007.
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3.3 – Credit risk3.3.1 Description of credit risk The Bank takes on exposure to credit risk. The Bank
structures the levels of credit risk it undertakes
by placing limits on the amount of risk accepted in
relation to one borrower or groups of borrowers, and
to geographical segments. Such risks are monitored
on a revolving basis and subject to monthly reviews.
Limits are approved by the Board of Directors and
reviewed at least annually. Under delegation of the
Board of Directors, Management has the possibility
to approve country limits up to a predetermined level.
The Board of Directors also determines who has the
authority to approve excesses and up to what level. The
excesses exceeding amounts and tenor defined within
Group Risk Guidelines are immediately reported
to Local Management and the Group Risk Unit in
Geneva (EFG Bank European Financial Group).
The exposure to any borrower including banks and
brokers is further restricted by sub-limits covering
on-and off balance sheet exposures. Actual exposures
against limits are monitored daily.
Exposure to credit risk is managed through regular
analysis of the ability of borrowers and potential
borrowers to meet interest and capital repayment
obligations and by changing these lending limits
where appropriate. Exposure to credit risk is primarily
managed by obtaining collateral and corporate and
personal guarantees.
The Group Risk Unit is setting types of collateral as
well as minimum margins. The Bank imposes more
strict collateral rules than those set by the group
based on careful analysis, internal policies and the
market environment. The Bank has a clear procedure
to approve “eligible” collateral and it periodically
reviews approved collateral.
On currency and interest rate swaps, the Bank’s
credit risk represents the potential cost to replace
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notes to the annual accounts ( continued )
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27eurobank eFG Private Bank Luxembourg s.A.
the swap contracts if counterparties fail to perform
their obligation. This risk is monitored on an ongoing
basis with reference to the current fair value and the
liquidity of the market. To control the level of credit
risk taken, the Bank assesses counterparties using the
same techniques as for its lending activities.
3.3.2 Measures of credit risk exposureInformation on credit risk as it relates to financial
instruments is disclosed on the basis of the carrying
amount that best represents the maximum credit risk
exposure at the balance sheet date without taking
account of any collateral.
With respect to derivative instruments not dealt on
a recognised, regulated market (OTC), the carrying
amount (principal or notional amount) does not reflect
the maximum risk exposure. The maximum exposure
to credit risk is determined by the value of the overall
replacement cost.
The table below discloses the level of credit exposure
in terms of notional amounts, replacement cost,
potential future credit exposure and net risk exposure
adjusted for any collateral, broken down by the
degree of creditworthiness of the counterparty based
on internal or external ratings.
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credit Risk on otc derivative instruments (use of market risk method) as at december 31, 2008
Counterparty solvency (based on external/internal ratings)
Notional amount
Current Replacement
cost
Potential future
replacement cost
Overall replacement
cost CollateralNet risk exposure
(1) (2) (3)(4)=(2) + (3) -
Provision (5) (6) = (4) - (5)
External rating
A 429,092,279 4,986,367 4,024,703 9,011,979 - 9,011,979
Sub-total 1 9,011,979
Internal Rating
Customer & Fund
2 31,614,314 542,742 227,947 770,689 - 770,689
4 56,395,115 437,870 317,322 755,192 - 755,192
Sub-total 2 1,525,881
Total 10,537,860
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28 --- Annual Report 08
credit Risk on otc derivative instruments (use of market risk method) as at december 31, 2007
Counterparty solvency (based on external/internal ratings)
Notional amount
Current Replacement
cost
Potential future
replacement cost
Overall replacement cost Collateral
Net risk exposure
(1) (2) (3)(4)=(2) + (3) -
Provision (5) (6) = (4) - (5)
External rating
A 227,079,765 175,866 1,768,501 1,944,367 - 1,944,367
AA 16,094,694 - - - - -
Sub-total 1 1,944,367
Internal Rating
Customer & Fund
2 19,496,744 - 79,673 79,673 - 79,673
4 493,188 14,036 4,932 12,853 - 12,853
Sub-total 1 92,526
Total 2,036,893
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3.3.3 Concentrations of credit riskThe table below shows credit risk concentration as it relates to financial instruments from on- and off balance
sheet exposures by geographic location and economic sector.
Geographic credit risk concentrations
Geographical zone (by country or zone)
Credits and other balance sheet OTC derivatives
2008 2007 2008 2007
Luxembourg 8,396,334,392 5,456,947,515 56,395,116 -
Other European Monetary Union (EMU) countries 7,031,083,182 4,688,072,493 434,504,594 224,182,324
Other countries 3,648,779,598 3,029,400,587 26,202,000 39,335,231
Total 19,076,197,172 13,174,420,595 517,101,709 263,517,555
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notes to the annual accounts ( continued )
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29eurobank eFG Private Bank Luxembourg s.A.
As the Bank is mainly active on the European markets, it has a significant concentration of credit risk with
other European financial institutions. In total, credit risk exposure is estimated to have amounted to EUR
19,593,298,881 as at December 31, 2008 (2007: EUR 13,437,938,150) of which EUR 517,101,709 (2007: EUR
263,517,555) consisted of derivative financial instruments.
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economic sector credit risk concentrations
The table below shows that credit exposure on credit institutions including multilateral development banks,
financial intermediaries and governments constitutes over 86% of the total balance sheet credit risk of the Bank
as at December 31, 2008 (87% as at December 31, 2007).
Economic sector
Credits and other balance sheet items OTC derivatives
2008 2007 2008 2007
Credit institutions 5,971,424,254 4,101,234,570 429,092,280 243,608,754
Households 218,358,837 115,211,385 1,823,323 935,168
Investment funds 12,129,704 26,993,985 56,395,115 -
Activity ancillary to financial intermediation and insurance 2,406,774,100 2,625,636,921 - -
Non financial corporations 2,241,495,618 1,415,413,289 29,790,991 18,973,633
Governments 242,864,111 201,723,670 - -
Central banks 94,213,638 21,200,623 - -
Financial holding companies 7,723,829,477 4,573,456,642 - -
Others 165,107,433 93,549,510 - -
Total 19,076,197,172 13,174,420,595 517,101,709 263,517,555
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3.4 Market riskThe Bank takes on exposure to market risks. Market
risks arise from open positions in interest rate,
currency and equity products, all of which are exposed
to general and specific market movements.
Interest rate risk is monitored daily and reported to
local management and the Head of Group Treasury.
On a monthly basis, the Bank applies a “value at
risk” (VAR) methodology to estimate the market
risk of positions held and the maximum losses
expected, based upon a number of assumptions for
various changes in market conditions. The Board
of Directors sets limits on the value of risk that
may be accepted, which is monitored as deemed
appropriate.
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30 --- Annual Report 08
The Bank’s market risk reporting and the limit
structure is based on a measure of potential loss under
normal market conditions. The parameters used are:
X A 95% one tailed confidence level. This means that
the potential loss amount is the maximum amount
that could be lost, on average, on 95% of trading
days. Conversely it is the minimum loss that should
be expected on 5% of trading days;
X A 10-day holding period. This means that the Bank
measures risk assuming that exposures could not be
hedged or unwound in less than 10 working days; and
X A 180-day time series of changes in market variables.
This means that a 6-month history of market
movements is used to estimate likely changes in
market risk factors (volatilities and correlations).
Since VAR constitutes an integral part of the Bank’s
market risk control system, VAR limits are established
by the Board on all portfolio operations including
interest rate, FX and equities.
Exchange rate risk measurement incorporates factors
corresponding to individual foreign currencies in
which the Bank has material positions.
Interest rate risk measurement includes a set of risk
factors corresponding to interest rates in each of the
currencies in which the Bank has material interest
rate sensitive positions. For each currency, the yield
curve is divided into a number of maturity segments
in order to capture the variation in volatility of interest
rates at different points on the yield curve.
Equity prices risk measurement includes risk factors
corresponding to each of the national markets in
which the Bank has a material position. A market
index captures market-wide movement in equity
prices.
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note 4 – cash in hand, balances with central banks and post office banks
In accordance with the requirements of the European
Central Bank, the Luxembourg Central Bank
implemented, effective January 1, 1999, a system
of mandatory minimum reserves which applies to
all Luxembourg credit institutions. The minimum
reserve balance as at December 31, 2008 held by the
Bank with the Luxembourg Central Bank amounted
to EUR 94,213,638 (2007: EUR 21,200,623).
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notes to the annual accounts ( continued )
31eurobank eFG Private Bank Luxembourg s.A.
note 5 - transferable securities
5.1 – Listed securities
2008
EUR
2007
EUR
Debt securities and other fixed-income securities
public sector issues 242,864,111 195,199,276
other issues 142,033,268 150,085,189
384,897,379 345,284,465
5.2 – Unlisted securities
2008
EUR
2007
EUR
Shares and other variable-yield securities 83,619 87,022
Participating interests 9,058 8,723
Shares in affiliated undertakings 23,420 126,418,960
5.3 – Fixed-income securitiesX Bonds and other fixed-income transferable securities
maturing in 2009 amount to EUR 86,609,245 (2008:
EUR 58,391,362).
X Bonds and other fixed-income transferable securities
classified into the structural portfolio amount to
EUR 384,897,379 (2007: EUR 345,284,465).
5.4 – Bonds eligible for refinancing with a central bank of the Euro zoneThe amount of bonds eligible for refinancing with a
central bank of the Euro zone included in the heading
“Bonds and other fixed-income transferable securities”
is EUR 267,555,295 (2007: EUR 206,676,477).
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notes to the annual accounts ( continued )
note 6 - Affiliated undertakings and participating interests
6.1 – Summary of shares in participating interests and affiliated undertakingsAt December 31, 2008, the Bank held participating interests and shares in affiliated undertakings in the following
companies:
Participating interests Head OfficeCostEUR
Proportion of years capital
held%
Capital and reserves at
31/12/08EUR
Profit or (loss) at 31/12/08
EUR
European Financial Group EFG S.A. Luxembourg 3,099 10% 30,987 (8,928)
Other participations 6,106 - - -
9,205
Cumulative value adjustments (see note 7) (147)
Net value of participating interests 9,058
Shares in affiliated undertakings
Aristolux Investment Fund
Management Company S.A. Luxembourg 125,000 98.40% 27,017 (4,007)
Eurobank EFG Holding
(Lux) S.A. Luxembourg 310 1% 31,000 (102,124) (1)
Eurobank EFG Fund Management
Company (Lux) S.A. Luxembourg 100 0.008% 1,200,000 (2) 5,390,508 (2)
125,410
Cumulative value adjustments (see note 7) (101,990)
Net value of shares in affiliated undertakings 23,420
(1) December 31, 2006(2) December 31, 2007
y
y
y
y
y
y
y
y
y
33eurobank eFG Private Bank Luxembourg s.A.
6.2 – Transactions with other Group Companies
2008
EUR
2007
EUR
Assets
Loans and advances to credit institutions 5,784,504,488 3,848,750,053
Loans and advances to customers 10,039,199,009 7,015,415,234
15,823,703,497 10,864,165,287
Liabilities
Amounts owed to credit institutions 13,208,720,032 10,297,781,073
Amounts owed to customers 2,008,801,000 845,457,605
Subordinated liabilities 116,752,491 116,752,491
15,334,273,523 11,259,991,169
y
y
y
y
y
y
y
y
y
34 --- Annual Report 08
notes to the annual accounts ( continued )
no
te 7
- M
ove
men
ts in
fixe
d a
sset
s
Cos
tVa
lue
adju
stm
ents
Net
Am
oun
ts in
EU
R
Gro
ss v
alue
at
the
begi
nnin
g of
the
finan
cial
ye
ar 2
008
Add
itio
nsD
ispo
sals
Gro
ss v
alue
at
the
end
of th
e fin
anci
al y
ear
2008
Cum
ulat
ive
valu
e ad
just
men
ts a
t the
be
ginn
ing
of th
e fin
anci
al y
ear
2008
Valu
e ad
just
men
ts
Cum
ulat
ive
valu
e ad
just
men
ts a
t th
e en
d of
the
finan
cial
yea
r 20
08
Net
boo
k va
lue
at th
e en
d of
the
finan
cial
yea
r 20
08
Long
term
inve
stm
ents
incl
udin
g
Part
icip
atin
g in
tere
sts
9,20
50
-9,
205
(50
6)35
9(1
47)
9,0
58
Shar
es in
affi
liate
d un
dert
akin
gs12
5,41
0-
-12
5,41
0(9
8,02
2)(3
,968
)(1
01,9
90)
23,4
20
134
,615
0-
134,
615
(98,
528)
(3,6
09)
(102
,137
)32
,478
Inta
ngib
le fi
xed
asse
ts
Softw
are
and
Con
sulta
ncy
1,10
8,77
122
4,73
71,
333,
508
(1,0
80,7
13)
(43,
362)
(1,1
24,0
75)
209,
433
1,10
8,77
122
4,73
71,
333,
508
(1,0
80,7
13)
(43,
362)
(1,1
24,0
75)
209,
433
Tang
ible
fixe
d as
sets
incl
udin
g
Oth
er fi
xtur
es a
nd fi
tting
s, to
ols
and
equi
pmen
t3,
714,
771
312,
773
-4,
027,5
44(3
,313
,360
)(2
12,4
58)
(3,5
25,8
18)
501,7
29
Tech
nica
l equ
ipm
ent a
nd m
achi
nery
421,
233
113,
458
-53
4,69
1(3
64,2
98)
(20,
675)
(384
,973
)14
9,71
8
4,13
6,00
442
6,23
1-
4,56
2,23
5(3
,677
,658
)(2
33,1
33)
(3,9
10,7
91)
651,
444
y y y y y y y y y
35eurobank eFG Private Bank Luxembourg s.A.
note 8 – subordinated liabilities
The following subordinated borrowings granted by the Mother Company, EFG Eurobank Ergasias S.A., were
outstanding at December 31, 2008:
Currency Nominal value Interest rate (%) Maturity date
EUR 25,000,000 4.137 27/11/2013
EUR 25,000,000 3.628 11/12/2013
EUR 20,000,000 3.253 24/03/2014
EUR 46,752,491 5.027 31/07/2014
116,752,491
These subordinated borrowings meet the requirements of point 7 e) of part VII of the circular 00/10.
Interest periods (starting from the date of the drawdown of the loan) have a duration of three months. The
interest rate applicable is EURIBOR + 20 b.p.. Interest paid during the year amounts to EUR 5,843,610.
y
note 9 – subscribed capital
The authorised and paid-up share capital of the Bank amounts to EUR 70,000,000.
The Bank’s capital comprised the following shares at the end of the year:
NumberNominal
valueTotalEUR
Registered shares 500,000 140 70,000,000
y
note 10 – Reserves
10.1 – Legal reserveIn accordance with Luxembourg law, the Bank is
required to transfer at least 5% of its annual profit to
the legal reserve until this equals 10% of subscribed
capital. The legal reserve is not available for
distribution to shareholders.
10.2 – Special reserveIn accordance with the tax law, the Bank reduces the Net
Worth Tax liability by deducting it from itself. In order to
comply with the tax law, the Bank allocates under non-
distributable reserves (item “special reserve”) an amount
that corresponds to five times the amount of reduction
of the Net Worth Tax. This reserve is non-distributable
for a period of five years from the year following the one
during which the Net Worth Tax was reduced.
y
y
y
y
y
y
y
36 --- Annual Report 08
note 11 – shareholders’ equity
The movements of shareholders’ equity of Eurobank EFG Private Bank Luxembourg S.A. may be summarised
as follows:
Subscribed capital EUR
Reserves Profit brounght forward
EUR
Current year profit
EURTotal own funds EUR
Legal EUR
Special EUR
Total reserves
EUR
Balance at December 31, 2007 70,000,000 2,385,673 13,632,410 16,018,083 30,734,406 14,991,154 131,743,643
Transfer to legal
reserve - 749,558 - 749,558 - (749,558) -
Transfer to special reserve - - 956,111 956,111 (956,111) -
Profit brought forward - - - - 13,285,485 (13,285,485) -
Current year profit - - - - - 22,604,230 22,604,230
Balance at December 31, 2008 70,000,000 3,135,231 14,588,521 17,723,752 44,019,891 22,604,230 154,347,873
The appropriation of the 2007 result was approved by the Annual Meeting of Shareholders on March 11, 2008.
y
note 12 – Assets and liabilities denominated in foreign currencies
2008 EUR
2007 EUR
Total assets in foreign currencies 1,328,352,928 866,473,568
Total liabilities in foreign currencies 1,390,813,722 865,804,042
y
notes to the annual accounts ( continued )
y
y
y
y
y
y
y
y
37eurobank eFG Private Bank Luxembourg s.A.
note 13 – contingent liabilities and commitments
13.1 – Contingent liabilitiesContingent liabilities included in off balance sheet accounts at December 31, 2008 comprised:
2008
EUR
2007
EUR
Guarantees and other direct substitutes for credit 16,603,089 36,321,445
13.2 – Other off balance sheet commitments
2008
EUR
2007
EUR
Assets held on behalf of third parties 3,275,089,483 6,840,156,055
Credits confirmed but not used 1,336,340,086 1,373,977,261
Repurchase agreements 3,227,912,778 940,155,531
Interest rate swaps 139,136,236 108,755,486
Forward foreign exchange transactions 400,973,398 154,762,069
Fiduciary operations 72,601,773 49,353,181
Other 216,464 37,407
The repurchase agreements represent firm sales and repurchase contracts of securities mainly with the
Luxembourg Central Bank.
y
13.3 – Deposit Guarantee SchemeAll credit institutions in Luxembourg are a member of
the non-profit making “Association pour la Garantie
des Dépôts, Luxembourg” (AGDL).
The exclusive objective of the AGDL is the
establishment of a system of mutual guarantee of cash
deposits and of receivables arising from investment
operations made by individuals with members of
the AGDL, without distinction of their nationality
or residence, by corporations incorporated under
Luxembourg or another European Union member
state law, which are authorised, because of their size,
to prepare an abridged balance sheet in conformity
with the applicable law, as well as by those
corporations of a similar size as defined by law of
another European Union member state.
The AGDL reimburses to the deposit holder the
amount of his guaranteed cash deposits and to the
investor the amount of his guaranteed receivable with
a maximum foreign currency equivalent limit of EUR
20,000 per guaranteed cash deposit and EUR 20,000
per guaranteed receivable arising from investment
y
y
y
y
y
y
y
y
y
y
38 --- Annual Report 08
operations other than that relating to a cash deposit.
At December 31, 2008, the Bank has a remaining
provision (EUR 55,906; 2007: EUR 0) in connection
with this deposit guarantee and investor compensation
scheme corresponding to the maximum claim made
by the AGDL in 2008. The 2008 payments requested
by the AGDL (EUR 117,997; 2007: EUR 0) have been
recorded against the provision.
13.4 – Management and representative servicesThe Bank has provided the following management
and representative services to third parties in the
course of the financial year:
X Investment management and advice;
X Safekeeping and administration of securities;
X Fiduciary services;
X Agency services.
y
note 14 – Profit and loss account
14.1 – Sources of income by geographical region (OECD)By application of Article 69 of the law of June 17, 1992 on the annual accounts of credit institutions, sources of
income have not been analysed by geographical region.
14.2 – Other operating incomeOther operating income at December 31, 2008 represents:
2008
EUR
2007
EUR
Service fees billed to Eurobank EFG Fund Management
Company (Lux) S.A. 158,104 159,624
Other income 213,451 77,124
Reversal of prior years tax provisions 93,161 -
464,716 236,748
notes to the annual accounts ( continued )
y
y
y
y
y
39eurobank eFG Private Bank Luxembourg s.A.
14.3 – Other operating chargesOther operating charges at December 31, 2008 represent:
2008
EUR
2007
EUR
Financial charges linked to short position 698,947 978,360
Effective Greek withholding taxes 460,693 752,377
Serbian withholding tax - 183,114
Ukrainian withholding tax 207,645 89,885
Tax prior year 102,094 -
AGDL 173,903 -
Other charges 103,346 73,031
1,644,534 2,076,767
The financial charges linked to short position are
related to a transaction having involved the purchase
of a Corporate Convertible Bond and the hedging
of the embedded “equity option” through a stock
short selling position. The convertible bonds will
be held until the first day the conversion rights can
be exercised. At that date, the equity option will be
exercised and the shares will compensate the short
position. The realised profit (EUR 23,611,400 in
2008) on the short selling position will be taken into
account into Profit and loss on a straight line basis
over the period which lasts until the maturity of the
transaction and is recorded in Net profit on financial
operations. A premium paid on these convertible
bonds is amortised on a straight line basis over the
period which lasts until the maturity of these bonds
and is recorded in Interest payable and similar
charges (EUR 18,852,885 in 2008).
14.4 – Tax chargeThe Bank is liable to taxes on income, capital and
net assets. The Luxembourg tax authorities have
issued assessments for the years up to and including
2005. Tax liabilities including tax advances paid
are recorded under “Provisions for taxation” in the
balance sheet.
y
y
y
y
y
y
y
y
y
40 --- Annual Report 08
14.5 – Independent Auditor’s feesFor the year ending December 31, 2008 independent auditor’s fees are as follows:
2008 2007
Audit fees 238,200 198,000
Other assurance services 61,000 42,300
Tax 52,167 8,100
Other 57,525 32,150
y
note 15 - staff and directors
15.1 – StaffNumber of employees at the end of the financial year 2008:
2008 2007
Senior Management and Management 7 8
Employees 54 47
61 55
15.2 – Information relating to ManagementSenior Management and Management received
emoluments totalling EUR 1,106,672 in respect of
their duties (2007: EUR 1,256,097).
Board members received emoluments totalling EUR
314,072 in respect of their duties (2007: EUR 76,122).
Pension commitments in respect of Senior
Management have been concluded with an external
insurance company.
As at December 31, 2008 loans totalling EUR
6,572,448 were granted to 4 members of Management,
Senior Management and Board Members (2007: EUR
1,535,347).
Guarantees (EUR 12,040) for the rent of apartments
have been given on behalf of the Bank to 3 members
of the Management and Senior Management (2007:
EUR 21,085).
notes to the annual accounts ( continued )
y
y
y
y
y
y
y
y
y
42 --- Annual Report 08
Singapore
Jakarta
Hong Kong Taipei
Philippines
Beijing(Representative office)
DubaiBahrain
Miami Nassau
Mexico City
Bermuda
New York
Gibraltar
MonacoGENEVA
JerseyGuernsey
Birmingham
ZurichLiechtenstein
Valais
Luxembourg
Greece
BulgariaTurkey
Cyprus
Serbia
Poland
Ukraine
London
Malmo
Gothenburg
StockholmHelsinki
Kristianstad
Lulea
Romania
Buenos Aires
Lima
Bogota
Quito
CaracasPanama
Cayman Islands
Toronto
Barcelona
Lugano
Bangkok
Madrid
Moscow
Mumbai
Vancouver
Los Angeles
Montreal
St Catherines
Paris
Abu Dhabi
EFG Bank European Financial Group24, quai du Seujet
1211 Geneva, Switzerland
Tel.: (+41) 22 918 72 72
Fax: (+41) 22 918 72 73
www.efggroup.com
EFG Eurobank Ergasias S.A.(Eurobank EFG)
20, Amalias Avenue
105 57 Athens, Greece
Tel.: (+30) 210 333 7000
Fax: (+30) 210 323 3866
www.eurobank.gr
EFG International12, Bahnhofstrasse
8001 Zurich, Switzerland
Tel.: (+41) 44 226 18 50
Fax: (+41) 44 226 18 55
www.efginternational.com
PRinciPAL oFFices
43eurobank eFG Private Bank Luxembourg s.A.
Singapore
Jakarta
Hong Kong Taipei
Philippines
Beijing(Representative office)
DubaiBahrain
Miami Nassau
Mexico City
Bermuda
New York
Gibraltar
MonacoGENEVA
JerseyGuernsey
Birmingham
ZurichLiechtenstein
Valais
Luxembourg
Greece
BulgariaTurkey
Cyprus
Serbia
Poland
Ukraine
London
Malmo
Gothenburg
StockholmHelsinki
Kristianstad
Lulea
Romania
Buenos Aires
Lima
Bogota
Quito
CaracasPanama
Cayman Islands
Toronto
Barcelona
Lugano
Bangkok
Madrid
Moscow
Mumbai
Vancouver
Los Angeles
Montreal
St Catherines
Paris
Abu Dhabi
Design and production: Photoengraving: GCS Printing: DEJAGLMC
Printed on Antinoë Brut Soft White to 270 gsm and Focus Art Natural to 135 gsm
Eurobank EFG Private Bank Luxembourg S.A. 5, rue Jean Monnet – L-2180 Luxembourg — P.O. Box 897 L-2018 Luxembourg
Telephone (+352) 42 07 24-1 — Facsimile (+352) 42 07 24-650www.eurobankefg.lu
R.C. B 24724 registered office as above Eu
rob
ank
EFG
Pri
vate
Ban
k Lu
xem
bo
urg
S.A
.A
NN
UA
L R
EP
OR
T 0
8