Annual report 2010 - Banca Privata Edmond de Rothschild Lugano ...

Annual report 2010

2 • 

banca privata Edmond dE rothschild lUGano 

The Baron Edmond de Rothschild 

collection is the unquestioned jewel of the 

donations through which our family has honoured 

the French National Museums since the 

nineteenth century. 

As an informed collector and a major patron 

of the arts, Edmond de Rothschild (1845-1934) 

patiently assembled an unrivalled collection of 

exceptional works, comprising drawings, engravings, 

manuscripts and rare books, some 

of which date back to the fourteenth century. 

His passion and dedication were to enable 

this to become one of the largest collections 

of graphic art in the world, bringing together 

the greatest artists who forged the legacy of 

Western art. 

Albrecht Dürer 

(nuremberg, 1471 - id., 1528) 

Lioness (detail), 1521 

In 1935, Baron Edmond de Rothschild’s heirs 

were to donate the collection to the Louvre 

Museum in memory of their parents, thus 

contributing to the conservation of some of the 

greatest works bequeathed by human genius. 

The collection was naturally destined for this 

exceptional institution, whose outstanding 

scientific expertise and educational mission 

continue to underpin its international reputation 

with, in particular, the numerous exhibitions 

at global level. 

Our passion and commitment to patrimony 

and artistic creativity is a long-standing tradition 

which is integral to the history of our 

family. Promoting the arts as a key vector of 

knowledge remains a cornerstone of our philanthropic 

commitment. 

Ariane and Benjamin de Rothschild

© Musée du Louvre 


Albrecht Dürer (nuremberg, 1471 - id., 1528) 

Lioness, 1521 

Pen, brown ink and watercolour on vellum, 16 x 25,6 cm 

The Edmond de Rothschild Collection 

Martin Schongauer (colmar, c. 1450 – brisach, 1491)) 

Foolish Virgin 

Engraving, 14,8 x 10,7 cm 

The Edmond de Rothschild Collection 


Master of the Baroncelli Portraits (Flanders, late 15th century) 

Portrait of Giacomo di Giovanni d’Antonio Loiani (?), c. 1489-1499 

Silver point on blued prepared paper, 14 x 9,8 cm 

The Edmond de Rothschild Collection


Leonardo da Vinci (vinci, 1452 – amboise, 1519) 

Horseman at a gallop, studies of horses 

Pen and sepia ink, sepia wash, 19,4 x 12,3 cm 


4 • 


Contents 

Part 1 

8 Chairman’s message 

11 Directors, executives 

and auditors 

Part 2 

Financial statements 2010 

15 Report of the directors 

18 Balance sheet 

20 Income statement 

Notes to the financial 

statements 

23 Description of operations 

and staff 

25 Accounting and 

valuation principles 

28 Information on the 

balance sheet 

36 Information on 

off-balance sheet 

transactions 


income statement 

Raphael 

(raff aello sanzio) 

(Urbino, 1483 – rome, 1520) 

Portrait of a Young Man, 

c. 1502-1504 

Part 3 

42 Report of the 

Statutory auditors 

44 Addresses


Raphael (raffaello sanzio) 

(Urbino, 1483 – rome, 1520) 

Portrait of a Young Man, c. 1502-1504 

Black chalk, 28,8 x 20,4 cm 


6 • 


Contents part 1 

8 Chairman’s message 

11 Directors, executives 

and auditors 

School of Altichiero 

late 14th century 

Interior courtyard of a Gothic palace 

with a falcon attacking a duck 

and a peacock


School of Altichiero 

late 14th century 

Interior courtyard of a Gothic palace 

with a falcon attacking a duck and a peacock 

Coloured ink on parchment, 30,3 x 21,5 cm 


8 • 


Chairman’s message 

At this puzzling turning point in the twenty-first century 

many are prophesying a profound change in the 

course of history. It is still rash to formulate a diagnostic 

of planetary metamorphosis. No political, economic 

or religious leader can, however, allow himself or 

herself to underestimate the bend in the road at the risk 

of leaving the road altogether. And it is true that the 

symptoms of upheaval are spectacular. 

Firstly, what everyone sees – continental drift. Let’s not 

forget that, until the early nineteenth century, at 

a time when the Rothschild bankers had already 

celebrated their hundredth anniversary, the “BRICs” 

dominated global manufacturing. Then, for a good 

century, Europe took the ascendancy before the United 

States supplanted its former motherland, England, 

and its European neighbours. Henceforth, it is the 

formerly-dominated countries in Asia, Latin America, 

and soon Africa that are going to gradually wrest 

the centre of gravity away from North America. It is, 

moreover, today as in the past, finance and currency 

that make the difference. China’s implicit Marshall 

plan to help the United States and the euro zone will 

bring the same shift in influence and domination 

as the American assistance to their European debtors. 

This by no means implies that the formerly-dominant 

nations are going to be swallowed whole. Just as 

old Europe benefited from the emergence of the United 

States, the Western powers will benefit from the 

dawning of the emerging economies. Still, the global 

game has changed and poor sports who are tempted 

to reject the new rules will find themselves out of the 

match. Furthermore, while no-one can be unaware 

of this shake-up in the world order, many are preparing 

themselves poorly, too slowly and with bad grace. 

It is, moreover, difficult to identify and take on board 

the impact of this geographical change on the 

future development of our organisations, States and 

companies and, ultimately, on our economic and 

social models. The old debate on the respective 

merits of the capitalist and socialist models is only 

so much splitting of hairs in the cobwebs of another 

era. New models are struggling to emerge. 

Triumphant globalisation has shown the limits of the 

traditional relationship between capital and labour. 

The pay gap has effectively widened to inflammatory 

proportions. On the one hand, shareholders 

and company directors with access to equity have 

benefited to the full from the wealth creation resulting 

from global growth; on the other, employees have 

been forced to adapt their demands to the new global 

competition where the reserve army of emerging 

workers has dictated the cost of labour world-wide. 

Of course, Western workers are also consumers: they 

have thus benefited from the increased purchasing 

power linked to emerging imports. Naturally, the 

Western capitalist has suffered from the higher cost of 

luxury goods and services driven by the rising 

tide of emerging millionaires. But the middle classes will 

remember only one consequence of this globalisation: 

the downgrading of their status, which is now too close 

to that of the working class. 

Today the benefits and constraints of globalisation 

need to be distributed more fairly. The long-term growth 

models of the future must ensure that all employees 

share in the profits and value creation if we want to 

avoid a rampant anti-globalisation epidemic amongst 

the Western middle classes. Currently, States are forced 

to intervene awkwardly in the domestic squabbles 

between the capital-labour couple and their conciliatory 

role is wearing thin, and even risks throwing oil on the fire.

From this perspective, faced with the challenge of 

globalisation, the preparations of some in Europe, and 

especially France, are nothing short of disastrous. 

Instead of increasing access to capital through, for 

example, employee shareholding or funded pension 

schemes, France sanctions it with a confiscatory tax, 

crushing, along the way, the family capitalism so well 

accepted in the working world and thus, necessarily, 

more effective over the long term. France thus holds 

the record in Europe for the sale of family-owned 

companies on inheritance, which deprives it of this 

fabric of mid-sized family businesses that underpins 

wealth creation in Germany, Italy and the Scandinavian 

countries. 

Another example of the persecution of capital: France, 

which brilliantly created the G20 to facilitate global 

responses to the global crisis, on the occasion of its 

presidency, decides to dust off that impracticable, 

tired idea of a Tobin tax on financial transactions. It is 

true that the prevailing populism prefers to incriminate 

the banks that risk their capital to manage assets 

and forget about the others, financiers, lawyers and 

consultants of all sorts, who benefit from financial 

transactions without risking any capital of their own. 

annUal rEport 2010 • 9 

But, what is worse, France is subject to double jeopardy. 

To ease its conscience, the French government, 

while squeezing more from capital also demands less 

from labour. The amount of work a French person 

does over his or her lifetime, eroded as it is by the 

thirty-five-hour working week and retirement at 62 or 

even 60, has seriously undermined French 

competitiveness. By reducing both its capital and 

its labour, France is seeking to average down its point 

of equilibrium. Magnificently blessed by nature and 

bearer of a glorious past, France is playing the global 

game by throwing away its most valuable legacies. 

This is like Brigitte Bardot taking part in a modern-day 

Miss Universe contest! 

Why not try to win the globalisation game and 

transform this formidable vicious circle into a virtuous 

circle? It would be so beneficial for France and for the 

global economy were the capital-labour couple 

to inherently agree on the harmonious growth of the 

enterprise that is their common home and their future. 

All the more so in that global demographic growth 

and the new wealth of the emerging consumer 

is going to run smack bang into the issue of scarcity. 

At a time when the world’s population is seeing 

spectacular growth and most of these billions of 

inhabitants aspire to Western levels of consumption, 

the need to preserve finite resources has suddenly 

become pressing. Rising energy prices and the 

increased cost of agricultural and industrial commodities 

threatens the return on the factors of production, 

the capital-labour couple necessarily becoming 

accomplices in the quest for savings.

10 • 


Lastly, the UN climate negotiations are focused on 

the issue of climate change, and are seeking to preserve 

prosperity and well-being through the equitable 

allocation of rare emission quotas. But the UN has 

barely begun to address the global economic cost of 

inaction on the ecosystems and biodiversity economy. 

And yet, there are so many scarcities that need to be 

managed by negotiation and offset by positive 

technical advances! Our models do not adequately 

measure the urgency of ecological investment and our 

investors the plethora of exceptional opportunities. 

The transformation of our models under the influence 

of scarcity is not just an economic challenge: it is 

also a powerful psychological driver. Economists have 

never been able to fully explain the growth rate of 

the thirty-year post-war period by the combination of the 

capital and labour factors. The much-talked-about 

residual factor, or around one third of French growth, 

was attributed to intangible investment, such as 

technical progress but also the frame of mind of the 

masses. They wanted growth, they expected it, so 

they went out and made it. What would happen if this 

state of mind turned sceptical? While young people in 

the emerging countries still dream of a western lifestyle 

today, those in the rich countries seem disenchanted, 

seeking another model. The risk of desertion by 

our young people touches the very concept of wealth 

and progress, at least such as our economic growth 

is currently defined and measured. When attempting 

to measure gross national well-being, without falling 

into the still-overly-creative national accounting 

approximations, we cannot dissociate ourselves from 

our children’s disappointment with regard to the religion 

of their parents – the rate of growth. 

Although they are serious, believing that environmental 

concerns represent a threat to economic efficiency 

is a fatal misinterpretation. For our young people in the 

Western world, there is no other path to less profligate 

growth than sustainable development. 

We have long known that the twenty-first century will 

be mystical. Those faithful to the goddess Reason 

will need to convert to new models of production. And 

the faster the better, since the rivals of the enlightened 

religion of equitable sustainable development are none 

other than the religious fundamentalists who confront 

each other in something too closely akin to a Middle 

Age war between civilizations. Let’s obey the old 

precept of changing so that nothing changes. 

This is what our Group, which has always embraced 

change over the centuries, must continue to do. 

Baron Benjamin de Rothschild

Directors, executives and auditors 

Board of directors 

Chairman 

Benjamin de Rothschild 

Vice-chairman 

E. Trevor Salathé 

Secretary 

Giorgio Foppa 

Luc Baatard 

Stéphane Bloch-Saloz 

Walter Blum Gentilomo 

Manuel Dami 

Claude Messulam 

Leonardo Poggi 

Board committee 

Chairman 

Claude Messulam 

Luc Baatard 

Walter Blum Gentilomo 

Leonardo Poggi 

E. Trevor Salathé 

* until June 30, 2010 

** interim president from July 1, 2010 

Executive committee 

Chairman 

Robert Misrahi * 

Senior vice-president 

Vice-chairman 

Pasquale Ubertini ** 


Roger Misrahi 


Rolf Marthaler 

First vice-president 

Corrado Valsangiacomo 

First vice-president 

Members of management 

First vice-presidents 

Roberto Castiglioni 

Gualtiero Cimasoni 

Reto Collenberg 

Franco Costa 

Marco Jelmini 

Roberto Merazzi 

Claudio Mosconi 

Nicola Paris 

Daniele Poggi 

Members 

Stefano Bazzani 

Alberto Bianchi 

Gianmaria Bobbià 

Fabrizio Colombini 

Filomena Franzi 

Stefano Ghirlanda 

Alberto Masa 

Mauro Passavini 

Marcello Pincardini 

Giorgio Rezzonico 

Matteo Scacchi 


PricewaterhouseCoopers S.A. 

Geneva 

Internal audit 

François Maendly 

Banque Privée 

Edmond de Rothschild S.A., Geneva 

Tiziano Tunesi 

Banca Privata 

Edmond de Rothschild Lugano S.A. 

Lugano 

annUal rEport 2010 • 11

12 • 



Financial statements 2010 

15 Report of the directors 

18 Balance sheet 

20 Income statement 

Notes to the financial 

statements 

23 Description of operations 

and staff 

25 Accounting and 

valuation principles 


balance sheet 

36 Information on 

off-balance sheet 

transactions 


income statement 

Workshop of Leonardo da Vinci 

(vinci, 1452 – amboise, 1519) 

Entrelacs: interwoven lines with 

a heart-shaped escutcheon, 

c. 1490-1500


Workshop of Leonardo da Vinci 

(vinci, 1452 – amboise, 1519) 

Entrelacs: interwoven lines with 

a heart-shaped escutcheon, c. 1490-1500 

Burin, 29,2 x 20,4 cm 


Report of the directors 

Developments in 2010 

By the end of 2009 the financial crisis touched off 

by the implosion of US real estate bubble, its spread 

through the credit sector and the threat it posed to 

the global banking system looked vanquished by 

the massive fiscal stimulus provided by governments. 

2010 however brought the risk of all that state 

intervention undermining the creditworthiness of some 

of the world’s major countries. 

Although solutions to this problem may now have 

been found, at huge expense, the smug view that we 

had of the so-called “developed” countries until a couple 

of years ago has changed radically. 

The days of easy borrowing and open-handed 

spending by public authorities operating independently 

from the underlying economy may be over. 

Not long after a serious debt scare in Dubai, investors 

suddenly realised in early 2010 that the sovereign debt 

of Greece, a member of the European Union, was 

spiralling out of control. It was becoming impossible 

for the Greek government not only to repay its creditors 

but also simply to rein in the growth of its liabilities. 

A bailout was necessary to stave off a banking and 

euro crisis, but organising it was no easy task as the very 

idea ran counter to the spirit and letter of the European 

Union’s fundamental treaties. 


This difficulty moreover laid bare the weakness of 

the Union, which still had no centralised economic 

policy and was hostage to the diverging interests of its 

members’ national governments. 

In the following months fear of a domino effect 

loomed ever larger in the sovereign bond segment. 

First investors were worried about the potential collapse 

of Ireland’s leading banks. Although the Celtic 

Tiger finally asked for EU aid, concern soon centred on 

Portugal and Spain and there was even speculation 

about the public debt crisis engulfing Belgium and 

Italy as well. 

Taking the bull by the horns, finally, the EU provided 

more credit facilities to the countries in difficulty while 

the European Central Bank gained credibility by taking 

pragmatic decisions designed to shore up the 

financial system. These actions stabilised the situation, 

temporarily at least. In addition, to help balance 

their budgets in short order the financially shaky 

countries had to adopt austerity plans. The spending 

cuts involved, by weighing on economic growth 

and employment, could end up worsening these 

countries’ public debt burden instead of alleviating it. 

While Europe struggled with its contradictions, 

the United States took advantage of its role as the 

global economic leader. To hasten the slow 

recovery, the authorities left interest rates at rockbottom 

and continued to provide handouts. 

This stimulus kept the American economy in expansion 

mode, but wage growth and job creation 

remained below the levels seen prior to the recession. 

The US Federal Reserve decided last autumn 

to begin a new round of quantitative easing (dubbed 

“QE2”) to ward off the spectre of deflation 

while buttressing growth and employment. For the 

moment, however, this gambit has merely 

spurred the stockmarket and weakened the dollar 

against the other major currencies.

16 • 


And on the face of it the debt situation of the federal, 

state and municipal governments is worse 

than that of the European Union as a whole, with no 

sign of curbs on public spending being implemented 

any time soon. 

Meanwhile the growing lack of confidence in the 

major trading blocs and their currencies prompted 

investors to turn in droves to the Swiss franc, 

which last year regained its traditional role as a safe 

haven. It was not alone, though: 

the currencies of other low-profile developed countries 

with sound finances such as Norway, Sweden, 

Canada and Australia were bid up as well, along with 

those of emerging countries. Although regarded 

in the past as unstable, the emerging economies are 

nowadays underpinned by robust growth. 

Moreover, because they are less sophisticated 

and indebted they will no doubt be able to 

weather crises better than the developed world. 

While some observers fear this trend will prove 

short-lived, many others believe it is here to stay. 

There is no denying that China has become a leading 

economic and political power in just a few years. 

Other countries could follow its example, albeit to a 

smaller scale. 

Concern about a future surge in inflation as a 

consequence of massive monetary stimulus has driven 

up the prices of precious metals 

and commodities. 

With a few exceptions, property values meanwhile 

have remained depressed owing to excess supply 

and banks’ reluctance to lend. 

Profit and loss account 

In these tough conditions our Bank registered a gross 

profit of CHF 12’778’263. Net earnings came to 

CHF 10’851’561. Return on equity worked out to 9%. 

Ordinary revenues, net of interests and commissions 

payable, totalled CHF 35’932’150 as against 

CHF 44’336’196 in 2009, down 19%. The interest 

margin fell 23% while fees and commissions on 

services fell 20%, in line with market developments. 

Results of trading operations declined by 23% and 

other ordinary income by 1%. 

Costs were down 2% and remained under tight 

control. Personnel expenses decreased 4%, 

reflecting the reduction in staff size, while general 

overheads rose 6%.

Balance sheet 

The balance sheet total came to CHF 533’780’975, 

down 20% on the level at December 31, 2009. 

Assets were comprised 63% of cash and bank 

deposits (2009: 73%), 4% of loans to clients 

(unchanged), 29% of financial investments (2009: 20%), 

3% of holdings and real estate (2009: 2%) and 1% of 

adjustment accounts and other assets (unchanged). 

On the liabilities side, amounts due to other banks 

accounted for 0.3% of the total (2009: 2%), client 

funds for 65% (2009: 69%), adjustment accounts and 

other liabilities for 2% (unchanged), valuation 

adjustments and provisions for 9% (2009: 7%) and 

shareholders’ equity for 24% (2009: 20%). 

Thus, in terms of structural balance and cohesion 

there were no significant changes in comparison with 

2009. 

Appropriation of earnings 

In view of our Bank’s substantial resources and, in 

particular, our shareholders’ equity which amply 

exceeds the capital ratios required by law, we are 

able to propose the dividend set out below. 

The shareholders are therefore asked to approve the 

following allocation of available income: 

CHF % 

Gross ordinary dividend 13’000’000 79.38 

Allocation to other reserves 1’000’000 6.11 

Net income carried forward 2’376’944 14.51 

Total available 16’376’944 100.00 

Governing bodies 


The terms of all the members of the Board of directors 

expire on the date of the 2011 general meeting 

of shareholders. We propose that the members be 

re-elected for the periods prescribed in our Bylaws. 

After 15 years serving the Group, including eight 

in Lugano, Robert Misrahi, Chairman of the Board, 

has decided to step down and take early retirement. 

We thank Mr. Misrahi for his devotion and wish 

him good health and satisfaction in his future pursuits. 

From July 1, 2010 Pasquale Ubertini will take over 

as interim Chairman of the Board of directors. 

We further propose that PricewaterhouseCoopers SA, 

Geneva be reappointed as the Bank’s independent 

auditors for 2011. 

We cannot conclude this report without expressing 

gratitude to all our clients for their abiding trust and 

loyalty and for their appreciation of our work. 

Our thanks also go to our management and staff 

for their dedication and for their service to the Bank’s 

clients.

18 • 


Balance sheet 

31.12.2010 

CHF 

31.12.2009 

CHF 

Assets 

Cash and other liquid assets 55’586’952 189’807’262 -134’220’310 -71 

Money market instruments 561’232 912’956 -351’724 -39 

Due from banks 277’351’329 294’646’224 -17’294’895 -6 

Due from customers 19’737’162 26’218’692 -6’481’530 -25 

Mortgages 740’018 1’004’499 -264’481 -26 

Financial investments 157’256’115 131’313’114 25’943’001 20 

Participations 10’068’696 10’068’696 0 – 

Fixed assets 4’500’005 4’500’005 0 – 

Accrued income and prepaid expenses 3’365’481 3’476’664 -111’183 -3 

Other assets 4’613’985 4’093’236 520’749 13 

533’780’975 666’041’348 -132’260’373 -20 

Total due from Group companies and significant shareholders 271’871’123 265’785’669 6’085’454 2 

Change 

CHF 

Change 

%

Balance sheet 


CHF 

31.12.2009 

CHF 


Liabilities and shareholders’ equity 

Money market instruments 15’000 15’000 0 – 

Due to banks 1’607’156 12’905’940 -11’298’784 -88 

Due to customers on savings and investment accounts 7’877’807 7’473’003 404’804 5 

Due to customers, other 337’562’557 454’408’670 -116’846’113 -26 

Accrued expenses and deferred income 2’872’689 6’152’671 -3’279’982 -53 

Other liabilities 8’448’215 7’267’338 1’180’877 16 

Valuation adjustments and provisions 45’192’194 45’464’930 -272’736 -1 

Reserves for general banking risks 6’628’413 6’628’413 0 – 

Share capital 5’000’000 5’000’000 0 – 

General legal reserve 23’200’000 23’200’000 0 – 

Other reserves 79’000’000 76’500’000 2’500’000 3 

Retained earnings brought forward 5’525’383 2’178’686 3’346’697 154 

Net income 10’851’561 18’846’697 -7’995’136 -42 

533’780’975 666’041’348 -132’260’373 -20 

Total due to Group companies and significant shareholders 1’709’421 3’073’543 -1’364’122 -44 


CHF 

31.12.2009 

CHF 

Off-balance sheet transactions 

Contingent liabilities 2’480’451 2’596’954 -116’503 -4 

Irrevocable liabilities 

Derivative instruments 

1’880’000 1’794’000 86’000 5 

Contract volume 296’618’880 250’053’982 46’564’898 19 

Positive replacement value 3’702’205 3’065’277 636’928 21 

Negative replacement value 5’777’890 2’709’672 3’068’218 113 

Fiduciary transactions 52’587’597 120’092’643 -67’505’046 -56 

Change 

CHF 

Change 

CHF 

Change 

% 

Change 

%

20 • 


Income statement 

Revenues and expenses from ordinary banking activities 


CHF 

31.12.2009 

CHF 

Results from interest activities 

Interest and discount income 1’377’839 2’097’475 -719’636 -34 

Interest and dividend income on financial investments 2’003’556 2’401’743 -398’187 -17 

Interest expenses -112’815 -236’027 123’212 -52 

3’268’580 4’263’191 -994’611 -23 

Results from commission and service fee activities 

Commission income on lending activities 20’802 24’771 -3’969 -16 

Commission income on securities and investment transactions 25’210’253 30’791’137 -5’580’884 -18 

Commission income on other services 2’711’089 4’675’467 -1’964’378 -42 

Commission expenses -2’357’045 -3’482’093 1’125’048 -32 

25’585’099 32’009’282 -6’424’183 -20 

Results from trading operations 3’248’162 4’197’458 -949’296 -23 

Other ordinary results 

Results from the sale of financial investments 342’069 11’285 330’784 2’931 

Participation income 2’660’585 2’834’874 -174’289 -6 

Real estate income 598’864 615’000 -16’136 -3 

Other ordinary income 248’136 405’106 -156’970 -39 

Other ordinary expenses -19’345 -19’345 – 

3’830’309 3’866’265 -35’956 -1 

Operating expenses 

Personnel expenses -17’108’926 -17’861’824 752’898 -4 

Other operating expenses -6’044’961 -5’697’134 -347’827 6 

-23’153’887 -23’558’958 405’071 -2 

Gross profit 12’778’263 20’777’238 -7’998’975 -38 

Change 

CHF 

Change 

%

Income statement 


CHF 

31.12.2009 

CHF 


Net income 

Gross profit 12’778’263 20’777’238 -7’998’975 -38 

Valuation adjustments, provisions and losses -107’391 -1’718’246 1’610’855 -94 

Extraordinary income 630’689 4’021’547 -3’390’858 -84 

Extraordinary costs -33’842 33’842 -100 

Taxes -2’450’000 -4’200’000 1’750’000 -42 

10’851’561 18’846’697 -7’995’136 -42 

19.04.2011 

CHF 


CHF 

Allocation of retained earnings 

Net income 10’851’561 18’846’697 -7’995’136 -42 

Retained earnings brought forward 5’525’383 2’178’686 3’346’697 154 

Total disposable earnings 16’376’944 21’025’383 -4’648’439 -22 

Allocation to other reserves -1’000’000 -2’500’000 1’500’000 -60 

Ordinary gross dividend -13’000’000 -13’000’000 0 – 

Retained earnings carried forward 2’376’944 5’525’383 -3’148’439 -57 

Change 

CHF 

Change 

CHF 

Change 

% 

Change 

%

Notes to the Financial Statements 

Description of operations 

and staff 

General 

Banca Privata Edmond de Rothschild Lugano S.A. 

is a service company. It has offices in Lugano only 

and operates mainly in Switzerland, in accordance 

with its articles of incorporation. 

Core business 

The Bank specializes in wealth management on 

behalf of private clients. The bulk of its revenue 

derives from investment advisory and asset 

management services, which together generated 

71% of ordinary income in 2010 (2009: 72%). 

Balance sheet operations 

Traditional banking activities aimed at securing an 

interest-rate spread on customer deposits or 

outlays, are of secondary importance conducted 

as an additional service to clients. 

Most of the credit facilities issued by the Bank 

are Lombard loans, wherein the client pledges 

securities and other negotiable assets as collateral. 

Mortgage-backed loans have been granted 

occasionally as well, but only on property located 

in Switzerland. 

Negotiation activities 

This segment primarily includes securities dealing. 

The Bank does not hold significant positions in its 

other trading activities involving currencies, foreign 

banknotes and precious metals. 

Other lines of business 


The Bank’s cash reserves are mainly managed via a 

portfolio of fixed-income investments, most of which 

may be tendered to the Swiss National Bank under 

repurchase and rediscounting agreements. Equity 

stakes, all in financial companies, were acquired with 

a view to developing synergies in the form of long-term 

operational and administrative cooperation. The Bank 

also owns two properties in Lugano: our headquarters 

at Via Ginevra 2 and another building at Via Bossi 9, 

which formerly housed the Bank and is now rented out. 

No other business activities could significantly affect 

profitability or pose any identifiable potential risk. 

Risk analysis 

Internal control system and risk management is 

discussed on a semi-annually basis by Board 

of directors. For that purpose, the Management 

prepares a specific risk report which is established 

twice a year. This risk report summarizes the risk 

policy, the risk exposures (for credit risk, legal risk, 

market risk, liquidity risk and operational risk) 

and provides a global risk analysis, information 

regarding the control environment and the activities 

of the Risk control unit. 

Risk management 

Control of risks is based on the application of a riskmanagement 

policy laid down by the Board of directors 

and abides by the guidelines set in this area by the 

Swiss financial market supervisory authority (FINMA). 

The Bank’s senior management permanently 

monitors compliance with the established limits.

24 • banca privata Edmond dE rothschild lUGano 


Market risk 

Interest-rate risks are kept within bounds by state-ofthe-art 

software, which checks for proper matching 

of assets and liabilities in terms of their structure and 

maturities. Loan applications are subject to strict 

requirements as regards borrower quality and granting 

authority, and the facilities themselves are closely 

tracked using various analytical criteria. Foreign 

currency positions are overseen continuously to ensure 

they remain within predetermined intra-day and 

overnight limits. Country risks are identified and 

quantified based on ratings assigned by the world’s 

leading credit-rating agencies. The liquidity risk is 

managed in accordance with the applicable banking 

legislation. 

Operational risk 

Operating risks are controlled by means of 

organizational guidelines and procedures within 

the Bank. The internal auditors ensure that 

operations are properly checked and report their 

activity regularly to the Board of directors. 

Legal and compliance risk 

Legal risks and ways of handling them are identified 

in cooperation with professional consultants outside 

the Bank. The Compliance officer and the Bank’s legal 

Dept. monitor adherence to the applicable regulations 

and fulfilment of the obligation of due diligence. 

They also keep abreast of new legislation and see to it 

that internal guidelines are adapted accordingly. Senior 

executives and supervisory bodies are kept regularly 

informed of the Bank’s capital adequacy, financial 

position, liquid assets, profit level, compliance with 

established limits, current business and implicit risks. 

It management 

The Bank has outsourced data processing, banking 

applications management and the ongoing development 

of the relevant software to the IT department of 

Banque Privée Edmond de Rothschild S.A., Geneva. 

This arrangement meets the standards set by the 

Swiss financial market supervisory authority (FINMA) 

and is governed by a special agreement guaranteeing 

the confidentiality of the information accessible 

to the parent company’s IT department employees. 

Staff 

Converted to full-time jobs, the number of staff 

employed by Banca Privata Edmond de Rothschild 

Lugano S.A. stood at 77 at Dec. 31, 2010 

(Dec. 31, 2009: 79).


Accounting and valuation principles 

General 

The Bank’s financial statements are drawn up in 

accordance with the provisions of the Swiss Code 

of Obligations, the Federal Law on Banks and 

Savings Banks and its implementing ordinance and 

the circulars issued by the Swiss financial market 

supervisory authority (FINMA). The rules pertaining to 

presentation and valuation have remained practically 

identical compared with the previous year. 

Transaction bookings and balance sheet reporting 

The balance sheet and profit and loss statement 

for the 2010 financial year have been drawn up 

on the basis of settlement dates. 

Amounts in foreign currency 

Assets and liabilities denominated in foreign currency, 

including precious metals positions, are converted 

into swiss francs at the exchange rate prevailing on the 

last day of the reporting year. Expenses and income 

in foreign currency are converted at the rate prevailing 

on the day they are booked. The end-year exchange 

rates used to convert amounts into Swiss francs in this 

report are as follows: 0.9357 versus the US dollar 

(2009: 1.0298) and 1.2504 versus the euro (2009: 1.4836). 

Cash, money market instruments, loans and amounts 

due to and from banks 

All these items are stated at their face value, 

with allowance made for a scheduled 

discounting of money market instruments. 

Amounts due from and to clients 


Loans are reported at their presumed liquidation 

value, including accrued interest, based on a 

case-by-case assessment. Any interest in arrears 

(i.e. unpaid more than 90 days after the contractual 

due date) is charged directly to “Valuation 

adjustments and provisions”. These provisions are 

released in the financial statements for subsequent 

years if developments show that the loan was 

excessively devalued or if the overdue interest is 

actually collected. Liabilities appear at their face 

value instead, to which accrued interest up to the 

balance sheet date is added, where applicable. 

Nonperforming loans are evaluated on an 

individual basis, along with a statement of the 

assets tendered as collateral. Nonperforming 

loans consist of exposures for debtors that are 

unlikely to be able to honour their future 

commitments. Provision on these loans is calculated 

on the difference between the book value 

and the probable recover value of the collateral. 

Trading portfolio 

Securities and precious metals held for trading 

purposes are reported at their market value 

on the balance sheet date. Capital gains and losses 

are recorded in the profit and loss account.

26 • 


Financial investments 

Debt securities that at the time of purchase were 

already intended to be held to maturity are stated 

as per the accrual method, meaning that capital gains 

and losses are calculated up to the redemption date. 

Fixed-income paper bought within a shorter time 

horizon appear, like equities, at their purchase price 

or year-end market value, whichever is lower. 

Holdings 

This item includes stakes in companies that were 

bought for a specific purpose and with the intention 

of being kept indefinitely. Holdings are reported 

at their purchase price, less any depreciation deemed 

necessary. Dividends are entered directly in the profit 

and loss account as at the date they are collected. 

Fixed assets 

The values of fixed assets appearing in the balance 

sheet begin at the purchase price, which is written 

down each year as appropriate. Whereas the Bank’s 

premises at Via Ginevra 2 are depreciated each year 

in a linear manner until it has reached about the 

minimum limit authorised by the Tax authorities, our 

other properties have now been fully paid off. 

Other fixed assets are depreciated to reflect the value 

of their remaining useful life. This value takes account 

of the risk of rapid obsolescence, especially in the case 

of high-tech equipment and software, and is reviewed 

annually. If this assessment reveals a change in the 

remaining useful life of a fixed asset or a reduction 

in its value, the Bank respectively adjusts the value 

to the revised remaining useful life or writes it down 

further. This prudent depreciation policy may give 

rise to hidden reserves. 

Adjustment accounts 

These items include income and expenses that 

fall outside the reporting year: accrued income 

and prepaid expenses on the assets side; accrued 

expenses and deferred income on the liabilities side. 

Personnel welfare liabilities 

Contributions are reported as personnel expenses in 

the profit and loss account for the year to which 

they relate. Each year the Bank determines whether it 

has derived any economic benefits or commitments 

from personnel welfare plans and states them in the 

balance sheet pursuant to the Swiss GAAP RPC 16: 

– Liabilities are stated in the balance sheet and any 

difference in relation to the corresponding 

amount reported the previous year is included in 

“Personnel expenses” in the profit and loss 

account. 

– Benefits are not stated in the balance sheet. 

The annual study is based on financial statements 

bearing a closing date no older than 12 months and 

drawn up in accordance with GAAP RPC 26. 

Valuation adjustments and provisions 


Every identifiable risk as at the balance sheet 

date is quantified and reported under this heading. 

Latent risks are covered by flatrate valuation 

adjustments and provisions. The resulting allocations 

may contain hidden reserves.


Reserves for general banking risks 

These reserves are intended to cover the Bank’s 

general operating risks and are deemed to be part 

of shareholders’ equity, within the meaning of the 

relevant banking legislation. 

Off-balance sheet guarantees and commitments 

All the Bank’s liabilities towards correspondents 

and clients are reported at their total value. 

Derivative instruments 

Forward positions are stated at their residual value. 

Positions in derivative instruments held for trading 

purposes are reported at their market value, 

provided an organized market exists. If there is 

no such organized market, they appear at their 

purchase price or market price, whichever is lower. 

Derivatives held for hedging purposes are 

reported as per the same principles applied to the 

operations they are meant to cover. 

Capital gains and losses are recorded in the profit 

and loss account. 

Current taxes 


Current taxes are calculated on the basis of the year’s 

profit and reported capital. They are charged to the 

reporting year. A provision is allocated for the following 

year’s taxes under “Accrued expenses and deferred 

income”, on the liabilities side of the balance sheet. 

Consolidation 

The Bank’s financial statements are incorporated in 

the consolidated accounts of the Banque Privée 

Edmond de Rothschild Group, Geneva. These accounts 

are themselves included in the annual report of 

Banque Privée Edmond de Rothschild S.A., Geneva.

28 • 


Information on the balance sheet 

Listing of collateral 

Mortgage 

collateral 

CHF 

Other 

collateral 

CHF 

Without 

collateral 

CHF 

Loans 

Due from customers 

Mortgages 

17’328’719 2’408’443 19’737’162 

– residential real estate 740’018 740’018 

Total 31.12.2010 740’018 17’328’719 2’408’443 20’477’180 

Total 31.12.2009 1’004’499 24’728’275 1’490’417 27’223’191 

Off-balance sheet transactions 

Contingent liabilities 2’457’451 23’000 2’480’451 

Irrevocable liabilities 1’880’000 1’880’000 

Total 31.12.2010 2’457’451 1’903’000 4’360’451 

Total 31.12.2009 2’573’954 1’817’000 4’390’954 

Gross value 

CHF 

Estimated 

sales value 

of collateral 

CHF 

Net value 

CHF 

Total 

CHF 

Individual 

value 

adjustments 

CHF 

Nonperforming Loans 

Total 31.12.2010 0 0 0 0 

Total 31.12.2009 0 0 0 0 

Portfolio structure 

Book value 


CHF 


Market value 


CHF 

Book value 

31.12.2009 

CHF 

Market value 

31.12.2009 

CHF 

Financial investments 

Interest bearing securities and rights 

– valued according to the “accrual method” 149’489’290 150’727’400 121’284’392 123’095’400 

– valued according to the principle of the lower of cost or market value 1’453’082 1’464’604 4’986’288 5’008’000 

Shares and similar securities and rights 6’313’743 7’155’561 5’042’434 5’609’953 

157’256’115 159’347’565 131’313’114 133’713’353 

of which securities acceptable to Central Banks 117’428’678 86’344’940 

Participations 

Participations without market value 10’068’696 10’068’696 

10’068’696 0 10’068’696 0



Participation’s list 

Fixed assets 

Fire insurance value 

Historical 

cost 

CHF 

Share 

capital 


Accumulated 

write-offs 

CHF 

Ratio by 

capital 


% 

Book value 

31.12.2009 

CHF 

Ratio by 

vote 


% 

Additions 


CHF 

31.12.2009 

CHF 


Real estate 

Lugano, Via Ginevra 2 17’470’400 17’527’800 -57’400 0 

Lugano, Via Bossi 9 13’206’800 13’177’000 29’800 0 

Other fixed assets 6’607’700 6’557’700 50’000 1 

2010 

CHF 

Ratio by 

capital 

31.12.2009 

% 

Disposals 


CHF 

Ratio by 

vote 

31.12.2009 

% 

Banque de Gestion Edmond de Rothschild Monaco, Monaco EUR 

bank 

12’000’000 18 18 18 18 – 

Cefeo Investimenti S.A., Lugano 

portfolio management, participations 

CHF 100’000 100 100 100 100 – 

La Compagnie Benjamin de Rothschild S.A., Geneva 

cash management and advice 

CHF 11’534’000 17 17 17 17 – 

Testafid Anstalt, Vaduz 

trustees and portfolio management 

CHF 20’000 100 100 100 100 – 

Write-offs 


CHF 

Change 

CHF 

Book value 


CHF 

Participations 

majority participations 90’002 -2 90’000 90’000 

minority participations 13’473’830 -3’495’134 9’978’696 9’978’696 

Real estate 

bank building 17’823’603 -13’323’602 4’500’001 4’500’001 

other buildings 12’049’001 -12’048’999 2 2 

Other fixed assets 3’105’466 -3’105’464 2 2 

Change 

% 

Change 

%

30 • 



Other assets and other liabilities 

Other assets 


CHF 

Other liabilities 


CHF 

Other assets 

31.12.2009 

CHF 

Other liabilities 

31.12.2009 

CHF 

Replacement value of derivative instruments 

– Contracts as intermediary 2’136’720 220’186 

– Contracts as commission agent 3’702’205 3’641’170 3’065’277 2’489’486 

Total derivative instruments 3’702’205 5’777’890 3’065’277 2’709’672 

Indirect taxes 911’780 2’670’325 1’027’276 4’557’666 

Other adjustment accounts 683 

Total other assets and other liabilities 4’613’985 8’448’215 4’093’236 7’267’338 


CHF 

31.12.2009 

CHF 

Change 

CHF 

Change 

% 

Assets either encumbered or under reservation of property 

Securities and financial investments pledged for discount 2’041’941 2’041’941 0 – 

of which amount actually drawn 0 0 0 – 

Financial investments pledged for margin on quoted options 561’232 908’801 -347’569 -38 


Other 0 392’570 -392’570 -100 


Personnel welfare plans 

The staff of the parent company and of some affiliates are insured by the Personnel 

Welfare Foundation for the Staff of Banque Privée Edmond de Rothschild S.A. and 

Allied companies (the “Joint foundation”). 

Its purpose is to protect the staff of its member companies from the economic 

consequences of old age, disability and death. The Joint foundation is semi-autonomous 

and operates on the basis of actual contributions (the “primacy of contributions” 

principle). Contribution rates increase with age. Employers pay in two-thirds of 

contributions and employees one-third. Death and disability coverage is financed by 

the Employers’ Personnel Welfare foundation for the Staff of Banque Privée Edmond de 

Rothschild S.A. and Allied Companies (the “Employers’ foundation”). Administrative 

overheads are covered by member employers. Employees are jointly liable in full within 

the Joint foundation. 

The Foundation’s latest audited financial statements showed a funding ratio of 97.2% 

at Dec. 31, 2009 (as against 89.8% at Dec. 31, 2008). 

Thanks to good management of the Foundation’s assets, the funding ratio was back 

above 100% by the end of 2010. The Foundation Council resolved not to adjust current 

pensions and to pay 1.5% interest on members’ retirement savings for the reporting year. 

The Board of directors believes that any surplus as defined in rule RPC 16 of the 

accounting principles (Swiss GAAP) will be used for the benefit of employees and that, 

as a consequence, no profit will arise for the member companies. 

The member companies whose staff are insured by the Joint foundation also pay into 

the Employers’ foundation. The purpose of the Employers’ foundation is, for example, 

provide additional benefits or relief allowances at its discretion. 

Such benefits are financed by the member companies’ voluntary contributions. 

At that date there was no employer contribution reserve. 

Notes to the Financial Statements



The Bank is currently engaged in legal proceedings concerning a number of 

business matters. 

The Bank allocates provisions in line with the expectations of the solicitors 

involved when they believe we will probably incur a payout or a loss, the size of 

which can be reasonably estimated. 

Balance 

31.12.2009 

CHF 

Specific 

usage 

and 

reversals 

CHF 

Recoveries, 

doubtful 

interest, 

currency 

differences 

CHF 

New 

creation 

charged 

to income 

statement 

CHF 


Reversals 

credited 

to income 

statement 

CHF 

Balance 


CHF 

Valuation adjustments and provisions 

Valuation adjustments and provisions for default 

risks (credit and country risks) 5’000 5’000 

Valuation adjustments and provisions for other business risks 1’220’425 -358’736 97’169 -97’169 861’689 

Other provisions 44’239’505 86’000 44’325’505 

Total valuation adjustments and provisions 45’464’930 -358’736 0 183’169 -97’169 45’192’194 

less: valuation adjustments directly netted with assets – – – – – – 

Total valuation adjustments and provisions as per balance sheet 45’464’930 – – – – 45’192’194 

Reserves for general banking risks (taxed) 6’628’413 – – – – 6’628’413

32 • 



Capital structure 

Total 

nominal 

value 


CHF 

Number of 

units 


CHF 

Dividend 

bearing 

capital 


CHF 

Total 

nominal 

value 

31.12.2009 

CHF 

Number of 

units 

31.12.2009 

CHF 

Dividend 

bearing 

capital 

31.12.2009 

CHF 

Share capital 

Bearer shares at CHF 1’000 par value 4’500’000 4’500 4’500’000 4’500’000 4’500 4’500’000 

Registered shares at CHF 100 par value 500’000 5’000 500’000 500’000 5’000 500’000 

Participation capital – – – – – – 

5’000’000 9’500 5’000’000 5’000’000 9’500 5’000’000 

Authorized capital – – – – – – 

Par 

Value 


CHF 

Ratio 

by 

capital 


% 

Ratio 

by 

vote 


% 


Par 

Value 

31.12.2009 

CHF 

Ratio 

by 

capital 

31.12.2009 

% 

Ratio 

by 

vote 

31.12.2009 

% 

Significant shareholders 

Banque Privée Edmond de Rothschild S.A., Geneva 4’990’000 99.80 99.89 4’990’000 99.80 99.89 

31.12.2009 

CHF 

Change 

CHF 


CHF 

Statement of changes in shareholders’ equity (before profit distribution) 

Share capital (fully paid-in) 5’000’000 

General legal reserve 23’200’000 

Other reserves 76’500’000 

Reserves for general banking risks 6’628’413 

Retained earnings 21’025’383 132’353’796 

Dividends and other distributions of retained earnings brought forward -13’000’000 

Net income 2010 10’851’561 -2’148’439 

130’205’357 

thereof 

share capital 

5’000’000 

general legal reserve 

23’200’000 

other reserves 79’000’000 

reserves for general banking risks 6’628’413 

retained earnings 16’376’944



Maturity structure 

At sight 

CHF 

Reedemable 

by notice 

CHF 

Maturity 

within 

3 months 

CHF 

Maturity 

within 3 

to 12 months 

CHF 

Maturity within 

12 months 

to 5 years 

CHF 


Maturity 

after 

5 years 

CHF 

Current assets 

Cash and other liquid assets 55’586’952 55’586’952 

Money market instruments 561’232 561’232 

Due from banks 26’601’599 250’749’730 277’351’329 

Due from customers 17’114 5’118’859 10’742’287 3’773’902 85’000 19’737’162 

Mortgages 740’018 740’018 

Financial investments 6’313’743 13’254’079 20’066’426 116’168’785 1’453’082 157’256’115 

Total 31.12.2010 88’519’408 5’858’877 275’307’328 23’840’328 116’253’785 1’453’082 511’232’808 

Total 31.12.2009 217’689’294 7’239’430 284’836’767 43’304’453 90’832’803 0 643’902’747 

Borrowed funds 


Due to banks 

Due to customers in savings and 

92’243 1’218’007 296’906 1’607’156 

investment accounts 7’877’807 7’877’807 

Due to customers, other 337’102’032 460’525 337’562’557 

Total 31.12.2010 337’194’275 7’892’807 1’678’532 296’906 0 0 347’062’520 

Total 31.12.2009 464’260’573 7’518’003 1’273’800 1’750’237 0 0 474’802’613 


CHF 

31.12.2009 

CHF 

Change 

CHF 

Total 

CHF 

Change 

% 

Intragroup debtors and creditors 

Due from Group companies 271’871’123 265’785’669 6’085’454 2 

Due to Group companies 1’567’939 2’930’729 -1’362’790 -47 

Loans and exposures to the members of the bank’s governing bodies 1’282’484 1’171’856 110’628 9 

Intragroup debtors and creditors are originated by inter-bank activities. 

Loans and exposures to the governing bodies of the Bank are granted to members of 

the Board of directors, of the Executive committee and of the Internal audit. 

These loans and exposures are granted at the conditions defined by the Bank’s internal 

regulation and Personnel regulation. 

Total loans granted to members of the Executive committee amount to CHF 58’904. 

Total loans granted to members of the Board of directors amount to CHF 1’223’580.

34 • 



Domestic 


CHF 

Foreign 


CHF 

Domestic 

31.12.2009 

CHF 

Foreign 

31.12.2009 

CHF 

Assets by domestic and foreign origin 

Cash and other liquid assets 55’586’952 189’807’262 

Money market instruments 561’232 1’300 911’656 

Due from banks 270’575’067 6’776’262 265’582’453 29’063’771 

Due from customers 1’035’615 18’701’547 8’918’042 17’300’650 

Mortgages 740’018 1’004’499 

Financial investments 101’761’544 55’494’571 86’532’722 44’780’392 

Participations 2’093’560 7’975’136 2’093’560 7’975’136 

Fixed assets 4’500’005 4’500’005 

Accrued income and prepaid expenses 3’365’481 3’476’664 

Other assets 4’613’985 4’093’236 

444’272’227 89’508’748 566’009’743 100’031’605 

Domestic 


CHF 

Foreign 


CHF 

Domestic 

31.12.2009 

CHF 

Foreign 

31.12.2009 

CHF 

Liabilities by domestic and foreign origin 


Due to banks 1’548’394 58’762 2’853’196 10’052’744 

Due to customers on savings and investment accounts 7’195’253 682’554 6’770’053 702’950 

Due to customers, other 72’357’896 265’204’661 71’811’921 382’596’749 

Accrued expenses and deferred income 2’872’689 6’152’671 

Other liabilities 6’151’137 2’297’078 3’373’627 3’893’711 

Valuation adjustments and provisions 45’192’194 45’464’930 

Reserves for general banking risks 6’628’413 6’628’413 

Share capital 5’000’000 5’000’000 

General legal reserve 23’200’000 23’200’000 

Other reserves 79’000’000 76’500’000 

Retained earnings brought forward 5’525’383 2’178’686 

Net income 10’851’561 18’846’697 

265’537’920 268’243’055 268’795’194 397’246’154 

Amount 


CHF 


Ratio 


% 

Amount 

31.12.2009 

CHF 

Ratio 

31.12.2009 

% 

Assets by countries or country groups 

Switzerland 444’272’227 83 566’009’743 85 

Other european countries 64’039’549 12 74’685’680 11 

North America 7’583’083 2 8’934’245 1 

South America 634’740 0 16’170 0 

Asia, Australia, Oceania 10’639’251 2 10’532’310 2 

Caribbean 6’606’372 1 5’797’399 1 

Africa and Middle East 5’753 0 65’801 0 

533’780’975 100 666’041’348 100



CHF 


CHF 

USD 


CHF 

EUR 


CHF 


Other 


CHF 

Total 


CHF 

Assets by currencies 

Cash and other liquid assets 54’855’464 43’601 669’752 18’135 55’586’952 


Due from banks 100’297’078 19’675’123 129’716’355 27’662’773 277’351’329 

Due from customers 10’759’292 144’162 5’947’165 2’886’543 19’737’162 

Mortgages 740’018 740’018 

Financial investments 150’505’748 2’560’326 4’190’041 157’256’115 

Participations 10’068’696 10’068’696 

Fixed assets 4’500’005 4’500’005 

Accrued income and prepaid expenses 3’338’844 76 21’695 4’866 3’365’481 

Other assets 4’613’985 4’613’985 

Total balance sheet assets 339’679’130 22’984’520 140’545’008 30’572’317 533’780’975 

Claims arising from delivery of forward and option contracts 40’839’007 146’228’233 101’750’111 7’801’529 296’618’880 

Total assets 380’518’137 169’212’753 242’295’119 38’373’846 830’399’855 

CHF 


CHF 

USD 


CHF 

EUR 


CHF 

Other 


CHF 

Total 


CHF 

Liabilities by currencies 


Due to banks 58’510 5’295 1’543’351 1’607’156 

Due to customers on savings and investment accounts 7’877’807 7’877’807 

Due to customers, other 76’166’181 92’696’384 139’923’577 28’776’415 337’562’557 

Accrued expenses and deferred income 2’872’689 2’872’689 

Other liabilities 7’357’828 1’090’387 8’448’215 

Valuation adjustments and provisions 45’192’194 45’192’194 

Reserves for general banking risks 6’628’413 6’628’413 

Share capital 5’000’000 5’000’000 

General legal reserve 23’200’000 23’200’000 

Other reserves 79’000’000 79’000’000 

Retained earnings brought forward 5’525’383 5’525’383 

Net income 10’851’561 10’851’561 

Total balance sheet liabilities 269’687’056 92’754’894 141’019’259 30’319’766 533’780’975 

Liabilities arising from delivery of forward and option contracts 112’813’344 76’329’030 101’606’258 7’946’381 298’695’013 

Total liabilities 382’500’400 169’083’924 242’625’517 38’266’147 832’475’988 

Net position by currencies -1’982’263 128’829 -330’398 107’699 -2’076’133

36 • 


Information on off-balance 

sheet transactions 


CHF 

31.12.2009 

CHF 

Change 

CHF 

Change 

% 

Contingent liabilities 

Credit guarantees and similar 23’000 23’000 0 – 

Back-up guarantees and similar 

Liabilities for calls on shares and other equities 

270’000 270’000 0 – 

Other contingent liabilities 2’187’451 2’303’954 -116’503 -5 

2’480’451 2’596’954 -116’503 -4 


CHF 


31.12.2009 

CHF 

Fiduciary transactions 

Fiduciary placements with third correspondent banks 

Fiduciary placements with Group banks 

50’710’597 118’057’297 -67’346’700 -57 

Fiduciary loans and other fiduciary financial transactions 1’877’000 2’035’346 -158’346 -8 

52’587’597 120’092’643 -67’505’046 -56 

Change 

CHF 

Change 

%



sheet transactions Trading 

Outstanding derivative financial instruments 

Interest rate-related instruments 

Positive 

replacement 

values 

CHF 

instruments Hedging instruments 

Negative 

replacement 

values 

CHF 

Contract 

volumes 

CHF 

Positive 

replacement 

values 

CHF 


Negative 

replacement 

values 

CHF 

Contract 

volumes 

Forward contracts including FRAS 

Swaps 

Futures 

Options (OTC) 

Options (exchange-traded) 

Foreign exchange / Precious metals 

2’136’720 70’175’000 

Forward contracts 

Combined interest / Currency swaps 

Futures 

3’597’405 3’536’370 221’790’704 

Options (OTC) 


Equity securities / Indices 


Swaps 

Futures 

Options (OTC) 


Credit derivatives 

Credit default swaps 

Total return swaps 

First to default swaps 

Other credit derivatives 

Other 


Swaps 

Futures 

Options (OTC) 


104’800 104’800 4’653’176 

Total before netting contracts 31.12.2010 3’702’205 5’777’890 296’618’880 0 0 0 

Total before netting contracts 31.12.2009 3’065’277 2’709’672 250’053’982 0 0 0 

Total after netting contracts 31.12.2010 3’702’205 5’777’890 296’618’880 0 0 0 

Total after netting contracts 31.12.2009 3’065’277 2’709’672 250’053’982 0 0 0 

CHF

38 • 



sheet transactions 


CHF 

31.12.2009 

CHF 

Customer’s assets 

Breakdown of customer’s assets 

Assets in bank’s own investment funds 

Assets with discretionary mandate 1’136’759’098 1’213’132’572 -76’373’474 -6 

Other customer’s assets 2’636’817’516 3’070’979’628 -434’162’112 -14 

3’773’576’614 4’284’112’200 -510’535’586 -12 

Net increase /decrease of client assets -207’192’268 -781’239’506 574’047’238 -73 

Net entries/exits of fresh client funds includes account openings and closures as well 

as deposits and withdrawals by existing clients. Changes in assets due to performance 


Change 

CHF 

Change 

% 

(e.g. price variations, payments of interest and dividends and bank charges) are not 

considered as deposits/withdrawals.


Information on the income statement 


CHF 

2009 

CHF 


Analysis of results from trading operations 

Foreign exchange and banknote 3’244’051 4’237’079 -993’028 -23 

Income from forward precious metals transactions 2’657 -15’512 18’169 117 

Securities 1’454 -24’109 25’563 106 

3’248’162 4’197’458 -949’296 -23 

Analysis of personnel expenses 

Salaries 13’614’405 14’428’210 -813’805 -6 

Social benefits 992’459 1’028’133 -35’674 -3 

Contributions to pension funds 1’824’656 1’934’068 -109’412 -6 

Other personnel expenses 677’406 471’413 205’993 44 

17’108’926 17’861’824 -752’898 -4 

Analysis of other operating expenses 

Premises 618’274 644’702 -26’428 -4 

Information technology, machinery, fixtures and fittings, other equipment 1’992’367 1’774’268 218’099 12 

Other operating expenses 3’434’320 3’278’164 156’156 5 

6’044’961 5’697’134 347’827 6 


CHF 


CHF 


CHF 

2009 

CHF 

2009 

CHF 

2009 

CHF 

Change 

CHF 

Change 

CHF 

Change 

CHF 

Change 

CHF 

Change 

% 

Change 

% 

Change 

% 

Change 

% 

Extraordinary income and expenses 

Extraordinary income 630’689 4’021’547 -3’390’858 -84 

Extraordinary expenses -33’842 33’842 -100

40 • 



42 Report of the 


44 Addresses 


(nuremberg, 1471-id., 1528) 

Ladies from Livonia, 1521



(nuremberg, 1471-id., 1528) 

Ladies from Livonia, 1521 

Pen and ink, watercolour, 18,3 x 19,3 cm 


42 

A free translation of the report on the financial statements originally 

issued in Italian. In the event of a discrepancy, the Italian 

language version prevails. 

Report of the statutory auditor 

to the general meeting of 

Banca Privata Edmond de Rothschild Lugano SA 


Report of the statutory auditor on the financial statements 

As statutory auditor, we have audited the financial statements of Banca Privata Edmond de Rothschild 

Lugano SA, which comprise the balance sheet, income statement and notes (pages 18 to 39), for the 

year ended on December 31, 2010. 

Board of Directors’ Responsibility 

The Board of directors is responsible for the preparation of the financial statements in accordance with 

the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes 

designing, implementing and maintaining an internal control system relevant to the preparation of 

financial statements that are free from material misstatement, whether due to fraud or error. The Board 

of directors is further responsible for selecting and applying appropriate accounting policies and 

making accounting estimates that are reasonable in the circumstances. 

Auditor’s Responsibility 

Our responsibility is to express an opinion on these financial statements based on our audit. We 

conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards 

require that we plan and perform the audit to obtain reasonable assurance whether the financial 

statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures 

in the financial statements. The procedures selected depend on the auditor’s judgment, including the 

assessment of the risks of material misstatement of the financial statements, whether due to fraud or 

error. In making those risk assessments, the auditor considers the internal control system relevant to 

the entity’s preparation of the financial statements in order to design audit procedures that are 

appropriate in the circumstances, but not for the purpose of expressing an opinion on the 

effectiveness of the entity’s internal control system. An audit also includes evaluating the 

appropriateness of the accounting policies used and the reasonableness of accounting estimates 

made, as well as evaluating the overall presentation of the financial statements. We believe that the 

audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 

Opinion 

In our opinion, the financial statements for the year ended on December 31, 2010 comply with Swiss law 

and the company’s articles of incorporation.

Report on other legal requirements 

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act 

(AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances 

incompatible with our independence. 

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm 

that an internal control system exists which has been designed for the preparation of financial 

statements according to the instructions of the Board of directors. 

We further confirm that the proposed appropriation of available earnings complies with Swiss law and 

the company’s articles of incorporation. We recommend that the financial statements submitted to you 

be approved. 

PricewaterhouseCoopers SA 

Philippe Bochud Vincent Simon 

Audit expert Audit expert 

Auditor in charge 

Geneva, March 15, 2011 

43

44 • 


Addresses 

Banque Privée Edmond de Rothschild 

Switzerland 

Head office 

Geneva 

Banque Privée Edmond de Rothschild S.A. 

18, rue de Hesse 

1204 Geneva 

P. +41 58 818 91 11 

F. +41 58 818 91 21 

www.edmond-de-rothschild.ch 

Branches 

Fribourg 


11, rue de Morat - CP 144 

1701 Fribourg 

P. +41 26 347 24 24 

F. +41 26 347 24 20 


Lausanne 


2, avenue Agassiz 

1003 Lausanne 

P. +41 21 318 88 88 

F. +41 21 323 29 22 


Affiliates 


Banca Privata Edmond de Rothschild 

Lugano S.A. 

Via Ginevra 2 - CP 5882 

6901 Lugano 

P. +41 91 913 45 00 

F. +41 91 913 45 01 

privata.edmond-de-rothschild.ch 

Fribourg 

Rouiller, Zurkinden & Cie Finance S.A. 

11, rue de Morat - CP 1296 

1701 Fribourg 

P. +41 26 347 26 00 

F. +41 26 347 26 15 

Geneva 

Privaco Trust S.A. 

2, rue Firmin-Abauzit 

1204 Geneva 

P. +41 58 818 96 19 

F. +41 58 818 91 78 

Privaco Trust Limited 

(Subsidiary of Privaco Trust SA) 

Level 3, Parnell road 

Parnell 

Auckland 1052 – New Zealand 

Abroad 

Affiliates 

BAHAMAS 

Banque Privée Edmond de Rothschild Ltd. 

P.O. Box SP-63948 

Lyford Financial Center Lyford Cay no. 2 

West Bay Street 

Nassau Bahamas 

P. +1 242 702 80 00 

F. +1 242 702 80 08 

www.edmond-de-rothschild.bs 

LUXEMBOURG 

Banque Privée Edmond de Rothschild Europe 

(Details, p. 46) 

MONACO 

Banque de Gestion Edmond de Rothschild - 

Monaco 

Les Terrasses 

2, avenue de Monte-Carlo - BP 317 

98006 Monaco Cedex 

P. +377 93 10 47 47 

F. +377 93 25 75 57 

Edmond de Rothschild Conseil 

et Courtage d’Assurance - Monaco 

Les Terrasses 

2, avenue de Monte-Carlo 

98000 Monaco 

P. +377 97 98 28 00 

F. +377 97 98 28 01

Edmond de Rothschild Gestion (Monaco) 

Les Terrasses 

2, avenue de Monte-Carlo 

98000 Monaco 

P. +377 97 98 22 14 

F. +377 97 98 22 18 

UNITED KINGDOM 

Edmond de Rothschild Limited 

- LCF Edmond de Rothschild Securities 

Limited 

- LCF Edmond de Rothschild Asset 

Management Limited 

Orion House 

5 Upper St. Martin’s Lane 

WC2H 9EA London 

P. +44 20 7845 5900 

F. +44 20 7845 5901 

www.edmond-de-rothschild.co.uk 

LCF Edmond de Rothschild Holdings (C.I.) 

Limited 

- LCF Edmond de Rothschild (C.I.) Limited 

- LCF Edmond de Rothschild Asset 

Management (C.I.) Limited 

Hirzel Court Suite D 

St. Peter Port – Guernsey GY1 2NH 

Channel Islands UK 

P. +44 1481 716 336 

F. +44 1481 714 416 

www.edmond-de-rothschild.gg 

TAIWAN 

Priasia Limited (Edmond de Rothschild Group) 

Tortola, British Virgin Islands 

205 Tun Hwa North Road, Suite 202 

Taipeh - Taiwan 105 

P. +886 2 2545 0505 

F. +886 2 2545 1407 

Representative offices 

CHINA 


Hong Kong Representative Office 

Suite 5001 / 50F One Exchange Square 

8 Connaught Place 

Central - Hong-Kong 

P. +852 3765 0600 

F. +852 2877 2185 

URUGUAY 

Representación Banque Privée 

Edmond de Rothschild S.A. 

« World Trade Center Montevideo » 

Torre II - Piso 21 

Avenida Luis Alberto de Herrera 1248 

11300 Montevideo 

P. +598 2 623 24 00 

F. +598 2 623 24 01 


46 • 



Head office 

LUXEMBOURG 


20, boulevard Emmanuel Servais 

L-2535 Luxembourg 

P. +352 24 88 1 

F. +352 24 88 82 22 

www.edmond-de-rothschild.eu 

Affiliates 

LUXEMBOURG 

Adjutoris Conseil 


L - 2535 Luxembourg 

P. +352 26 26 23 92 

F. +352 26 26 23 94 

Edmond de Rothschild Investment Advisors 


L - 2535 Luxembourg 

P. +352 24 88 23 86 

F. +352 24 88 84 02 

Abroad 

Branches 

BELGIUM 


Avenue Louise 480 Bte 16A 

1050 Brussels 

P. +32 2 645 57 57 

F. +32 2 645 57 20 

www.edmond-de-rothschild.be 

Liège branch 


Quai de Rome 56 

4000 Liège 

P. +32 4 234 95 95 

F. +32 4 234 95 75 


Antwerp branch 


Frankrijklei 103 

2000 Antwerpen 

P. +32 3 212 21 11 

F. +32 3 212 21 22 


SPAIN 


Calle Orfila, 8 Bajo C 

28010 Madrid 

P. +34 91 364 66 00 

F. +34 91 364 66 63 

www.edmond-de-rothschild.es 

Barcelona branch 


Josep Bertrand 11 

08021 Barcelona 

P. +34 93 362 30 00 

F. +34 93 362 30 50 

www.edmond-de-rothschild.es 

ITALY 


Via Ulrico Hoepli, 7 

20121 Milan 

P. +39 02 72 17 44 11 

F. +39 02 72 17 44 57 

www.bpere.edmond-de-rothschild.it 

PORTUGAL 


Rua D. Pedro V, 130 

1250-095 Lisbon 

P. +351 21 045 46 60 

F. +351 21 045 46 87/88 

www.edmond-de-rothschild.pt 

Affiliate 

PORTUGAL 

Edmond de Rothschild Real Estate 

Mediação Imobiliária S.A. 

Rua D. Pedro V, 128 

1250-095 Lisbon 

P. +351 213 408 360 

F. +351 213 408 369 

www.edmond-de-rothschild.pt 


ISRAEL 


46, boulevard Rothschild 

66883 Tel-Aviv 

P. +972 356 69 818 

F. +972 356 69 821 

www.bpere.edmond-de-rothschild.co.il 

POLAND 


Rondo ONZ 1, 12th Fl. 

00-124 Warsaw 

P. +48 22 581 64 00 

F. +48 22 581 64 01 

www.edmond-de-rothschild.pl 

CZECH REPUBLIC 


P a r ˇ í ž s k á 2 6 

Prague 1 

110 00 

SLOVAKIA 


Hlavné námestie 4 

811 01 Bratislava 

P. +421 2 5443 0940 

F. +421 2 5443 4084 

www.edmond-de-rothschild.sk 

Joint-venture affiliate 

JAPAN 

Edmond de Rothschild 

Nikko Cordial Co., Ltd 

1-12-1, Yurakucho, Chiyoda-ku 

Tokyo # 100-0006 

P. +81 3 3283-3535 

F. +81 3 3283-1611 

www.edmond-de-rothschild.jp

Other Edmond de Rothschild Group companies belonging to 

La Compagnie Financière Edmond de Rothschild 

Head office 

FRANCE 

La Compagnie Financière Edmond 

de Rothschild Banque 

47, rue du Faubourg Saint-Honoré 

75401 Paris cedex 08 

P. +33 1 40 17 25 25 

F. +33 1 40 17 24 02 

www.edmond-de-rothschild.fr 


Bordeaux 

La Compagnie Financière 

Edmond de Rothschild Banque 

Hôtel de Saige 

23, cours du Chapeau Rouge 

33000 Bordeaux 

P. +33 5 56 44 20 66 

F. +33 5 56 51 66 03 


Lille 



116, rue de Jemmapes 

59800 Lille 

P. +33 3 62 53 75 00 

F. +33 3 28 04 96 20 


Lyon 



55, avenue Foch 

69006 Lyon 

P. +33 4 72 82 35 25 

F. +33 4 78 93 59 56 


Marseille 



165, avenue du Prado 

13272 Marseille 

P. +33 4 91 29 90 80 

F. +33 4 91 29 90 85 


Nantes 



10-12, rue du Président Herriot 

44000 Nantes 

P. +33 2 53 59 10 00 

F. +33 2 53 59 10 09 


Strasbourg 



6, avenue de la Marseillaise 

67000 Strasbourg 

P. +33 3 68 33 90 00 

F. +33 3 88 35 64 86 


Toulouse 



22, rue Croix Baragnon 

31000 Toulouse 

P. +33 5 67 20 49 00 

F. +33 5 61 73 49 04 


Affiliates and sub-affiliates 

Paris 

Edmond de Rothschild Asset Management 



P. +33 1 40 17 25 25 

F. +33 1 40 17 24 42 

www.edram.fr 

Edmond de Rothschild Investment Managers 



P. +33 1 40 17 25 25 

F. +33 1 40 17 23 67 

www.edrim.fr 

Edmond de Rothschild Corporate Finance 



P. +33 1 40 17 21 11 

F. +33 1 40 17 25 01 

www.edrcf.com 


Edmond de Rothschild Private Equity Partners 



P. +33 1 40 17 25 25 

F. +33 1 40 17 23 91 


Edmond de Rothschild Capital Partners 



P. +33 1 40 17 25 25 

F. +33 1 40 17 23 91 

www.edrcp.com 

Edmond de Rothschild Investment Partners 



P. +33 1 40 17 25 25 

F. +33 1 40 17 31 43 

www.edrip.fr 

Assurances Saint-Honoré Patrimoine 



P. +33 1 40 17 22 32 

F. +33 1 40 17 89 40 

www.ashp.fr 

Edmond de Rothschild Entreprises 

Patrimoniales 



P. +33 1 40 17 31 63 

F. +33 1 40 17 23 93 

www.edrep.fr 

Lyon 

Edmond de Rothschild Entreprises 

Patrimoniales 

55, avenue Foch 

69006 Lyon 

P. +33 4 26 72 95 00 

F. +33 4 37 42 51 91 

www.edrep.fr

48 • 


Abroad 


CHINA 



Room 3, 28F China Insurance Building, 

166 East Lujiazui Road, Pudong New Area 

200120 Shanghai 

P. +86-21 58 76 51 90 

F. +86-21 58 76 71 80 


Affiliates, sub-affiliates and branches 

CHINA 


Hong Kong Ltd 

Suite 4101-04, 41F, 

Exchange Square Two, 


Central - Hong Kong 

P. (852) 3926 5199 

F. (852) 3926 5008 

www.edram.fr 

Edmond de Rothschild Asia Ltd 

Suite 4101-04, 41F, 

Exchange Square Two, 


Central - Hong Kong 

P. (852) 3926 5199 

F. (852) 3926 5008 

www.edram.fr 

Edmond de Rothschild China Ltd 

Room 02, 28F China Insurance Building 

166 East Lujiazui Road, 

Pudong New Area 

Shanghai 200120 

P. +(86 21) 6086 2503 

F. +(86 21) 6086 2503 

CHILE 


Chile 

Apoquindo 4001 

oficina 305 

Las Condes 

Santiago 

P. +56 2598 99 00 

F. +56 2598 99 01 

www.edram.fr 

ISRAEL 

Edmond de Rothschild Investment 

Services Limited 

Alrov Tower 

46, Rothschild Boulevard 

66883 Tel Aviv 

P. +972 3 713 03 00 

F. +972 3 566 66 89 

www.edris.co.il 

GERMANY 


Deutschland 

Opernturm 

60306 Frankfurt am Main 

BELGIUM 


Benelux 

Marnix, 28 

1000 Brussels 

P. +32 2517 60 90 

F. +32 2503 56 88 

www.edram.fr 

SPAIN 

Edmond de Rothschild Investment 

Managers Espagne 

Edmond de Rothschild Asset 

Management Espagne 

(subject to CNMV approval) 

Calle Serrano, 32 

28043 Madrid 

P. +34 91 781 49 75 

F. +34 91 577 39 08 

www.edrim.fr 

ITALY 



Edmond de Rothschild S.G.R. SpA 

Palazzo Chiesa 

Corso Venezia 36 

20121 Milan 

P. +39 02 76 061 200 

F. +39 02 76 061 222 

UNITED KINGDOM 

Edmond de Rothschild Private Equity 

Select LLP 

Orion House, 5 Upper St Martin’s Lane 

WC2H 9EA London 

P. +44-20 7845 59 93 

F. +44-20 7557 59 93 

www.edmond-de-rothschild.fr

Other Edmond de Rothschild Group companies 

La Compagnie 

Benjamin de Rothschild 

SWITZERLAND 

La Compagnie Benjamin de Rothschild 

29, route de Pré-Bois 

CP 490 

1215 Geneva 15 

P. +41 22 319 75 00 

F. +41 22 319 75 09 

www.ctbr.ch 

COGIFRANCE 

FRANCE 

COGIFRANCE 


75408 Paris 

P. +33 1 40 17 25 25 

F. +33 1 40 17 24 02 


50 • 


All rights reserved 

Concept and realization: Flgraf, François Lemaire 

Layout: 

KeyDesign S.A., CH-6593 Cadenazzo, www.key-design.net 

Press: 

Atar Roto Presse S.A., CH-1214 Vernier / Genève, www.atar.ch

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