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

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
annUal rEport 2010 • 23
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.