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

Notes to the Financial Statements
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
annUal rEport 2010 • 25
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.