Landeskreditbank Baden-WÃ¼rttemberg - L-Bank

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Notes to the annual financial statements for the financial year ended December 31, 2004 Other financial obligations With respect to equity investments, the Bank has call commitments of EUR 13.7 million relating to outstanding, hitherto uncalled contributions to subscribed capital. The total sum of other financial obligations existing at the balance sheet date which are not included in the balance sheet or shown below the line is of minor significance to an evaluation of the Bank’s financial position. Transactions involving derivatives At the balance sheet date, the following transactions involving financial derivatives (forward transactions as defined in § 36 RechKredV) formed part of L-Bank’s portfolio. The majority of the transactions were undertaken in order to hedge interest rate and exchange rate fluctuations. The practice of netting (i.e. offsetting the positive against the negative market values of contracts with the same contracting party) was not applied. The following tables do not include fully hedged derivative structures incorporated into standard Bank products. In compliance with the new requirements in § 285 no. 18 HGB, the positive and negative market values of interest rate, foreign currency and credit derivatives calculated using the marking-to-the-market method are shown for the first time. Transactions involving derivatives – by maturity Residual maturities Dec. 31, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2003 Interest rate risks EUR million Interest rate risks EUR million Currency risks EUR million Currency risks EUR million Credit derivatives EUR million Credit derivatives EUR million – up to 3 months ...... 2,348 5,062 123 452 0 20 – up to 1 year ......... 18,272 19,185 910 921 62 30 – up to 5 years ........ 32,773 25,176 3,506 3,139 746 566 – more than 5 years .... 33,811 37,854 812 715 696 433 Total ................. 87,204 87,277 5,351 5,227 1,504 1,049 Transactions involving derivatives - by contracting party Dec. 31, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2004 Nominal value EUR million Nominal value EUR million Market worth (positive) EUR million Market worth (negative) EUR million – Banks in the OECD .......................... 85,359 85,515 2,496 -3,997 – Public-sector institutions in the OECD ........... 950 549 33 0 – Other counterparties* ........................ 7,750 7,489 766 -198 Total ....................................... 94,059 93,553 3,295 -4,195 * including stock exchange contracts F-14
Notes to the annual financial statements for the financial year ended December 31, 2004 Transactions involving derivatives - by volume Interest rate risks Dec. 31, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2004 Nominal value EUR million Nominal value EUR million Market worth (positive) EUR million Market worth (negative) EUR million – Interest rate swaps ........................... 86,572 86,625 2,755 -3,079 – Caps, floors ................................ 383 383 0 -5 – Other forward transactions .................... 249 269 32 0 Interest rate risks – total – ....................... 87,204 87,277 2,787 -3,084 Currency risks – Forward exchange deals and swaps ............. 123 498 1 -1 – Cross-currency interest rate swaps .............. 5,228 4,729 57 -1,110 – Currency risks – total – ....................... 5,351 5,227 58 -1,111 Credit derivatives – Bought (long) .............................. 1,484 1,029 450 0 – Sold (short) ................................ 20 20 0 0 Credit derivatives – total – ...................... 1,504 1,049 450 0 In net terms, there is no foreign exchange result or interest rate valuation result arising on cross-currency interest rate swaps and the underlying hedged items, in particular foreign currency notes issued. Totaling EUR 1,105 million, the negative market worth of cross-currency interest rate swaps is attributable to differences in spot exchange rates. An adjustment item for this amount was set up on the liabilities side for foreign currency translation and is shown under Other liabilities. As at year-end 2004, interest rate swaps in the investment books used primarily to manage the overall interest rate risk position show a negative net market worth of EUR 324 million. These interest rate swaps have not been valued on the balance sheet. Balance sheet items under assets and liabilities include interest-driven hidden reserves that are significantly larger than the negative market worth of the interest rate swaps. Credit derivatives are allocated to the investment book and consist of credit default swaps and credit-linked notes. Credit default swaps for which the Bank is acting as guarantor appear under contingent liabilities at their nominal value. Credit-linked notes are shown under securities. The transactions reported above include the following commercial transactions: Transactions involving derivatives - commercial transactions Dec. 31, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2004 Nominal value EUR million Nominal value EUR million Market worth (positive) EUR million Market worth (negative) EUR million – Interest rate contracts ........................ 20 1,370 0 0 Total ....................................... 20 1,370 0 0 F-15
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INTERNATIONAL PROSPECTUS SUPPLEMENT
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ISSUER Landeskreditbank Baden-Würt
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TABLE OF CONTENTS Use of Proceeds .
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EXCHANGE RATE INFORMATION The follo
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Maturity, Repurchase Maturity. The
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the rules of such stock exchange pe
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THE CLEARING SYSTEMS DTC DTC is a l
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Cross-market transfers between pers
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For the purposes of this provision,
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These activities by the managers or
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You should rely only on the informa
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PROSPECTUS SUMMARY The following su
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APPLICATION OF PROCEEDS As may be m
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(4) Loans to customers (i.e., non-c
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transferred to independent subsidia
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Our housing-related activities are
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(1) Holdings in companies for strat
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Loan Portfolio Risks We maintain a
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securities portfolio. In accordance
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The following table shows our borro
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authorized limits. A daily risk and
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MANAGEMENT INFORMATION Introduction
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credit institutions increased by 10
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To control the risks of unhedged po
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RECENT DEVELOPMENTS Development of
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MANAGEMENT Board of Management Our
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Wirtsch.-Ing. Bernd Bechtold Presid
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REGULATION AND SUPERVISION OF L-BAN
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non-banking corporations if the use
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Covering Market Risk Positions Mark
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ank, and the aggregate nominal valu
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may at any time change the reserve
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The Entschädigungseinrichtung GmbH
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ECONOMY General Germany The economy
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Industrial Structure General Positi
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The following table shows the amoun
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The Euro-zone follows a mutual mone
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Page 78 and 79: For more detailed information regar
Page 80 and 81: Outstanding Principal Maturity Amou
Page 82 and 83: DESCRIPTION OF THE DEBT SECURITIES
Page 84 and 85: (iv) a waiver by the holders of the
Page 86 and 87: CURRENCY CONVERSION RATES The follo
Page 88 and 89: TAXATION UNITED STATES FEDERAL INCO
Page 90 and 91: number of complete years to maturit
Page 92 and 93: will equal such U.S. Holder’s ini
Page 94 and 95: using the constant yield method des
Page 96 and 97: We have included the federal income
Page 98 and 99: Capital gains resulting from the di
Page 100 and 101: SUMMARY OF CERTAIN DIFFERENCES BETW
Page 102 and 103: The credit risk of the loan and sec
Page 104 and 105: Under U.S. GAAP, repurchased debt s
Page 106 and 107: LIMITATIONS ON ACTIONS AGAINST THE
Page 108 and 109: GLOSSARY This glossary describes ce
Page 110 and 111: Administrative loans, which are loa
Page 112 and 113: Depreciation and accumulated amorti
Page 114 and 115: Landeskreditbank Baden-Württemberg
Page 116 and 117: Balance sheet as at December 31, 20
Page 118 and 119: Statement of income for the period
Page 120 and 121: Notes to the annual financial state
Page 132 and 133: Authorities of Landeskreditbank Bad
Page 134 and 135: Proposal of the Board of Management
Page 136 and 137: FINANCIAL STATEMENTS OF L-BANK AS O
Page 140 and 141: Landeskreditbank Baden - Württembe
Page 154 and 155: Directorships held by members of th
Page 156 and 157: State government deputy representat
Page 158 and 159: Independent Auditors’ opinion We
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Notes to the annual financial state
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Directorships held by members of th
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Authorities of Landeskreditbank Bad
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Proposal of the Board of Management
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Debt of L-Bank at December 31, 2004
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Debt Securities
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Landeskreditbank Baden-WÃ¼rttemberg - L-Bank

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