Af-RALux2010Neide:Layout 1 - paperJam

“If you choose to sail upon the seas of banking, build your bank 

as you would your boat, with the strength to sail safely through 

any storm.” 

Jacob Safra

Table of Contents 

Management report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4 

Report of the reviseur d’entreprises agree . . . . . . . . . . . . . . . . . . . . . . . . Page 7 

Balance sheet and off-balance sheet items . . . . . . . . . . . . . . . . . . . . . . . . Page 8 

Profit and loss account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 11 

Notes to the accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 12

BANQUE SAFRA-LUXEMBOURG, Société Anonyme 

Board of Directors 

Chairman of the Board of Directors 

M. Jorge A.Kininsberg 

Auditors 

Deloitte S.A. 

Vice-Chairman of the Board of Directors 

M. Gilbert Ribeira 

Members of the Board of Directors 

M. Marcelo Szerman 

M. Salomon Sebban 

Group companies J. Safra Holding AG 

Head Office 

J. Safra Holding AG 

Bleicherweg 1 / Paradeplatz 

8022 Zürich 

Tel. +41 58 317 51 51 

Fax +41 58 317 51 00 

In Switzerland 

Banque J. Safra (Suisse) SA 

Rue du Rhône 70 

1211 Genève 11 

Tel. +41 58 317 55 55 

Fax +41 58 317 55 00 

Bank J. Safra (Schweiz) AG 

Bleicherweg 1 / Paradeplatz 

8022 Zürich 

Tel. +41 58 317 51 51 

Fax +41 58 317 51 00 

Banque J. Safra (Suisse) SA 

Via Marconi 2 

6900 Lugano 

Tel. +41 58 317 58 58 

Fax +41 58 317 58 00 

Outside of Switzerland 

Safra International Bank and Trust Ltd. 

Katherina Court 

Suites 203 & 205 Lagoon Court, 

Olde Towne at Sandyport 

Nassau, The Bahamas 

Tel. +1 242 327 7771 

Fax +1 242 327 7774 

Bank J. Safra (Gibraltar) Ltd. 

Suite 971, Europort 

Gibraltar 

Tel. +350 2000 2500 

Fax +350 2000 2501 

Bank J. Safra (Gibraltar) Ltd. London Branch 

47 Berkeley Square 

Mayfair 

London W1J 5AU 

Tel. +44 207 514 1000 

Fax +44 207 514 1001 

J. Safra Asset Management (Europe) Ltd. 

47 Berkeley Square 

Mayfair 

London W1J 5AU 

Tel. +44 207 514 1000 

Fax +44 207 514 1001 

J. Safra Immo (Monaco) SA 

La Belle Epoque 

15 Bis 17 Avenue d’Ostende 

98 006 Monaco 

Tel. +377 93 10 66 55 

Fax +377 93 50 60 71 

Outside of Switzerland 

Banque Safra-Luxembourg 

10a, boulevard Joseph II 

L-2018 Luxembourg 

Tel. +352 45 47 81 1 

Fax +352 45 47 86 

Banque J. Safra (Monaco) SA 


15 Bis 17 Avenue d'Ostende 

98 006 Monaco 

Tel. +377 93 10 66 55 

Fax +377 93 50 60 71 

Banque Safra - France SA 

16, Place Vendôme 

75001 Paris 

Tel. +33 1 47 03 55 55 

Fax +33 1 47 03 55 00 

J. Safra Asset Management SA 

Calle 50, Torre Global, piso 24 

Panama 

Tel. +507 209 0955 

Fax +507 209 0956 

J. Safra Gestion (Monaco) SA 


15 Bis 17 Avenue d’Ostende 

98 006 Monaco 

Tel. +377 93 10 66 55 

Fax +377 93 50 60 71

MANAGEMENT REPORT 

The Management of Banque Safra-Luxembourg, Société 

Anonyme (“the Bank”), is pleased to present the Annual 

Accounts for the year ended December 31, 2010. 

Total client assets, which include client off-balance sheet items, 

were EUR 13,724 million at the end of 2010, compared to EUR 

12,037 million in the previous year. The total balance sheet of 

the Bank was EUR 3,802 million at the end of 2010. 

This compares to EUR 3,279 million at the end of the previous 

year. The variation of the total balance sheet is due to the 

combination of the increase of the Bank’s securities portfolio, 

loans and advances to customers and the variation of the 

exchange rate used for translation of other currencies into EUR. 

The Bank’s main activity is the private banking business to 

selected high net worth individuals. Deposits from clients 

represent the major portion of the liabilities and are 

essentially considered a stable source of funds. The amounts 

deposited may vary from time to time according to clients’ 

demand for securities, which depends on market conditions 

and interest rate trends. The securities thus acquired are 

recorded as off-balance sheet items. 

The Bank continues to adhere to its main philosophy of 

protecting and preserving wealth, while procuring prudent 

growth. Balance sheet assets comprise liquid placements 

with highly rated credit institutions, loans and advances to 

customers which are of short-term maturity, generally not 

exceeding three months and liquid securities issued by public 

bodies and other borrowers from the private sector. 

Off-balance sheet items as presented in this report are 

comprised in part of contingent liabilities, representing 

various types of agreements with clients in the form of 

guarantees and other substitutes for credit, including stand-by 

letters of credit. These facilities normally have specific 

expiration dates, credit risk equivalent to that of loans to 

customers and are subject to the prudent credit policies of 

the Bank. In addition, off-balance sheet items also include 

commitments, representing the sum of forward purchases and 

forward sales of assets, settlement of spot transactions and 

amounts not yet paid up on traded securities. 

The profit for the year, after allocation for depreciation, 

taxes and value adjustments, was EUR 19.44 million. The Bank 

proposes to allocate the full profit for the year to reserves. 

The Bank’s total own funds, as defined by the capital adequacy 

ratio under Basel II principles at the end of the year 2010, 

were EUR 229.6 million. The Bank is required by the banking 

supervisory authorities to observe at all times a capital 

adequacy ratio, in which the Bank’s own funds must equal at 

least 8% of the sum of its weighted assets and off-balance sheet 

items. At the end of 2010, this ratio was 27% before the 

appropriation of the profit of the year. 

The Bank is a member of the non-profit making “Association 

pour la Garantie de Dépôts Luxembourg” (AGDL), whose 

objective is the establishment of a mutual guarantee scheme 

for deposits made by customers of member credit institutions 

and, as such, the Bank is required to set up provisions under 

the limits set out by the regulations (please refer to note 31 

of this report). As of December 31, 2010, the Bank’s AGDL 

provisions amounted to EUR 0.7 million. During 2010, no 

advances have been requested by the AGDL. 

Risk Management 

The Bank’s continued commitment towards strong controls 

and a systematic approach to risk management provides 

assurance that all risks are identified and analyzed according 

to the recommendations of the banking supervisory authorities 

and market practices. Risk is monitored by the Risk, Planning 

and Control department at management level. Specific risk 

management issues are as follows: 

1. Credit Risk 

Loans to customers are approved within the powers set up 

in the chart of authorities. Loans to customers above the 

specified limits are submitted to the Bank’s Credit Committee, 

which operates at senior management level. The majority 

of lending operations are with private customers and due 

to their nature they are reserved for individuals and corporate 

entities of good financial standing. The risks are mitigated by 

a selective account opening process and, whenever deemed 

necessary, additional guarantees are obtained. 

4

Credits to banks, which represent 14% of the balance sheet 

items, are made within the limits established and revised 

regularly by the Credit Committee and the Board of 

Directors. The Bank’s policy is to establish limits to 

counterparties taking into consideration the credit ratings, 

capital strength and other relevant credit information, as 

well as the applicable regulatory requirements. 

The purchase of securities for the investment, structural 

and trading portfolios is subject to very conservative 

principles and is undertaken within the established limits. 

In the event that no limit has been established or if the maturity 

of the instrument falls beyond one year, prior approval of the 

Credit Committee is required. 

Daily reports permit management to adequately monitor 

compliance with the approved limits and to immediately detect 

any irregular transaction. The regulatory maximum exposure 

limit towards any individual borrower or those belonging to 

a same economic group is measured as a percentage of the 

capital and must not be exceeded. The Bank has consistently 

complied with these limits. 

2. Liquidity Risk 

The Bank is required to maintain a liquidity ratio, as defined 

by the banking supervisory authorities. A calculation of this 

ratio is performed monthly and included in the Bank’s monthly 

reports addressed to the management and Board of Directors. 

In addition, a daily cash flow statement lists total assets and 

liabilities falling due for repayment each day, beginning on the 

reporting day, preventing liquidity shortages. A list of cash 

balances available at each correspondent bank is prepared and 

submitted to the attention of management on a daily basis, 

along with an analysis of the balance sheet, taking into account 

expected payments and receipts falling due on that date. 

3. Currency Risk 

The majority of the Bank’s commitments in currencies is made 

on behalf of customers. Only a small limit is granted for the 

purposes of own dealing in major currencies. Daily currency 

positions are generally covered using foreign exchange 

contracts and similar hedging instruments, in order to arrive 

at a low net position. 

A detailed report of all foreign exchange deals by maturity 

date comprising all open positions on the previous day is 

produced daily. The report is prepared for the Treasury 

department of the Bank. 

4. Market Risk 

The Bank’s Asset and Liability Management (ALM) Committee 

regularly monitors exposure to interest rate risk. A complete 

report, which is produced by the Risk, Planning and Control 

Department and addressed to the ALM Committee, analyses 

the entire risk exposure of the Bank. A mark-to-market analysis 

is applied to each individual item of the balance sheet. 

Additionally, the Bank calculates the maximum expected net 

financial result following parallel shifts in the yield curves using 

a variety of basis point scenarios for each individual currency. 

The interest rates applied to mainstream assets and liabilities 

are a function of recognized floating rate basis. 

5. Operational Risk 

The Bank analyses all specific risks individually. Operational 

risk is assumed as that associated with human or technological 

failure. In addition to a comprehensive contingency plan, which 

is tested regularly, the Bank has developed several control levels 

and an efficient management information system to ensure that 

operational risk is minimized. Reconciliation of transactions 

at nostri, vostri and depositary level is made daily 

complementing the matching of all transaction confirmations. 

All option transactions are checked for accuracy and 

reported daily by expiration dates, including strike and 

market prices. 

The Bank operates on the principle of strict segregation of 

duties and application of the four-eye principle at all levels. 

Front, middle and back office functions are kept autonomous 

of each other. Access to systems to any individual or group 

of users is granted only upon approval of senior management 

and subject to restrictions corresponding to the respective 

function of the user. 

5

6. Settlement Risk 

The Bank only deals with counterparts of good financial 

standing, subject to the approval of the Credit Committee. 

Settlement risk is taken into consideration when setting limits. 

In addition the Bank makes use of netting agreements when 

appropriate. Formal written confirmation of all transactions 

with counterparts is required, including authenticated 

S.W.I.F.T. confirmation when applicable. 

7. Legal Risk 

In addition to an in-house legal counselor, the Bank uses 

the services of a number of external legal counselors 

to obtain advice in their respective areas of expertise. 

All documentation is submitted to the legal counselors 

for revision, in order to ensure legal validity, counterpart 

capacity, performances, enforceability and all other relevant 

legal aspects. 

It is the Bank’s policy to enter into business only with approved 

counterparts of good reputation and financial standing, and 

whenever possible the Bank requires that its own jurisdiction is 

taken into consideration for the enforceability of legal documents. 

8. Compliance Risk 

In line with regulatory requirements in the field of compliance 

and the fight against money laundering and terrorism 

financing, in particular the law of 12 November 2004 and CSSF 

Circulars 04/155 and 08/387 (as amended), the Bank has 

established a Compliance Department. 

More particularly, the Compliance Department provides 

assurance that the regulations the Bank is subject to are being 

duly respected and promotes a compliant culture throughout 

the organization, the conduct of operations with integrity and 

the highest ethical and professional standards in conformity 

with applicable regulations, especially those relating to the 

fight against money laundering and terrorism financing. 

Furthermore, the Department contributes to the development 

of internal control systems, the identification and management 

of risks and the establishment of preventive procedures, and 

organizes training programs to ensure that all employees are 

periodically made aware of the Bank’s Compliance Policy, that 

they understand their responsibilities and are kept up-to-date 

with the regulatory environment. 

Since the end of 2010, no significant events have occurred, 

which would have an impact on the balance sheet and reported 

results or disclosures. No major changes in activities are 

anticipated in the forthcoming year and therefore the Bank 

remains committed to strengthening the relationship with its 

clients, seeking to understand and address their needs, and 

continue to offer a complete array of products and services 

at the highest level of professional standards. 

The management wishes to express its gratitude for the loyalty 

of the customers, and its appreciation to the entire staff for 

their contribution to the continued development of the Bank. 

The Compliance Department is headed by a full time 

Director of Compliance and its main responsibility is to assist 

the Bank to ensure fulfillment of its regulatory obligations, 

notably the establishment and development of compliance 

policies, procedures and systems, the coordination of efforts 

in the compliance field and the permanent monitoring 

of business activities. 

6

REPORT OF THE REVISEUR D’ENTREPRISES AGREE 

To the board of directors of Banque Safra - Luxembourg, Société Anonyme 

Report on the annual accounts 

Following our appointment by the board of directors, we have audited the accompanying annual accounts of Banque Safra - 

Luxembourg, Société Anonyme, which comprise the balance sheet as at December 31, 2010, the profit and loss account for 

the year then ended and a summary of significant accounting policies and other explanatory notes. 

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 

the 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. 

Responsibility of the réviseur d’entreprises agréé 

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 for Luxembourg by the Commission de Surveillance du Secteur Financier. 

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 judgement of the réviseur d’entreprises agréé, including the assessment of the risks 

of material misstatement of the annual accounts, whether due to fraud or error. In making those risk assessments, the réviseur 

d’entreprises agréé 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. 

Opinion 

In our opinion, the annual accounts give a true and fair view of the financial position of Banque Safra - Luxembourg, Société 

Anonyme as of December 31, 2010, and of the results of its operations for the year then ended in accordance with the Luxembourg 

legal and regulatory requirements relating to the preparation of the annual accounts. 

Report on other legal and regulatory requirements 

The management report, which is the responsibility of the board of directors, is in accordance with the annual accounts. 

For Deloitte S.A. 

Cabinet de révision agréé 

Olivier Lefèvre 

Réviseur d’entreprises agréé – Partner 

April 6, 2011 

7

BANQUE SAFRA - LUXEMBOURG, SOCIÉTÉ ANONYME 

BALANCE SHEET AND OFF-BALANCE SHEET ITEMS 

DECEMBER 31, 2010 

(EXPRESSED IN EUR) 

NOTE 2010 2009 (see note 1) 

ASSETS 

Cash, balances with central banks and post office banks 33 36,045,487 225,158,136 

Loans and advances to credit institutions 33 530,483,572 572,470,467 

a) repayable on demand 235,631,267 119,593,925 

b) other loans and advances 3 294,852,305 452,876,542 

Loans and advances to customers 4, 30, 32, 33 461,305,540 97,213,916 

Debt securities and other fixed-income securities 5, 6, 8, 33 1,435,937,526 1,225,785,172 

a) issued by public bodies 409,392,988 455,491,063 

b) issued by other borrowers 1,026,544,538 770,294,109 

Shares and other variable-yield securities 5, 33 1,290,732,385 1,116,383,513 

Intangible assets 8, 9 328,086 390,651 

Tangible assets 8, 9 1,071,143 1,319,730 

Other assets 7 22,199,812 19,412,134 

Prepayments and accrued income 10, 32 24,077,225 20,663,813 

TOTAL ASSETS 11 3,802,180,776 3,278,797,532 

See notes to the accounts. 

8

NOTE 2010 2009 (see note 1) 

LIABILITIES 

Amounts owed to credit institutions 32, 33 563,154,542 486,218,938 


b) with agreed maturity dates or periods of notice 12 433,726,831 368,323,274 

Amounts owed to customers 33 1,319,497,663 1,403,918,053 


b) with agreed maturity dates or periods of notice 13 766,443,519 447,606,374 

Debts evidenced by certificates 14, 33 1,543,062,133 1,116,345,471 

Other liabilities 15 19,654,581 14,975,035 

Accruals and deferred income 32, 16 130,536,942 60,429,925 

Provisions 18 6,536,255 6,362,972 

a) provisions for taxation 5,200,333 5,693,829 

b) other provisions 31 1,335,922 669,143 

Subordinated liabilities 19, 33 44,903,400 41,649,600 

Fund for general banking risks 45,891,719 39,391,719 

Subscribed capital 20, 21 8,800,000 8,800,000 

Reserves 21 100,705,819 86,116,449 

Profit for the financial year 19,437,722 14,589,370 

TOTAL LIABILITIES 22 3,802,180,776 3,278,797,532 


9


OFF-BALANCE SHEET ITEMS 



NOTE 2010 2009 (see note 1) 

Contingent liabilities 23, 33 24,972,916 31,737,234 

of which: 

- guarantees and assets pledged as collateral security 24,972,916 31,737,234 

Commitments 24, 33 304,711,925 1,049,307,010 

Fiduciary operations 26 310,684,842 286,324,006 


10


PROFIT AND LOSS ACCOUNT 



NOTE 2010 2009 (see note 1) 

Interest and similar income 81,060,522 59,838,938 

of which: 

- that arising from fixed-income securities 60,686,962 42,271,873 

Interest and similar charges 19 (54,670,127) (36,142,981) 

Income from securities 606,017 50,602 

of which: 

- Income from shares and other variable-yield securities 606,017 50,602 

Commission income 21,526,263 20,738,468 

Commission expense (2,526,780) (2,405,895) 

Net loss on financial operations (6,824,551) (3,127,515) 

Other operating income 27 3,057,828 3,788,157 

General administrative expenses (19,953,258) (16,359,610) 

a) staff costs 29, 30 (14,180,436) (12,247,910) 

of which: 

- wages and salaries (12,636,413) (10,829,316) 

- social security costs (1,231,130) (1,187,515) 

of which: 

- social security costs relating to pensions (926,650) (837,560) 

b) other administrative expenses (5,772,822) (4,111,700) 

Value adjustments in respect of tangible and intangible assets (649,126) (639,904) 

Other operating charges 28 (1,199,641) (3,202,511) 

Value adjustments in respect of loans and advances and 

provisions for contingent liabilities and for commitments 0 (8,226,525) 

Value re-adjustments in respect of loans and advances and 

provisions for contingent liabilities and for commitments 6,309,781 1,085,275 

Transfer to fund for general banking risk (6,500,000) 0 

Tax on profit on ordinary activities 18 (461,983) (260,820) 

Profit on ordinary activities after tax 19,774,945 15,135,679 

Other taxes not shown under the preceding items (337,223) (546,309) 

Profit for the financial year 19,437,722 14,589,370 


11


NOTES TO THE ACCOUNTS 


NOTE 1 - GENERAL 

1.1. Corporate matters 

Banque Safra - Luxembourg, Société Anonyme (hereafter the 

"Old Bank") was incorporated in Luxembourg on August 19, 

1985 as a société anonyme. 

On December 6, 2010 in accordance with a contribution plan 

dated October 29, 2010 published in the Mémorial C number 

2373 dated November 5, 2010 and Article 308bis-4 of the law 

of August 10, 1915 on commercial companies, as amended, the 

Old Bank transferred all of its assets and liabilities by way of 

an universal transfer (“apport d’universalité”) to a newly 

incorporated société anonyme governed by Luxembourg law. 

The latter has been incorporated on December 6, 2010 through 

such transfer and under the corporate denomination “Banque 

Safra - Luxembourg” (the “ Bank”). The Old Bank changed its 

corporate denomination from “Banque Safra - Luxembourg” 

to “B.Safra Luxembourg S.A.”. 

The Bank has thus taken over the name of the Old Bank and 

operates with the same former human and technical 

infrastructure of the Old Bank. The Bank obtained a new 

banking licence under the number 47/10 on December 2, 2010. 

For accounting purposes, the transfer was made with 

retroactive effect from January 1, 2010. Comparative figures 

for 2009 presented in these accounts correspond to audited 

accounts of the Old Bank as of December 31, 2009, which are 

the most appropriate comparative figures based on the 

restructuring described above. 

The Bank is a wholly owned subsidiary of J. Safra Holding A.G., 

a corporation organized under the laws of Switzerland. 

Consolidated annual accounts of J. Safra Holding A.G., are 

available at the head office of this company, Paradeplatz, 

Bleicherweg 1, 8001 Zürich, Switzerland. 

1.2. Nature of the Bank's business 

The object of the Bank is to undertake all banking and financial 

operations of whatsoever kind. 

1.3. Annual accounts 

The Bank prepares its annual accounts in Euro (EUR), the 

currency in which the capital is expressed. 

The Bank’s accounting year coincides with the calendar year. 

NOTE 2 - SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES 

The Bank prepares its annual accounts under the historical 

cost principle, in accordance with the laws and regulations in 

force in the Grand-Duchy of Luxembourg and on the basis of 

accounting principles generally accepted in the banking sector 

in the Grand-Duchy of Luxembourg. 

In observing these, the following significant accounting policies 

are applied: 

2.1. The date of recording of transactions in the balance 

sheet 

Assets and liabilities are stated in the balance sheet when the 

amounts concerned become cleared funds. 

2.2. Foreign currencies 

The Bank maintains a multi-currency accounting system that 

records all transactions in the currency or currencies of the 

transaction on the day on which the contract is concluded. 

Revenues and expenses in foreign currencies are translated 

into EUR monthly at the prevailing exchange rates. 

All assets and liabilities are converted into EUR at the average of 

the buy and sell spot rates applicable at the balance sheet date. 

Both realised and unrealised profits and losses arising on revaluation 

are accounted for in the profit and loss account for the year. 

At year-end, all uncompleted forward transactions are 

translated into EUR at the forward rate applicable for the 

remaining term at the balance sheet date. 

Results on uncompleted forward transactions linked to spot 

transactions and on swap transactions are accrued at the 

balance sheet date. The revaluation of these transactions does 

not affect the result from the financial year. 

12

Uncovered forward transactions are valued individually on 

the basis of forward foreign exchange rates applicable at the 

balance sheet date. Unrealised revaluation profits are ignored, 

whereas a provision is set up in respect of any unrealised 

revaluation losses. This provision is included on the liability 

side of the balance sheet under "Provisions: other provisions". 

Currency futures and options are translated into EUR at 

the spot rate at the balance sheet date. 

2.3. Financial instrument derivatives 

The Bank's commitments resulting from financial instrument 

derivatives such as interest rate swaps, financial futures and 

options are recorded on the transaction date as off-balance 

sheet items. 

At year-end, where necessary, a provision is set up in respect 

of individual unrealised losses resulting from the revaluation 

of the Bank's commitments at market value. This provision 

is included on the liability side of the balance sheet under 

"Provisions: other provisions". 

No provision is set up in cases where a financial instrument 

clearly covers an asset or a liability and economic unity is 

established or where a financial instrument is hedged by a 

reverse transaction so that no open position exists. 

2.4. Specific value adjustments with respect to 

doubtful and irrecoverable debts 

It is the Bank's policy to establish specific value adjustments 

in respect of doubtful and irrecoverable debts, as deemed 

appropriate by the board of directors. 

Value adjustments, if any, are booked in the same currency as 

the underlying assets and are deducted from the assets items 

to which they relate. It is the Bank’s policy to reclassify existing 

specific value adjustments on securities arising from sovereign 

risk to or from specific value adjustments on loans as required 

without affecting the profit and loss account. 

2.5. Country risk provision 

It is the Bank’s policy to create a country risk provision (CRP) 

to cover risk linked to Brasilian exposure. The CRP is calculated 

once a year at year-end and amounts to 10% of total exposure. 

2.6. Fund for general banking risks 

The Bank has created a fund for general banking risks intended 

to cover particular risks associated with banking operations 

persuant to Article 63 of the Law on the accounts of banks. 

Increases or decreases to this fund are determined based on 

the profit after tax, but before determining the profit for the 

financial year, and are not subject to limitations. 

2.7. Transferable securities 

Transferable securities are recorded initially at their purchase 

price, plus additional charges. 

The average cost method is used for valuation purposes. 

Investments made under Credit Linked Notes, Total Return 

Swaps and Term Deposits (“CLN/TRS/TD”) programs are kept 

at cost, as note holders bear all the related risks and rewards 

including the effect of foreign exchange differences. As of the 

reporting date the effect of these foreign exchange differences 

on the balance sheet items is neutralized for the purpose of 

presentation of the Bank’s accounts. 

2.8. Debt securities and other fixed-income securities 

The Bank has divided its portfolio of fixed-income securities 

into three categories, the principal characteristics of which 

are the following: 

- an investment portfolio of financial fixed assets, which are 

intended to be used on a continuing basis in the Bank's 

activities; 

- a trading portfolio of securities purchased with the intention 

of resale in the short term; and 

- a structural portfolio of securities which do not fall within 

either of the two other categories. 

13




Fixed-income securities are valued as follows: 

Investment portfolio 

Fixed-income securities included in the Bank's investment 

portfolio are stated at the lower of cost (purchase price) or 

market value. 

Where the purchase price of fixed-income securities included 

in the Bank's investment portfolio exceeds the amount 

repayable at maturity, the difference is amortized through the 

life of the bond and charged to the profit and loss account. 

Trading portfolio 

Fixed-income securities included in the Bank's trading 

portfolio are stated at the lower of cost or market value. 

Structural portfolio 

Fixed income securities included in the Bank's structural 

portfolio are stated at the lower of cost or market value. 

Securities issued on a discounted basis 

Securities issued on a discounted basis, in cases where the 

discount represents the sole source of income from these 

securities, are stated at cost as adjusted for the difference 

between the issue (or purchase) value and the par (or disposal) 

value. This difference is accrued over the life of the security. 

2.9. Shares and other variable-yield securities 

At the balance sheet date, shares and other variable-yield 

securities are stated at the lower of cost or market value. 

2.10. The "Beibehaltungsprinzip" 

It is the Bank's policy to retain value adjustments in respect 

of certain categories of assets made previously but which no 

longer correspond to a reduction in the value of the assets 

in question, in accordance with Articles 56 (2) (f) and 58 (2) 

(e) of the Law on the accounts of banks. 

2.11. Intangible assets 

Intangible assets are stated at purchase price. 

The value of intangible assets with limited useful economic lives 

is reduced by value adjustments calculated to write-off the value 

of such assets systematically over their useful economic lives. 

2.12. Tangible fixed assets 

Tangible fixed assets are valued at purchase price. 

The value of tangible fixed assets with limited useful economic 

lives is reduced by value adjustments calculated to write-off the 

value of such assets systematically over their useful economic lives. 

2.13. Taxes 

Income taxes are accounted for on an accrual basis. 

NOTE 3 - LOANS AND ADVANCES TO CREDIT 

INSTITUTIONS 

Loans and advances to credit institutions other than those 

repayable on demand may be analysed according to their 

remaining maturity as follows: 

2010 2009 (see note 1) 

EUR 

EUR 

Not more than three months 220,013,305 452,876,542 

More than one year but 

not more than five years 74,839,000 0 

294,852,305 452,876,542 

NOTE 4 - LOANS AND ADVANCES TO CUSTOMERS 

Loans and advances to customers may be analysed according to 

their remaining maturity as follows: 

2010 2009 (see note 1) 

EUR 

EUR 


More than three months but 

not more than one year 20,348,886 4,834,358 

More than one year but not 

more than five years 692,388 339,125 

More than five years 6,548,480 1,388,320 

461,305,540 97,213,916 

14

NOTE 5 - TRANSFERABLE SECURITIES 

Transferable securities shown under the various items "Debt 

securities and other fixed-income securities", "Shares and other 

variable-yield securities" and "Shares in affiliated undertakings" 

may be broken down as follows into listed and unlisted 

securities: 

Listed Unlisted Total 

2010 2010 2010 

EUR EUR EUR 

Debt securities and 

other fixed-income 

securities 1,435,541,936 395,590 1,435,937,526 

Shares and other 

variable-yield 

securities 1,290,716,913 15,472 1,290,732,385 

2,726,258,849 411,062 2,726,669,911 

Listed Unlisted Total 

2009 2009 2009 

(see note 1) (see note 1) (see note 1) 

EUR EUR EUR 

Debt securities and 


securities 1,225,418,247 366,925 1,225,785,172 


variable-yield 

securities 1,116,368,042 15,471 1,116,383,513 

2,341,786,289 382,396 2,342,168,685 

Items under this category represent the Bank's proprietary 

investment portfolio of EUR 1,072,595,226 (2009 (see note 1): 

EUR 1,173,490,372) and portfolio of equities, bonds and 

investment funds for EUR 1,654,074,685 (2009 (see note 1): 

EUR 1,168,678,313) acquired as underlying for the Credit Link 

Notes and Total Return Swaps issued by the Bank, as per notes 

14 and 16. 

NOTE 6 - DEBT SECURITIES AND OTHER 

FIXED-INCOME SECURITIES 

Transferable securities shown under "Debt securities and other 

fixed-income securities" may be analysed as follows: 

2010 2009 (see note 1) 

EUR 

EUR 

Financial fixed assets 928,112,294 669,064,298 

Current assets 507,825,232 556,720,874 

1,435,937,526 1,225,785,172 

As at December 31, 2010, transferable securities shown 

under "Debt securities and other fixed-income securities" 

due within one year of the balance sheet date amount to 

EUR 507,825,232 (2009 (see note 1): EUR 556,720,874). 

Transferable securities are included under financial fixed assets 

where the Bank intends to use them on a continuing basis in its 

activities. It is the Bank’s policy to reclassify financial fixed assets 

due within a year to current assets. 

NOTE 7 - OTHER ASSETS 

2010 2009 (see note 1) 

EUR 

EUR 

Premiums on options 

purchased (see note 15) 20,215,159 16,574,484 

Short term receivables 0 53,518 

VAT recoverable 0 1,658,508 

Other 1,984,653 1,125,624 

22,199,812 19,412,134 

For options contracted on behalf of customers, the Bank enters 

into reverse hedging transactions. 

As of December 31, 2010 (and 2009), the premiums on options 

purchased include amounts for options designated as a hedge 

for securities in the Bank own portfolio. 

15




NOTE 8 - MOVEMENTS IN FIXED ASSETS 

The following movements have occurred in the Bank's fixed assets in the course of the financial year: 

MOVEMENTS IN FIXED ASSETS 

Gross value Gross value Value Net value 

at the at the end adjustments at the end 

beginning of Foreign of the at the end of of the 

the financial Reclassi- exchange financial the financial financial 

year Additions Disposals fications* translation year year year 

EUR EUR EUR EUR EUR EUR EUR EUR 

1. Debt securities and 


securities 680,488,194 487,264,881 (145,743,785) (85,862,780) 11,203,201 947,349,711 19,237,417 928,112,294 

2. Intangible assets 1,681,367 211,859 0 0 0 1,893,226 1,565,140 328,086 

3. Tangible assets 4,178,003 126,116 0 0 0 4,304,119 3,232,976 1,071,143 

of which: 

a) Land and buildings 2,221,258 0 0 0 0 2,221,258 1,870,106 351,152 

b) Plant and machinery 1,300,582 125,331 0 0 0 1,425,913 916,602 509,311 

c) Other fixtures and 

fittings, tools and 

equipment 656,163 785 0 0 0 656,948 446,268 210,680 

* It is the Bank’s policy to reclassify financial fixed assets due within a year to current assets. 

NOTE 9 - INTANGIBLE AND TANGIBLE ASSETS 

Intangible assets are made up of software used by the Bank 

for its own activities for a net amount of EUR 328,086 

(2009 (see note 1): EUR 390,651). 

Tangible assets include land and buildings used by the Bank for 

its own activities for a net amount of EUR 351,151 

(2009 (see note 1): EUR 425,186). 

NOTE 10 - PREPAYMENTS AND ACCRUED INCOME 

As of December 31, 2010 total balance of Prepayments and 

accrued income of EUR 24,077,225 (2009 (see note 1): EUR 

20,663,813) includes EUR 23,151,001 (2009 (see note 1): EUR 

17,203,941) of accrued interest and EUR 926,224 

(2009 (see note 1): EUR 3,459,872) of prepayments. 

NOTE 11 - FOREIGN CURRENCY ASSETS 

As at December 31, 2010, the aggregate amount of the Bank's 

assets denominated in currencies other than Euro amounts to 

EUR 2,851,899,418 (2009 (see note 1): EUR 2,917,975,582). 

NOTE 12 - AMOUNTS OWED TO CREDIT 

INSTITUTIONS WITH AGREED MATURITY DATES 

OR PERIODS OF NOTICE 

Amounts owed to credit institutions with agreed maturity dates 

or periods of notice may be analysed according to their remaining 

maturity as follows: 

2010 2009 (see note 1) 

EUR 

EUR 



not more than one year 50,188 964,667 

433,726,831 368,323,274 

16

NOTE 13 - AMOUNTS OWED TO CUSTOMERS 

WITH AGREED MATURITY DATES OR PERIODS OF 

NOTICE 

Amounts owed to customers may be analysed according to 

their remaining maturity as follows: 

2010 2009 (see note 1) 

EUR 

EUR 



not more than one year 1,603,800 2,311,553 

766,443,519 447,606,374 

NOTE 14 - DEBTS EVIDENCED BY CERTIFICATES 

Debts evidenced by certificates other than debt securities in 

issue may be analysed according to their remaining maturity as 

follows: 

2010 2009 (see note 1) 

EUR 

EUR 

Not more than three months 49,053,257 0 


not more than one year 44,302,993 0 

More than one year but 

not more than five years 1,448,707,376 1,010,895,971 

More than five years 998,507 105,449,500 

1,543,062,133 1,116,345,471 

The items under this category represent Credit Linked Notes 

and Total Return Swaps (CLN and TRS) issued by the Bank. 

These instruments are linked to underlying assets acquired by 

the Bank, as disclosed in note 5. 

NOTE 15 - OTHER LIABILITIES 

2010 2009 (see note 1) 

EUR 

EUR 

Premiums on options 

written (see note 7) 15,288,266 11,308,386 

Short-term payables 918,704 2,321,383 

Preferential creditors 897,837 1,323,865 

Other 2,549,774 21,401 

19,654,581 14,975,035 

For options contracted on behalf of customers, the Bank enters 

into reverse hedging transactions. 

NOTE 16 - ACCRUALS AND DEFERRED INCOME 

As of December 31, 2010 total balance of accruals and deferred 

income of EUR 130,536,942 (2009 (see note 1): EUR 

60,429,925) includes the neutralisation of foreign exchange 

result related to CLN and TRS amounting to EUR 114,740,870 

(2009 (see note 1): EUR 52,332,842). 

NOTE 17 - FEES PAYABLE TO THE AUDIT FIRM 

Fees charged to the Bank by the audit firm and its respective 

entire network are analysed as follows: 

2010 2009 (see note 1) 

EUR EUR 

Annual Audit fees 136,700 120,000 

Other assurance services 15,000 31,700 

Tax advisory fees 20,500 20,500 

Other fees 400 400 

172,600 172,600 

Fees are shown net of VAT on an accrual basis for the financial year. 

NOTE 18 - PROVISIONS 

As at December 31, 2010, the Bank has provided EUR 461,983 

(2009 (see note 1): EUR 260,820) for revenue taxes in the profit 

and loss account. 

As at December 31, 2010, other provisions mainly consist of the 

AGDL provision for an amount of EUR 1,335,922 (2009 (see 

note 1): EUR 669,023). See note 31. 

NOTE 19 - SUBORDINATED LIABILITIES 

The following represents the total amount of subordinated 

liabilities: 

Amount Rate of Maturity Amount in 

of borrowing Currency Interest Date EUR 

60,000,000 USD 8.375 % 06/04/2011 44,903,400 

For the purpose of calculating the Bank's capital adequacy ratio, 

the subordinated liabilities may be assimilated to own funds to 

a certain extent. 

17




The Bank has incurred charges of EUR 3,764,201 (2009 (see 

note 1): EUR 3,568,229) during the financial year with respect 

to its subordinated liabilities. 

NOTE 20 - SUBSCRIBED CAPITAL 

The subscribed capital has not changed during the year 2010. 

The share capital of EUR 8,800,000 is divided into 14,100 shares 

without nominal value. 

NOTE 21 - MOVEMENTS IN RESERVES 

The following movements have occurred in the Bank’s reserves 

in the course of the financial year: 

Legal Other 

Capital reserve reserves Profit 

Balance 

contributed 

as per note 1 8,800,000 880,000 85,236,449 0 

Profit for the 

year ended 

December 31, 

2009 14,589,370 

Appropriation 

of profit 

- Transfer to 

reserves 14,589,370 (14,589,370) 

Profit for the 

financial year 19,437,722 

Balance at 

December 31, 

2010 8,800,000 880,000 99,825,819 19,437,722 

Under Luxembourg Law, the Bank must appropriate to a legal 

reserve an amount equivalent to at least 5% of the annual net 

profit until such reserve is equal to 10% of the share capital. 

This appropriation is made in the following year. Distribution 

of the legal reserve is restricted. The legal reserve is equal to 

10% of the share capital. 

The Annual General Meeting of Shareholders of May 11, 2010 

resolved to allocate to other reserves the profit for the year 

2009 of EUR 14.6 million split into a reserve for tax credit 

of EUR 4.25 million and free reserves of EUR 10.35 million. 

As at December 31, 2010, a total of EUR 25,212,142 (2009: 

EUR 20,962,142) is allocated to reserves for tax credit. 

In order to take advantage of the provisions of paragraph 8a 

of the Net Worth Tax Law, the Bank may elect to get a tax 

credit for all or part of the net worth tax due for that year. 

This tax credit is, however, limited to the amount of the 

corporate income tax due for the same year before any tax 

credit. In order to benefit from this provision, the Bank must 

commit itself to post to a special reserve before the end of 

the subsequent year an amount equal to five times the net 

worth tax to be credited, which has to be maintained for a 

period of five years. 

NOTE 22 - FOREIGN CURRENCY LIABILITIES 

As at December 31, 2010, the aggregate amounts of liabilities 

denominated in currencies other than Euro amounts to EUR 

2,774,740,109 (2009 (see note 1): EUR 2,894,490,469). 

NOTE 23 - CONTINGENT LIABILITIES 

The Bank's contingent liabilities may be analysed as follows: 

2010 2009 (see note 1) 

EUR 

EUR 

Guarantees and other 

direct substitutes for credit 24,972,916 31,737,234 

24,972,916 31,737,234 

A significant proportion of the guarantees issued by the Bank and 

the opened documentary credits are secured by assets pledged in 

due form. At year-end, there were no related party balances. 

18

NOTE 24 - COMMITMENTS 

The Bank's commitments may be analysed as follows: 

2010 2009 (see note 1) 

EUR 

EUR 

Forward purchases of assets 131,807,711 509,270,099 

Forward sales of assets 131,498,118 510,738,213 

Amounts not paid up on 

securities, participating 

interests and shares in 

affiliated undertakings 38,751,017 29,133,059 

Settlement of spot transactions 2,655,079 165,639 

304,711,925 1,049,307,010 

The Bank has entered into certain other commitments which 

are not disclosed either in the balance sheet or in the offbalance 

sheet items but which are not significant for the 

purposes of assessing the financial situation of the Bank. Such 

other commitments are: 

- Commitments in respect of fixed rental payments contracted 

on office building; 

- Financial liabilities arising out of membership of the deposit 

guarantee scheme (see note 31). 

NOTE 25 - OPERATIONS LINKED TO CURRENCY 

EXCHANGE RATES, INTEREST RATES AND OTHER 

MARKET RATES 

The following types of forward transactions are outstanding as 

at December 31, 2010: 

Operations linked to currency exchange rates 

- Forward exchange transactions (swaps, outrights); 

- Options; 

- Precious metal futures. 

Operations linked to interest rates 

- Interest rate swaps. 

Operations linked interest rates are made to a large extent for 

hedging purposes. 

Operations linked to other market rates 

- Futures; 

- Options; 

- Other instruments. 

Operations linked to other market rates are made to a large 

extent for hedging purposes. 

NOTE 26 - INVESTMENT MANAGEMENT SERVICES 

AND UNDERWRITING FUNCTIONS 

Management and agency services consist of: 

- Custody and administration of transferable securities; 

- Fiduciary operations; 

- Agency functions. 

NOTE 27 - OTHER OPERATING INCOME 

Other operating income is made up as follows: 

2010 2009 (see note 1) 

EUR 

EUR 

Release of provisions 

from prior years 0 2,472,292 

Income related to prior years 965,615 566,255 

Reimbursement from AGDL 139,788 326,692 

Account closing fees 120,942 123,267 

Reimbursement of taxes paid 1,702,810 0 

Other 128,673 299,651 

3,057,828 3,788,157 

Operations linked to currency exchange rates are made to a 

large extent for hedging purposes. 

19




NOTE 28 - OTHER OPERATING CHARGES 

Other operating charges are made up as follows: 

2010 2009 (see note 1) 

EUR 

EUR 

Charges related to 

prior years 449,659 1,577,786 

Charges related to 

commercial activities 72,166 1,104,557 

AGDL provision 664,392 508,287 

Other 13,424 11,881 

1,199,641 3,202,511 

NOTE 29 - STAFF NUMBERS 

The average number of persons employed during the financial 

year by the Bank is as follows: 

2010 2009 (see note 1) 

Number Number 

Senior management 7 9 

Middle management 12 13 

Employees 105 103 

124 125 

NOTE 30 - MANAGEMENT REMUNERATION 

The Bank has granted emoluments in respect of the financial 

year to the members of the Senior Management of the Bank by 

reason of their responsibilities, and has entered into 

commitments in respect of retirement pensions for present 

members of these bodies, as follows: 

RetirementRetirement 

EmolumentsEmoluments pensions pensions 

2010 2009 (see note 1) 2010 2009 (see note 1) 

EUR EUR EUR EUR 

Senior 

Management 2,954,086 2,956,218 107,344 119,723 

The Bank has granted advances and credits to the members of 

its Senior Management as follows: 

Advances Advances 

and credits and credits 

2010 2009 (see note 1) 

EUR 

EUR 

Senior management 53,046 26,183 

NOTE 31 - DEPOSIT GUARANTEE SCHEME 

On September 25, 1989, all credit institutions in the 

Luxembourg banking sector became members of the 

non-profit making association “Association pour la 

Garantie des Dépôts, Luxembourg” (“AGDL”). 

In accordance with the Law of April 5, 1993, as amended 

by the Law of June 11, 1997, the sole object of AGDL is 

the establishment of a mutual guarantee scheme covering 

deposits made by customers of member credit institutions 

(“the Guarantee”). The customers covered by the Guarantee 

include all depositors who are physical persons, whatever their 

nationality or country of residence. Also covered by the 

Guarantee are small companies constituted under the Law of 

a Member State of the European Union, whose size is such 

that they would be permitted to draw up abbreviated accounts 

pursuant to Article 35 of the Law of December 19, 2002 on 

commercial companies, as amended. 

In accordance with the Law of December 18, 2008 and 

with respect to each member, the Guarantee is limited to a 

maximum amount per depositor of EUR 100,000 or its foreign 

currency equivalent. No depositor can receive more than this 

sum, regardless of the number of accounts or deposits held 

in the sole or joint name of the depositor with the same 

credit institution. 

20

The Law of July 27, 2000 stipulates that banks must also belong 

to an investment Guarantee scheme. This additional Guarantee 

covers the reimbursement of claims resulting from investment 

transactions up to the amount of EUR 20,000. 

The total amount of the Guarantees which will in no case 

exceed EUR 120,000 per customer (EUR 100,000 deposit 

guarantee and EUR 20,000 investor compensation) represents 

an absolute figure and cannot be increased by any interest, 

charges or any other amount. 

As at December 31, 2010 and 2009, the Bank has set up a 

provision in recognition of its potential liabilities under the 

Guarantees within the limits set out in the Grand-Ducal 

Regulation of December 21, 1991 enacting Article 167 § 1 (5) 

of the income tax Law of December 4, 1967 (see note 18). 

During the year 2010, the additional amount of EUR 664,392 

(2009 (see note 1): EUR 508,287) has been allocated to the 

AGDL provision. 

No advances were paid in 2010 (2009 (see note 1): EUR 

600,815). During the year 2010, the Bank received 

reimbursements from AGDL for an amount of EUR 139,788 

(2009 (see note 1): EUR 326,692), posted in “Other operation 

income” (see note 27). 

As at December 31 the following balances with related parties 

are included on the liabilities side of the balance sheet: 

Affiliated Affiliated 

undertakings undertakings 

2010 2009 * 

EUR 

EUR 

Amounts owed to 

credit institutions 67,677,368 60,704,996 

Accruals and deferred 

income 56 0 

67,677,424 60,704,996 

*Figures disclosed for 2009 are just for information as the group of affiliated 

undertakings is existing since January 2010. 

The Bank has not entered into any material transaction with 

related parties (as defined in International Accounting Standard 

24“Related Party Disclosure”) which were not made on terms 

equivalent to those that prevail in arm’s length transactions 

as of December 31, 2010 and for the year then ended. 

At the request of the Bank, the CSSF has granted a total 

exemption for the exposures towards the credit institutions 

included in the consolidation scope of J.Safra Holding AG for 

the calculation of large exposure limits, in accordance with 

Part XVI, point 24 at Circular 06/213, as amended. 

NOTE 32 - RELATED PARTIES 

As at December 31 the following balances with related parties 

are included on the assets side of the balance sheet: 

Affiliated Affiliated 

undertakings undertakings 

2010 2009 * 

EUR 

EUR 

Loans and advances to 

credit institutions 80,548,231 72,628,561 

Prepayments and accrued 

income 0 3,760 

80,548,231 72,632,321 

*Figures disclosed for 2009 are just for information as the group of affiliated 

undertakings is existing since January 2010. 

21




NOTE 33 - FINANCIAL INSTRUMENT DISCLOSURES 

33.1. Primary non-trading financial instruments 

As at December 31, 2010, the analysis of primary non-trading financial instruments by class and residual maturity is the following: 

> 3 months > 1 year 

≤ 3 months ≤ 1 year ≤ 5 years > 5 years Total 

At carrying amount in EUR EUR EUR EUR EUR EUR 

Financial Assets 

Cash on hand 248,416 0 0 0 248,416 

Balances with the BCL 35,797,071 0 0 0 35,797,071 

Loans and advances 

to credit institutions 455,644,572 0 74,839,000 0 530,483,572 


to customers 433,715,786 20,348,886 692,388 6,548,480 461,305,540 

Listed government 

fixed-income securities 202,813,690 76,426,079 110,718,230 19,434,989 409,392,988 

Listed non government 

fixed-income securities 198,357,596 30,227,866 765,390,610 32,172,876 1,026,148,948 

Not listed non government 

fixed-income securities 0 0 0 395,590 395,590 


variable-yield securities 1,290,732,385 0 0 0 1,290,732,385 

Total 2,617,309,516 127,002,831 951,640,228 58,551,935 3,754,504,510 

Financial Liabilities 

Amounts owed to credit institutions 563,104,354 50,188 0 0 563,154,542 

Amounts owed to customers 1,317,893,863 1,603,800 0 0 1,319,497,663 

Debts evidenced by certificates 49,063,257 44,302,993 1,448,697,376 998,507 1,543,062,133 

Subordinated debt 0 44,903,400 0 0 44,903,400 

Total 1,930,061,474 90,860,381 1,448,697,376 998,507 3,470,617,738 

Off-balance sheet items disclosed as 

contingencies and commitments 

Guarantees and assets pledged 11,720,543 10,699,414 2,552,959 0 24,972,916 

Forward purchases of securities 131,807,711 0 0 0 131,807,711 

Forward sales of securities 131,498,118 0 0 0 131,498,118 

Amounts not paid up on securities 38,751,017 0 0 0 38,751,017 

Settlement of spot securities transactions 2,655,079 0 0 0 2,655,079 

Total 316,432,468 10,699,414 2,552,959 0 329,684,841 

22

As at December 31, 2009 (see note1), the analysis of primary non-trading financial instruments by class and residual maturity was 

the following: 




Financial Assets 

Cash on hand 169,418 0 0 0 169,418 

Balances with the BCL 224,988,718 0 0 0 224,988,718 


to credit institutions 572,470,467 0 0 0 572,470,467 


to customers 90,652,113 4,834,358 339,125 1,388,320 97,213,916 

Listed government 


Listed non government 


Not listed non government 

fixed-income securities 0 0 0 366,924 366,924 


variable-yield securities 1,116,383,513 0 0 0 1,116,383,513 

Total 2,515,342,544 50,876,917 262,032,763 408,758,980 3,237,011,204 

Financial Liabilities 

Amounts owed to credit institutions 485,254,271 964,667 0 0 486,218,938 

Amounts owed to customers 1,401,606,500 2,311,553 0 0 1,403,918,053 

Debts evidenced by certificates 0 0 1,010,895,971 105,449,500 1,116,345,471 

Subordinated debt 0 0 41,649,600 0 41,649,600 

Total 1,886,860,771 3,276,220 1,052,545,571 105,449,500 3,048,132,062 

Off-balance sheet items disclosed as 

contingencies and commitments 

Guarantees and assets pledged 7,838,331 17,301,012 4,100,268 2,497,623 31,737,234 

Forward purchases of securities 509,270,099 0 0 0 509,270,099 

Forward sales of securities 510,738,213 0 0 0 510,738,213 

Amounts not paid up on securities 29,133,059 0 0 0 29,133,059 

Settlement of spot securities transactions 165,639 0 0 0 165,639 

Total 1,057,145,341 17,301,012 4,100,268 2,497,623 1,081,044,244 

23




33.2. Derivative non-trading financial instruments 

As at December 31, 2010, the analysis of derivative non-trading financial instruments by class and residual maturity is the following: 




FINANCIAL ASSETS 

Instrument class 

Foreign exchange transactions 

Forwards 2,680,256,548 485,299,724 0 0 3,165,556,272 

Swaps 2,477,283,349 34,983,089 0 0 2,512,266,438 

Options 8,515,667 97,355,043 4,050,661 0 109,921,371 

Futures 1,222,075,609 0 0 0 1,222,075,609 

Securities transactions 

Options 385,258,973 0 0 0 385,258,973 

Interest rate transactions 

Interest rate swaps 0 26,942,075 26,942,075 13,470,681 67,354,831 

Total 6,773,390,146 644,579,931 30,992,736 13,470,681 7,462,433,494 

FINANCIAL LIABILITIES 



Forwards 2,441,050,666 524,104,598 0 0 2,965,155,264 

Swaps 2,675,202,691 39,421,856 0 0 2,714,624,547 

Options 8,585,427 19,892,819 27,013,059 0 55,491,305 

Futures 707,628,508 0 0 0 707,628,508 



Total 5,832,467,292 647,825,799 111,528,850 60,896,572 6,652,718,513 

These amounts include derivative non-trading financial instruments with a trade date before December 31, 2010 and a value date 

after December 31, 2010. 

24

As at December 31, 2009 (see note 1), the analysis of derivative non-trading financial instruments by class and residual maturity 

was the following: 







Forwards 68,998,491 9,576,172 249,402 0 78,824,065 

Swaps 324,241,530 44,773,551 0 0 369,015,081 

Options 16,395,611 3,485,088 4,907,711 0 24,788,410 

Futures 387,792 3,906,373 0 4,294,165 


Options 353,186,172 0 0 0 353,186,172 



Total 762,821,804 67,628,405 31,227,862 45,376,927 907,054,998 

FINANCIAL LIABILITIES 



Forwards 63,612,196 9,349,551 277,664 0 73,239,411 

Swaps 342,908,293 40,480,467 0 0 383,388,760 

Options 16,049,286 4,705,094 18,522,532 0 39,276,912 

Futures 0 0 5,344,203 0 5,344,203 



Total 422,569,775 63,940,915 90,130,794 11,106,483 587,747,967 

These amounts include derivative non-trading financial instruments with a trade date before December 31, 2009 and a value date 

after December 31, 2009. 

25




33.3. Information on credit risk on primary non-trading financial instruments 

The Bank is exposed to the following credit risk on primary non-trading financial instruments: 


By instrument class and geographic location 

Carrying amount Carrying amount 

2010 2009 (see note 1) 

in EUR 

in EUR 

Cash, balances with the BCL 

EU member countries 35,797,071 225,158,136 

35,797,071 225,158,136 

Loans and advances to credit institutions 


Western Europe, non-EU member countries 24,765,718 24,836,756 

Eastern Europe, non-EU member countries 681,602 632,377 

Asia 427,605 117,441 

Oceania 1,137,553 37,046 

North America 11,220,614 224,128,276 

Central and South America 68,702,201 138,806,599 

530,483,572 572,470,467 

Loans and advances to customers 


Western Europe, non-EU member countries 679,552 254,175 

Middle East 4,612,400 15,188 

North America 266,383,798 4,821,828 

Asia 7,587,101 7,969 

Oceania 849,410 680,971 

North Africa 36,441 60,363 


461,305,540 97,213,916 

Listed OECD government fixed-income securities 


North America 0 27,766,400 

75,304,582 163,491,423 

Listed non OECD government fixed-income securities 

Asia 153,466,759 68,820,525 


379,799,065 291,999,640 

Listed OECD non-government fixed-income securities 

North America 167,751,928 302,563,974 

Western Europe 19,630,130 18,525,999 

Oceania 62,003,210 57,755,056 


404,482,592 507,650,145 

(continued) 

26

Carrying amount Carrying amount 

2010 2009 (see note 1) 

in EUR 

in EUR 

Listed non OECD non-government fixed-income securities 

Eastern Europe 3,689,563 3,422,209 


575,955,697 262,277,040 

Unlisted non OECD non-government fixed-income securities 

Central and South America 395,588 366,925 

395,588 366,925 

Listed shares 

Central and South America 1,265,707,978 1,116,368,042 

Western Europe 4,003,408 0 

EU member countries 21,005,526 0 

1,290,716,912 1,116,368,042 

Unlisted shares 

EU member countries 15,472 15,471 

15,472 15,471 

Total 3,754,256,091 3,237,011,205 

33.4. Information on credit risk on derivative non-trading financial instruments 

As at December 31, 2010, the Bank is exposed to the following credit risk on derivatives non-trading financial instruments: 

Notional 

Risk-equivalent 

Amount 

Amount 

Use of initial risk method EUR EUR 

COUNTERPARTY SOLVENCY AND GEOGRAPHIC LOCATION 


Zone A credit institutions and financial institutions 

EU member countries 4,568,497,369 97,680,127 

North America 230,218,034 4,604,361 


Oceania 46,618,802 932,376 

Zone B credit institutions and financial institutions 


Private customers 


Middle east 2,491,370 49,827 

EU member countries 250,739 5,015 

Central and South America 5,803,479,391 122,281,484 

(continued) 

27




Notional 


Amount 

Amount 









Total 12,346,133,837 259,826,164 

As at December 31, 2009, the Bank was exposed to the following credit risk on derivatives non-trading financial instruments: 

Notional 


Amount 

Amount 


COUNTERPARTY SOLVENCY AND GEOGRAPHIC LOCATION 




North America 1,548,110 30,962 

Western Europe, non-EU member countries 46,408,804 955,941 


Central and South America 5,366,280 128,004 

Private customers 


EU member countries 1,853,409 37,068 









Total 1,625,418,717 30,023,252 

28

33.5. Fair value of derivative non-trading financial instruments 

As at December 31, 2010, the fair value of non-trading financial derivatives is as follows: 

2010 2009 (see note 1) 

EUR 

EUR 


Forward exchange transactions 

Positive results 82,082,647 2,347,869 

Negative results (75,423,784) (2,169,788) 

Net result on forward exchange transactions 6,658,863 178,081 

Swaps 

Positive results 58,391,458 2,067,972 


Net result on swaps (3,895,229) 936,659 

Options 

Positive results 1,861,140 374,126 


Net result on options (8,202,985) (7,482,831) 

The total foreign exchange transactions (5,439,351) (6,368,091) 


Interest rate swaps 

Positive results 1,319,229 714,632 


Net result on interest rate swaps (2,053,789) (831,447) 

Futures 

Positive results 24,721,998 0 

Negative results (11,868,612) 0 

Net result on futures 12,853,386 0 

The total interest rate transactions 14,907,175 (831,447) 


Options 

Positive results 1,849,648 0 


Net result on options (6,299,207) (1,198,112) 

The total securities transactions (6,299,207) (1,198,112) 

29

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