2005 Annual Report / CrÃ©dit Agricole (Suisse) SA

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26 – 2005 Annual Report / Crédit Agricole (Suisse) SANotes to the Consolidated Financial Statements1. Comments on the Group’soperations and workforceCrédit Agricole (Suisse) SA (hereinafter “the Group”) isactive in Private Banking, Commercial Banking andTransactional Commodity Finance, as well as spot andforward trading in money-market instruments, currenciesand precious metals, both as an intermediary and on aproprietary basis.In 2005, the Group increased its shareholders’ equity byCHF 461,883,000, including CHF 225,458,000 of sharecapital, following the merger by absorption of the CréditLyonnais (Suisse) SA Group. This operation was completedon 19 March, with retroactive effect from 1 January 2005.On this same date, Crédit Agricole Indosuez (Suisse) SAwas renamed Crédit Agricole (Suisse) SA.Through the acquisition of Crédit Lyonnais (Suisse) SA,the Group strengthened its international presence,notably with a branch in Singapore and a subsidiary inthe Bahamas. Its position in Switzerland was also reinforcedby a branch in Basel.The Group has three business lines, which give riseprimarily to counterparty risk, market risk, operationalrisk, legal risk and reputation risk.Counterparty riskCounterparty risk, or credit risk, represents the loss borneby the Group in the event of default by a counterparty.Loans are granted according to a system of authoritydelegation and are subject to a rating system.A credit committee examines loan applications, grantingauthorisations on the basis of the aforementioned delegationsand policy. This policy encompasses the commitmentsof the Group’s customers and correspondents that resultfrom lending activities, issuance of guarantees, and tradingin currencies, derivatives and securities. Risks areregularly monitored by the Credit and Risk divisionaccording to stringent procedures. Management and theBoard of Directors are kept informed on a regular basis.At 31 December 2005, the Group had a workforce of1 119 (on a full-time equivalent basis), compared with732 at 31 December 2004.Risk managementGeneral risk policyThe Board of Directors establishes the risk policy on thebasis of statutory requirements and head-office directives.Responsibility for implementing the policy lies withManagement.
2005 Annual Report / Crédit Agricole (Suisse) SA – 27Market riskMarket risk measures the potential loss on the Group’sportfolio caused by fluctuations in exchange rates,interest rates and the prices of securities.Managing market risk involves identifying, measuring andmonitoring open positions. The trading portfolio is valuedand compliance with assigned limits is monitored on adaily basis. The main risks faced by the Group are :• Foreign exchange riskForeign exchange risk relates to changes in the value ofpositions denominated in foreign currencies as a resultof fluctuations in the exchange rates of the said currenciesagainst the Swiss franc.Positions in foreign currencies are adjusted as soon asthe transaction is initiated. They are revalued severaltimes a day at regular intervals. In addition, limits areset for each currency in order to limit the risk.• Interest rate riskInterest rate risk measures the loss of value on positions,other than those in the trading portfolio, caused by interestrate movements. It mainly encompasses the capital loansand acceptances business (net outstanding loans toclients and banks).been created to cater for the collection and analysis ofany incidents which may occur. This new database willalso enable the Group to prepare for implementation ofthe Basel Committee’s recommendations relating to thehedging of operational risk by equity capital.Compliance and legal riskCompliance and legal risk relates to the loss, whetherfinancial or in terms of reputation, that could result fromfailing to comply with regulations or with due diligenceduties specific to financial intermediaries.The Group has a compliance and legal departmentwhose role is to monitor compliance with regulations,notably in relation to the prevention of money laundering,the financing of terrorism and fraud. This departmentalso ensures that in-house directives are consistentwith new legislation and regulations.Outsourcing of activitiesThe Group does not outsource any of its activities asdefined by circular 99/2 of the Swiss Federal BankingCommission (Commission Fédérale des Banques).The Group assesses interest rate risk using asset-liabilitymanagement techniques in order to evaluate maturitystructures and the impact of possible interest rate movementsaffecting on- and off-balance sheet loans andcommitments.Operational riskOperational risk is defined as the risk resulting from inadequaciesin the design, procurement or implementationof procedures for recording data relating to Groupoperations in information systems in general, and inaccounting systems in particular.This risk is limited through the use of highly automatedprocesses and an internal control department. TheGroup has an internal control unit that ensures proceduralcompliance and analyses data flows. A database hasConsolidated Financial Statements
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2005 Annual Report / CrÃ©dit Agricole (Suisse) SA

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