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

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62 – 2005 Annual Report / Crédit Agricole (Suisse) SANotes to the Parent Company Financial Statements1. Comments on the Bank’soperations and workforceCrédit Agricole (Suisse) SA (hereinafter “the Bank”)is active 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 Bank increased its shareholders’ equity byCHF 461,883,000, including CHF 225,458,000 of sharecapital, following the merger by absorption of CréditLyonnais (Suisse) SA. This operation was completed on19 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 Bank strengthened its international presence with abranch in Singapore and a subsidiary in the Bahamas.Its position in Switzerland was also reinforced by abranch in Basel.At 31 December 2005, the Bank had a workforce of1103 (on a full-time equivalent basis), compared with700 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.The Bank has three business lines, which give rise primarilyto counterparty risk, market risk, operational risk, legalrisk and reputation risk.Counterparty riskCounterparty risk, or credit risk, represents the lossborne by the Bank 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 Bank’s customers and correspondentsthat result from lending activities, issuance of guarantees,and trading in currencies, derivatives and securities.Risks are regularly monitored by the Credit and Riskdivision according to stringent procedures.Management and the Board of Directors are keptinformed on a regular basis.
2005 Annual Report / Crédit Agricole (Suisse) SA – 63Market riskMarket risk measures the potential loss on the Bank’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 Bank are :• Foreign exchange riskForeign exchange risk relates to changes in the value ofpositions denominated in foreign currencies as a result offluctuations 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).incidents which may occur. This new database will alsoenable the Bank to prepare for implementation of theBasel 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 Bank has a compliance and legal department whoserole is to monitor compliance with regulations, notably inrelation to the prevention of money laundering, thefinancing of terrorism and fraud. This department alsoensures that in-house directives are consistent withnew legislation and regulations.Outsourcing of activitiesThe Bank does not outsource any of its activities asdefined by circular 99/2 of the Swiss Federal BankingCommission (Commission Fédérale des Banques).The Bank assesses interest rate risk using asset-liabilitymanagement techniques in order to evaluate maturitystructures and the impact of possible interest ratemovements affecting on and off-balance sheet loansand commitments.Operational riskOperational risk is defined as the risk resulting frominadequacies in the design, procurement or implementationof procedures for recording data relating to Bankoperations 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. The Bankhas an internal control unit that ensures procedural complianceand analyses data flows. A database has beencreated to cater for the collection and analysis of anyParent Company Financial Statements
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2005 Annual Report / CrÃ©dit Agricole (Suisse) SA

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