Annual Report 2011 - Hong Kong Monetary Authority

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he was first elected. Sadly that jump-start has had only a limited impact, and in combination with soaring military spending America’s national debt has doubled in five years. Meanwhile the Fed, under Bernanke’s monetarist guidance, has embarked on aggressive quantitative easing by buying up Treasury bonds mortgage-backed securities. The Fed’s balance sheet has literally exploded and now exceeds $2.9 trillion. The Fed chairman’s nickname “Helicopter Ben” was well earned. Moreover his actions are logically modelled on his predecessor, Alan Greenspan, whose unduly low interest rates contributed to the subprime implosion. In Europe the Bank of England is resorting to a similar strategy of quantitative easing. The European Central Bank was at first reluctant to follow suit and allow its sacrosanct objective of fighting inflation take a back seat to economic stimulus. However, under the mounting threat of financial collapse among Euroland’s Mediterranean members and a total freeze-up of the interbank market, the ECB decided to try a new tack: it has introduced indirect monetisation by injecting nearly €1.5 trillion into the commercial banks. This has been done in two rounds, in the form of three-year loans with relaxed collateral requirements. The ECB hopes that these cash infusions will instigate a carry trade, with banks borrowing at risk-free, rock-bottom interest rates and lending to governments in southern Europe to secure higher yields. If the gambit works, it will kill two birds with one stone by saving Italy and European banks. Angela Merkel, Euroland’s Joan of Arc Unfortunately, you can lead a horse to water but you can’t make it drink. The challenges that have to be met to overcome the present crisis are many. Governments must spur economic growth by bolstering competitiveness. Those on the brink of bankruptcy must bring down their debt. There must be enough liquidity in the system to refinance banks and solvent countries. The International <strong>Monetary</strong> Fund has catalogued the necessary measures: it continues to recommend budget discipline buttressed by ultra-accommodative monetary policy. Banks must recapitalise to reverse their financial leverage. In Europe the squabbling between banks and governments has to end. Medium term, sweeping reforms are needed in goods and labour markets to boost the competitiveness of the laggard countries. The iconic investor George Soros would like to see more incisive action still. He criticises the ECB for saving tottering banks while letting governments fail. His plan would allow Italy and Spain to borrow at 1% against treasury bonds that would be held by banks and the ECB but backed by the euro area’s publicly operated bailout funds (the EFSF and the ESM). This would restore confidence quickly and provide scope for an orderly default by Greece and even Portugal, without creating a disastrous domino effect. Soros also recommends setting up a Treasury for the euro zone as a whole that would pool the currency union’s public debt. Meanwhile Europe’s modern-day Joan of Arc, Angela Merkel, is likely to have her way with an agreement on fiscal discipline modelled on the Maastricht treaty but with stricter requirements and providing for fines for offenders meted out by the European Court of Justice. This would lay the groundwork for fiscal union, a prerequisite to putting the euro area back on its feet. A permanent €500 billion bailout fund would also be established. Yet implementing these reforms will be trickier than the German chancellor believes. Many EU members have run roughshod over the Maastricht criteria, and no one has stopped them. Moreover, governments are not the only ones to blame for Euroland being on the rocks: adventurous dealing by banks using excessive financial leverage played a major role as well. Thus, it is ironic that reluctant participants should have to suffer: when governments are swimming in red ink, it is not a good time to impose additional constraints on them. Tighter control of state budgets is a laudable objective, but fiscal austerity alone could never provide the Western countries with a future. Those that have fallen behind must rebuild their competitiveness. The welfare state is a myth from a bygone era. Of course we should beware the easy money promised by the world of finance, which merely amounts to monetary hocus-pocus. But it is also 13
dangerous to bet on bureaucracy as a way to revitalise society. The present stalemate has caused the proponents of the market economy to dig in their heels. Reforms are urgently needed, and innovation must become a priority again. Despite everything, what we call “capitalism” is one of mankind’s most shining inventions for ensuring prosperity. This is neither the first nor the last crisis to be confronted, and each new period of turmoil is an opportunity to improve the system. If the present one doesn’t kill us, it will make us stronger. “A day will come when you France, you Russia, you Italy, you England, you Germany, you all, nations of the continent, without losing your distinct qualities and your glorious individuality, will be melded tightly within a higher unity...” Michel Lagier – Victor Hugo 14 <strong>2011</strong> ANNUAL REPORT - BANQUE PRIVÉE EDMOND DE ROTHSCHILD SA
Page 1 and 2: Annual Report 2011
Page 4 and 5: Contents 6 20 Banque Privée Edmond
Page 7 and 8: Banque Privée Edmond de Rothschild
Page 9 and 10: 1 4 1 Odéon, Théâtre de l’Euro
Page 11 and 12: within our group, which have develo
Page 13: Is this the end of the market econo
Page 17 and 18: SENIOR MANAGEMENT Head Office Execu
Page 19: BRANCHES In Switzerland Fribourg Se
Page 22 and 23: Social Entrepreneurship Economic te
Page 24 and 25: Corporate governance Introduction O
Page 26 and 27: 1.1.2. / 1.1.3. Group legal structu
Page 28 and 29: 2.6. Transferability restrictions a
Page 30 and 31: 1965-1996 First Vice-President, the
Page 32 and 33: Jean Laurent-Bellue Member, French,
Page 34 and 35: 3.2. Other activities and vested in
Page 36 and 37: 3.5. Powers The Board of Directors
Page 38 and 39: 4. Executive Committee The Executiv
Page 40 and 41: Jean-Pierre Pieren Member, Swiss, 1
Page 42 and 43: Present duties Since 1988 Chief Fin
Page 44 and 45: 5. Remuneration, profi t-sharing an
Page 46 and 47: This scheme was implemented for a f
Page 48 and 49: 7. Take-overs and defensive measure
Page 50 and 51: 9. Information policy Banque Privé
Page 52 and 53: Intercultural Dialogue Too often, p
Page 54 and 55: Key fi gures Banque Privée Edmond
Page 56 and 57: Awards 2011 in Milan and Large Fund
Page 58 and 59: esources of institutional clients i
Page 60 and 61: Outlook for 2012 2012 will be marke
Page 62 and 63: Report on other legal requirements
Page 64 and 65:
Abroad Banks Banque Privée Edmond
Page 66 and 67:
Prifund Conseil SA Luxembourg 3) 10
Page 68 and 69:
Dividends are eliminated through re
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Personnel welfare liabilities Contr
Page 72 and 73:
Consolidated balance sheet at 31 De
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Consolidated cash fl ow statement a
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- The Risk Manager sees to it that
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2011 2010 Change (in CHF ‘000) (i
Page 80 and 81:
2011 2010 Change (in CHF ‘000) (i
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Forex adjustments Redesignations In
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Situation at end-2010 Uses and rele
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2011 2010 (in CHF ‘000) (in CHF
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2011 2010 Change (in CHF ‘000) (i
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22 Breakdown of consolidated assets
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2011 2010 Change (in CHF ‘000) (i
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(Note 26 cont’d) 2011 2010 Positi
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2011 2010 Change (in CHF ‘000) (i
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2011 2010 42 Earnings per share Gro
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Health and Research For over a cent
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Key fi gures of Banque Privée Edmo
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Roundup of results The Bank’s net
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Elections as per our Articles of As
Page 108 and 109:
Breakdown of revenues (% of total)
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Report on other legal requirements
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Balance sheet at 31 December 2011 (
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Notes to the fi nancial statements
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2011 2010 Change (in CHF ‘000) (i
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2011 2010 Change (in CHF ‘000) (i
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Par value Number of shares 2011 201
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Loans granted to the Bank’s gover
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(Note 15 cont’d) 2011 2010 Employ
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2011 2010 Change (in CHF ‘000) (i
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Edmond de Rothschild Conseil et Cou
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Other Edmond de Rothschild Group co
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Other Edmond de Rothschild Group co
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Annual Report 2011 - Hong Kong Monetary Authority

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