Annual Report 2011 - Hong Kong Monetary Authority

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- The Risk Manager sees to it that the risk management guidelines and methods are incorporated in decisionmaking and operational processes. He monitors risk exposure and compliance with the relevant limits, and reports on risk status to the Bank/Group. Each Group entity has a Risk Control and Management section that reports regularly to the Risk Manager of the Bank. Interest rate and liquidity risks The liquidity risk is the risk that the Group might not be able to meet its present and future cash flow and collateral requirements, whether expected or unexpected, without harming its daily operations or financial situation. The interest rate risk resides in the vulnerability of the Group’s net worth or net interest margin to an adverse movement in market interest rates. It is not the Bank’s or the Group’s objective to take advantage of our ability to change due dates or to expose ourselves to the liquidity risk. We take a prudent approach to cash management by choosing short maturities and firstclass counterparties. Our emphasis is on safeguarding our commitments to clients, in normal and stress situations alike. We moreover seek to match resources to their use both short and long term. The risks attaching to liquidity and to interest rate positions/ maturities are gauged by using the most up-to-date balance sheet management techniques and by tracking these items with dedicated software. An Asset and Liability Management Committee drafts and oversees the implementation of rules on managing liquidity, interest rate and forex risks. It is also responsible for optimising cash management and ensuring structural control of the balance sheet. Counterparty risk This is the risk that a client or counterparty bank might not be able to honour an obligation towards the Group. Counterparty banks The counterparty banks that the Group deals with are selected rigorously and kept under close scrutiny. Our exposure to them is monitored continuously by a team of controllers, and the limits that we have granted to each are updated periodically or in real time if so required by a deteriorating situation. To minimise the counterparty risk attaching to correspondent banks, we give preference to reverse repo agreements and to depositing cash directly with central banks. All the Group entities use the limits system and monitor the risk of counterparty concentration. Clients The credit facilities that we grant to clients are mainly shortterm advances secured by their investments and, less frequently, loans in connection with their business activities. Applications for these facilities are subject to stringent analysis, and the pledged securities are assigned a collateral ratio according to their liquidity, valuation, credit rating and diversification in terms of asset class and geographical spread. Daily monitoring of the client credit risk is handled by a special team that also administers the loans. Market risk This lies in the vulnerability of the Group’s financial situation to adverse swings in market prices and especially in the underlying value and implied volatility of currencies, equities, precious metals and commodities. Securities dealing on a propriety basis forms a very small part of the Group’s business. In currencies and precious metals we chiefly operate on behalf of clients and build only small nostro positions. The limits granted to traders are low, and their use of these is monitored constantly with software by separate risk management and internal control services. Operational risk This is the risk of loss that the Group would suffer owing to the inadequacy or failure of internal procedures, staff, IT systems or external occurrences. The Group entities have adopted a policy aimed at monitoring and mitigating the following operational risks inherent in wealth management: - internal and external fraud - negligence regarding confidentiality and/or banking secrecy protection requirements FINANCIAL REPORT CONSOLIDATED ACCOUNTS 75
- flawed practices in managing client assets and collective investment schemes - business disruptions resulting from system failures and other extraordinary causes. The Risk Control and Management Dept has a section focused on operational risks that suggests ways to improve our risk management and internal control facilities. Its responsibilities include: - devising the methodology for managing operational risks (based primarily on the Basel II provisions), submitting this methodology to the Risk Committee for approval and overseeing its implementation - recording operational incidents, analysing them and evaluating measures designed to prevent their recurrence. This section collaborates with another that is in charge of gauging the relevance and effectiveness of the internal control system in force. It also uses specially designed IT tools deployed throughout the Group. It reports to the Executive Committee periodically or as required by the circumstances on the status of operational risks and on incidents. A business continuity and organisational plan has been drawn up to deal with possible crisis situations that the Bank has identified and that could totally or partially disrupt our operational processes. Human and technical resources including an entire infrastructure have been deployed that would enable us to provide essential services at reduced capacity and return to normal. Given our Bank’s objectives in terms of business continuity following a disaster or major incident, this plan will be further developed in 2012. Outsourcing Our Group does not outsource services within the meaning of FINMA circular 2008/7. 76 <strong>2011</strong> ANNUAL REPORT - BANQUE PRIVÉE EDMOND DE ROTHSCHILD SA
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Annual Report 2011
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Contents 6 20 Banque Privée Edmond
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Banque Privée Edmond de Rothschild
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1 4 1 Odéon, Théâtre de l’Euro
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within our group, which have develo
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Is this the end of the market econo
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dangerous to bet on bureaucracy as
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SENIOR MANAGEMENT Head Office Execu
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BRANCHES In Switzerland Fribourg Se
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Social Entrepreneurship Economic te
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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
Page 70 and 71: Personnel welfare liabilities Contr
Page 72 and 73: Consolidated balance sheet at 31 De
Page 74 and 75: Consolidated cash fl ow statement a
Page 78 and 79: 2011 2010 Change (in CHF ‘000) (i
Page 82 and 83: Forex adjustments Redesignations In
Page 84 and 85: Situation at end-2010 Uses and rele
Page 86 and 87: 2011 2010 (in CHF ‘000) (in CHF
Page 90 and 91: 22 Breakdown of consolidated assets
Page 94 and 95: (Note 26 cont’d) 2011 2010 Positi
Page 98 and 99: 2011 2010 42 Earnings per share Gro
Page 100 and 101: Health and Research For over a cent
Page 102 and 103: Key fi gures of Banque Privée Edmo
Page 104 and 105: Roundup of results The Bank’s net
Page 106 and 107: Elections as per our Articles of As
Page 108 and 109: Breakdown of revenues (% of total)
Page 110 and 111: Report on other legal requirements
Page 112 and 113: Balance sheet at 31 December 2011 (
Page 114 and 115: Notes to the fi nancial statements
Page 120 and 121: Par value Number of shares 2011 201
Page 122 and 123: Loans granted to the Bank’s gover
Page 124 and 125: (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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