Annual Report Euram Bank AG 2014 / 2015

eurambank

Decision

Control

Concretization

Negotiation

Annual Report

Euram Bank AG

2014/ 2015


2014

Initiative

Analysis

Innovation

Models

Vision

Evaluation

07 08 09 10 11 12


2015

Decision

Control

Concretization

Structuring

Realization

Negotiation

Rome

wasn’t built in a day.

01 02 03 04 05 06


Annual Report 2014/2015

European American Investment Bank AG


Annual Report

Euram Bank AG

2014/ 2015


FOREWORD

BY THE CHIEF EXECUTIVE OFFICER

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In our last annual report, we asked if the much discussed restructuring

of the banking sector was finally completed after turbulent

years.

It is not – and that’s just what we anticipated at the time. The

financial industry is still trying to cope with the consequences

of regulatory changes and new settings. More than ever, these

conditions require adequate action, clear decisions, long-term

strategies, and their well-considered implementation into reality.

This takes time. Even more it demands that we use the time wisely

to avoid letting ourselves be dazzled by quick transactions that

would be negligible, if not even counterproductive, to deliberately

planned development.

We have used the time well in the past year and have restructured

our bank with calm and utmost diligence, carefully considering

all aspects, all opportunities and all risks and consequences.

This foresight has enabled us to win over new partners

who share our goals and support us in achieving them: refraining

from high-risk transactions, focussing on our core competences

and further developing the domestic markets of Austria and Germany

and as well as initiating the development of sustainably

profitable new areas of business.

The goal is solid growth – based on professional knowledge and

innovative action, and absolute reliability every step of the way.

Let’s embark on that path together! On behalf of the Management

Board, I would like to thank you for your continued trust and

support.

Manfred Huber

Chief Executive Officer

September 2015


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The entrepreneurial mind lets early

anticipation lead the way to later

knowledge. It takes the first step,

encourages and drives forward

the development of a plan and its

implementation.

Initiative


CORPORATE BODIES

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Supervisory Board

Adolf Walter Höllmer

Chairman

Dr. Erik Max Michael Obermayer

Vice Chairman

Dkfm. Senta Penner

Managing Board

Manfred Huber

Chairman

Manfred Huber

Johannes Langer

Josef Leckel

Johannes Langer

Josef Leckel


Realising future opportunities is

even more important than analysing

past events. Knowledge emerges

through a constant dialogue with

potential clients and partners,

beyond any statistics and numbers.

Analysis


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Vision

It may take some time to translate an

entrepreneur’s vision into an effective

operation and a real marketable value.

But those who set out are still faster

than those who spend their time idly

waiting without perspective.


MANAGEMENT REPORT

1. Business development and economic environment

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Business model

European American Investment Bank Aktiengesellschaft (Euram

Bank) is an Austrian bank specialising in private banking, asset

management and card payment services. Our clients are mainly

international high net worth individuals and entrepreneurs, as

well as established institutional investors. Our highly qualified

staff are drawn from various nations, reflecting the cosmopolitan

corporate culture of Euram Bank.

Euram Bank is 100% privately owned. Senior management and

financial investors hold a majority stake in the bank through

Euram Holding AG.

Business Development

The international economic environment showed a volatile development

in the first half of 2015. Due to diverging trends between

industrialized countries and emerging markets, the global economy

only reported moderate growth rates. Again, impulses primarily

originated from industrialized countries, while the growth

dynamic in the emerging markets continued at a slow pace. The

conflict in Ukraine, recession in Russia and the export sanctions

imposed, as well as the Greek budget crisis still had a restraining

effect on economic activity – especially in Europe. The low

oil prices were an additional burden on commodity-exporting

emerging market countries. In Asia, economic development was

also volatile. China is experiencing a continuation of declining

growth rates. On the other hand, the Japanese economy has reported

slightly higher growth rates recently – with the export

sector in particular benefitting from the low yen exchange rate.

The countries of Southeast Asia are currently benefitting from

gradual relocations of production sites from China. Positive signals

came from the USA. Europe continued to report only slight

growth. Apart from Great Britain and Spain, France made positive


contributions to growth again. Business activity in Germany and

industrial production have only increased slightly during the

period under review.

Ever since its formation in 1999, Euram Bank remained true to

its successful strategy. A strong focus on business areas that require

a high amount of advisory service and consciously avoiding

retail business have proven successful – to private banking, asset

management and card payment services alike. Owing to the

experience and commitment of our outstanding staff, and very

good performance in all investment strategies, the confidence

and expectations of our clients were again not disappointed in

the financial year 2014/2015, despite the difficult market environment.

Our competence and many years’ experience in advising

our clients in wealth and investment matters, our reliable

and committed way of working, and the risk-aware management

of the assets entrusted to us absolutely proved their worth.

The balance sheet total increased as compared to the previous

year by 4.8% from EUR 148.1 million (30.6.2014) to EUR 155.2

million. “Receivables from customers” increased by 38.6% to

EUR 79.6 million (EUR 57.4 million as at 30.6.2014), the “Liabilities

to customers” also increased by 6.5% to EUR 133.9 million

(EUR 125.7 million as at 30.6.2014). As per 30 June 2015,

“Cash at hand and balances with central banks” amounted to

EUR 1.4 million; the decline by 94.5% as compared to the previous

year (EUR 26.4 million as at 30.6.2014) is due to regrouping

of cash and cash equivalents to “Debt instruments

issued by public authorities and bills of exchange admitted

for refinancing with the central bank” (EUR 9.0 million) and

“Debentures and other fixed-income securities” (EUR 9.0 million).

“Claims against credit institutions” amounted to EUR 49.2

million (EUR 57.0 million as at 30.6.2014), the “Liabilities to

credit institutions” amounted to EUR 2.6 million at the end of

the financial year (EUR 2.1 million as at 30.6.2014), due to the

minor importance of this type of refinancing in the financial year

2014/2015.


In spite of the low level of interest rates and due to the continued

focus on quality when investing liquidity, net interest income

increased to EUR 1.2 million (EUR 1.0 million as at 30.6.2014). In

the period under review, operating income decreased from EUR

8.3 million (30.6.2014) to EUR 6.7 million. As mentioned already,

Euram Bank successfully sold an innovative and customized

card-based payment processing product developed with international

partners to an international partner in the financial year

2013/2014. In the financial year 2014/2015 the final payment of

EUR 3.0 million arising from this sale was recognized in profit

or loss.

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As in the financial year 2013/2014, operating expenses were

reduced again and amounted to EUR 6.8 million (EUR 7.6 million

as at 30.6.2014). This was due to a reduction in payroll costs to

EUR 3.4 million (EUR 3.8 million as at 30.6.2014), primarily due

to the elimination of performance-related remuneration components,

on the one hand, and to reduced administrative expenses

of EUR 3.2 million, which fell by 13.2% (EUR 0.5 million), on the

other hand (EUR 3.7 million as at 30.6.2014). The slightly negative

operating result amounted to EUR -54 thousand (EUR 763

thousand as at 30.6.2014).

Income from the release of value adjustments of receivables and

of accruals for contingent liabilities and for credit risks amounted

to EUR 87 thousand (as per 30.6.2014, value adjustments for

receivables of EUR 91 thousand were reported), value adjustments

for securities and for investments and shares in affiliated

companies amounted to EUR 59 thousand (EUR 138.3 thousand

as at 30.6.2014).

The slightly negative result on ordinary activity accordingly

amounted to EUR -26 thousand (EUR 534 thousand as at

30.6.2014).

Tax compensation and deferred taxes had a positive influence on

the item “income and earnings tax”, in the amount of EUR +219.2

thousand (EUR -231.9 thousand as at 30.6.2014), the annual surplus

thus amounted to EUR 193.2 thousand (EUR 302 thousand

as at 30.6.2014).


Not all that is new is also relevant.

To obtain value the market’s interest

is vital. This ‘inter-est’ - this “beingin-between”

– materializes in the

relationship between market players:

demand, supply and satisfaction.


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Innovation


Financial and non-financial performance indicators

The capital resources of Euram Bank continue to be excellent.

The eligible capital for the purposes of Part 2 of EU Regulation no.

575/2013 amounted to EUR 15.4 million (EUR 15.4 million as at

30.6.2014), and the overall risk value under Article 92 of the Regulation

(EU) 575/2013 amounts to EUR 65.5 million (EUR 58.9

million as at 30.6.2014). The total capital ratio ((eligible capital )/

(overall risk value)) amounts to 23.5% (26.1% as at 30.6.2014),

which is well above the legal minimum. The equity capital reported

consists entirely of Tier 1 capital. The cost/income ratio

(administrative expenses/revenue) amounted to 100.8% (90.9%

as at 30.6.2014) due to the slightly negative operating result.

In the financial year 2014/2015, a net profit of EUR 197.4 thousand

was earned. After passing a respective resolution in the

annual general meeting in November 2015, Euram Bank will not

distribute a dividend to its shareholders.

Euram Bank is a wholly owned subsidiary of Euram Holding AG.

In the financial year 2014/2015, two shareholders of Euram Holding

AG sold their shares in Euram Holding AG to several international

investors – further sales of shares by existing shareholders

to investors with strategic potential for Euram Bank are not excluded

in the financial year 2015/2016.

Retaining experienced and committed staff is a fundamental

precondition for any enterprise’s long-term success. The qualification

of its staff is of utmost concern for Euram Bank. Euram

Bank offers its employees the opportunity of ongoing training

and development to achieve their personal and career goals by

systematically developing their competencies.

Events of particular importance after the balance sheet

date of 30 June 2015

In the general assembly meeting on 28.7.2015, Dr. Peter Maser

was elected a member of the Supervisory Board.


2. Anticipated trends and risks

Prospects for 2015/2016

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We anticipate that the growth of the global economy will gain momentum

in 2015 and 2016, but will remain subdued compared to

the time before the crisis; additionally, the distribution of growth

over the various global regions will change compared to the past

years. An acceleration of economic activity will be supported by

very favourable monetary conditions, a slower consolidation of

public households, an improved financial situation, and reduced

oil prices. However, investments need to pick up yet. The appreciation

of the US dollar versus most other currencies has resulted

in a marked adjustment of exchange rates. Due to the resulting

relative price effects, global demand is shifting more towards Europe,

Japan and some emerging markets. Within the group of

emerging markets, growth is slackening due to individual factors

in China, Brazil and Russia. Without structural reforms to

eliminate bottlenecks, growth rates might remain weak in these

countries. Exceptional risks include geopolitical upheavals and a

situation of serious financial instability that might emerge, if the

exit from the zero-interest strategy in the United States fails to

take place in an orderly manner, if Greece fails to reach a satisfactory

agreement with its creditors, or if the Chinese economy

experiences a hard landing. In order to avoid these risks and to

get the global economy back on a more sturdy, more stable course

of growth, mutually reinforcing measures of monetary, fiscal and

structural politics are required.

For the Private Banking division, the financial year 2015/2016

will bring a clear focus on integrated strategies to maintain capital

and assets, based on individual planning combined with firstclass

customer care. Additionally, the division plans to extend

its product range for clients from Austria and Germany – with

a focus on the financing of residential and commercial real estate

projects. With our competence in financing matters, swift

processing and transparent communication, we intend to use

these market opportunities successfully. The Asset Management

division will consistently pursue the conservative investment


approach, thus striving again for the continuous positive performance

of Euram’s public funds. In the Card Payment Services

division we are currently developing further projects in the field

of card-based payment transactions together with our international

partners.

Material risks and uncertainties

An order issued by the Securities and Exchange Board of India

(SEBI) dated 22 September 2011, accusing Euram Bank of infringing

the code of conduct of the Indian stock exchange as an FII

licensee, remains in force. In October 2014, Euram Bank made

another comprehensive statement vis-à-vis SEBI in this respect.

Euram Bank continues to cooperate with all the authorities involved,

seeking rapid resolution.

In February 2012, an Indian enterprise brought an action for

declaratory judgement against Euram Bank before the Commercial

Court of Vienna, based on a dispute as to whether a pledge

agreement dated March 2010 between the Indian enterprise as

pledgor and Euram Bank as pledgee is genuine. On 2.7.2015, the

judge concluded the oral proceedings of first instance, announcing

that a decision would follow. Considering the course of the

proceedings until this date, Euram Bank anticipates the decision

to be in its favour – the provision for risk of litigation formed in

this respect in the financial year 2012/2013 was not reversed in

the current financial year 2014/2015.

In January 2013, Euram Bank learnt that an American citizen

brought an “action for damages” in August 2011 against Euram

Bank before the North Carolina Central County Court in the United

States. In November 2014, the competent court denied the appeal

of the American citizen and upheld the decision to dismiss

the American citizen’s complaint.


Euram Bank has applied to a UNCITRAL arbitration tribunal in

respect of an escrow investment in Slovakia on account of infringement

of the bilateral investment treaty. The arbitration tribunal

dismissed Euram Bank’s action against the Slovak Republic

in June 2014 as being outside its jurisdiction. The resultant

costs incurred by Euram Bank are covered. A civil action is still

pending in this matter brought by Euram Bank before a Slovakian

court.

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3. Research and development

Euram Bank undertakes no research and development activities.

4. Risk reporting

Euram Bank continuously develops its risk management in order

to effectively detect, assess and control risks. Risk management

is a component of overall bank management, and takes into account

the nature, extent and complexity of transactions, and the

resultant risks, in addition to the legal and regulatory framework.

Euram Bank creates a risk strategy that is updated annually. As

provided for in the risk strategy, the analysis of risk-bearing capacity

checks the risk coverage against the prevailing risks. This

analysis is created quarterly, and brought to the attention of the

Management Board and the Supervisory Board in the risk report.

Euram Bank uses the standard approach specified in CRR, Part

3, Articles 107 to 311, to calculate credit risk. Loans are granted

within established customer relationships and are fully collateralized,

either by cash deposits or securities held in a custody

account at Euram Bank, taking account of the relevant (conservative)

lending limits. Own account investments in derivative

financial instruments are occasionally made to a minor extent for

the purpose of managing own risk positions.


Evaluation

Models

Business models are similar to

architectural models. They enable

us to consider all aspects of a

plan in order to make ourselves

familiar with and understand its

true and multi-dimensional impact.


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The evaluation of alternative

options relies on precise

information. However, exact

information from the future

is scarce.


Because of the geographical orientation of Euram Bank, the operational

risk represents the most significant risk. Money laundering

risk is limited by the use of an analytical anti-money laundering,

compliance and risk solution. This AML solution allows

to detect unusual, unexpected and suspicious customer features

and transactions, and automatically alerts the Compliance Officer

if there are indicative grounds for suspicion. In addition to identifying

grounds for suspicion, this AML solution supports the

investigation, processing and documentation of identified cases.

Each operation is also comprehensively documented in auditable

form, and can be reviewed and tracked by reports at any time.

In operational risk management, the guidelines for identifying,

assessing, and monitoring are updated annually; day-to-day risk

management has been firmly established in the business and administration

departments. This business partnership model creates

close control, and leads to increased internal awareness of

operational risks.

The base indicator approach according to CRR, Part 3, Articles

312 to 324 is applied for calculating operational risk.

Euram Bank does not trade securities for its own account. The

bank mainly holds debt instruments issued by public authorities,

and debentures and other fixed-income securities with top

ratings. Euram Bank allocates very low limits for overnight positions,

so the foreign exchange exposure in Euram Bank’s banking

book is very limited. Foreign currency loans are refinanced

exclusively in the same currency as the loan.

Liquidity risk is limited by matching maturities to a great extent.

Client deposits are predominantly invested according to maturities

– and demand deposits for up to one week – with a selected

group of third-party banks. Interest-rate risks are controlled on

the basis of the recommendations of the Asset/Liability Management

Committee (ALCO), which sets rules for active and passive

management. The results are discussed in biweekly meetings,

and the assumptions made are reviewed.


In order to limit legal risk, Euram Bank maintains a close cooperation

with a prestigious law firm, and uses the expertise of this

law firm in connection with introducing new products, transactions

and lines of business.

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Vienna, on 7 September 2015

The Management Board

Manfred Huber

Johannes Langer

Josef Leckel


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BALANCE SHEET AS OF JUNE 30, 2015

Assets 30. 6. 2015 30. 6. 2014

EUR EUR TSD EUR

1. Cash in hand, balances with

central banks and post office banks 1,438,580.56 26,444

2. Debt instruments issued by public authorities 8,983,651.50

3. Claims against credit institutions 49,238,513.41 57,048

a) repayment on demand 49,238,513.41 54,756

b) other loans and advances 0.00 2,292

4. Loans and advances to customers 79,560,829.26 57,403

5. Debentures and other fixed-income

securities of public issuers 8,979,895.74 0,00

6. Stocks and other non fixed-income

securities 4,801,363.88 3,501

7. Participations 70.00 1,205

8. Shares in affiliated companies 159,000.00 159

9. Intangible fixed assets 87,072.80 46

10. Tangible Assets 138,907.96 155

11. Other Assets 1,369,191.01 1,736

12. Prepayments and accrued income 444,398.46 357

155,201,474.58 148,054

1. Foreign assets 99,486,064.04 74,017


BALANCE SHEET AS OF JUNE 30, 2015

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Liabilities 30. 6. 2015 30. 6. 2014

EUR EUR TSD EUR

1. Liabilities to credit institutions 2,564,532.28 2,058

a) repayable on demand 64,514.92 2

b) with agreed maturity dates

or period of notice 2,500,017.36 2,056

2. Liabilities to customers 133,852,640.18 125,711

a) Other liabilities

aa) repayable on demand 125,315,653.17 119,415

bb) with agreed maturity dates

or period of notice 8,536,987.01 6,296

3. Securitized liabilities 25,262.20 424

a) self-issued bond 15,572.52 16

b) other securitized liabilities 9,689.68 408

4. Other liabilities 1,524,261.78 2,048

5. Accruals and deferred income 84,000.00 67

6. Provisions 1,466,934.73 2,156

a) provisions for severance payments 380,884.34 308

b) other provisions 1,086,050.39 1,848

7. Subscribed capital 10,045,712.61 10,046

8. Capital reserves 1,920,350.77 1,920

a) tied-up 1,886,813.16 1,887

b) free 33,537.61 33

9. Profit reserves, other reserves 2,859,904.17 2,860

10. Liability reserve pursuant

to §57 para 5 Banking Act 660,500.00 660

11. Net Profit 197,375.86 104

155,201,474.58 148,054

1. Contingent liabilities 6,757,288.65 5,556

2. Fiduciary Deposits 0.00 1,230

3. Own funds to be taken into account pursuant to

Part Two Regulation (EU) 575/2013 15,403,527.28 15,373

4. Required own funds pursuant to Article 92

Regulation (EU) 575/2013 65,522,534.02 58,938

a) CET 1 capital ratio 23.5 % 26.1 %

b) T1 capital ratio 23.5 % 26.1 %

c) Total capital ratio 23.5 % 26.1 %

5. Liabilities abroad 126,422,949.47 121,321


PROFIT- AND LOSS ACCOUNT AS OF JUNE 30, 2015

Profit- and Loss Account 30. 6. 2015 30. 6. 2014

EUR EUR TSD EUR

1. Interest and interest-like earnings 1,347,209.50 1,469

hereof: fixed interest securities 177,975.38 34

2. Interest and interest-like expenditures -192,157.04 -465

I. NET INTEREST EARNINGS 1,155,052.46 1,004

3. Earnings from securities and participations 132,246.20 197

a) Earnings from shares, other share rights

and not fixed-income securities 132,246.20 126

b) Earnings from shares in affiliated

companies 0.00 71

4. Earnings from commissions 95,874,415.44 69,319

5. Expenditures from commissions -93,525,701.44 -65,910

6. Earnings/expenditures from

financial transactions -210,687.62 28

7. Other operating earnings 3,271,129.95 3,700

II. OPERATING EARNINGS 6,696,454.99 8,338

8. General administrative expenditures

a) personnel expenditures -3,438,732.55 -3,775

aa) wages and salaries -2,554,034.16 -2,872

bb) payment of legal social levies

and compulsory contributions -605,270.66 -605

cc) other social expenditures -52,678.66 -46

dd) expenditures for old-age provisions

and assistance -112,064.25 -73

ee) endowment of the severance

payment provision -114,684.82 -179

b) Other administrative expenditures

(overhead) -3,016,321.55 -3,205

-6,455,054.10 -6,980


PROFIT- AND LOSS ACCOUNT AS OF JUNE 30, 2015

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Profit- and Loss Account 30. 6. 2015 30. 6. 2014

EUR TSD EUR

9. Value adjustments of the assets listed

in asset items 9 and 10 -109,308.99 -109

10. Other operating expenditures -186,009.34 -486

III. OPERATING EXPENDITURES -6,750,372.43 -7,575

IV. OPERATING RESULT -53,917.44 763

11. Value adjustmens of claims and

allocations to provisions

for contingent liabilities and for credit risk 0.00 -91

12. Earnings from the dissolution of value adjustments

of claims and from provisions

for contingent liabilies and for credit risk 87,000.00 0.00

13. Value adjustments of securities valued

like financial investments

as well as of participations and

shares held in affiliated companies -59,000.00 -138

V. RESULT OF ORDINARY BUSINESS OPERATION -25,917.44 534

14. Income and earnings tax 219,160.77 -232

VI. ANNUAL SURPLUS 193,243.33 302

15. Change of reserves 0.00 -225

VII. ANNUAL PROFIT 193,243.33 77

16. Profit carryforward 4,132.53 27

VIII. NET PROFIT 197,375.86 104


Future success is the result of a

well calculated entrepreneurial risk.

Not taking any risks would mean

not taking any decisions and

surrendering success to others.

Decision


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Negotiation

Negotiating well does not mean to

pull the partner over the barrel to

reach a common perspective. It

rather means to share perspectives

in order to develop mutual assets

and benefits for all parties involved.


NOTES

to the annual accounts of European American

Investment Bank Aktiengesellschaft

(“Euram Bank”) for the year ending 30

June 2015.

The principle of itemised valuation was

applied for the valuation of the assets and

liabilities, on the assumption of a going

concern.

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The annual accounts for the year ending

30 June 2015 were prepared in accordance

with the regulations of the Accounting

Act, taking account of the special requirements

of the Banking Act.

The principle of prudence was observed

by reporting only profits realised on the

reporting date, and recognising all discernible

risks and impending losses in the

balance sheet.

1. General principles and information

on accounting and valuation

General principles

The annual accounts for the year ending

30 June 2015 are prepared in compliance

with generally accepted accounting principles,

and with the general standard of

conveying a true and fair view of the company’s

assets, financial situation and results

of operation.

Under the provisions of section 9 of the

Corporate Income Tax Act (KStG) relating

to group taxation, a corporate group exists

as at 30.06.2015 comprising Euram Holding

AG as group parent and Euram Bank

as group member. The tax sharing agreements

stipulate the stand-alone method.

The bank is organized as a stock corporation.

Euram Bank is wholly owned by Euram

Holding AG.

The principle of completeness and accounting

continuity was observed in preparing

the annual accounts. With respect

to accounting consistency, the option

to account for deferred tax assets under

section 198 (10) Austrian Business Code

(UGB) was newly exercised in the financial

year 2014/15, and a deferred tax asset

was itemised for the first time.

Foreign currency amounts

Foreign currency amounts are translated

at the middle rates set on the reporting

date, in accordance with section 58 (1)

Banking Act.


Financial investments

Holdings are valued at cost of purchase.

Lower values are recognised in the case of

material, sustained impairments.

Securities held as fixed assets are valued at

the lower of fair value and cost of purchase

on the balance sheet date. Non-scheduled

depreciation of a fair value that is lower on

the reporting date is applied if the impairments

seem likely to be enduring.

Write-ups of fixed assets are applied if

the reasons for the non-scheduled depreciation

no longer apply, unless the lower

value can be retained for determining taxable

income, provided that it also remains

unchanged in the annual accounts.

For holdings write-ups are applied in the

event of recovery, regardless of the reasons

responsible for the non-scheduled

depreciation.

Current assets

Items classified as current assets were reported

at cost of purchase less value adjustments

for discernible individual risks

or possibly a lower share price, market

value, or market value derived from a similar

financial instrument, on the reporting

date.

Financial instruments in the bank

book

Shares in hedge funds and a special fund

of EUR 2.2 million (EUR 1.1 million as at

30.06.2014) are held in the bank book.

Hedge fund shares EUR thousand

1794 Commodore

Overseas Fund EUR 0

CFS I EUR 25

Sharpe Futures Fund EUR 682

Sharpe Art Segregated

Portfolio Fund EUR 1,501

Collateralized loan

obligations

EUR thousand

Canal Point I Ltd. EUR 0

Lending risks

Loans to customers amount to EUR 79.6

million (EUR 57.4 million as at 30.6.2014);

loans to customers with a volume of EUR

35.1 million (EUR 29.8 million as at

30.6.2014) are secured by deposits, loans

to customers with a volume of EUR 43.9


million (EUR 27.4 million as at 30.6.2014)

are mainly secured by mortgages, deposits

and/or securities. The amounts due from

customers include amounts due from issuers

with a volume of EUR 2.9 million (EUR

0.0 million as at 30.6.2014).

Lendings

EUR million

secured by

deposits EUR 35.1

secured by mortgages,

deposits and securities

EUR 43.9

unsecured EUR 0.6

Shares in affiliated companies

Euram Bank has a 100% holding in Euram

Invest Holdings 3 GmbH headquartered in

Munich, Germany (line of business of the

GmbH: management of investments).

Participations

This item includes the share in the deposit

guarantee scheme (Einlagensicherung

der Banken and Bankiers GmbH), Vienna,

in the amount of EUR 70.0 (EUR 70.0

as at 30.6.2014). In the financial year

2014/2015, the trust investment in E.I.C.

a.s. (EUR 1.2 million) was terminated.

Intangible and tangible assets

Intangible fixed assets and tangible assets

are valued at cost of acquisition or production,

less scheduled depreciation. Low-value

items are capitalized and fully depreciated

in the year of acquisition. Assets are

depreciated on a straight-line basis.

The following useful life is assumed for

the purposes of scheduled depreciation:

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In the financial year 2014/2015, as already

in financial year 2013/2014, no dividends

were distributed to Euram Bank.

According to section 238 (2) of the Commercial

Code (UGB), the equity capital

and results of the last financial year of the

affiliated undertakings are as follows:

Euram Invest Holdings 3 GmbH

(in EUR Thousand)

Equity 257.6

Share of Equity 100%

Result last FY -8.0

Company cars

Office furniture

Fixtures

Office equipment

Software

Hardware

8 years

5 years

5 years

5 years

5 years

5 years


After concluding the appropriate

groundwork and considering

all restrictions, control means the

empowerment to act.


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Control


The tax regulations permit a full year’s depreciation

for acquisitions in the first half

of the year, and half a year’s depreciation

for acquisitions in the second half of the

year.

Provisions for severance payments

The provisions for severance pay are calculated

according to actuarial principles,

applying an interest rate of 1% (previous

year: 3%), and on the basis of an imputed

pension age of 60 for women and 65 for

men. A fluctuation discount is not applied.

Other provisions

Observing the principle of prudence, other

provisions include all risks discernible

at the time the accounts are prepared, and

liabilities that are uncertain in terms of

amount and substance are reported at the

amounts dictated by prudent commercial

judgment.

Contingent liabilities

Contingent liabilities contain financing

guarantees given, secured by banks, securities

or cash, amounting to EUR 0.1

million (EUR 2.1 million as at 30.6.2014),

and an unsecured financing guarantee

amounting to EUR 0.7 million (EUR 0.6

million as at 30.6.2014).

Credit risks

This item contains undrawn credit facilities,

amounting to EUR 3.6 million (EUR

0.7 million as at 30.6.2014) as well as

guarantees to credit card institutions for

the facilities granted to Euram Bank customers

in the amount of EUR 2.4 million

(EUR 2.1 million as at 30.6.2014).

Fiduciary receivables

Fiduciary receivables are contained in the

following items:

- Shares and other non-fixed interest

securities: EUR 1.1 million

(EUR 0.7 million as at 30.6.2014)

- Participations: EUR 0.0 million

(EUR 1.2 million as at 30.6.2014)


Fiduciary liabilities

Fiduciary liabilities are contained in the

following items:

- Liabilities to customers: EUR 1.1 million

(EUR 1.9 million as at 30.6.2014)

- Securitized liabilities: EUR 25.3 thousand

(30.6.2014: EUR 25.3 thousand)

2. Notes to the accounts

A. Maturities analysis

Receivables from and payables to banks

and customers other than repayable on demand

are structured according to remaining

maturity as follows:

Receivables from banks EUR thousand

up to 3 months EUR 0

more than 3 months

up to 1 year EUR 0

more than 1 year

up to 5 years EUR 0

over 5 years EUR 0

Receivables from customers


EUR thousand

up to 3 months EUR 1,192

more than 3 months

up to 1 year EUR 12,873

more than 1 year

up to 5 years EUR 30,401

over 5 years EUR 2,180

Payables to banks

EUR thousand

up to 3 months EUR 2,500

more than 3 months

up to 1 year EUR 0

more than 1 year

up to 5 years EUR 0

over 5 years EUR 0

Payables to customers

EUR thousand

up to 3 months EUR 0

more than 3 months

up to 1 year EUR 1,660

more than 1 year

up to 5 years EUR 6,877

over 5 years EUR 0

B. Securities

In the financial year 2014/2015, securities

were held in the following assets:

- Debt instruments issued by public

authorities: EUR 9.0 million

(EUR 0.0 million as at 30.6.2014)

- Amounts due from customers:

EUR 2.9 million (EUR 0.6 million as at

30.6.2014)

- Debentures and other fixed-interest

securities: EUR 9.0 million

(EUR 0.0 million as at 30.6.2014)

- Shares and other non-fixed interest

securities: EUR 4.8 million

(EUR 3.5 million as at 30.6.2014)

40

41


B.1. Debt instruments issued by public

authorities that are admitted for

refinancing at the Central Bank

In the financial year 2014/2015, a nonfixed

interest listed security (regulated

market) was held in current assets.


thousand

Land Niederösterreich

FRN 01.10.14–01.10.19 EUR 8,984

B.2. Amounts due from customers – of

which other issuers

In the financial year 2014/2015, a fixed-interest

unlisted security was held in the

fixed assets and a fixed-interest listed security

(open market) was held in current

assets.

Fixed assets

thousand

CPI Immobilien AG

30.11.13–30.11.33 EUR 1,910

Current assets

thousand

ADLER Real Estate AG

01.04.14–01.04.19 EUR 0

ADLER Real Estate AG

08.04.15–08.04.20 EUR 1,012

B.3. Debentures and other fixed-interest

securities

In the financial year 2014/2015, the following

fixed-interest listed securities are held

in current assets:

Current assets

thousand

Republic of Austria

17.06.11–17.06.16 EUR 1,811

Asian Development Bank

30.05.12–17.08.15 EUR 1,343

Asian Development Bank

19.03.13–20.06.16 EUR 1,341

Kommunalbanken AS

19.01.11–19.01.16 EUR 1,369

The Netherlands

24.02.12–24.02.17 EUR 1,775

Schweden, Kingdom of

29.10.12–22.12.15 EUR 1,340

B.4. Shares and other non-fixed interest

securities

This item contains investment fund shares

allocated to fixed assets in the amount of

EUR 1,712 thousand (EUR 1,771 thousand

as at 30.6.2014).


Hedge fund shares amounting to EUR 0.7

million (EUR 1.1 million as at 30.6.2014)

and a special fund amounting to EUR 1.5

million (EUR 0.0 million as at 30.6.2014)

are reported in current assets. Current assets

also include investment fund shares

of the Euram public funds in the amount

of EUR 0.9 million (EUR 0.6 million as at

30.6.2014). Shares are also held in “Petrocapital

Resources PLC” in the amount

of EUR 10 (EUR 10 as at 30.6.2014) are

held. All securities shown in the asset

item “Shares and other non-fixed-interest

securities” are unlisted.

One share (“Petrocapital Resources PLC”)

was held in the financial year 2014/2015.

“Petrocapital Resources PLC” was delisted

in 2010.

In the financial year 2014/2015, the company

managed a customer securities portfolio

to a value of EUR 160.3 million (EUR

127.1 million as at 30.6.2014).

C. Fixed assets

The fixed assets movement schedule is

presented as a separate schedule.

42

43

Fixed assets

thousand

Europportunity Bond EUR 1,712

Current assets

thousand

CFS I EUR 25

Sharpe Futures Fund EUR 682

Sharpe Art Segregated

Portfolio Fund EUR 1,501

1794 Commodore

Overseas Fund EUR 0

Europportunity Bond EUR 277

USD Convergence Bond EUR 593

Advantage Stock EUR 10

Petrocapital

Resources PLC EUR 0.01

No securities trading book was kept in the

financial year 2014/2015.


A goal is not yet a plan, a plan not

yet a model, a model not quite

a house – the house must yet be

built. It is no coincidence that

the English word “concrete” also

means “cement”.


44

45

Concretization

Structuring

To link up the future with the

present, time must be turned

into space and paths must

be established and reinforced.


D. Other assets

Other assets include

- a pending repayment of EUR 0.4 million

(EUR 0.6 million as at 30.6.2014),

- fees charged for the management of

investment funds amounting to

EUR 0.3 million (EUR 0.3 million as at

30.6.2014),

- receivables due from an affiliated

company from distribution of the tax

burden: EUR 5.6 thousand (EUR 0.0 as

at 30.6.2014)

- outstanding receivables: EUR 0.2 million

(EUR 0.2 million as at 30.6.2014)

- a long-term discounted receivable of

EUR 0.2 million (EUR 0.4 million as at

30.6.2014)

- a real estate property not intended to

be held long-term amounting to EUR

240 thousand (EUR 240 thousand as at

30.6.2014).

Other receivables with a remaining term

to maturity of more than one year amounting

to EUR 0.2 million (EUR 0.4 million as

at 30.6.2014) were reported in the financial

year 2014/2015.

The material revenue included in the

item “Other assets” in the financial year

2014/2015 that becomes payable only after

the reporting date amounts to 0.7 million

(EUR 0.9 million as at 30.6.2014).

E. Prepayments

This item includes current salary payments

amounting to EUR 115.4 thousand

(EUR 150.6 thousand as at 30.6.2014),

prepaid insurance premiums, and information

and maintenance costs amounting

to EUR 160.3 thousand (EUR 192.2 thousand

as at 30.6.2014) as well as other prepayments

amounting to EUR 48.3 thousand

(EUR 13.8 thousand as at 30.6.2014).

At the balance sheet date, prepayments

according to section 198 (10) UGB amount

to EUR 120.4 thousand (previous year:

EUR 0.0). The option to capitalize deferred

taxes was exercised.

F. Securitized liabilities

This item includes a self-issued bond and

a self-issued certificate.


thousand

CFS Alternative Investment

Note I EUR 25

Euram Commodore Index –

Euro Protected 2 Certificates

EUR 0

The amount of securitized liabilities becoming

due in the year following the balance

sheet date is EUR 25 thousand (EUR

0.4 million as at 30.6.2014).


G. Other liabilities

I. Equity capital

46

47

Other liabilities include invoices already

received but not yet paid relating to the

financial year 2014/2015 amounting to

EUR 0.2 million (EUR 0.4 million as at

30.6.2014), liabilities to a data acquisition

company amounting to EUR 0.7 million

(EUR 1.3 million as at 30.6.2014), liabilities

arising from tax allocations with an

affiliated undertaking amounting to EUR

234.6 thousand (EUR 240.1 thousand as

at 30.6.2014), and liabilities to the tax

authorities amounting to EUR 367.1 thousand

(EUR 77.2 thousand as at 30.6.2014).

The material expenses included in the

item “Other liabilities” in the financial

year 2014/2015 that become payable only

after the reporting date amount to EUR 0.4

million (EUR 0.4 million as at 30.6.2014).

1.) The share capital amounting to EUR

10,045,700 is divided into 270 thousand

share units, each with an equal portion of

the share capital.

2.) The equity capital is made up as follows:


thousand

Subscribed capital EUR 10,045.7

(Appropriated) capital

reserve EUR 1,886.8

(Free) capital reserve EUR 33.5

Retained Earnings EUR 2,859.9

Liability reserve as per

section 57 (5) Banking Act EUR 660.5

3.) The net profit for the financial year

2014/2015 amounts to EUR 197.4 thousand

(EUR 104.1 thousand as at 30.6.2014).

H. Accruals and deferred income

This item includes mainly fees already received

but allocated to the financial year

2015/2016 amounting to EUR 84 thousand

(EUR 67.5 thousand as at 30.6.2014).

4.) Euram Bank effected no allocations

to revenue reserves in the financial year

2014/2015 (EUR 225 thousand as at

30.6.2014).


J. Required own funds

Euram Bank uses the following methods

to calculate its required own funds:

Credit risk: Standard approach

Operational risk: Basic indicator approach

Risk of adjustment to credit valuation

(CVA risk): Standard method

In the financial year 2014/2015, the total

amount of risk under Article 92 of the CRR

– EU Regulation no. 575/2013 amounts to

EUR 65,522 thousand (EUR 58,938 thousand

as at 30.6.2014).

The total amount of risk from foreign currency

risks amounts to EUR 0 (EUR 0 as at

30.6.2014).

The total amount of risk from adjustment

to the credit valuation (CVA risk)

amounts to EUR 856.53 (EUR 362.13 as

at 30.6.2014).

The total amount of risk of the exposures

to operational risk amounts to EUR 17,959

thousand (EUR 22,438 thousand).

The risk weighted item amounts for the

credit risk are EUR 47,562 thousand (EUR

36,500 thousand as at 30.6.2014) and

break down as follows:




thousand

Exposures to central governments or central banks EUR 0

Exposures to regional or local administrative bodies EUR 0

Exposures to multilateral development banks EUR 0

Exposures to institutes EUR 9,379

Exposures to corporates EUR 22,213

Exposures from retail business EUR 3,105

Defaulted exposures EUR 0

Exposures secured by real estate property EUR 1,315

Exposures to institutes and corporates with short-term

credit ratings EUR 1,569

Exposures in the form of investment fund units (UCI) EUR 3,723

Investment exposures EUR 159

Other items EUR 6,099


K. Additional disclosures

1.) Total of assets and liabilities in foreign

currency:


million

Assets in foreign

currency EUR 89.6

Liabilities in foreign

currency EUR 93.7

The foreign currency assets and liabilities

essentially concern USD.

2.) In the financial year 2014/2015, Euram

Bank had a restraint on disposal for an asset

amounting to EUR 3.0 million (EUR 2.5

million as at 30.6.2015).

3.) Receivables from affiliated undertakings

amount to EUR 1.7 million (EUR 1.2

million as at 30.6.2014).

4.) Liabilities to affiliated undertakings

amount to EUR 1.6 million (EUR 4.3 million

as at 30.6.2014).

5.) In the financial year 2014/2015, Euram

Bank had no material transactions

with other “related parties” (30.6.2014: no

material transactions with other “related

parties”). All transactions have been concluded

on arm's length terms.

6.) Other provisions amounting to EUR 1.1

million (EUR 1.8 million as at 30.6.2014)

include:


thousand

Legal, auditing and

consultancy fees EUR 310.9

Outstanding

vacation

entitlements EUR 221.2

Bonuses EUR 553.9

Other expenses EUR 0.0

7.) From a present-day perspective, the liabilities

arising from the use of fixed assets

not reported in the balance sheet amount

to EUR 411.5 thousand (EUR 409.3 thousand

as at 30.6.2014) for the coming year

and EUR 2 million for the subsequent five

years, and relate exclusively to rental payments

for the use of office space.

8.) The three forward exchange transactions

(30.06.2014: one) concluded by the

company serve to secure foreign currency

positions. As at 30 June 2015, the total volume

of derivative instruments was:

Nominal Market

volume value

EUR thousand

Exchange rate contracts

– forward

exchange transaction 5,462 44

Underlying transaction 5,462 44

Hedging transaction 5,462 44

The term of the foreign exchange transactions

is less than one year.

48

49


Realization


50

51

The reality check for successful

implementation: long-term profitability

as a result of far-sighted initiative,

solid investment and systematic work.


9.) In the financial year 2014/2015,

Euram Bank issued one loan to officers

and related persons (30.6.2014: three

loans) amounting to EUR 665 thousand

(EUR 625.9 thousand as at 30.6.2014).

10.) In the financial year 2014/2015,

Euram Bank reports a return on assets

(annual result after tax / total assets) in

the amount of 0.12%.

3. Notes to the profit and loss

account

In the financial year 2014/2015, the breakdown

of income by geographical markets

as per section 64 (1) (9) BWG is essentially

the following:

Interest income:

thousand

The Caribbean EUR 81.3

Asia EUR 75.3

Europe – EU EUR 667.7

CEE EUR 514.9

Income from securities and investments:


thousand

Europe – EU EUR 132.2

Fees earned:

thousand

The Caribbean EUR 237.0

Asia EUR 101.6

Europe – EU EUR 95,284.9

CEE EUR 148.3

Income/expenses from financial transactions:

thousand

The Caribbean EUR -83.8

Europe – EU EUR -129.7

Other operating income:

thousand

Europe – EU EUR 3,271.1

The operating expenses of EUR 3.0 million

(EUR 3.2 million as at 30.6.2014) reported

in the financial year 2014/2015, comprise

mainly the following:


thousand

IT and information

expense EUR 927

Office and operating

expense EUR 106

Rental expense EUR 411

Advertising expense EUR 371

Insurance EUR 179

Legal and consultancy

expense EUR 591

Supervisory board EUR 138

Recruitment and training EUR 63

Travel expenses and motor

vehicle operating costs EUR 141

Other costs EUR 89


With reference to section 237 UGB, the

itemisation of other operating income and

other operating expense in accordance

with section 64 (1) (12) BWG is as follows:

- Other operating income includes part

of the proceeds of an innovative payment

processing product amounting

to EUR 3.0 million (EUR 3.1 million

as at 30.6.2014), in addition to costs

recharged to customers amounting to

EUR 0.2 million (EUR 0.3 million as at

30.6.2014), as well as a value added

tax credit in the amount of EUR 10.9

thousand (EUR 164.9 thousand as at

30.6.2014).

- The other operating expenses of EUR

186 thousand (EUR 486.3 thousand as

at 30.6.2014) reported in the financial

year 2014/2015 mainly relate to expenditures

for external consultants.

No value adjustments on receivables were

recognized in the financial year 2014/2015

(EUR 91 thousand as at 30.6.2014).

Value adjustments for securities and investments

and shares in affiliated companies

amount to EUR 59 thousand (EUR

138.3 thousand as at 30.6.2014), and relate

to the value adjustments for the Europportunity

Bond Fund held in fixed assets

amounting to EUR 59 thousand (EUR

73.8 thousand as at 30.6.2014).

The expenses for auditors attributable

to the financial year are disclosed in the

group accounts of Euram Holding AG.

The “Taxes on income and earnings” reported

in the profit and loss accounts including

tax allocations amounting to EUR

+219.2 thousand (EUR -231.9 thousand as

at 30.6.2014) affected the “Profit or loss on

ordinary activity” to the extent of +845.6%

(30.6.2014: -43.4%).

No allocation to retained earnings was

effected in the financial year 2014/2015

(EUR 225 thousand as at 30.6.2014).

52

53

Income from the release of value adjustments

on receivables and from provisions

for contingent liabilities and for credit

risks in the amount of EUR 87 thousand

arose in the financial year 2014/2015

(EUR 0.0 as at 30.6.2014).


4. Other information

1.) An average of 32 staff were employed

in the financial year 2014/2015 (30 as at

30.6.2014).

2.) Severance payment expenses in the

financial year 2014/2015 for senior staff

amounted to EUR 178.7 thousand (EUR

156.6 thousand as at 30.6.2014) and for

other employees EUR 202.2 thousand

(EUR 151.1 thousand as at 30.6.2014). In

addition, the amount of EUR 120.9 thousand

(EUR 73.2 thousand as at 30.6.2014)

was paid in contributions to the company

pension fund.

3.) Total remuneration of 3 (3 as at

30.6.2014) members of the Management

Board for their services in the financial

year 2014/2015 amounted to EUR 1.1 million

(EUR 1.5 million as at 30.6.2014); the

remuneration paid to the members of the

Supervisory Board in the financial year

2014/2015 amounts to EUR 0.1 million

(EUR 0.1 million as at 30.6.2014).

4.) No loans were granted to senior staff in

the financial year 2014/2015 (EUR 0.0 as

at 30.6.2014).

5.) The company’s Management Board consisted

of the following members during

the financial year 2014/2015:

Manfred Huber (chairman)

Johannes Langer

Josef Leckel

6.) The Supervisory Board consisted of the

following members during the financial

year 2014/2015:

Adolf Walter Höllmer (chairman)

Dr. Erik Max Michael Obermayer (vice

chairman)

Dkfm. Senta Penner

7.) Euram Bank is included in the consolidated

accounts of the following company:

Euram Holding AG

Wallnerstrasse 4

1010 Vienna, Austria


5. Additional disclosures

54

55

In order to comply with the company's

disclosure obligations under Articles 431

to 435 of the CRR – EU Regulation no.

575/2013, it is pointed out that the publication

is made available on the website

of Euram Bank (www.eurambank.com) under

Euram Bank / Publications and Disclosures”.

Vienna, on 7 September 2015

The Management Board

Manfred Huber

Johannes Langer

Josef Leckel


56

57


AUDIT OPINION

Report on the Financial Statements

58

59

We have audited the accompanying financial statements, including

the accounting system, of European American Investment

Bank Aktiengesellschaft, Vienna, for the fiscal year from July 1,

2014 to June 30, 2015. These financial statements comprise the

balance sheet as of June 30, 2015, the income statement for the

fiscal year ended June 30, 2015, and the notes.

Management’s Responsibility for the Financial Statements

and for the Accounting System

The company’s management is responsible for the accounting

system and for the preparation and fair presentation of these

financial statements in accordance with Austrian Generally Accepted

Accounting Principles. This responsibility includes: designing,

implementing and maintaining internal control relevant

to the preparation and fair presentation of financial statements

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.

Auditor’s Responsibility and Description of Type and Scope

of the Statutory Audit

Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit in accordance

with laws and regulations applicable in Austria and Austrian

Standards on Auditing. Those standards require that we comply

with professional guidelines and that we plan and perform

the audit to obtain reasonable assurance whether the financial

statements are free from material misstatement.


An audit involves performing procedures to obtain audit evidence

about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor’s judgment, including

the assessment of the risks of material misstatement

of the financial statements, whether due to fraud or error. In

making those risk assessments, the auditor considers internal

control systems relevant to the company’s preparation and fair

presentation of the financial statements 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

company’s internal control. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness

of accounting estimates made by management, as well as

evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Opinion

Our audit did not give rise to any objections. In our opinion,

which is based on the results of our audit, the financial statements

comply with legal requirements and give a true and fair

view of the financial position of the company as of June 30, 2015

and of its financial performance for the fiscal year from July 1,

2014 to June 30, 2015 in accordance with Austrian Generally Accepted

Accounting Principles.


Comments on the Management Report

Pursuant to statutory provisions, the management report is to

be audited as to whether it is consistent with the financial statements

and as to whether the other disclosures are not misleading

with respect to the company’s position. The auditor’s report also

has to contain a statement as to whether the management report

is consistent with the financial statements.

60

61

In our opinion, the management report is consistent with the

financial statements.

Vienna, September 7, 2015

KPMG Austria GmbH

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

Mag. Bernhard Gruber

Certified Public Accountant

p.p. Mag. (FH) Doris Thomann

Certified Public Accountant


Rome

wasn’t built in a day.


62

63


Euram Bank AG

Palais Esterházy

Wallnerstrasse 4

1010 Vienna, Austria

Tel. +43 1 512 38 80 0

Fax +43 1 512 38 80 888

office@eurambank.com

www.eurambank.com

This is a translation from German. In case of any discrepancies

between the English and the German version the German text

shall prevail.

Concept, design and production

die3 Agentur für Werbung und Kommunikation GmbH

Photographs

Kurth Keinrath

Print

Druckerei Thurnher


4

5


Innovation

Models

Evaluation

Vision

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