Annual Report of Euram Bank Vienna 2010/2011

eurambank

The Keys to Growth

and Protection.


A walk in the park.

While you are reading these

lines, we might possibly be

walking through a park – with

one of our clients. The park

provides a peaceful ambiance

to think and listen. With every

step the joint understanding

of our client’s objectives and

strategies, of business intent

and personal goals grows.

We cast our eyes on carefully

groomed trees and the meticulously

cut lawn. There is a

fascinating order in the vivid

growth of flowers and shrubs.

The gardener’s hand gives

shape and structure to the

natural environment. With his

knowledge, he trims undesirable

growth. With great care,

he distinguishes between

what is valuable and what is

detrimental. His foresight and

experience tell him how to

protect what he has carefully

created against inclement

weather.

Imagine that this park is

yours – and that we are your

gardeners. This is how we

define our service for you.


The language of the trees.

Allow us to talk about our

work, and remain with the

metaphor of a gardener in

your park. A clever gardener

understands his business.

If he is really good, he will

understand the owner of the

park with all his intentions,

his culture, and his personal

needs – as well as the park

itself, and each of its trees,

flowers, lawns and shrubs.

It is relatively easy to learn

that a palm tree needs a different

kind of care than an

apple tree to be able to grow.

Likewise, it is easy to learn

the language of the owner

of the trees. All this is smart

and effective, but not yet

good enough – in the sense

of deeply understanding our

clients in the context of their

world, and what they expect

from us. Our members of

staff not only speak many

languages – they themselves

come from the countries and

cultures where we are active.

We have our roots where we

work. This is our understanding

of internationality.

Lake Gardens, Kuala Lumpur


About growing and prospering.

Successful asset management

demands in-depth knowledge,

good skills and a robust

strategy, and even more

so, responsibility, personal

attention and dedication.

We act with resolve so that

you can harvest not only

in good times, but also in

challenging environments.

Over time, it simply adds up –

to better yields and consistent

outperformance of the typical

benchmarks.

Schlosspark Schönbrunn, Vienna


Euram Bank Managing Board: Viktor Popovic,

Johannes Langer, Manfred Huber

Private in the true

sense of the word.

Euram Bank is 100% privately owned,

and its owners manage the bank. This

independence creates the freedom to

match the clients’ needs and provides

a mutual eye-to-eye understanding of

economic and personal goals.

More than a

bouquet of flowers.

Our services and competences

are comprehensive

and diversified. We

carefully select and tailor

them to your individual

needs.

• Private Banking

• Asset Management

• Corporate Finance

• Card Payment

Services

Botanical Gardens, Moscow


Creativity and Innovation.

Creativity has many aspects.

We focus on a very specific

one: let’s assume you have a

business idea. You need the

technical and financial means

for its implementation, or

partners and investors, or a

combination thereof. That is

where our innovative strength

and competence can help you.

For example, our experience in

card-based payment solutions,

our networks and licences.

To quote the image of the

gardener one last time, if you

want to create a new park,

one that is different from any

other, you benefit from your

gardener’s imagination and

design skills.

Innovative services and technologies

to turn your ideas

into a successful business

venture. That is what we mean

by creative solutions.

Jumeirah, Dubai


2010/2011 Annual Report

European American Investment Bank AG


Foreword by the Chief Executive Officer

| 8

When political and business leaders find it

difficult to reign in the aberrations in the

financial markets it primarily points to a

lack of sustainability in the existing control

and incentive structures – in other

words, their actions do not anticipate and

create sustainable results, but merely react

to problems and address symptoms.

Sustainability in everyday business must

seek to satisfy the needs of our contemporary

society without diminishing the basis

of future generations’ livelihood – enough

for all, for all times.

In our world, this means developing, selecting

and providing financial products and

services for our customers that ensure lasting

success, not only in the short term but

also for longer-term growth and profitability,

allowing for future risks and inflation.

In doing so we must not forget that taking

risks is a core competence of a bank. Nowadays,

increasing risk has become a reality

which will not diminish in the foreseeable

future. The new millenium has not heralded

an “end of history” but, quite the opposite,

has brought about greater instability

and new sources of risk.

In the past we have managed to achieve

positive returns for our investment clients

with our public funds and managed portfolios,

even in most dire market conditions,

and we have used our specialised expertise

in the expansion of innovate service lines,

for example in the development of innova-


tive cashless payment systems to generate

sustainable returns and lasting cost savings

for our institutional customers.

For us, sustainability is not just an abstract

claim crafted by a marketing department,

but it is an intrinsic part of our company

culture and products. Consistent preservation

and growth of assets is the basis of our

entrepreneurial activities and goes hand in

hand with our clients’ trust in a reliable

team, that is led by the active partners of

an independent bank which is 100% privately

owned. The result is sustainable success

for our clients, members of staff and

the entrepreneurs.

Viktor Popovic, October 2011


Corporate Bodies

| 10

Supervisory Board

Dr. Erik Max Michael Obermayer

– Chairman

Adolf Walter Höllmer

– Vice chairman

Dkfm. Senta Penner

Viktor Popovic

Managing Board

Viktor Popovic

Manfred Huber

Johannes Langer

Manfred Huber

Johannes Langer


Management Report

| 14

Business Development and

Economic Situation

European American Investment Bank

AG („Euram Bank“) is an Austrian private

bank specializing in Private Banking,

Asset Management and Corporate Finance.

Besides our traditional operations,

we increasingly offer bespoke solutions

for the card payment service industry.

Our customers are mainly wealthy international

private clients and entrepreneurs,

as well as established institutional

investors. Our highly qualified employees

come from 11 different nations and reflect

Euram Bank’s open-minded corporate

culture.

Manfred Huber, managing board member,

heads the sectors Private Banking and Asset

Management. Viktor Popovic, chief executive

officer, heads the divisions Corporate

Finance and Card Payment Services.

Hans-Jürgen Eberling, who was responsible

for the sector Alternative Investments,

resigned from the managing board. Senta

Penner, partner and long-standing member

of the managing board, changed to the

supervisory board. Johannes Langer succeeded

Ms. Penner as Chief Financial Officer.

Johannes Langer has worked for

Euram Bank since 2000 and was responsible

for Accounting & Controlling, Risk,

AML and Compliance.

After a temporary setback in growth in the

second half of 2010, Q1 2011 was marked

by a significant GDP growth in the Euro

zone. However, not all countries experience

this positive mood. While Germany

continues to be the driving force for

growth, the peripheral countries are suffering

from weak economic activity or

even a recession. The difficult situation in

Greece burdened the entire banking industry.

Persistent pressure exerted by rating

agencies on other European countries

(Greece, Portugal, Ireland, Italy and Spain)

continues to adversely affect the bond

portfolios of many banks.


Euram Bank managed this crisis unscathed.

Despite these difficult market conditions,

we were not only able to preserve, but

even to consistently increase our customers’

funds. We achieved outstanding results

both with our in-house investment

funds and with the portfolios managed on

a discretionary basis.

Euram Bank achieved satisfactory results

in a very challenging market environment.

Despite a decrease of the balance sheet

total as of June 30, 2011 to EUR 469,7 million

(June 30, 2010: EUR 734,1 million),

we achieved an operating result of EUR

4,7 million (June 30, 2010: EUR 3,5 million).

The operating income amounted to

EUR 15,1 million (June 30, 2010: EUR

14 million), operating expenses amounted

to EUR 10,5 million as in the last year. The

profit on ordinary activities amounted to

EUR 2,1 million (June 30, 2010: EUR

3,2 million). The decrease in the profit on

ordinary activities was mainly driven by

value adjustments in respect of loans and

advances of EUR 2,2 million (June 30, 2010:

EUR 138 thousand) and value adjustments

in respect of shares in affiliated companies

of EUR 389 thousand (June 30, 2010: EUR

122 thousand).

A business model realized in cooperation

with Euram Bank Asia Limited (a 51%

subsidiary of Euram Bank), namely the

support of Indian companies in connection

with the issue of Global Depositary Receipts

(GDR) at the Luxembourg Stock Exchange,

tangibly affected the balance sheet total,

due to its underlying structure (100% collateralization

of lendings by deposits) and

the decreasing use of said business model.

Receivables from customers were reduced

by 40.7% to EUR 334,7 million compared

to last year (June 30, 2010: EUR 564,6 million).

Liabilities to customers were also reduced

by 37.8% to EUR 433,7 million

(June 30, 2010: EUR 697,3 million).


| 16

The volume of lendings collateralized by

deposits amounted to EUR 303,8 million

(June 30, 2010: EUR 532,3 million); the

volume of lendings collateralized by mortgages,

deposits & securities amounted to

EUR 30,8 million (June 30, 2010: EUR

28,6 million); the volume of unsecured

lendings amounted to EUR 0,1 million

(June 30, 2010: EUR 3,7 million).

The volume of assets under management

decreased simultaneously with the balance

sheet total. It amounted to EUR 1,457 million

and decreased by 39% compared

to June 30, 2010 (June 30, 2010: EUR

2,385 million).

Eligible capital pursuant to Section 23 of

the Banking Act (BWG) amounted to

EUR 14,6 million (June 30, 2010: EUR

14,6 million) and thus exceeded by far the

capital requirement of EUR 5,6 million

(June 30, 2010: EUR 6,3 million). The

equity ratio amounted to 34.7% and thus

exceeded by far the statutory minimum

level (June 30, 2010: 29.4%). Own funds

consist entirely of Tier 1 capital. The cost/

income ratio amounted to 69.1% compared

to 75.2% of last year.

Proposed Dividend Payment

In the fiscal year 2010/2011, Euram Bank

generated net profits of EUR 1,8 million.

Once a relevant resolution has been adopted

at the shareholders’ meeting in October

2011, Euram Bank anticipates to distribute

a dividend of EUR 1,8 million, i. e. 12.25%

of the capital of EUR 14,615 million, to its

shareholders Euram Beteiligungverwaltung

GmbH and Euram Holding AG.

Risk Reporting

Euram Bank applies the standard method

set out in Section 22a of the Banking Act

(BWG) to calculate its credit risk. Euram

Bank grants loans in the context of existing

customer relationships and subject to

full collateralization, either through cash

deposits or through securities held in securities

deposit accounts at Euram Bank,

taking into account the corresponding

(conservative) lending limits. Euram Bank

does not invest in derivative financial instruments.


| 18

In addition, Euram Bank does not engage

in proprietary trading. Securities held in

the Bank’s current assets were exclusively

held for resale to clients and not to take

advantage of short-term price and interest

fluctuations.

The liquidity risk is limited by largely

matching maturities. Customer deposits

are mainly invested according to maturities,

and demand deposits are invested up

to a maximum of one week with a selected

group of third banks. Interest rate risks are

controlled upon advice from the Asset/Liability

Management Committee (ALCO),

which issues recommendations for the

asset/liability management. The results are

evaluated and discussed on a monthly

basis. The recoverability of collaterals

provided for collateralized loans is reviewed

automatically on a daily basis.

Due to Euram Bank’s geographical range,

the operational risk is the most significant

risk. The money laundering risk is limited

by implementing an analytical anti-money

laundering-, compliance- and risk solution.

This AML solution allows us to identify

unusual, unexpected and suspicious

customer features and transactions, and

the Compliance Officer is automatically

warned in case of any significant suspicion.

In addition to identifying suspicious

situations, this AML solution supports the

investigation, further processing and documentation

of identified cases. Each step is

completely documented in compliance with

audit guidelines and can be reviewed and

verified at any time by means of a report.

To limit its legal risk, Euram Bank closely

cooperates with a renowned law firm and

uses this firm’s expertise in connection

with the launch of new products, transactions

and lines of business.

In the process of operational risk management,

identification, evaluation and monitoring

guidelines are updated on an annual

basis. Daily risk management was incorporated

into business and administration areas.

This business partnership model ensures

close monitoring and guides the staff to a

high awareness of operational risks.

We apply the base indicator method pursuant

to Section 22j of the Banking Act

(BWG) in conjunction with Section 182 of

the Solvency Ordinance to calculate our

operational risk.


In compliance with the pillar II/Basel II requirements,

„ICAAP“ measures were taken.

Euram Bank issues a risk strategy

which is updated on an annual basis. As

provided in the risk strategy, the risk bearing

capacity analysis compares the available

risk coverage with potential risks.

This analysis is prepared on a quarterly

basis and submitted to the managing board

and the supervisory board as part of the

risk report.

Material events after the balance sheet

date as of June 30, 2011

On September 22, 2011, by way of an interim

order of the Securities and Exchange

Board of India (SEBI), Euram Bank became

aware of possible market manipulations at

the Indian stock exchanges by a company

acting under Euram Bank’s FII license (foreign

institutional investor license). An affiliated

company of that company is also

involved. This market abuse is said to have

taken place from January 2009 until May

2010. The misconduct mentioned in the interim

order suggests illegal agreements of

the market participants, of which Euram

Bank was not aware. The trading partners

were exclusively brokers and consequently

the buyers themselves were not known to

Euram Bank. Thus Euram Bank could not

have known of any agreements between

the sellers and the buyers. The two above

mentioned companies are suspected of

prohibited action by abusing Euram Bank’s

FII license. The order accuses Euram Bank

of having breached the rules of conduct of

the Indian Stock Exchange as FII licensee

in this context.

Upon becoming aware of the accusations,

Euram Bank has cooperated with all authorities

involved and urges a fast clarification

of the matter. A business partner

who is also involved has immediately relinquished

his position as director in

Euram Bank’s subsidiary Euram Bank Asia

Limited.

In addition, Euram Bank decided to refrain

from continuing the GDR business model.

The contribution of the GDR business model

to the results as originally included in

the budget 2011/2012 was removed; Euram

Bank’s planned results for the fiscal year

2011/2012 will nevertheless be clearly

positive.


| 20

Outlook for 2011/2012

For the fiscal year 2011/2012, we expect

further growth and hence increase in income

from our Private Banking business.

The outstanding performance of our funds

even during the crisis should induce increasing

volumes for our Asset Management

division. We will no longer focus on

Alternative Investments. We will continue

to manage existing funds and investment

products in this field, but do not anticipate

any new issues. With its excellent local

Corporate Finance team our subsidiary

Euram Bank Asia Limited will become our

competence center for Corporate Finance

transactions. Furthermore, we will focus

on developing our Private Banking business

in this region. In our Card Payment

Services division we see very promising

projects at launch stage, together with our

international partners we are currently developing

further ventures in the field of

card based payment transactions.

Vienna, September 30, 2011

The Managing Board

Viktor Popovic

Johannes Langer

Manfred Huber


Balance sheet as at June 30, 2011

| 22

ASSETS June 30, 2011 June 30, 2010

EUR EUR THOUSAND EUR

1. Cash balance and credit balance

at central banks 42,688,937.70 47,017

2. Accounts receivable from financial institutions 41,679,686.29 62,006

a) daily receivables 38,329,633.06 43,709

b) other receivables 3,350,053.23 18,297

3. Receivables from customers 334,671,772.54 564,594

4. Shares and other securities

without fixed interest 13,953,752.76 14,571

5. Investments 30,591,893.85 35,275

6. Shares in affiliated companies 1,862,983.84 2,417

7. Intangible assets included in assets 77,286.58 59

8. Fixed assets 254,002.40 296

9. Other assets 3,477,394.09 7,287

10. Accruals and deferrals 456,370.40 579

469,714,080.45 734,101

11. Foreign assets 386,239,899.78 624,472


LIABILITIES June 30, 2011 June 30, 2010

EUR

EUR THOUSAND EUR

1. Liabilities to financial institutions 5,112,288.95 3,085

a) payable daily 111,680.62 85

b) with agreed term and notice of termination 5,000,608.33 3,000

2. Liabilities to customers 433,670,458.05 697,348

a) other liabilities

aa) payable daily 125,681,772.37 162,614

ab) with agreed term and

notice of termination 307,988,685.68 534,734

3. Securitised liabilities 10,212,943.78 11,298

4. Other liabilities 2,077,755.86 841

5. Accruals and deferrals 13,109.71 200

6. Provisions 2,127,389.78 3,573

a) Provisions for settlements on dismissal 185,993.97 264

b) Tax provisions 275,000.00 880

c) Other provisions 1,666,395.81 2,429

7. Signed up capital 10,045,712.61 10,046

8. Capital reserves 1,886,813.16 1,887

a) tied 1,886,813.16 1,887

9. Revenue reserve 2,098,904.17 2,099

a) other reserves 2,098,904.17 2,099

10. Reserve for liabilities in ac. with

§ 23 section 6 BWG 660,500.00 661

11. Balance sheet profit 1,808,204.38 3,063

469,714,080,45 734,101

1. Contingent liabilities 3,883,599.00 4,739

2. Credit risks 1,071,267.89 13,214

3. Allowable equity capital in ac. with

§ 23 BWG 14,614,643.36 14,633

4. Required equity capital in ac. with

§ 22 section 1 BWG in connection with § 29 BWG 5,595,800.00 6,249

5. Foreign liabilities 430,544,858.59 687,390


Profit and loss account for 2010/2011

| 24

Profit and loss account for 2010/2011 June 30, 2011 June 30, 2010

EUR

EUR THOUSAND EUR

1. Interest and similar returns 8,987,587.35 5,897

from fixed interest securities

2. Interest and similar expenditures -4,435,296.03 -3,187

I. Net interest return 4,552,291.32 2,710

3. Returns from securities and investments 1,089,857.22 2,770

a) Returns from shares, other share

entitlements and securities 95,220.46 112

without fixed interest

b) Returns from investments 994,636.76 2,658

4. Returns from commissions 14,790,548.68 10,865

5. Commission expenditures -7,263,642.83 -3,465

6. Returns/expenditure from financial transactions 1,491.87 223

7. Other business earnings 1,958,045.68 902

II. BUSINESS RETURNS 15,128,591.94 14,004

8. General administration expenditure -5,067,273.14 -5,774

a) Staff expenditure

aa) Wages and salaries -4,002,488.14 -4,877

bb) Expenditure for legally required social

security payments and pay-related

mandatory social security contributions -755,706.74 -715

cc) Other social security payments -59,060.13 -59

dd) Pension expenditures -98,955.17 -91

ee) Payments for settlements on dismissal

& contributions to staff pension funds -151,062.96 -32

b) Other operating expenditures

(operating expenditure) -4,831,830.61 -4,609

-9,899,103.75 -10,383


Profit and loss account for 2010/2011 June 30, 2011 June 30, 2010

EUR THOUSAND EUR

9. Value adjustments on items

7. and 8. (assets) -159,622.82 -142

10. Other business expenditure -396,715.13 0

III. BUSINESS EXPENDITURE -10,455,441.70 -10,525

IV. OPERATING RESULT 4,673,150.24 3,479

11. Balance from funding/dissolutions of losses

from receivables -2,214,963.86 -138

12. Losses from securities rated as financial

investments and from investments and shares

in affiliated companies -389,320.09 -122

V. RESULT FROM ORDINARY OPERATIONS 2,068,866.29 3,219

13. Tax on income and earnings -324,099.59 -165

VI. ANNUAL NET INCOME = PROFIT FOR THE YEAR 1,744,766.70 3,055

14. Profit brought forward 63,437.68 9

VII. BALANCE SHEET PROFIT 1,808,204.38 3,064


Notes

| 28

to the financial statements of European

American Investment Bank AG as of June

30, 2011.

The financial statements as of June 30, 2011

were prepared according to the provisions

of the Accounting Act in compliance with

the special provisions of the Banking Act

(BWG).

1. General Principles and Information

on Accounting and Valuation

General Principles

The financial statements as of June 30, 2011

were prepared in compliance with generally

accepted accounting principles and the

general standard to present a true and fair

view of the company’s assets and liabilities,

financial condition, and results of operation.

The financial statements were prepared in

compliance with the principle of consistency

of presentation.

Assets and liabilities were valued in compliance

with the principle of individual

valuation and the going concern principle.

Compliance with the principle of conservatism

is ensured by recognizing only profits

realized on the balance sheet date and recognizing

all identifiable risks and impending

losses in the balance sheet.

Foreign Currency Amounts

Pursuant to Section 58 (1) of the Banking

Act (BWG), foreign currency amounts are

translated on the basis of the mean rates of

exchange as of the balance sheet date.

Financial Instruments in the Bank Book

As of June 30, 2011, Euram Bank recorded

hedge fund shares as well as two collateralized

loan obligations in the amount of

EUR 10,1 million in the bank book.

Hedge Fund Shares EUR thousand

1794 Commodore

Overseas Fund EUR 852

CFS I EUR 933

CFS II EUR 8.082

Collateralized

Loan Obligations EUR thousand

Whitebark Pine I Ltd EUR 234

Canal Point I Ltd EUR 36


Lending Risks

In the fiscal year 2010/2011, Euram Bank’s

loans to customers amounted to EUR

334,7 million, of which EUR 303,8 million

are collateralized by deposits; the remaining

loans are mainly collateralized by

mortgages, deposits and/or securities.

Lendings

EUR million

Collateralized

by deposits EUR 303,8

Collateralized by mortgages,

deposits and securities EUR 30,8

Unsecured EUR 0,1

Shares in affiliated companies

Euram Bank holds 100% in Euram Invest

Holdings I GmbH with its registered office in

Vienna, Austria, in Euram Invest Holdings II

GmbH with its registered office in Vienna,

Austria, in Euram Invest Holdings 3 GmbH

with its registered office in Munich, Germany,

in Euram Invest Holdings Vier

GmbH with its registered office in Vienna,

Austria (the companies’ line of business

being the management of investments),

and 51% in Euram Bank Asia Limited with

its registered office in Dubai, United Arab

Emirates. In the fiscal year 2010/2011,

Euram Bank liquidated its 100% shares in

Euram Asset Management Monaco S.A.M.,

a Monaco-based asset management company.

In the fiscal year 2010/2011, Euram Bank

Asia Ltd. distributed a dividend of USD

1,4 million to Euram Bank.

Pursuant to Section 238 (2) of the Companies

Act, the equity capital and the last fiscal

year’s results of affiliated companies

are as follows:

(EUR thousand) Share of Results of last

Equity equity fiscal year

Euram Invest Holdings I GmbH 200,8 100% 84,7

Euram Invest Holdings II GmbH 108,3 100% 73,9

Euram Invest Holdings 3 GmbH 318,2 100% 439,9

Euram Invest Holdings Vier GmbH 52,6 100% -10,2

Euram Bank Asia Ltd 2,786,5 51% 1,999,0


| 30

Participations

This item includes the investments in the

deposit guarantee scheme of “Einlagensicherung

der Banken und Bankiers GmbH”,

Vienna, and in the “Österreichische Clearingbank

AG”, as well as shares of EUR

30,6 million held in a fiduciary capacity

for four companies.

Property, Plant and Equipment

Intangible fixed assets as well as property,

plant and equipment are valued at cost less

regular depreciation. Low-value items are

fully depreciated in the year of acquisition.

Regular depreciation is made on a straightline

basis.

Regular depreciation is based on the following

useful lives:

Company cars:

Office furniture:

Leasehold improvements:

Office equipment:

Software:

Hardware:

8 years

5 years

5 years

5 years

5 years

5 years

Accruals for Severance Payments

Accruals for severance payments are calculated

according to principles of financial

mathematics by applying an interest rate

of 4% and on the basis of an arithmetical

pension age of 60 years for women and 65

years for men. A fluctuation discount is

not applied.

Contingent Liabilities

Contingent liabilities include financing

guarantees collateralized by securities

(EUR 0,3 million), unsecured guarantees

for financing (EUR 1,7 million) as well as a

guarantee toward a credit card company

for the credit card limits granted to Euram

Bank clients (EUR 1,9 million).

Credit Risks

This item includes undrawn credit facilities

(EUR 1,1 million).

Fiduciary Receivables

Fiduciary receivables are included in the

positions ”loans and advances to customers”

(EUR 10,6 million), “shares and other

variable-yield securities” (EUR 9,4 million),

and “participating interest”

(EUR 30,6 million).


Fiduciary Liabilities

Fiduciary liabilities are included in the positions

“liabilities to customers” (EUR

41,2 million) and in “securitised liabilities”

(EUR 9,3 million).

2. Notes to the Balance Sheet

A. Presentation of Maturities

Receivables (not repayable on demand)

from banks and customers as well as payables

(not repayable on demand) to banks

and customers are summarized according

to remaining maturities:

Receivables from banks EUR thousand

Up to 3 months EUR 3,350

More than 3 months

to 1 year EUR 0

More than 1 year

to 5 years EUR 0

More than 5 years EUR 0

Receivables

from customers

EUR thousand

Up to 3 months EUR 139,968

More than 3 months

to 1 year EUR 141,816

More than 1 year

to 5 years EUR 43,175

More than 5 years EUR 9,348

Payables to banks EUR thousand

Up to 3 months EUR 5,001

More than 3 months

to 1 year EUR 0

More than 1 year

to 5 years EUR 0

More than 5 years EUR 0

Payables to customers EUR thousand

Up to 3 months EUR 139,254

More than 3 months

to 1 year EUR 134,478

More than 1 year

to 5 years EUR 34,257

More than 5 years EUR 0


| 32

B. Securities

In the fiscal year 2010/2011, Euram Bank

did not hold any fixed-interest securities.

C. Shares and Other Non-fixed-interest

Securities

This item includes investment fund shares

held as fixed assets of EUR 1,8 million.

Current assets include hedge fund shares

of EUR 9,0 million held in trust, two collateralized

loan obligations of EUR 0,3 million

(a related fiduciary liability is recognized

in “securitised liabilities”) as well as

hedge fund shares of EUR 0,9 million of

the 1794 Commodore Fund. This item also

includes investment fund shares of

EUR 1,8 million, a self-issued partial debenture

of EUR 0,2 million as well as a

Euro hedge fund certificate of EUR 36 thousand.

Fixed Assets

EUR thousand

Europportunity Bond EUR 1,845

Current Assets

EUR thousand

CFS I EUR 933

CFS II EUR 8,082

Whitebark Pine I Ltd EUR 234

Canal Point I Ltd EUR 36

1794 Commodore

Overseas Fund EUR 852

Europportunity Bond EUR 882

USD Convergence Bond EUR 122

Advantage Stock EUR 737

Euram CLO Note I EUR 194

Euram Commodore

Index – Euro Protected

2 certificates EUR 36

None of the items of fixed and current assets

are quoted on the stock exchange.

In the fiscal year 2010/2011, Euram Bank

did not hold a securities trading book.

In the fiscal year 2010/2011, Euram Bank

did not hold any equity shares.


D. Fixed Assets

The fixed-asset movement schedule is presented

as a separate schedule of the notes.

E. Other Assets

Other assets include corporate income tax,

VAT and capital gains tax receivables from

prepayments to the Tax Office for Corporations

(EUR 61 thousand), a pending repayment

in the amount of EUR 1 million, fees

charged for the management of investment

funds (EUR 0,5 million), outstanding receivables

(EUR 1 million), a real estate

property which is not intended to be held

on a long-term basis (EUR 250 thousand),

as well as an investment (WhiteConcierge

Ltd) which is not intended to be held on a

long-term basis (EUR 0,8 million).

F. Prepayments and accrued income

This item includes salary advances

(EUR 137,2 thousand), prepaid insurance

premiums, information and maintenance

expenses (EUR 164,1 thousand), prepaid

rent (EUR 7,6 thousand), prepayments for

the data processing center (EUR 145,8 thousand),

as well as other prepayments (EUR

1,6 thousand).

G. Securitised Liabilities

This item includes fiduciary liabilities

(EUR 9,3 million) and a liability for the

issue of an index certificate (EUR 0,9 million).

EUR thousand

Euram CLO Note I EUR 251

CFS Alternative

Investment Note I EUR 933

CFS Alternative

Investment Note II EUR 8.082

Euram Commodore

Index – Euro Protected

2 certificates EUR 947

H. Other Liabilities

Besides invoices received for fees charged

for the management of investment funds

in the amount of EUR 1,3 million, this item

also includes liabilities to a data collection

company (amount of profit share from

ATM business) of EUR 0,8 million.

I. Accruals and deferred income

This item mainly includes fees of EUR

13,1 thousand already received, but allocated

to the following fiscal year.


| 34

J. Shareholders’ Equity

1.) The share capital of EUR 10,045,7 thousand

is divided into 270,000 share units,

each representing the same interest in the

share capital.

2.) The shareholders’ equity consists of the

following:

EUR thousand

Subscribed capital EUR 10,045,7

(Appropriated) reserve EUR 1,886,8

Retained earnings EUR 2,098,9

Liability reserve pursuant

to Section 23 (6) of the

Banking Act (BWG) EUR 660,5

3.) The net profit for the fiscal year 2010/2011

amounts to EUR 1,808,2 thousand.

K. Required own funds

The calculation of the required own funds

is based on the following methods:

Credit risk: Standard method (Standardansatz)

Operational risk: Basis indicator method

(Basisindikatorenansatz)

The required own funds for the Credit risk

amount to EUR 3,369 thousand,

Pursuant to Section 22a (4) of the Banking

Act (BWG), 8% of the weighted receivables

for each class of receivables amount to:

EUR thousand

Receivables from

institutions EUR 667

Receivables from

companies EUR 1,776

Retail receivables EUR 211

Receivables collateralized

by real estate properties EUR 83

Receivables in the form

of investment fund

shares EUR 188

Other items EUR 444

Foreign currency risk amount to EUR 0.

Operational risk amount to EUR 2,227 thousand.


L. Additional Disclosures

1.) Total amount of assets and liabilities in

foreign currency:

EUR million

Foreign currency

assets EUR 351,4

Foreign currency

liabilities EUR 350,2

2.) In the fiscal year 2010/2011, Euram

Bank was restraint in the disposal of an asset

in the amount of EUR 3,6 million.

3.) Liabilities to affiliated companies

amount to EUR 0,5 million.

4.) Other accruals of EUR 1,7 million include

accruals for bonuses, unconsumed

annual leave, legal, auditing and advisory

fees, as well as other expenses.

5.) Obligations from the use of fixed assets

(not recognized in the balance sheet)

amount to EUR 396,7 thousand in the next

year and to approx. EUR 2 million in the

next five years, mainly concerning rent of

office space.

6.) In the fiscal year 2010/2011, Euram

Bank redesignated 7.270 shares in the Advantage

Stock Fund held in the non-current

assets at a rate of 65,13 to the current assets.

The current rate at the time of redesignation

amounted to 88,06.

3. Notes to the Income Statement

With reference to Section 242 (1) of the

Companies Act, income will not be itemized

by geographical markets pursuant to Section

64 (1) no. 9 of the Banking Act (BWG).


| 36

With reference to Section 237 of the Companies

Act, other operating income and

other operating expenses are summarized

as follows pursuant to Section 64 (1) no.

12 of the Banking Act (BWG):

– Other operating income mainly consists

of costs recharged to customers

(EUR 638 thousand), income from consulting

services (EUR 1 million), costs

recharged to group companies

(EUR 82 thousand), elimination of liabilities

(EUR 65 thousand), the release of

accruals concerning the fiscal year

2009/2010 (EUR 64 thousand) and a

VAT credit (EUR 90 thousand).

– In the fiscal year 2010/2011, Euram

Bank recognized other operating expenses

in the amount of EUR 397 thousand

(expenses for two external consultants

and for non operating interests).

Expenditures from value adjustments in

respect of loans and advances amount to

EUR 2,2 million and mainly relate to the

depreciation of two receivables from customers.

Expenditures from value adjustments in

respect of securities as well as of participations

and shares held in affiliated companies

amount to EUR 0,4 million and are

mainly related to the liquidation of Euram

Asset Management Monaco S.A.M.

„Taxes from income and earnings“ of

EUR 0,3 million recognized in profit and

loss accounts adversely affect the „Profit

or loss on ordinary activities“ to an extent

of 15.7%.


| 38

4. Miscellaneous

1.) In the fiscal year 2010/2011, Euram Bank

employed on average 37 employees.

2.) In the fiscal year 2010/2011, accruals for

redundancy and retirement benefits amount

to EUR 116 thousand for executives and

EUR 70 thousand for other employees. In addition,

contributions in the amount of

EUR 99 thousand were made to the internal

pension fund. Expenses for a severance payment

to a member of the managing board

amounted to EUR 142,5 thousand.

3.) The total compensation for 5 members of

the managing board amount to EUR 1,6 million

in the fiscal year 2010/2011; the members

of the supervisory board received a

compensation of EUR 69,3 thousand in the

fiscal year 2010/2011.

4.) In the fiscal year 2010/2011, Euram Bank

granted 2 loans amounting to EUR 177 thousand

to executives.

5.) In the fiscal year 2010/2011, the managing

board consisted of the following members:

Viktor Popovic

Dkfm. Senta Penner (until July 27, 2010)

Hans Jürgen Eberling (until October 7, 2010)

Manfred Huber

Johannes Langer (since August 1, 2010)

6.) In the fiscal year 2010/2011, the supervisory

board consisted of the following

elected members:

Dr. Erik Max Michael Obermayer

– Chairman

Adolf Walter Höllmer

– Vice chairman

Mag. Helmut W. Seitz (until July 1, 2010)

Dkfm. Senta Penner (since July 28, 2010)

7.) Euram Bank is included in consolidated

financial statements. The company, which

prepares the consolidated financial statements

is as follows:

Euram Holding AG

Wallnerstrasse 4

1010 Wien


The Euram Group

100%

Euram Beteiligungverwaltung GmbH

63%

Euram Holding AG

37%

European American Investment Bank AG

Euram Invest Holdings I GmbH (100%)

Euram Invest Holdings II GmbH (100%)

Euram Invest Holdings 3 GmbH (100%)

Euram Invest Holdings Vier GmbH (100%)

Euram Bank Asia Ltd. (51%)

Vienna, September 30, 2011

The managing board

Viktor Popovic

Johannes Langer

Manfred Huber


Audit opinion

| 42

Report on the Financial Statements

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, 2010 to

June 30, 2011. These financial statements

comprise the balance sheet as of

June 30, 2011, the income statement for

the fiscal year ended June 30, 2011, 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 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.


| 44

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, 2011

and of its financial performance for the

fiscal year from July 1, 2010 to

June 30, 2011 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. In our

opinion, the management report is consistent

with the financial statements.

Vienna, September 30, 2011

Ernst & Young

Wirtschaftsprüfungsgesellschaft m.b.H.

Dr. Robert Wauschek mp

Certified Public Accountant

Mag. Ernst Schönhuber mp

Certified Public Accountant


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

Euram Bank Asia Ltd.

Liberty House, Offices 915/916

DIFC, Sheikh Zayed Road

Dubai, United Arab Emirates

Tel. +971 4 5080 300

Fax +971 4 3258 331

office@eurambankasia.com

www.eurambankasia.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

Michael Stelzhammer, Shutterstock

Print

Vorarlberger Verlagsanstalt


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

Euram Bank Asia Ltd.

Liberty House, Offices 915/916

DIFC, Sheikh Zayed Road

Dubai, United Arab Emirates

Tel. +971 4 5080 300

Fax +971 4 3258 331

office@eurambankasia.com

www.eurambankasia.com

Euram Bank at

Palais Esterházy, Vienna

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