Review - Bcge

je connais mon banquier je connais mon banquier 

Annual report 



2004 


















je connais mon banquier je connais mon banquier

“BCGE will be increasingly catering to SMEs” 

Tribune de Genève, 02.07.2004 

“BCGE resumes dividend payments after profits surge” 

Schweizerische Depeschenagentur, 03.03.2005 

“BCGE awarded A- and A-2 ratings by Standard & Poor’s” 

L’Agefi, 15.12.2004 

“BCGE making a good profit once again – net profits quadrupled in 2005” 

Tribune de Genève, 04.03.2005 

“ The measures introduced 5 years ago to reshape BCGE and make it profitable 

once again are reaching completion” 

Neue Zürcher Zeitung, 04.03.2005


BCGE je connais mon – banquier the je leader connais mon in banquier construction 


finance in Geneva 




This year the Annual Report takes as its theme a subject 

which is central both to Geneva and its Cantonal Bank – 

construction finance. 

There are many reasons for this and we would like to 

highlight four of them. 

Employment 

Including apprentices, the construction industry employs 13,000 

people and is one of the pillars of Geneva’s economy. As the canton 

is so closely associated with services, the other sectors can often 

too easily be overlooked. 

The crisis 

Nobody can ignore the housing shortage in the Canton of Geneva. 

This subject has therefore become sensitive and is one of the main 

preoccupations of Geneva’s citizens. 

The economy 

It is a truism to say that one franc invested in construction 

generates five francs in the overall economy. There is also a 

corollary to this fact: “if the construction sector is healthy, the 

whole economy is healthy”. These two factors allow us to 

assess the true importance of construction for the Geneva 

economy in its widest sense. 

Architecture 

This art form, which is functional and at the same time engages 

our emotions, contributes to the beauty of our surroundings and 

gives it a human touch. It provokes discussion, passionate debates 

even – in all types of public and private forums. Architecture, 

with its fantasy and creativity, defines our environment and 

contributes to the quality of our urban life. 

Construction is also strategic for BCGE as our organisation 

holds the position of market leader in Geneva. BCGE has a 

centre of competence which is valued and recognised by 

even the most demanding professionals. It contributes 

to the construction of industrial buildings, offices, apartment 

blocks and private housing both for new constructions and 

renovation. BCGE plays a role in the construction of the majority 

of apartments subsidised by the Canton of Geneva and in a 

large number of private housing developments of all types. 

This is just one of the many ways in which the Bank fulfils 

its mission of developing the local and regional economies. 

As construction is also an aesthetic achievement, we have chosen 

to illustrate this Annual Report with pictures which showcase this. 

We therefore appointed the photographer Philippe Schiller to 

capture on film the richness of the architectural achievements in 

Geneva and France (as BCGE is also active on the other side of 

the Jura), in which BCGE has played a role. 

Nicolas de Saussure 

Manager, CEO’s Office and Communications 

In 2004, BCGE launched Simplissimmo, a new concept for the financing of houses 

and apartments; the name was selected to emphasise both its competitiveness 

and its accessibility.

Offices and retail arcade 

Simplicity and transparency are 

the key words in the composed, 

clean-lined architecture of this 

construction. A building’s 

appearance and its integration 

into its surroundings are important 

considerations for BCGE. 

1:1 

2004 

BCGE


Contents 


* 




The BCGE Group in brief 4 

The BCGE Group key figures 9 

Message from the Chairman of the Board of Directors 10 

Message from the Chief Executive Officer 12 

Business review 14 

Review of the business units 18 

• Finance and Risk Management 

• Retail Banking and Branch Network 

• Corporate Banking 

• Private Banking 

• Administration and Credit Control 

• Logistics and Information Technology 

Achievements of 2004 25 

BCGE in the community 29 

Risk management – at the heart of the Bank’s strategy 30 

BCGE and its employees 32 

Eco-effectiveness of the BCGE Group 34 

Review of the Geneva economy in 2004 36 

Review of the financial markets in 2004 38 

Report of the Group auditors 42 

Consolidated financial statements 2004 43 

• The BCGE Group balance sheet 

• The BCGE Group profit and loss account 

• The BCGE Group cash flow statement 

• The BCGE Group statement of shareholders’ equity 

• Notes to the consolidated financial statements 2004 

Corporate governance 69 

Auditor’s report 86 

Parent company accounts 2004 87 

• Balance sheet before allocation 

• Profit and loss account 

• Statement of shareholders’ equity 

• Notes to the financial statements – parent company 

Statutes of 15 May 2001 96 

BCGE, a banking group at the service of its region 102 

*This English version of the annual report is a free translation of the official French version. 

BCGE 1:1 

Annual Report 

2004 

3

4 


The BCGE Group in brief 


“To contribute to the development of Geneva and its region” 



The mission of the Banque Cantonale de Genève is to “contribute 

to the development of the Canton of Geneva and its region” by 

providing all residents, businesses and institutions with banking 

services developed or independently selected by the Bank which 

are both competitive and in line with the organisation and 

capabilities of a regional bank. 

BCGE 1:1 

Annual Report 

2004 

BCGE Group is present mainly in the Geneva market, but 

also in France and other parts of Switzerland. Through its 

four units, the parent company and its three wholly-owned 

subsidiaries, it provides banking services to individual, 

corporate and institutional clients. In all, the Group has 

845 employees (773 full-time equivalents). 

1816 

The general mission of the Banque Cantonale de Genève SA is to contribute to the development 

of the Canton of Geneva and its region by providing all its residents, businesses and institutions with 

high-quality and highly competitive banking services. The Bank is listed on the Swiss Stock Exchange 

SWX (BCGE). It employs 759 staff, has 25 branches and 67 ATMs. 

1994 

With its Head Office in Lyon and a branch in Annecy, the Banque Cantonale de Genève (France) SA 

is a wholly-owned subsidiary of the Banque Cantonale de Genève. It offers corporate and property 

development financing for its corporate customers, as well as asset management for its private 

customers. It extends the regional influence of the BCGE Group in France. The Bank’s balance sheet 

totals CHF 319.1 million, and it employs 29 staff. Further details on pages 20 and 84. 

1996 

A subsidiary of the Banque Cantonale de Genève, Synchrony Asset Management SA provides 

sophisticated asset-management solutions and services, integrating quantitative management, aimed 

at institutional investors. Assets under management currently amount to CHF 2.324 billion and it 

employs 15 staff. Further details on pages 18 and 84. 

1934 

A wholly-owned subsidiary of the Banque Cantonale de Genève since 1997, Anker Bank SA contributes 

to the development of the BCGE Group’s management of private assets on the Swiss market. 

With its head office in Zurich, it has branches in Lausanne, Lugano and Geneva. Its balance sheet 

totals CHF 228.4 million and it employs 42 staff. Further details on pages 21 and 84.

the BCGE Group in brief the BCGE Group in brief 






As a “full-service regional bank”, BCGE offers an extensive 

range of banking services tailored to meet customers’ needs. 

This strategic configuration is reflected in the management of 

a portfolio of activities aimed at individual (the left-hand column 

A complete portfolio of well diversified activities 

Debit cards 

Mail and branch communication channel 

Telephone banking 

E-banking 

Foreign exchange 

ATM facilities 

Investment mandates 

Retirement plans 

Asset management 

Swiss clients – Investment mandates 

International clients – Investment mandates 

Advisory services 

Independent financial advisors 

Lombard credits 

Credit against securities 

Short-term 

Medium- and long-term 

Short-term notes 

Principal residence 

Second home 

Loans for the surrounding 

regions of France 

Credit cards 

Leasing 

Personal loans 

INDIVIDUALS 

Banking 

transactions 

Asset 

management 

Savings 

products 

Housing 

finance 

Financial 

support 

below) and corporate clients (the right-hand column below). 

Each activity includes several skills which are summarised in 

the table below. 

CORPORATE CLIENTS 

Market and 

financial services 

Asset 

management 

Treasury 

management 

Property development and 

construction finance 

Corporate 

finance 

Global 

trade finance 

Corporate 

consultancy 

Finance and treasury 

management for 

public bodies 


corporate finance in France 

Payment and cash-flow solutions 

Foreign currencies 

Shares – investments 

Bonds 

Cash management 

Passive management 

Active management 

Active investment services 

Competence centre for corporate 

retirement plans 

Long-term management of Swiss small caps 


investment 

SME 

Large companies 

Capital goods leasing 

Trade finance 

Structured finance 

Commodities 

Financial management 

Risk management 

Public bodies and companies 

Quasi-governmental bodies and 

associations 

Property development companies 

established under public law 

Property development 

Finance for company sales and 

acquisitions 

BCGE 1:1 

Annual Report 

2004 

5

6 


the The BCGE BCGE Group in brief Group the BCGE Group in in brief 


Organisation the BCGE Group in chart brief on the BCGE 31 December Group in brief 2004 



Executive Board 

Chief Executive Officer 

Blaise GOETSCHIN 

Finance and Risk Management 

Corporate Banking 

Private Banking 

Member of the 


Claude BAGNOUD 

Member of the 


Alain SPADONE 

Credit Control and 

Administration 

Member of the 


Emile RAUSIS 

Logistics and Information 

Technology 

Member of the 


Jean-Marc JORIS 

BCGE 1:1 

Annual Report 

2004 

Member of the 


Eric BOURGEAUX 

Retail Banking and Branch Network 

Member of the 


Johan B. A. KROON 

Marketing and Product 

Management 

Laurence EQUEY 

Financial Markets and 

Treasury 

Max BAERTSCH 

Corraterie Sector 

Thierry JAQUIER 

International 

Corporations 

Pierre-Olivier 

FRAGNIERE 

Centralised Management 

Urs BUSER 

Debt Recovery 

Bernard MATTHEY 

Market Transactions 

Juerg Bernhard 

SCHWAB 

CEO’s Office and 

Communications 

Nicolas 

de SAUSSURE 

General Accounting 

Yvan NICOLET 

Chêne Sector 

André FROSSARD 

Real Estate and 

Construction 

Jos von ARX 

Investment Strategy and 

Financial Studies 

Jean-Luc LEDERREY 

Workout 

François KIRCHHOFF 

Information Technology 

Christian KEMPER 

Human Resources 

Alessandro LANCI 

Risk Management 

Michel MAIGNAN 

Vernier Sector 

Patrick BLANCHARD 

Public Bodies 

Ronald LABBE 

International Clients 

Amin KHAMSI 

Credit Control 

François GRIMM 

Logistics 

Christophe MARIN

Legal 

Felice GRAZIANO 

Financial Institutions 

François JULIA 

Servette Sector 

Giovanni LO BUE 

Swiss Corporate Clients 

Christian TURBE 

Swiss Clients 

Racheleano MECOZZI 

Credit Administration 

Hans-Joerg FREY 

Organisation 

Claudia HURTHER 

Management Control 

Marc DOERKS 

Corporate Lending, SMEs 

Tanguy De JAEGERE 

French Corporate Clients 

Jérôme MONNIER 

Reporting, Support and 

Management 

Philippe BAILAT 

Banking Transactions 

Claude REGAMEY 

Branch network and 

e-commerce 

Bernard BESSIRE 

Member of the Credit Committee 

Member of the Strategy Committee 

Member of the ALM Committee 

Member of the Risk Committee 

Member of the IT Strategy Committee 

Member of the Credit Risk Commission 

For a description of the principal committees, see page 70. 

Services Administration 

and Compliance 

Daniel BURKHARDT 

Synchrony Asset 

Management SA 

(100% BCGE subsidiary) 

Constantino CANCELA 

Business 

Development 

Andrew GILBERT 

BCGE (France) SA 


Alain BOCHET 

Anker Bank SA 


Gilbert PFAEFFLI 

BCGE 1:1 

Annual Report 

2004 

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The BCGE Group in brief 





The BCGE Group offers its services and supports its clients in 

Geneva, the rest of Switzerland and France 

In Geneva 

• Individuals who live and/or 

work in the canton 

• Companies of all sizes 

• Public bodies 

• Commodity trading companies 

• International clients in the 

financial sector 

Outline calendar 

Ordinary General Meeting of Shareholders 3 May 2005 

First-half 2005 results 31 August 2005 

Annual results 2005 2 March 2006 

Ordinary General Meeting of Shareholders 2 May 2006 

Information 

BCGE Group 

Quai de l’Ile 17 Tel: +41 (0)22 317 27 27 

P.O. Box 2251 Fax: +41 (0)22 317 17 37 

CH - 1211 Geneva 2 www.bcge.ch 

BCGE 1:1 

Annual Report 

2004 

In France 

• The business community of the 

Rhône-Alpes region 

• Long-established partners operating in France 

• Individuals for wealth management 

Financial institutions 

François Julia Tel: +41 (0)22 809 34 69 

Fax: +41 (0)22 809 34 74 

francois.julia@bcge.ch 

In Switzerland 

• International and Swiss clients in 

wealth management 

• Institutional clients 

A region in 

the heart of Europe 

Payments to public authorities – 2004 

Commission paid to the State 

for the savings guarantee CHF 2.6 million 

Amount paid to the State for the 

guarantee on the financing of 

the Fondation de valorisation CHF 1.0 million 

Dividend submitted for approval 

by the Ordinary General Meeting on 

3 May 2005 CHF 2.8 million 

Investor relations and communications 

Nicolas de Saussure Tel: +41 (0)22 809 34 12 

Fax: +41 (0)22 809 22 11 

actionnaires@bcge.ch


The BCGE Group key figures 





2004 2003 2002 2001 2000 

Balance sheet in CHF millions 

Total balance sheet 13,892 14,561 15,450 17,144 18,632 

Loans to clients 11,386 12,021 12,857 14,377 15,468 

Client deposits and borrowings 12,782 13,254 13,607 13,775 14,372 

Shareholders’ equity 654 622 624 653 685 

Results in CHF millions 

Interest income 179 171 173 161 168 

Commission income 81 73 67 71 86 

Trading income 9 18 13 12 16 

Other ordinary income 9 14 7 15 13 

Total income 278 276 260 259 283 

Operating expenses 199 200 190 191 196 

Gross profit 79 76 70 68 88 

Depreciation, valuation adjustments, 

provisions and losses, extraordinary income 47 69 110 345 317 

Group result 32 7 –28 –31 –158 

Staff (full-time equivalents) 773 829 847 888 900 

Ratios in % 

Shareholders’ equity / total balance sheet 4.7 4.3 4.0 3.8 3.7 

Gross profit / shareholders’ equity 12.1 12.2 11.2 10.5 12.8 

Expenses / income 71.6 72.5 73.1 73.7 69.1 

Data per bearer share in CHF 

Shareholders’ equity 182 173 173 181 190 

Gross profit 22 21 19 19 24 

Net profit 9 2 –8 –9 –44 

Dividend* 1 – – – – 

Stockmarket data 

History of bearer share price in CHF 

- high 198 173 170 225 292 

- low 174 115 115 143 206 

- at year-end 187 172 140 171 210 

Market capitalisation in CHF millions 673 619 504 616 756 

Number of shares in thousands 5,721 5,721 5,721 5,721 5,721 

Shareholders’equity / number of shares 187 179 177 

*Proposal to be submitted to the Ordinary General Meeting on 3 May 2005. 

BCGE 1:1 

Annual Report 

2004 

9

10 


Message from the Chairman of the Board of Directors 


BCGE is strong and is fulfilling its mission 



Dear shareholders, clients, employees and partners of BCGE 

We can celebrate our 10th birthday with pride and confidence in 

the future. Indeed, the results posted can be described as highly 

pleasing, and demonstrate the soundness of the strategy followed 

by the Bank since 2000. With a consolidated net profit of over 

CHF 31 million, as opposed to approximately CHF 7 million last 

year, the growth is significant and fully reflects the efforts devoted 

to the lasting reconstruction of BCGE. We can now give up the 

role of balance-sheet stabiliser to take on the more enviable one 

of optimiser, seeking the appropriate balance between risk and 

profitability growth. 

2004, a year of contrasts in Geneva’s economy 

A very good year for the world, and satisfactory for Europe, 

2004 can be described from the point of view of the Geneva 

economy as dynamic in the area of external trade on the one 

hand, and, on the other, by stagnation in the domestic market. 

We were happy to note growth in exports in certain areas, 

such as watch-making, jewellery, chemical products and also 

in some sectors of the electronics and biochemical industries. 

The financial market, too, rediscovered some of its energy, and 

the employment market, at least in this particular area, has 

reversed its downward trend in the last few years. But on the 

other hand, domestic demand is still lack-lustre, as can be seen 

for example in the construction industry, despite particularly 

attractive interest rates. If one then adds more open markets and 

consequently stronger competition, a massive increase in 

BCGE 1:1 

Annual Report 

2004 

health costs and fiscal pressure, then one can better understand 

why the domestic market is feeling the strain. This has 

unfortunately led to the highest unemployment rate 

in Switzerland, one which, in these circumstances, will be 

difficult to reduce. 

Working towards constant and progressive improvement in 

the profitability of our Bank 

In our remarks on the Bank’s financial outlook, we had anticipated 

a return to profitability starting in 2004. This goal has not only 

been met, it has been surpassed. That is why the Board of 

Directors unanimously approved recommending the payment of 

dividends. Although very satisfied with what has been achieved, 

we are continuing to pursue our objective of increased 

profitability. The current return on shareholders’ equity is in the 

area of 5%, and we intend to improve this gradually but very 

significantly, and thus approach the level of other cantonal banks. 

In order to achieve this and at the same time retain the same 

conservative characteristics we have at present, we will need to 

increase our equity progressively, which in comparison with the 

most profitable cantonal banks is still quite modest. This explains 

why, beginning with this year, we must find an appropriate 

balance between the dividend-to-profit ratio and the proportion 

to be allocated to available reserves. It is our view that the 

rebuilding of an additional CHF 100 million of assets over a 

period of 5 years is a reasonable goal, if we wish to reinvest 

the credit capacity created by the repayments to the Fondation 

de valorisation in the economy of Geneva. The Board of 

Directors will propose to the Ordinary General Meeting of 

Shareholders the payment of a first installment of CHF 22 million 

into the General Reserve. 

In 2000 very few expert observers would have bet that we would 

pay a dividend as early as 2004. It is our view that the loyalty 

and confidence you have demonstrated over the course of these 

difficult years should be rewarded, and it is with pleasure that 

the Board of Directors is proposing this year the payment of a 

dividend of 1%, for a total amount of CHF 3,600,000. 

Fondation de valorisation des actifs de la BCGE 

In 2004 the rate of repayment of credits from the Fondation 

de valorisation remained high and significantly above the 

CHF 500 million budgeted for in the ten-year plan. In general 

terms, we must be pleased with this reduction of our obligations. 

As a counterpart to this repayment flow, our goal is to contribute 

to the economy of Geneva by generating new business. 

However, this part of the restructuring effort will be undertaken 

with great caution.

message from the Chairman of the Board of Directors 






We therefore believe that the managed reduction of our balance 

sheet over these last four years will come to a halt and that we 

will begin to reverse the trend. Fully controlled and accompanied 

by an exemplary ALM policy, in the context of difficult markets, it 

will have been beneficial for the Bank in the areas both of its risk 

exposure and also of shareholders’ equity. 

In the light of these results, we can envisage starting to repay the 

operating costs of the Fondation provided for in our tripartite 

agreement. Consequently, we will propose a modification of our 

statutes to our Ordinary General Meeting, which will enable us to 

establish in a completely transparent manner the share of our future 

profits to be used to that end. It is also a concrete demonstration of 

the gratitude of the Bank towards the community which saved it in 

2000. This proposal is being made in complete harmony with the 

State of Geneva. The solution decided upon allows the Bank to 

meet the requirements of Cantonal law and to safeguard the 

interests of all shareholders in as much as the proportion to be 

deducted is limited in the long term to an amount equal to 20% of 

the total of ordinary and special dividends. 

Corporate Governance 

Last year I informed you of the large number of changes already 

made in this area and which fell within the responsibility of the 

Board of Directors. Today it is the Geneva State Council which is 

preparing an amendment to the Cantonal law which will 

contribute to increased cost-effectiveness in our operational 

procedures. The major thrusts of the bill are intended to: 

Restructure the Board of Directors 

The bill proposes an energising modification in the structure of the 

Board of Directors, which will be reduced from 15 to 9 members, 

a number within the normal range for Cantonal banks. 

Refocus the responsibilities of the Board of Directors 

The list of responsibilities of the Board of Directors is to be 

focused on the priorities of high-level monitoring and on the 

supervision of strategy. 

Reinforce the role of the Control Committee 

The Control Committee, a particular feature of BCGE, will have its 

responsibilities extended. It is to be the equivalent of the Audit 

Committee to be found in a large number of boards of directors. 

Define conflicts of interest 

The bill defines conflicts of interest relating to the function of 

director, in connection with his / her activities on behalf of 

another bank, in particular. 

Clarify monitoring responsibilities 

A redefinition of the responsibilities of the Board of Directors 

and of the Control Committee will be implemented. The Bank 

Committee will be abolished, in this way improving and 

energising the decision-making and monitoring procedures. 

As appropriate, permanent and ad-hoc committees, such as 

“Strategy”, “Risk” and “Human Resources and Remuneration” 

will be created. They will meet periodically in order to analyse 

the topics of current interest, and will thus prepare and facilitate 

decisions to be taken by the Board of Directors. 

This bill is now before the Grand Council. While waiting for its 

decision, we will continue working energetically with the current 

structures, and it is now highly appropriate for me to offer my 

warmest thanks to all my colleagues for the support and dedication 

with which they contribute to the results of the Banque Cantonale 

de Genève. 

5,477 individual shareholders: 

noteworthy support for the new Bank 

I would also like to thank the constantly increasing number of 

shareholders and particularly the State of Geneva and its President, 

Mrs Martine Brunschwig Graf, not only for her constant 

approachability and attention, but also for her significant support 

and confidence. At the same time I would like to acknowledge the 

high quality of the effort put in by all our employees and the 

professionalism with which the Executive Board contributes to the 

future of BCGE. On behalf of myself and also of all my colleagues 

on the Board of Directors I wish to extend our sincere thanks to 

every one of them. 

Michel Mattacchini 

Chairman of the Board of Directors 

BCGE 1:1 

Annual Report 

2004 

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12 


Message from the Chief Executive Officer 


The reasons for BCGE’s success today are also guarantees of its future 



There were many observers in the business and political arenas who, 

at the beginning of the restructuring process of BCGE in 2001, did 

not think the Bank would survive. A number of them indicated their 

scepticism to me and warned me about the lack of any possibility of 

regaining the necessary credit, the confidence of the markets, the 

motivation and skills of the employees, business growth or even 

adequate refinancing. Some competitors were preparing to occupy 

the important market opening they thought would become available, 

and a sister institution had even offered CHF 1 for the Bank. 

Four balance sheets later, the situation has been turned around. 

BCGE is now no longer the same bank and is presenting very 

respectable figures, justifying the term success. Success of the 

“resurrection strategy”, firmly and consistently followed up to the 

present time. This crisis strategy is now making way for a 

development plan of quite a different sort – one which will permit 

BCGE to reinforce its position and demonstrate performance 

growth. However, it is the case that, even though the strategy is 

being modified, the motors of the initial success, in other words, 

the fundamental reasons which brought about the recovery, are 

exactly the ones which will permit us to win in the future. I will 

briefly comment on four of them: 

The commitment and wealth of skills of employees and 

management 

Although working in a difficult situation over the past few years, our 

colleagues have remained focused and effective. An organisational 

strategy consisting of a portfolio of skills and a range of internal 

BCGE 1:1 

Annual Report 

2004 

“mini-businesses” made it possible to distribute the burden of 

the reforms and commercial challenges and to deal with them in 

teams which were suited to the nature and dimensions of the 

problems. A number of specialists from outside were added to 

the Bank and strengthened certain functions. A system of financial 

incentives for business successes or a spirit of innovation completed 

the new description of the Bank and made BCGE an attractive 

employer. Today, all levels of the staff of BCGE are prepared and 

organised to attain the performance levels demanded by the 

current banking market. The staff must be congratulated and 

thanked for their achievements. 

A competitive and innovative offer 

Numerous comparisons of banking services are made both by 

specialised publications and by websites updated on a daily 

basis. In most cases, BCGE’s range of services are rated among 

the best. This reflects a carefully designed service and product 

policy, based on an awareness of the increased mobility and the 

growing sophistication in the requirements of banking clients. 

When one adds the BCGE Avantage Service customer loyalty plan 

and its substantial financial advantages, BCGE’s services come out 

on top. It is certainly this quality which explains why so many clients 

remained loyal during the period of difficulties and increased 

their business activities in 2004. The strengthening of our 

on-the-doorstep availability and an approach to client service 

based on loyalty can be added to the price / quality ratio. The first is 

visible in facts, in the 25 branches, twenty 24/7 banking service 

areas, 67 ATMs, and a network of advisors with decision-making 

powers and excellent training. The second is perceptible in our 

respect for our clients, particularly the elderly or those with modest 

means. It is the corner-stone of our conception of client service. At 

BCGE a client without any particular financial knowledge will feel 

that he is treated with courtesy and will be guided with skill and 

respect towards solutions which are in his best interests. BCGE, a 

bank for life... 

Clear communication and sustained marketing 

When successfully coming out of a crisis, an institution must 

acknowledge the necessity of rebuilding its image. This priority was 

immediately recognised, and a special communication effort was 

made from 2001 onwards. A large number of publications, 

meetings with our private and public partners, and in particular with 

a rating agency, were all part of our programme for 2004. This 

responsibility of conveying information in a clear and open manner 

remains an imperative of our institutional communication plan. 

An important marketing campaign oriented towards our clients 

was undertaken in 2004. Posters, advertising at public events,

message from the Chief Executive Officer 






sponsoring of local events and even the BCGE tram were 

implemented with coherence and clarity. The surveys investigating 

the effectiveness of these campaigns reveal that they were very well 

received by the people of Geneva. Sales and service statistics show a 

return to growth and a welcome increase in client numbers. 

A cautious business strategy and experienced risk 

management 

In banking, the growth of the balance sheet or of net operating 

income does not necessarily demonstrate the success of a strategy. 

The important thing is to know at what risk “growth is being 

achieved”, whether credit risk or legal risk, in connection, for 

example, with asset management. For BCGE, the answer is simple: 

what is above all sought after and developed is a business model 

with low risk exposure. It is this feature which accounts for the 

gradual business growth in a series of upward steps throughout 

2004. This strategy of prudence will remain our guiding principle 

for the future, whatever the stage in the business cycle. 

This policy of “steady growth” is supported by experienced and 

sophisticated risk management. A number of monitoring capabilities 

are now operational. The major risk areas have been identified, 

conceptualised and measured. Preventive measures are in place and 

regularly tested. In addition, risk management is integrated into 

corporate practices and the Bank’s culture. This is complemented by 

numerous internal and external audit requirements, and also by the 

Bank’s monitoring authorities. 

Rebuilding BCGE is a fascinating and satisfying adventure. Giving 

form and strength to a business working on behalf of Geneva and 

its region is a highly rewarding project. This “extra meaning” 

complementing the routine tasks of the profession is an extremely 

motivating factor for many of our colleagues. It enables us to remain 

firmly committed to the heart of the matter and stimulates abundant 

creative energy among all those who make up BCGE. 

Beyond the ratios, our measurement techniques and statistics, this 

element is the foremost foundation of tomorrow’s BCGE. 

Blaise Goetschin 

Chief Executive Officer

14 


Business review 


Significant growth in profitability 



The BCGE Group experienced a very welcome growth in 

its profitability in 2004. Net profit increased four-fold to 

CHF 31.8 million. Operating profit increased by CHF 36.6 

million and the gross profit of CHF 78.9 million also followed 

an upward trend. These results are essentially due to a very 

satisfactory increase in commissions and interest-related 

products. Vigilant cost management, in spite of numerous 

essential on-going projects to increase the Bank’s efficiency, 

also contributed to this result, which confirms that the 

strategy adopted in 2000 was the right one. All the Bank’s 

profitability indicators have shown an unbroken upward 

movement over the last four years. The recovery process is 

now part of the Bank’s history. The first Standard & Poor’s 

rating (A-/A-2/stable) obtained in December 2004 

underlines the recovery achieved. From now on BCGE can 

devote all its attention to serving its clients and to 

extending its commercial strategies. 

Net profit quadrupled (CHF +24.6 million) and spectacular 

improvement in the operating profit (CHF +36 million) 

Dividend reinstated 

The return of a positive financial outlook has led the Board of 

Directors to propose to the Ordinary General Meeting of 

shareholders (3 May 2005) that a dividend of CHF 1 per share (1% 

of the nominal value, which amounts to a total distribution of 

CHF 3.6 million) be paid. This will be the first dividend since 1999. 

The amount of this dividend has been limited with the intention of 

using the greater part of the profit to increase shareholders’ equity. 

Its fundamental purpose is to keep pace with the Bank’s growth 

and to allow loans to the Fondation de valorisation to be converted 

into finance for the benefit of the economy and individuals. 

BCGE 1:1 

Annual Report 

2004 

Increase in gross and net profit 

The BCGE Group’s consolidated gross profit stands at CHF 78.9 million, 

an increase of 3.7%, continuing the regular upward progression of 

the last four years. The consolidated net profit, which moved into 

black figures in 2003, continued to advance and increased by 

CHF 24.6 million to reach a total of CHF 31.8 million. 

Continuous gross profit growth 

Group revenues were maintained at a good level (+0.6%) in spite 

of the refocusing of the balance sheet and the exceptionally low 

level of interest rates. The structure of Group revenues reflects the 

emphasis on prudence and diversification. The increase in 

commissions (+11.0%) was particularly pleasing and reflects the 

strength of international trade and the excellent growth in the 

Bank’s asset management activities. 

11% increase in commissions

usiness review business review business review 

business review business review business review 





Robust interest margin 

The interest margin remained robust thanks to the improvement 

in interest productivity and good ALM performance, increasing to 

CHF 179 million (+4.5%). When expressed in terms of interest 

productivity, the balance sheet margin has demonstrated 

continuous improvement since 2000. 

Reduction of the balance sheet to focus on increased 

profitability and decreased risk 

The balance sheet total is CHF 13.9 billion, a reduction of 

CHF 669.6 million due to the following factors: 

• concentration by the Group on good returns and managed risk, 

• the reduction in the loan to the Fondation de valorisation 

(repayment of CHF 641 million and CHF 250 million transferred 

from another bank), which stood at CHF 3 billion on 

31 December 2004, 

• the slight reduction in lending to clients due to a selective 

approach adopted in mortgage lending and moderate credit 

requirements by corporate clients. 

Further improvement in the refinancing structure 

Deposits with BCGE decreased slightly (down 3.5% to CHF 4.8 billion); 

this change was essentially linked to the reduction in institutional 

deposits which were moved in favour of other instruments. On the 

other hand, personal savings continued to grow in 2004. 

Refinancing structure improved yet again 

Liabilities to other banks continued their downward path and 

reached a very low level (down 41.2% to CHF 283.3 million) which 

ensures increased independence for BCGE. 

Long-term loans also continued to decline and for the second year 

running are at a level lower than that of deposits. 

Success with new asset management activities 

Funds administered and under management increased by 4.2% to 

CHF 10.9 billion (as calculated in line with Swiss Federal Banking 

Commission standards) due to a remarkable increase in private 

investment mandates (up CHF 170 million) and institutional assets 

managed (up 9.4% to CHF 2.324 billion). 

Increase in funds administered and under management: +4.2% 

This development clearly confirms that the strategy adopted in 

2001 was correct. 

Uninterrupted growth of BCGE Best of since its launch 

(2001) 

More and more investors are investing in BCGE Best of mandates, 

the spearhead of the Group’s new asset management activities. 

The introduction of this product in France via our subsidiary 

Banque Cantonale de Genève (France) SA and, in Switzerland, 

BCGE 1:1 

Annual Report 

2004 

15

16 







through Anker Bank (Zurich, Lausanne, Lugano and Geneva) 

has proved very successful. At the end of 2004 the number of 

mandates stood at 2,197, representing assets under 

management of CHF 704 million (+40.5%). 

Cost control 

Total expenses have been subjected to intense management 

scrutiny (expenses down 0.5% to CHF 198.6 million). This reduction 

has been achieved in spite of a significant number of ongoing 

projects designed to underpin the commercial activities and the 

modernisation of the Group’s operations. Although these projects 

give rise to significant expenses in the short term, they are 

nevertheless major contributors to future success. 

Particularly noteworthy in this connection are the development 

and launch of a new commercial concept for mortgage finance 

(BCGE Simplissimmo) and the installation and launch of a new 

program for loan administration across all the Bank’s branches. 

Two other far-reaching projects implemented in 2004 were the 

consolidation of operational centres into three sites and the 

resulting sale of the Corraterie building (550 jobs were relocated), 

and the migration of the Anker Bank IT systems onto Unicible plus 

the delegation of Anker Bank’s logistics to BCGE. 

At year-end, staff numbers were down 6.8% to 773 full-time 

equivalents. This reduction was mainly due to the reorganisation of 

Anker Bank. Productivity gains, a systematic examination of the 

adequacy of resources and the introduction of a skills management 

programme in the Retail Services and Branch Network division also 

contributed to this reduction. Staff costs as such diminished by a 

lesser amount, particularly as a result of costs incurred in training 

programmes, job certification and the launch of continuous training 

for managerial staff. The targeted recruitment of high-level 

specialists also impacted on staff costs. 

Provisions sharply reduced 

The level of provisions continued its unbroken downward path of 

the last four years to reach a total of CHF 31.2 million (down 

50.5%); this is now close to the standard level for cantonal banks. 

Financial strength reinforced 

The capital adequacy ratio also continued its upward trend 

and now stands at 142%. The issue of a subordinated loan of 

CHF 120 million on excellent conditions in November 2004 

was testimony to investors’ growing interest in BCGE. 

BCGE 1:1 

Annual Report 

2004 

Financial strength reinforced 

Encouraging outlook 

In spite of economic uncertainty and the unpredictability of 

stockmarkets, which can clearly affect the business of the region’s 

companies and individuals, BCGE has confidence in the future. 

With its varied and comprehensive range of services and products, 

its solid financial foundation and a motivated and energetic staff, 

the Bank is well equipped to tackle its main challenges – the selective 

growth of its balance sheet and improvements in productivity. 

The Bank’s main expectations for 2005 are the growth of its net 

profit, successful repositioning in the mortgage loan market and 

improving productivity (cost / income ratio).

Detached house 

A traditionally-built family 

house. BCGE financed 

the construction of more 

than 70 houses in 2004. 

1:1 

2004 

BCGE

18 


Review of the Business Units 


Finances Finance and et Gestion Risk Management des Risques 



The division’s mission is to provide the financial framework 

appropriate for the strategy and goals of the Bank by 

seeking strong and competitive financing. Basing its 

decisions on experienced risk management, it guides the 

balance sheet in a dynamic manner. 

Landmarks of 2004 

Dynamic balance sheet management 

In 2004 the division continued the recentering of the Bank’s 

balance sheet. Liabilities due to banks dropped to reach an optimal 

level of CHF 283.3 million. The Bank repaid 17 loans, for amounts 

between CHF 500 and 600 million – which made it possible to 

reduce the average refinancing cost further – and floated a 

subordinated loan of CHF 120 million, fully subscribed in a few 

hours. This is eloquent testimony to the Bank’s rediscovered 

attractiveness for investors. Repayments of the loan to the 

Fondation de valorisation amounted to CHF 641 million, 

above the amount prescribed in the 10-year plan. Also, in June 

2004 BCGE was able to take over a loan of CHF 250 million 

made by a foreign bank to the Fondation de valorisation. 

Standard & Poor’s Rating: A- / A-2 / stable 

At the end of the year, BCGE obtained its first official rating, 

from S&P. This excellent news confirms the strength of the 

Bank, its significant development potential, and the quality 

of its shareholders. This rating will contribute to the further 

consolidation of the Bank’s image and to the reduction of 

refinancing costs. 

Reinvigorating the trading desks 

The noteworthy event of the year was the appointment of 

Max Baertsch as head of the trading desks. It is his responsibility 

to stimulate and support the growth of the activities of the 

trading desks, and to strengthen the advisory capacity and 

orderly provision of services to private and institutional clients. 

Financial engineering: BCGE Club CFO 

Through its BCGE Club CFO, the Bank strengthened its advisory 

capability for both businesses and public bodies. It is a high-calibre 

advisory service providing flexible and individualised solutions with 

the objective of providing the best possible choices in the areas of 

financial strategy and risk control to fit the requirements of the 

financial officers of businesses and public bodies. 

Risk management: preparation for Basle II 

In 2004 the Bank continued its preparations in view of the 

implementation of Basle II, expected to become effective in 2007, 

BCGE 1:1 

Annual Report 

2004 

Eric Bourgeaux 

Member of the Executive Board 

and designed to improve credit risk assessment practices, at the 

same time taking operational risks into account. From 2007 

onwards, all banks will be required to assess each credit 

application individually using a range of criteria – and give it a 

rating. This rating will determine the interest rate for a loan. 

These measures are intended to increase the reliability of 

international financial markets. 

Strengthening the partnership with Swissca 

In 2004 the Bank strengthened its partnership with Swissca 

(Swisscanto from 1 January 2005). This organisation, a joint 

undertaking of Swiss Cantonal banks, specialises in the 

development and distribution of pension and investment 

services for private and institutional clients. It ranks third 

among managers of investment funds on the Swiss market. 

Synchrony Asset Management SA 

In 2004 Synchrony Asset Management, our institutional 

management subsidiary in Geneva, welcomed a new General 

Manager, Mr Constantino Cancela, who brought new dynamism 

to our institutional business. 

The year was marked by the welcome growth of assets under 

management, particularly in passive mandates, and the 

subsidiary’s income. In addition, Synchrony Finest of, an active 

management mandate focused on the client’s risk budget and 

distributed within an open architecture, was very favourably 

received by institutional clients. 

Remarkable successes in 2004, 

the “Synchrony Market Fund Swiss 

Government Bonds” won two 

Lipper Fund Awards for being 

the best CHF bond fund over 3 and 

5 years. 

Finally, Synchrony innovated by developing a complementary 

activity: the active management of smaller Swiss company stocks. 

Its goal is to invest in the 20 to 25 best stocks in this market 

segment, chosen according to financial but also environmental 

and social criteria. Synchrony Asset Management SA is thus able 

to market an SRI (Socially Responsible Investment) product, based 

on corresponding methodology.

eview of the business units review of the business units 

review of the business units review of the business units 


Retail Banking and Branch Network 



The division serves all of the people of Geneva by 

providing a complete range of products and services and 

expert advice at competitive rates. It carries out its mission 

of being close to clients by means of its branch network, 

its 24/7 banking service areas, its ATMs (67 in total), as 

well as online banking (www.bcge.ch), telephone banking, 

and its interactive voice response system (Openline). 


Outstanding performance 

2004 was marked by the success of savings products, investment 

mandates, loans and pension products, and bank insurance. The 

number of clients also increased in a very satisfactory manner. 

The issue of new Maestro and credit cards reached record levels, 

as did the number of Netbanking contracts. The success of the 

BCGE Avantage Service loyalty programme was even more 

evident, with more than 37,000 clients receiving a bonus on their 

savings account. 

Energising mortgage products 

The Bank demonstrated its dynamism with the new BCGE 

Simplissimmo product, drawing attention to its values in this 

area: loyalty and simplicity of solutions, value-pricing and expert 

advice to maximise the advantages for our clients. BCGE 

continued the process of extending its product range by making 

available a Libor mortgage loan and reactivating a product 

specifically designed for the acquisition of property in the 

surrounding area of France. 

In an effort to support its clients, whether present or future 

property owners, a number of lectures on the topics of property 

financing and retirement planning were held and attracted a 

total attendance of several hundred people. These meetings are 

part of our desire to maintain an ongoing dialogue with our 

clients and to provide them with support in their financial planning. 

New financing product: capital goods leasing 

The range of products now includes a new financing tool: capital 

goods leasing, a product completely revised and updated in May 

2004. It enables self-employed people and businesses to acquire 

new equipment necessary for their professional or business 

activities while preserving their liquid assets. 

Johan Bernard Alexander Kroon 


Closer to SMEs and self-employed clients 

In January 2004, the division created a new department, headed 

by Tanguy De Jaegere, consisting of a team of advisors dedicated 

to small- and medium-sized enterprises and self-employed 

clients. These businesses, with 1 to 10 employees, comprise the 

great majority (more than 80%) of businesses in the Canton. 

BCGE is thus emphasising its significant role in supporting the 

economy of Geneva. In addition, the Bank continues its practice 

of cultivating relationships with organisations providing 

guarantees and support in the area of job creation. 

Strategy of presence and accessibility in the Canton 

Through regular polls of its clients, BCGE has noticed that their 

habits and expectations have evolved considerably over the last 

few years. As a result, the organisation of branches and of other 

distribution channels within the division was made the subject of 

an optimisation study, which led to a number of changes. The 

Corraterie and Ile branches were merged, as were also those of 

Rive and Eaux-Vives. In both cases, the resulting branch was 

strengthened and the ATMs or existing 24/7 banking service areas 

were retained. 

New opening hours and Saturday opening 

With the same objective of client service, opening hours have 

been revised. Branches now open their doors earlier, at 8.15am. 

Some branches had their midday hours extended in order to 

provide service up to 12.45pm, while a significant number remain 

open continuously from 8.15am to 4.30pm. In addition, BCGE 

now has its Ile (centre of Geneva), Trois-Chêne (left bank) and 

Servette (right bank) branches open on Saturday mornings and 

provides improved service, offering appointments with 

professional advisors to manage complex financial issues. 

Making branches more client friendly 

The division modernised all the display windows of its branches 

and a number of advising areas. New display stands have been 

provided in all branches and the whole range of brochures has 

been revised. The branch modernisation programme will 

continue in 2005. In addition, a new client-reception concept has 

been launched in some branches with the creation of the 

position of client-reception representative (“greeter”) which 

enables shorter waiting times at the counter. His / her task is to 

welcome clients, provide general information in response to 

enquiries, and to direct clients to the appropriate specialist. 

BCGE 1:1 

Annual Report 

2004 

19

20 




Finances Corporate et Banking 

Gestion des Risques 



In line with its role of partner to businesses and public 

bodies in the Canton, the Corporate Banking division once 

more made a significant contribution to the economic life 

of Geneva in 2004. It granted, renewed, or modified 

1,678 loans, for a total in excess of CHF 1.3 billion. It also 

continued the highly pleasing growth of its financial 

engineering services for both businesses and public 

bodies. 2004 was also a very favourable year for its 

activities in international trade finance. 


Responding to growing business sophistication 

In 2004 the Corporate Banking division concentrated on the 

development of sophisticated solutions, responding to the 

multiplicity and diversity of corporate financial needs. These are 

becoming ever more complex and clients are more demanding. 

Entrepreneurs in Geneva, whether in the public or private sector, 

are highly appreciative of having access to a single and very 

approachable BCGE advisor, able to guide them and call in the 

Bank’s specialists within multidisciplinary teams. 

New leadership in the Corporate Banking department (France) 

2004 saw the appointment of Jérôme Monnier to head up the 

Corporate Banking department (France). In his new capacity, 

Jérôme Monnier has the specific task of intensifying the links 

between the parent company and its subsidiary headquartered in 

Lyon, the Banque Cantonale de Genève (France) SA. Together with 

the latter, or on its own, this department is involved in 

financing the acquisitions and sales of businesses and of 

commercial properties in France. This department was actively 

involved in the development of the property investment vehicles 

La Compagnie Foncière Franco-Suisse (CFFS, in the Region of 

Rhône-Alpes) and Dixence (see below). 

Success of the “BCGE L’essentiel de la finance” seminars 

Over 200 people took part in the “BCGE L’essentiel de la 

finance” seminars in September which dealt with a range of 

topics including managing and controlling business risks with the 

help of a business plan, financial planning, managing public 

debt, and property developers. By means of this valuable dialogue, 

the initiative achieved its goal of developing and strengthening 

the Bank’s links with its partners in and around Geneva. 

BCGE 1:1 

Annual Report 

2004 

Claude Bagnoud 


Outstanding cooperation with municipalities 

A valuable and ongoing dialogue is also maintained with 

municipalities in the Canton and with public bodies. The latter 

are intensifying their close contacts with BCGE, which has 

financed a significant number of projects. 

Exceptional performance in international trade 

The International Corporate Banking department, with its 

specialisation in the area of financing international trade, 

reported excellent results. They are the result of a dynamic and 

diversified business policy which made it possible to take full 

advantage of the market in commodities, whose prices 

remained high right across the board. As an important actor in 

the financing of international trade, BCGE is supporting the 

development of a sector of particular importance for Geneva. 

Property market: clear competitive advantages 

BCGE was able to make the most of its competitive advantage 

in a tight property market marked by strong competition. 

Our advantage consists of increased proximity and availability, 

of responses which are more closely related to clients’ stated 

needs, and of solutions which are both imaginative and 

professional – qualities which ensured the stability of the 

mortgage portfolio. 

Banque Cantonale de Genève (France) SA 

BCGEF’s mission is to extend the influence of the BCGE Group in 

the area of France adjacent to Geneva and in the Rhône-Alpes 

Region. Despite the very different situation of industry in the 

Rhône-Alpes Region, the BCGEF achieved its goals of strongly 

increasing its credit activity and optimising its profitability 

through syndications. In the course of the year, the Bank 

integrated its French subsidiary into its credit risk management 

process and intensified its business links with BCGEF. 

The growth of asset management activity, particularly by means 

of BCGE Best of, which was in its first year of operation in 

France, progressed very satisfactorily. 

Property development in the Paris region 

In 2004, the BCGE Group collaborated with the Zurich-based 

Karl Steiner Group in a new investment vehicle, “Dixence SAS”, 

oriented towards property development in the Paris Region. 

This collaboration brings about property risk diversification 

beyond the Geneva Region.




Private Banking 



This division, responsible for private banking clients, 

experienced an encouraging year in 2004. After redefining 

the segmentation of its clients, it created two separate 

departments, one responsible for clients located in Geneva, 

the other for international clients. It also launched a new 

segment within the BCGE Rainbow fund which proved an 

immediate success. 


2004, a good year for the division 

The development of the division’s business was encouraging in 

2004, with growth in the number of clients and assets under 

management, in spite of difficult stockmarket conditions. 

Discretionary management mandates (BCGE Best of) 

continued their upward trend and showed very satisfactory 

growth (see below), which was positive proof of our clients’ 

confidence in the Bank’s management expertise. Thanks to a 

policy of prudence emphasising the preservation of assets, all the 

segments in the portfolios performed better than their reference 

indices. BCGE’s private banking activities are gradually 

reaffirming their status, not just in the Geneva region but at an 

international level. 

Particular emphasis placed on client relationships 

The quality of the reception and advice provided to clients is one 

of the division’s priorities. With the objective of continuous 

improvement, the division has introduced a philosophy of 

collaborative working amongst its staff so that the expertise of 

all its specialists can be shared. To illustrate this, each client’s file 

is supervised by at least two consultants. The integration and 

additional communication between managers which this provides 

is aimed at improving the recognition of clients’ objectives and 

the quality of the preparation and conduct of client meetings. 

Creation of the “Swiss Clients” department 

In order to meet the specific requirements of our clients from 

Geneva and Switzerland as a whole, the division created a new 

department, the “Swiss Clients” department under the leadership 

of Racheleano Mecozzi; this department will work alongside the 

department responsible for international clients. The two 

departments provide asset management services to their 

respective clients. 

2,197 BCGE Best of mandates 

The number of BCGE Best of management mandates held by the 

Group reached 2,197 in 2004 (up 43% on the end of 2003). 

Alain Spadone 


Using an independent selection of the best international 

stockmarket fund managers, the BCGE Best of mandates once 

again showed a respectable performance in the context of a 

difficult stockmarket environment; this applied both to the 

defensive risk profile (+2.23% in CHF terms and +5.32% in EUR 

terms), the balanced profile (+3.42% in CHF terms and +6.51% 

in EUR terms) and the dynamic profile (+4.51% in CHF terms and 

+7.62% in EUR terms)*. The same applies to mandates in USD and 

GBP terms. 

The BCGE Rainbow fund: a new profile and 

an investment record 

The BCGE Rainbow fund, which meets the particular needs of 

clients wishing to invest over CHF 5,000, added a new risk 

profile, the Sapphire, to its range in 2004; this profile is aimed at 

the preservation of capital. The BCGE Rainbow fund, which was 

launched in 1990, also broke through the CHF 100 million net 

assets mark for the first time in its history. The BCGE Rainbow 

fund is also well regarded by retail customers. 

The provision of economic forecasts by BCGE 

Economic forecasts prepared by BCGE were the subject of a press 

conference held in December and were featured in an innovative 

document. A specific formula has been adopted in order to 

provide targeted recommendations which are of direct use 

both to companies in Geneva and to individuals. The division 

has continued to publish its investment strategy each quarter; 

the publication is available in the Bank’s branches and at 

www.bcge.ch. This step reflects the spirit of dialogue which 

BCGE is developing with its partners and clients. 

Anker Bank 

The year 2004 was marked by the consolidation of Anker Bank’s 

activities in Lausanne, the strengthening of its team in Zurich 

and the move to new offices in Lugano and Geneva. Anker 

Bank’s commercial development will continue in 2005 in part 

thanks to the encouraging development of the BCGE Best of 

management mandates. The Bank will also benefit from the 

effects of the in-depth migration of its IT and operational 

facilities (see page 23). Supported by a strengthened back office 

structure shared with the parent company, Anker Bank can now 

concentrate all its efforts on developing its business. 

*Proforma gross performance for 2004. 

BCGE 1:1 

Annual Report 

2004 

21

22 




Administration and Credit Control 



The division is responsible for the administration of lending 

operations as well as the monitoring and control of risks 

associated with lending. In addition, it handles distressed 

situations by way of debt recovery and workout. Its 

responsibilities also extend to the management of BCGE’s 

non-banking and non-strategic financial assets as well as 

the coordination of the Bank’s assets with the Fondation 

de valorisation. 


Automation of the process for granting loans 

The year was marked by the reorganisation of the Administration 

and Credit Control departments in the wake of the launch of 

Crédit+, a computer application designed to automate the 

processes for granting and amending mortgage and commercial 

loans. The creation of contractual documents is now the 

responsibility of the Loan Administration department. Following 

a pilot phase initiated in July 2004, the Retail Services and 

Branch Network division started using Crédit+ in December. 

This programme has allowed the Bank to achieve a major 

rationalisation and standardisation of its loan products. 

Establishment of the Loan Control department 

The year 2004 saw the intensification of the activity of the Loan 

Control department and the reinforcement of its organisation. 

A new team, led by François Grimm, has special responsibility for 

support for, training in and maintenance of Crédit+ as well as for 

checking clients’ credit ratings and the overall monitoring of the 

loan portfolio. 

Resumption of the monitoring of financial assets 

The Workout department is responsible for monitoring cases of 

commercial and financial investments which are in difficulty. It is 

very satisfying to record that this team’s activities have allowed 

the transfer of 8 debtors with loans totalling CHF 3.2 million to 

a more normal status after the improvement of their financial 

situation. Starting in January, the department also resumed 

responsibility for non-strategic financial assets. On the other 

hand, it passed responsibility for the Fondation Start-PME to 

the Corporate Banking division. 

Encouraging developments in defaulting loans 

The Litigation department recovered CHF 2.6 million of bad 

debts, reducing the need for provisions correspondingly. It also 

BCGE 1:1 

Annual Report 

2004 

Emile Rausis 


pursued its proactive management of bankrupt assets, recovering 

CHF 300,000. Even though the division auctioned several 

properties, it was forced to acquire a further 13 non-banking 

properties to safeguard the Bank’s interests. At the same time, 

it sold 9 properties, generating a small profit. 

Significant reduction in provisions made in the year 

The level of provisions has been in steep decline for the last four 

years and provisions made in 2004 amounted to CHF 31.2 million, 

a reduction of 50.5% compared with 2003. This total is well 

below the forecast level of provisions and reflects both 

successful overall risk management and more careful 

monitoring of individual cases. Total provisions therefore 

declined significantly to CHF 669.9 million. 

Reduction in provisions made during the year: –50.5%




Logistics and Information Technology 



The division manages the operational activities of the 

Bank. It includes logistical and organisational activities. 

Relations with the external IT service provider Unicible 

are also included in the responsibilities of the division. 

Banking transactions, which are increasing significantly, 

as a result of the strong growth in Netbanking in particular, 

occupy a significant place in the division. In 2004 a new 

Services Administration department was created in order 

to bring together a variety of activities which had 

previously been separate. 


Increase in interdivisional projects 

BCGE implemented a number of projects involving several 

divisions. These projects were made possible thanks to this 

division’s support, as in the case of Crédit+ (see page 22), new 

banking software for independent financial advisors, and an IT 

platform providing an overview of all the flows in the Treasury 

of the State of Geneva. In the same vein, the division replaced 

all the printers, fax machines, and photocopy machines by 

latest-generation integrated systems. This made possible a 

reduction in the number of devices from 600 to 204. 

New Services Administration and Compliance department 

A department called Services Administration and Compliance 

was created in 2004, headed by Daniel Burkhardt. It is envisioned 

as a centre of excellence, with capabilities responding in an 

optimal fashion to present and future regulatory, fiscal and legal 

requirements. It is responsible for client administration, account 

and pension products supervision, securities administration 

and compliance. 

Successful operational and IT integration of Anker Bank 

At the end of a process lasting eleven months, the operational 

integration of the Anker Bank subsidiary was concluded in July 

2004. The objective was to transfer the subsidiary’s IT system 

onto the platform of the parent company, in order to achieve 

gains in productivity and operational security. This transfer 

makes it possible to outsource a significant number of support 

activities to Unicible. In this way, the subsidiary can concentrate 

on promoting its commercial activities from its locations in 

Zurich, Lausanne, Geneva and Lugano. 

Sale of the Corraterie building to a major European 

banking group 

The Banque Cantonale de Genève sold its building at 

4, rue de la Corraterie to BNP Paribas. From 1972 it had 

Jean-Marc Joris 


been the headquarters of CEG-Genève, but it no longer 

met the current needs of BCGE, whose headquarters are located in 

the Ile area, only 150 metres away. The Bank will, however, 

continue to make available on a 24/7 basis a banking service area 

with three ATMs. 

Outsourcing IT services 

In 2004 the division continued its preparations and planning 

around the topic of outsourcing IT services with an aim to 

reducing expenses and identifying today the challenges of 

tomorrow in the whole IT area. 

Optimising the use of space: 550 employees moved 

In order to rationalise its expenses, the Bank completely rethought 

the use of its buildings and reduced the number of its operational 

centres from four to three. 550 employees were moved in 10 months. 

This resulted in organisational structures better suited to current 

needs and improved communication between work units. 

Client-facing teams are now concentrated in the centre of Geneva 

(Ile and Vallin), and operational units are together in Lancy. 

Meeting regulatory deadlines 

In order to meet the requirements of the new “Ordinance on 

money laundering” and the “Agreement on the Swiss banks' 

Code of Conduct with regard to the exercise of due diligence”, 

BCGE completed all relevant IT and administrative changes by 

the prescribed deadlines. These regulations are the reference 

texts issued by the Swiss Federal Banking Commission in the 

areas of money laundering and the financing of terrorism. In the 

main, it concerns the management of increased risks and the 

identification of suspicious persons. 

BCGE 1:1 

Annual Report 

2004 

23

Upgrading our heritage 

The renovation of a magnificent 

building as it approaches its 

centenary, highlighting its period 

architecture. A contribution to the 

development of Geneva’s heritage, 

financed by BCGE. 

1:1 

2004 

BCGE


Achievements of 2004 


In brief 



Ordinary General Meeting: 4 May 2004 

411 shareholders representing 80.47% of the capital were 

present at the 2004 Ordinary General Meeting. They approved by 

a large majority the various proposals from the Board of Directors 

and welcomed the return to profitability. 

The 2003 consolidated annual balance sheet and the 2003 balance sheet of the parent company were accepted, and the 

Meeting approved a proposal to use the net profit for 2003 in the following ways: CHF 4,602,000 to be allocated to the General 

Reserve, and the balance, CHF 61,000, carried forward to 2004. The Meeting also confirmed Deloitte & Touche SA as auditors, 

accepted the minutes of the General Meeting of 20 May 2003, and formally approved the activities of the Board of Directors in 2003. 

Advance of the BCGE share price 

Beginning the year at CHF 172, the 

bearer share was listed at CHF 187 on 

31.12.2004 (+8.7%). 

Sale of the Corraterie headquarters 

Within the framework of the new organisation of its offices 

and in order to bring its employees together in three locations 

instead of four, BCGE sold its building in rue de la Corraterie 

on excellent conditions. BCGE will continue at that location its 

24/7 banking service area with three ATMs. 

First S&P Rating: A- / A-2 / stable 

On 14 December 2004 the rating agency Standard & Poor’s 

gave its first rating to BCGE: A-/A-2 with a stable outlook. 

This evaluation confirmed the strength of the Bank, its 

excellent competitive position, its growth potential and the 

quality of its shareholders. This rating contributes to the 

consolidation of the Bank’s image and to the reduction of 

its refinancing costs. It facilitates the conduct of its 

business in the areas of banking relations and commodities 

trade financing. S&P also stresses the improvement 

potential of the Bank, particularly with regard to 

profitability, a development which the Bank is anxious to 

bring about gradually. 

BCGE 1:1 

Annual Report 

2004 

25

26 

achievements of 2004 in brief 






The 5,000th individual shareholder 

More and more people are demonstrating their confidence in BCGE by purchasing 

bearer shares. The number of such individual shareholders rose from 3,562 in July 

2002 to 5,477 at the end of December 2004 (+23%), with the 5,000 mark being 

passed in May of that year. The BCGE Avantage service programme, which among 

other benefits provides a bonus of an additional 0.5% interest on savings 

accounts for holders of 20 shares and up, is contributing to this growth. BCGE 

intends to continue promoting partnership and shareholding among its clients. 

BCGE L’essentiel de la Finance 

In its relations with its partners, individual and corporate clients, BCGE 

promotes direct dialogue and increased knowledge of essential areas of 

corporate and personal finance. With this in mind, in 2004 the Bank organised 

a number of seminars on a range of topics. A large number of corporate 

leaders, property developoment professionals, financial directors of public 

bodies and clients attended the seminars to discuss highly relevant topics such 

as business plans, property development companies, the demography of 

Geneva and debt management. An account of these seminars was published 

in the autumn 2004 issue of Dialogue, also available at www.bcge.ch. 

3 branches of BCGE open on Saturday morning 

Commenting on the extension of opening hours of the Bank’s branches, on 21 January 2004 

the Tribune de Genève ran the headline “Opening Hours: BCGE’s Smart Innovation”. With such 

a headline the paper clearly supported the Saturday morning opening of three branches 

(Servette, Ile, Trois-Chêne) from 8.15 am to 12.00 noon. Further innovations are: all branches 

open at 8.15 am (instead of 8.30 am) and stay open until 12.45 pm (instead of 12.15 pm), 

with the branches in the centre of Geneva remaining open non-stop at midday. 

BCGE 1:1 

Annual Report 

2004 

Transactions on BCGE Netbanking double 

In 2003 BCGE introduced a new, more attractive, and more powerful website: www.bcge.ch. 

It allows all clients who have signed a BCGE Netbanking agreement to review their accounts 

and perform transactions, whether they are in Switzerland or abroad. This is a significant success, 

as the number of users has increased by 58% and Netbanking transactions have virtually 

doubled in just one year.







Success of the BCGE Theme Lectures in 2004 

Asset management, mortgages and pension products were the major topics of these lectures 

organised by BCGE in 2004. More than 600 people attended, benefitting from BCGE’s own 

specialists and highly qualified outside speakers. These events took place from May to 

November in different locations in the Canton, for example the Hôtel du Rhône, the Château 

de Penthes, and the BCGE Training Centre in Conches. 

BCGE Best of proves a hit in France 

BCGE Best of mandate, the lead product of the BCGE Group’s 

asset management, was made available in France in late 2003 

by our French subsidiaries in Lyon and Annecy. At the end of 

its first year the success of this product was incontestable and 

led our French subsidiary to increase its office space on Place 

Louis-Pradel in Lyon. The Bank supported this dynamic 

initiative by creating a special private banking unit devoted to 

the “on-shore” French market. 

Strong growth of BCGE Rainbow fund in 2004 

The BCGE Rainbow fund, the Bank’s own investment fund, experienced an exceptional year in 

2004 with almost 90% growth of assets under management; these have now passed the 

CHF 100 million mark. This success can be explained by two key factors: first, the launch in 

2004 of a “conservative” Sapphire segment, invested largely in bonds, which was added to 

the “balanced” Diamond segment, in existence since 1990, and second, by an investment 

policy on the part of BCGE which favours the totally independent selection of a range of the 

best possible investments worldwide. 

New Advertising Tram 

Inaugurated on 28 June 2004 by Mrs Martine Brunschwig Graf, Member of 

the Geneva State Council and President of the Department of Finance, the 

new BCGE tram will be running on all the routes of the Geneva Public 

Transportation Commission until the end of 2005. The originality of its 

decoration lies in the fact that there are two different illustrations, one on 

either side. The first one is directly integrated into the campaign “Je connais 

mon banquier” (“I know my banker”), the other illustrates BCGE’s substantial 

branch network. 

BCGE 1:1 

Annual Report 

2004 

27

28 

BCGE 1:1 

Annual Report 

2004 

Company headquarters 

Daring, innovative architecture for the 

headquarters of one of the world’s 

leading video game companies located 

close to Lyon, a region which lies at the 

heart of BCGE’s activities in France. 

1:1 

2004 

BCGE


BCGE 


in the community 



BCGE is represented in a large number of economic 

organisations, professional bodies and educational 

institutions, both at regional and federal level. 

Cantonal Bank Organisations 

Union des Banques Cantonales Suisses (Basle) 

(Union of Swiss Cantonal Banks) 

Defence of common interests and encouragement to develop 

synergies between Switzerland’s 24 cantonal banks. 

Blaise Goetschin – Member of the Board of Directors 

www.ubcs.ch 

Centrale de Lettres de Gage (CLG), (Zurich) 

(Central Mortgage Bond Institution) 

Long-term loans for cantonal banks secured by mortgage bonds. 

Blaise Goetschin – Deputy Chairman of the Board of Directors 

www.pfandbriefzentrale.ch 

Finarbit (Zurich) 

Brokerage house specialising in the negotiation of money market 

products and derivatives. 

Max Baertsch – Member of the Board of Directors 

www.finarbit.ch 

Servisa SA (Zurich) 

Service provider of occupational retirement plans. 

Johan Bernard Alexander Kroon – Member of the Board of Directors 

www.servisa.ch 

Swisscanto (Zurich) 

Financial services, investment and retirement plan consultancy. 

Alain Spadone – Member of the Board of Directors 

www.swisscanto.ch 

Professional Banking Associations 

SwissBanking (Swiss Bankers Association) 

Development and protection of the interests of Switzerland as a 

financial market-place. 

Blaise Goetschin – Member of the Board of Directors 

www.swissbanking.org 

Geneva Financial Center Foundation 

Promotion of Geneva as a financial market-place. 

Training programmes. 

Blaise Goetschin – Member of the Foundation’s Board 

www.geneva-finance.ch 

Economic Organisations, Geneva 

Chambre de Commerce et d’Industrie de Genève 

Promotion of the Geneva economy and company coaching. 

Blaise Goetschin – Member of the Board 

www.ccig.ch 

Fondation du Palais des Expositions 

Exhibition and Convention Centre. 

Claude Bagnoud – Member of the Foundation’s Board 

www.geneva-palexpo.ch 

Union des Associations Patronales Genevoises (UAPG) 

Coordination of Geneva employers’ associations and 

representation of their interests. 

Claude Bagnoud – Member of the Foundation’s Board 

www.uapg.ch 

SMEs and New Companies 

Fondation Start PME 

Support for the Geneva economy and employment. 

Christian Turbé – Consultative member of the Foundation’s Board 

Genilem 

Partnership and consultative organisation for company founders. 

Narcisse Moix – Member of the Foundation’s Board 

www.genilem.ch 

Office Genevois de Cautionnement Mutuel 

Guarantees for commercial bank loans for new companies. 

Luca Bonaiti – Member of the Board of Directors 

Tanguy De Jaegere – Member of the Board of Directors 

www.ogcm.ch 

Property Development 

Chambre Genevoise Immobilière 

Representation and defence of property owners’ interests. 

Jos von Arx – Committee Member and Treasurer 

www.cgionline.ch 

Coopérative Romande de Cautionnement Immobilier (CRCI) 

Property guarantees for individuals. 

Jos von Arx – Member of the Board of Directors 

www.crci-hbw.ch 

Fondation Parloca (previously Locacasa) 

Federally assisted moderately priced housing. 

Jos von Arx – Member of the Foundation’s Board 

Educational Institutions 

Fondation Fame 

Competence and synergy centre for financial and academic circles. 

Blaise Goetschin – Member of the Foundation’s Board 

www.fame.ch 

Institut d’Etudes Immobilières 

Post-university training for managers working in the property 

development sector. 

Jos von Arx – Member of the Foundation’s Board 

www.iei-geneve.ch 

Institut Supérieur de Formation Bancaire 

Professional training specialised in banking and asset management. 

Blaise Goetschin – Deputy Chairman 

Tanguy De Jaegere – Member of the Scientific Committee 

www.isfb.ch 

Société d’Etudes Economiques et Sociales (Lausanne) 

Economic and social research. Liaison office between universities 

and business. 

Blaise Goetschin – Committee Member 

www.hec.unil.ch/sees 

BCGE 1:1 

Annual Report 

2004 

29

30 


Risk Management 


At the heart of the Bank’s strategy 



The policy adopted to protect BCGE against the risks to 

which it is exposed is detailed on pages 50 to 51. The 

section which follows presents the main thrusts of this 

activity in 2004. 

As a result of its mission, BCGE is a universal bank and must 

therefore develop a risk management strategy which is especially 

complex and varied so as to be able to arm itself against the 

wide range of risks which could impact on the totality of its 

activities. This need demands that risk management be placed 

at the centre of the Bank’s priorities. 

BCGE relies on the expertise of its Finance and Risk Management 

division to develop and implement a global concept for the 

identification, prevention and management of all the risk 

components to which the Bank is exposed directly or indirectly. It 

compiles an ever-changing inventory of risks and their potential 

impact, summarises and prioritises these and continuously 

examines means to protect the Bank against them. 

The purpose of BCGE’s risk strategy is to define the balance 

between the acceptable level of risk and optimal profitability. 

The Bank is motivated by the prudence and priority necessary to 

ensure the continuity of the Bank, its business and that of its clients. 

Risk management occupies a central position in the development 

of the Bank’s strategy. In particular, the annual revision of the 

strategic plan considers the continuously changing risks in great 

detail and ranks them. Where appropriate, the Bank will then 

modify its commercial and operational strategies accordingly. 

Organisational optimisation 

Conscious of its strategy of dividing responsibilities between risk 

management and the operational units, the Bank has improved 

its organisation, particularly by defining the objectives of the 

different committees and commissions responsible for risk 

analysis and by enhancing the coordination between them. 

The fundamental principle adopted was one of a vertical 

organisation which can be summarised below: 

• the front office units and the departments accountable for 

operations are responsible for risk assessment and are 

answerable for risk management at a first level, 

• risks are systematically listed, preventive measures initiated and 

vigorous action taken by each of the divisions and their managers 

should the risks become a reality; the member of the Executive 

Board responsible for the front office function affected by the 

risks will also assume responsibility for them, 

BCGE 1:1 

Annual Report 

2004 

• the risk committees, which form the second line of defence 

and which are composed essentially of members of the 

Executive Board and the Risk Management department, 

analyse the overall risks, advise the divisions, supervise the 

preventive measures and support the units with the help of adhoc 

working groups if a risk becomes a reality. The Internal 

Audit manager attends these meetings, 

• the Executive Board is regularly and systematically informed of 

the general status of risks and of each specific situation which 

represents a risk, 

• the Bank Committee and the Board of Directors are informed 

at regular intervals. 

“Economie des risques” 

As part of the strategy of continuous profitability improvement, the 

Bank has initiated a programme entitled “Economie des risques” 

which consists of developing a culture and method of working 

characterised by a deep-seated attitude of risk avoidance and risk 

anticipation; the programme makes use of alternative scenarios, 

simulations and advanced probabilistic methods. 

Reinforcement of compliance 

In January 2004 the Bank strengthened the efficiency of its 

compliance function by forming a department specialising in 

this activity and by putting a system of compliance monitoring 

in place in all front office units. This department is responsible 

for the systematic analysis and the constant and effective 

implementation of anti-money laundering regulations as well as 

compliance with BCGE’s own Code of Conduct relating to 

business practices. The Bank has also strengthened its 

organisation in order to take account of the requirements of 

the new rules in the Swiss banks’ Code of Conduct relating to 

due diligence and money laundering. The related training has 

been given to all front office staff and their middle offices. 

Adjustment to Basle II standards 

The Bank has continued to implement the changes necessary 

to ensure compliance with the requirements of Basle II. 

These requirements give the Bank improved methods of 

identifying both operational and default risks. The Bank is 

combining the new methods of calculating risk and 

shareholders’ equity. Both the “standard” method (weightings) 

and what is called the IRB (Internal Ratings Based approach) 

introduce a fundamental rethink of the assessment of risk on 

the use of the Bank’s equity.

isk management risk management 

risk management risk management 





Standardisation of credit risk management 

The Bank has refined its rating models and is now using them 

across the whole of the Bank and its branches which therefore 

now have an objective basis for comparison of their multi-faceted 

activities. Three rating models, unique to the BCGE Group, are 

used for manufacturing companies, individuals and trading 

companies. Client ratings published by recognised agencies are 

used in the first instance; if these are not available, internal 

ratings are used. Country ratings are based on internationally 

applied standards. A constellation of limits and sub-limits by 

country, type of operation – commercial or financial – and by 

maturity date has been put in place. A system designed to assist 

decision-making allows advance warning of risks in non-OECD 

countries to be given. 

Portfolio of corporate clients 

Rating models introduced in 2000-2001 have been compared 

and enhanced. It is now possible to construct a historical 

overview in which the probability of changes in monthly ratings 

(i.e. upward or downward movements from one month to the 

next) can be analysed statistically. This matrix of probable 

changes has also been implemented for private client ratings. 

Reduction in settlement risks 

The Bank has introduced CLS (Continuous Link Settlement) in 

order to limit the risks of non-payment at the agreed date. 

This measure allows forex adjustments to be made and 

considerably reduces risks. 

Internal controls and operational risks 

A precisely targeted CIROP (internal controls and operational risks) 

pilot study has been in place in the trading room for several months 

with the purpose of improved identification of operational risks 

and preparation for the introduction of the “good practice” 

standards of Basle II. This extremely detailed analysis has 

revealed about ten typical operational pathways in the trading 

room and has broken these down into a large number of 

individual processes. Potential risks for each of these have been 

identified and classified according to the Basle II categories and 

the probability of their occurrence. An analysis of the necessary 

controls has allowed the Bank to identify the preventive 

measures which must be implemented to reduce or eliminate 

such risks. This extremely comprehensive, quantitative analysis 

is linked to a process of improved internal controls. 

Market risks 

BCGE is one of the few medium-sized banks to have its own 

trading room. This gives the Bank the status of a direct member (A) 

of the Swiss Electronic Stock Exchange (SWX). Trades are made 

on behalf of clients or for the Bank’s own account. 

The Board of Directors has confirmed its strategy of prudence for 

all operations for the Bank’s own account. For this reason, the 

trading room remains a tool dedicated to its role of an interface 

between the needs of clients and the markets. Pure trading 

activities are extremely limited. 

Standard risk costs 

As part of an initiative launched in 2004, BCGE is introducing 

standard risk costs. These will provide improved identification of 

the relationship between ratings and defaults by rating classes 

via default probabilities per rating. The factors which are 

considered are the monetary exposure involved in each 

commitment, the equivalent loans, the default probability and 

the potential sum which could be recovered in the event of a 

default. In the terminology of the Basle II agreements these 

factors are called the POD (Probability Of Default), EAD 

(Exposure At Default) and the LGD (Loss Given Default). 

BCGE 1:1 

Annual Report 

2004 

31

32 


BCGE je connais mon and banquier its je connais employees 

mon banquier 





Excellent fit between needs and resources 

On 31.12.2004 BCGE Group had 845 employees, or 773 FTEs 

(Full-Time Equivalents). The distribution of the employees by 

number and responsibilities in the different units of the Group 

makes it possible to meet the needs of clients and guarantees 

the smooth running of the Bank. 

Optimising skills through staff training 

Significant attention is paid to focused staff training and 

development in order to upgrade employees’ skills 

and their ability to meet the needs of clients. A programme of 

training courses has been established by the Staff Development 

department, which uses the talents of instructors from both 

inside and outside the Bank. The approach is based on task 

accreditation in the key areas of asset management and 

mortgage lending. The accreditations, which include different 

levels, are subject to exams, which lead to the awarding of 

certificates and provide access to corresponding business 

responsibilities. The training is directed towards acquiring a 

thorough knowledge of the Bank’s products, current rules and 

regulations, and sales techniques. 

In 2004 the Bank implemented an ambitious programme of 

upgrading management skills for members of its middle 

management, called BCGE Micro MBA. This programme, which 

has approximately 80 hours of formal instruction plus 

appropriate practical activities, is based on innovative 

management, and is directed towards broadening and 

supporting management skills. 

Altogether, 462 employees received 2,300 course-days of 

training during 2004. 

Stimulating employees’ imagination and creativity 

BCGE’s Intrapreneur Prize is an internal competition designed to 

encourage and reward employees’ innovative ideas in the areas of 

productivity and / or the quality of work processes. 

Each year, several Intrapreneur Prizes are awarded to employees 

who have directed their experience and skills, their imagination 

and their creativity to optimising the Bank’s procedures. In 2004, 

four prizes were awarded, rewarding the innovative activities of 

six employees. 

BCGE 1:1 

Annual Report 

2004 

Inserts published in the Tribune de Genève 

on 23 April and 12 November 2004. 

Dynamic individual and group management 

of employee goals 

At year-end there is a quantitative and qualitative assessment 

of the achievement of individual goals, taking into account a 

self-evaluation by the employee, which is then discussed with 

the supervisor, leading finally to an agreed evaluation. The 

assessment criteria also take into account team spirit, management 

skills, and the fit between skills and the requirements of the 

position. Training needs are also covered in the discussion. 

Management by individual goals is complemented by the 

Balanced scorecard, a collective management tool used by all 

the departments of the Bank. Functioning as a series of 

management charts, this enables constant evaluation of the 

achievement of each department’s goals, as well as the progress 

of current projects. 

Remuneration policies 

The management of individual and group goals permits the 

gradual introduction of an element of variable remuneration 

within carefully circumscribed and defined limits, which is 

intended to reward both individual and team performances. 

The Bank’s employees at all levels benefit from an incentive plan 

giving them free shares and permitting them to acquire more at 

advantageous prices. Details of this plan are provided under 

point 11.8 on page 80 of this Report.

BCGE and its employees BCGE and its employees 






Integration of young adults by means of traineeships and 

student internships 

BCGE employs on average ten new trainees each year, which is 

approximately 20% of the total number of apprentices trained 

by Geneva’s banks (source: Geneva Financial Center). 

At the end of their training, more than 76% of the trainees 

extend their employment with the Bank. As of 31.12.2004, 

38 employees and managers of the Bank had been trained at 

BCGE over the last ten years. 

In addition, the Bank trains an average of 5 student interns each 

year for an 18-month period. Some of them then join the Bank’s 

staff. At year-end there were 15, with 13 at the officer level. 

Employees of BCGE Group at a glance in 

full-time equivalents 

Seniority in years 

Balanced distribution of men and women 

Full-time and part-time employment 

BCGE 1:1 

Annual Report 

2004 

33

34 


Eco-Effectiveness 



of the BCGE Group 




In its charter of ethics (2003) the Bank supports 

sustainable development and the lessening of the direct 

environmental impact of its activities by reducing its 

consumption of energy and materials, and also through 

waste management. 

Fundamental principles of BCGE’s environmental 

management 

To achieve practical implementation of these eco-effective 

principles, a wide range of decisions was taken in 2004. 

Among them are: 

• reducing the number of shuttle trips between buildings, 

• reducing electricity consumption by switching to flat-screen 

monitors, 

• intensive use of recycled and non-chlorine-bleached paper, 

• purchasing only recycled toner cartridges, 

• creating recycling centres for PET, batteries, aluminium and 

toner cartridges, 

• recycling paper in all offices, 

• recycling, or whenever possible, donating used materials or 

furniture (nearly 800 PCs were given to charitable foundations 

in Romania), 

• creating a “Second Time Round Area” for the collection of 

used paper products, which are then re-used by the Bank’s 

employees at work or at home, 

BCGE 1:1 

Annual Report 

2004 

• purchasing of recycled toilet paper, 

• replacing the motorised messenger service by pedestrian or 

bicycle messenger. 

Bank employees were made aware of these matters by the 

Intranet or by the in-house magazine. Suppliers also had their 

attention drawn to these eco-effective principles and were 

requested to commit themselves to respecting quality norms 

in accordance with the above principles. 

These measures were introduced progressively during 2004 and 

consequently, some have been applied only during the last few 

months. However, their impact can be quantified in the 

following ways: 

Quantities recycled 

Paper purchases (excluding Unicible)

eco-effectiveness of the BCGE Group 






BCGE eco-effectiveness 2005-2007 

In conformity with its commitments to sustainable development, 

BCGE has a medium-term eco-efficiency plan containing a list of 

17 projects with varying dimensions and objectives. Examples 

include a feasibility study on the installation of solar panels on 

building roofs, an eco-audit, supporting employees’ use of public 

transport, and a range of materials-recycling projects. This plan 

has been implemented by the Logistics department. 

International trade and energy transportation: 

risk prevention 

In connection with the financing of international trade, and in 

particular in the energy field, BCGE applies a very strict and 

cautious credit policy aimed at minimising risk. The credit analysis 

procedure includes some quite unique precautions exceeding 

industry norms. 

To protect itself against the risks arising from energy 

transportation, BCGE’s International Corporations department 

has been systematically applying its own declaration of 

chartering principles, also exceeding industry norms. It applies to 

charterers of oil tankers whose cargo is financed by the Bank. All 

the Bank’s clients sign the declaration of principles; without this 

signature, the Bank refuses to provide financing. Some largescale 

operators have their own declaration of chartering 

principles, which the Bank studies in depth before granting 

approval.

36 


Review 



of the Geneva economy in 2004 




After a difficult 2003, the year 2004 appeared to be a year 

of recovery, particularly for manufacturing, exports and the 

retail trade. On the other hand, the construction industry 

and the hotel / restaurant sector experienced a challenging 

period. On the job front, the unemployment rate resumed 

its upward course and reached a level which is causing 

concern. Overall, the Geneva economy benefited from a 

promising economic environment in 2004 but was unable 

to take full advantage of the improvement. 

Declining population growth but increased unemployment 

Population growth slowed in 2004, though there was an increase, 

due to inward migration from abroad. The population of the Canton 

of Geneva stood at 438,483 of which 38.7% were non-Swiss. 

By the end of the year, employment had contracted by 2.4% 

compared with a reduction of 1.1% in the previous year. The 

unemployment rate in Geneva continued to rise, climbing from 

6.9% at the end of December 2003 to reach 7.3% by the end of 

2004. Nevertheless, the rate of increase is less than that experienced 

in 2002 and 2003. The number of registered unemployed declined 

in the first half of the year (for the first time since 2001) but 

moved upwards again to reach 16,106 by the year-end. A total 

of 6,885 new cross-border work permits were granted in 2004, 

representing an increase of 38.6%; most resulted from the second 

stage of the bilateral EU agreement. Salaries and wages (excluding 

international organisations) paid in the Canton of Geneva in 2004 

totalled CHF 17.8 billion, demonstrating relative stagnation. 

Unemployment rate 

BCGE 1:1 

Annual Report 

2004 

Very satisfactory industrial activity, especially for exporters 

After two fairly bleak years, the business climate for the Geneva 

manufacturing industry improved considerably at the beginning 

of the year and can be described as good from the second 

quarter onwards, particularly for companies focusing on 

external markets. 

Of all Geneva’s manufacturing industries, watch-making 

experienced the greatest growth whilst the electrical and 

electronics equipment industries enjoyed throughout the year 

the good level of business they had already seen in 2003. 

Business levels for the manufacturing industry 

Exports totalled CHF 9.1 billion in 2004, an increase of 

5.6% compared with 2003, which was, however, 3.2% down on 

2002. Particularly noteworthy was the increase in exports of the 

watch-making industry (up 11.2% compared with 2003) and of 

the electrical and electronic equipment sector (up 4.7%). 

No growth in the construction industry 

The year 2004 remained poor. The value of new buildings started 

in 2004 (CHF 994 million) was down 29% on a year-on-year basis 

and 12% down on the 1999-2003 average. On the other hand, 

the significant increase in the value of buildings for which 

planning permission was granted (CHF 1.141 billion in 2004, an 

increase of 25% over 2003) promises an improvement in the 

medium term. 

Completion of new housing was also restrained, with only 

1,293 units being completed, compared with 1,209 in 2003 

and a twenty-year average of 1,800. At the end of 2004 a total 

of 2,519 units were under construction (up 249 on the previous 

year), of which 60% were started during the year.

eview of the Geneva economy in 2004 

r eview of the Geneva economy in 2004 





Expectations of new orders for the next three months 

by the Geneva construction industry 

The number of dwellings for which planning permission was 

granted (1,556) improved in 2004. The number of dwellings for 

which planning applications were made increased even more 

markedly to a total of 1,644. 

In the non-residential sector, the surface area completed in the 

year was not much more than half of the area completed in 

the previous year, and the area under construction at year-end 

was 4% down. The year 2004 also failed to meet the 

1999-2003 average. Nevertheless, the area for offices, 

banks and shops increased. 

A good performance from the retail sector 

The whole of the Geneva retail sector experienced a good 2004, 

but the growth seen since the middle of 2003 levelled out in the 

second quarter, leaving the market to continue at a satisfactory 

level until the end of the year. Viewed overall, the market was 

clearly better in the food sector than in the non-food sector. 

Consumer prices were extremely stable, with the increase over 

the whole of 2004 not exceeding 1.5%. 

On the other hand, business in the hotel / restaurant sector was 

far from satisfactory in 2004 even though the forecasts made at 

the end of the previous year were less depressing. This situation 

occurred in spite of increasing passenger numbers recorded by 

the Geneva international airport, which broke through the 

8.5 million passenger mark with a 6.3% increase over 2003. 

Assessment of business by company size 

Hotels and restaurants 

Source: ”Reflets conjoncturels de l’économie genevoise” copyright: OCSTAT, Geneva 2005. 

BCGE 1:1 

Annual Report 

2004 

37

38 


Review 



of the financial markets in 2004 




2004 was a vintage year 

2004 was a good year for the world economy. Under the 

influence of extremely strong growth in international trade and 

unprecedented fiscal and monetary stimuli in the USA, the 

economic recovery benefited all the world’s regions, but with 

growth being particularly strong in North America and Asia. 

Europe had to be content with more modest growth and 

persistent weakness in private consumption. 

Switzerland came out better than other countries thanks to 

increasing exports and the resumption of investments by the 

corporate sector. The Swiss economy grew by a figure close to 

2% in 2004, which is a perfectly respectable performance for a 

mature economy such as ours. 

Slow-down expected in 2005 

The economic outlook for 2005 is still uncertain. Increasing signs 

of a slow-down have been observed since summer 2004 both in 

the USA and in Europe; at the same time, economic indices 

predict a fresh deceleration in economic activity in the early 

months of 2005. Three major factors currently combine to restrain 

the economy: the surge in the price of oil, the fall of the dollar 

and the progressive weakening of the effects of the budgetary 

and monetary measures adopted in the USA from 2001 onwards 

to stimulate the American economy. 

Oil as a threat to growth 

The surge in energy prices has been one of the decisive 

features of 2004. The past year confirmed the increasingly 

important part played by China, now an industrial power on 

the international economic stage. The rapid economic growth 

of China will continue to underpin international growth over 

the next few years, but there is another side to this coin – the 

economic upswing of the emerging countries is making a 

major contribution to the increase in the price of oil and raw 

materials which we have seen since 2003. Even if the oil crisis 

of 2004 lacks the same dimensions in real terms as those of 

1973 and 1979, the doubling of the price of a barrel of oil we 

have experienced over the last two years should reduce global 

growth by at least 1% in the coming years. 

BCGE 1:1 

Annual Report 

2004 

All eyes on the dollar 

The economic slow-down we are seeing in Europe is being 

accentuated by the fall of the dollar, which reached its lowest level 

against the Euro in autumn 2004 and came close to its historical low 

against the Swiss franc. The dollar has lost more than 7% of its value 

against the Swiss franc in the past year. Its fall reflects the growing 

imbalances affecting the planet’s largest economy, particularly the 

USA’s ever-deepening trade deficit with the rest of the world. 

The massive monetary and fiscal stimuli adopted by the USA 

from 2001 to 2003 enabled the world’s greatest power to avoid 

recession after the terrorist attacks of 11 September 2003. 

These economic stimuli, unprecedented in scope, have now reached 

the limits of their effectiveness. They have created a significant 

budgetary deficit and a current account balance of payments 

deficit equivalent to 6% of America’s gross domestic product. 

An external deficit of this order cannot be absorbed without a 

further major depreciation of the dollar. However, a true dollar 

crash is unlikely because of the support for the American currency 

provided by Asian central banks wishing to maintain the flow of 

their exports to America. 

The USD-CHF exchange rate

eview of the financial markets in 2004 

review of the financial markets in 2004 





In spite of the economic recovery and the surge in the oil price, 

inflation remained relatively stable in most of the industrialised 

countries. If oil prices are excluded, inflation did not exceed 1% 

in Switzerland in 2004 – a situation which allowed the Swiss 

National Bank to pursue a monetary policy designed to stimulate 

the economy. Following the example of the US Federal Reserve, 

the Swiss National Bank, however, embarked on a process of 

gradual interest rate increases in June 2004 which are expected 

to continue in 2005. As a result, the 3 month Libor in Swiss 

francs, the Swiss National Bank’s benchmark interest rate, 

increased from 0.25% to 0.75% between the end of June and 

the beginning of December 2004. A further increase is expected 

in 2005 which would bring short term Swiss franc interest rates 

to about 1.50%. 

The increase in interest rates in the money markets did not have 

the effect of lifting Swiss franc bond yields, which remained at 

historically low levels. After an increase of 0.70% between 

March and June, the yield on the 10-year Confederation 

benchmark bond dropped once again from the summer onwards 

to reach almost 2.20% at the beginning of December, which was 

about 0.40% under its level at the beginning of the year. We still 

expect a modest increase of about 0.50% in Swiss bond yields 

in the next 12 months; Confederation 10-year bond yields 

could therefore settle at about 3.0% in 2005 if economic 

growth continues. 

Performance of the 10-year Confederation bond 

The difference in Euro and Swiss franc yields for long-term bonds 

has narrowed slightly from 1.60% to 1.40%, which reflects the 

relative stability of the Euro-Swiss franc exchange rate. 

Stockmarkets: a rebound can be anticipated for 2005 

The sideways movement of stockmarkets over the greater part 

of 2004 was characterised by low volumes and reduced volatility. 

The current wait-and-see attitude of investors results from 

increasing economic uncertainties surrounding 2005. The 

increase in geopolitical risks also serves to dampen stockmarket 

sentiment, as the terrorist attacks in Madrid in March 2004 

demonstrated by interrupting an upward movement in equity 

indices which commenced in March 2003 after the spectacular 

fall in the markets experienced after the summer of 2000. 

Stockmarkets moved in a series of “saw-tooth” movements 

during the greater part of 2004, with short upswings alternating 

with falls. The success of the Republican candidate in the 

American presidential elections on 2nd November 2004 

stimulated a more prolonged rally than earlier advances in the 

American market, with the result that at the beginning of 

December 2004 the S&P 500 index of the New York Stock 

Exchange stood at about 6.0% over its level at the beginning of 

the year, but this gain was entirely wiped out for European and 

Swiss investors by the fall in the dollar. At the close of the year the 

Swiss market was ahead of its level at the beginning of the year 

and the Eurozone indices were up about 6%. 

Swiss Market Index (SMI) 

BCGE 1:1 

Annual Report 

2004 

39

40 







A rebound in equity prices can be anticipated in 2005, not least 

because the economy is coming out of its current period of 

weakness. Compared with other asset categories such as 

property, where prices in industrialised countries have increased 

significantly over recent years, equities are comparatively cheap 

bearing in mind interest rates. The price / earnings ratio, which 

measures the price of a share against expected earnings, is lower 

than the ten-year average on the principal markets. 

Nevertheless, the potential further upside in equity prices is 

limited in the short term, as the growth in profits of listed 

companies will be subject to a major slow-down in 2005. 

The greater part of the improvement in company results since 

2001 has come from restructuring aimed at increasing 

productivity. We can well imagine that in the present economic 

cycle all the main productivity gains have already been achieved. 

As a result, future profit growth will be less spectacular as it will 

essentially depend on sales growth. In the long term, equity 

performance will be closely linked with economic growth. 

BCGE: a strategy of prudence 

In this uncertain context, BCGE’s investment strategy is marked 

by prudence. In 2004 we slightly increased the proportion of 

equities in our investment mandates and marginally decreased 

cash. US-dollar-denominated shares were reduced in order to 

minimise exposure to the US dollar. Equity investments were 

concentrated on the market’s best investment funds. The bond 

component was invested in medium-term bonds whilst maintaining 

very strict criteria on the selection of issuers. 

BCGE 1:1 

Annual Report 

2004

Subsidised apartments and condominiums 

Construction of 61 apartments in village-style 

buildings financed by BCGE. Up to 20 local 

companies and 70 building trade craftsmen 

worked on the project for over a year. 

1:1 

2004 

BCGE

Review - Bcge

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