Page 1

Annual Report 2011 LGT Group


Contents Corporate bodies

4

Financial highlights

5

Chairman’s report

6

Corporate governance

8

Consolidated financial statements

9

LGT Group Foundation

77

International presence and imprint

90

Contents

3


Corporate bodies as of April 2012 Board of Trustees

H.S.H. Prince Philipp von und zu Liechtenstein, Chairman Dr. Rodolfo Bogni 1 K B Chandrasekar 2 Dr. Phillip Colebatch 1

Sir Ronald Grierson 2 Dr. Dominik Koechlin 1, 2 Prof. Dr. Conrad Meyer 2

Senior Management Board

H.S.H. Prince Max von und zu Liechtenstein, CEO LGT Group Dr. AndrĂŠ Lagger, CEO LGT Financial Services Dr. Roberto Paganoni, CEO LGT Capital Partners Olivier de Perregaux, CFO LGT Group Thomas Piske, CEO LGT Private Banking Torsten de Santos , CEO LGT Capital Management

Internal Audit

Daniel Hauser

External Audit

PricewaterhouseCoopers Ltd., Zurich

4

Corporate bodies as of April 2012

1

2

Member of the Management Development and Compensation Committee Member of the Audit Committee


Financial highlights

Assets under administration

2011

2010

2009

2008

2007

CHF m

86 932

86 079

89 023

78 030

102 750

of which client assets under administration

CHF m

84 486

83 547

86 604

75 912

99 868

of which LGT’s Princely Portfolio

CHF m

2 446

2 532

2 419

2 118

2 882

CHF m

5 758

3 102

4 550

-1 265

11 000

of which net new money

CHF m

8 562

3 102

-3 651

-1 265

11 000

of which through acquisition

CHF m

 0

 0

8 201

 0

 0

of which through disposal

CHF m

-2 804

 0

 0

 0

 0

Total operating income

CHF m

 709

 883

 779

 788

 879

Group profit

CHF m

 70

 148

 106

 163

 255

Appropriation of Foundation earnings and dividends

CHF m

-75 1

-75

 -75

 -75

 -150

Group equity capital

CHF m

2 932

3 084

2 958

2 561

3 395

Total assets

CHF m

26 252

24 388

24 793

22 795

21 369

Net asset inflow

Ratios Tier 1

%

17.5

19.3

18.5

16.5

17.8

Cost/income

%

75 2

70 3

74

68

66

Performance of LGT’s Princely Portfolio

%

-1.7

13.3

15.7

-24. 1

15.5

1 779

1 889

1 985

1 870

1 689

Aa3

Aa3

Aa3

Aa3

Aa3

A+

A+

A+

A+

AA-

Headcount at 31 December

Rating 4 Moody’s Standard & Poor’s

1

Proposed

2

Excluding charges in connection with the sale of LGT Bank in Liechtenstein & Co. OHG

3

Excluding payment to German authorities in 2010

4

LGT Bank in Liechtenstein Ltd., Vaduz

Financial highlights

5


Chairman’s report payment of EUR 50 million to the German authorities in 2010, business and office expenses declined 4%, reflecting ongoing cost-saving measures and the implementation of the group’s international growth strategy, including the opening of the bank in Hong Kong. Depreciation, amortization and provisions fell 13% to CHF 48 million during the reporting period. This figure includes depreciation on IT investments in connection with the sale of LGT Bank Germany. Together with write-offs charged to income from trading activities and other operating income, the total costs associated ­ .S.H. Prince Philipp von und zu Liechtenstein, Chairman H of the Board of Trustees (left) and H.S.H. Prince Max von und zu Liechtenstein, Group CEO (right)

with exiting the private banking business in Germany came to CHF 50 million. Due to this one-time extraordinary effect, LGT Group posted a group profit of CHF 70 million for the 2011 financial year, down 52% on the CHF 148 million

In 2011 the world economy and the capital markets

recorded in 2010. With a Tier 1 capital ratio of 17.5%

were strongly affected by political changes in Northern

on 31 December 2011 (versus 19.3% at the end of

Africa and the Middle East, by the devastating effects

2010) the company is very well capitalized and has a

of the tsunami and nuclear disaster in Japan, but also

good liquidity.

by the ongoing sovereign debt crisis. The resulting turbulent market and currency environment presented

Strong growth in net new money

investors and the financial industry at large with

In 2011 LGT Group attracted net new money of CHF

opportunities, but also with many risks.

8.6 billion, equivalent to more than 10% of assets under administration. All LGT fields of business and

6

Strong net asset inflows and good capitalization

booking centers contributed to this very positive result.

In this environment LGT Group saw a 5% decline in

Inflows in the institutional asset management and fund

income from services, while net interest income was

businesses were driven primarily by good long-term

up 12% on higher client deposits. After increasing a

investment performance. Among other things, LGT was

sharp 58% in 2010, income from trading activities and

named best European fund company by Lipper, and

other operating income fell at a similar rate in 2011.

won the “Private Equity Asset Manager of the Year”

Contributory factors included currency and hedging

award in the “Financial Times spn Awards 2011”.

losses and depreciation on securities, as well as write-

Assets under administration reached CHF 86.9 billion

offs in connection with the sale of LGT Bank Germany.

on 31 December 2011, versus 86.1 billion at the end

The overall result was a 20% decline in total operating

of 2010. Excluding the CHF 3.0 billion managed at

income to CHF 709 million.

the end of 2010 by LGT Bank Deutschland, which

Operating expenses fell 17% to CHF 566 million in

was sold in the course of the year, LGT Group grew its

2011, with personnel expenses reduced by 11%, and

assets under management by 4.6% despite negative

business and office expenses down 29%. Excluding the

market influences.

Chairman’s report


Challenges in the Private Banking business

tionships and strong performance over years rather than

Over the last five years the speed of change in the

quarters. This long-term aspect gives LGT a strong edge

private banking industry has been unprecedented. We

over many other institutions that have not established

have witnessed several challenges to the profitability

governance structures comparable in their stability.

of our platforms that have come from a combination

While both LGT Capital Management and LGT Capital

of increasing costs, lower revenue margins and an

Partners have suffered from the difficult external envi-

increasing density of regulations. To respond to these

ronment mentioned before, they could compensate

developments in the private banking industry, we have

these adverse impacts through good performance and

implemented a number of initiatives:

strong inflows from an institutional client base that

n

To efficiently serve the needs of our various client

keeps growing and that is driven principally by the

segments we have completed a comprehensive

growing investment competence and track record of

survey of our clients’ needs and have further differ-

our well positioned asset management businesses.

entiated our service models. n

n

n

To grow our client base in various markets and to

Selective growth strategy

exploit economies of scale we have acquired and

Over the last twelve years LGT Group has successfully

integrated Dresdner Bank (Switzerland)

pursued an international growth strategy in its two

To drive efficiency we have been seeking more stand­

business areas Private Banking and Asset Management.

ardization and centralization – reducing complexity

The strong growth of our Asset Management fran-

and duplication in our operations

chise and the successful expansion in Private Banking

To respond to the increasing regulatory requirements

in Switzerland, Asia and Austria have considerably

we have implemented several changes in systems,

strengthened the group as a whole. We will now con-

processes, guidelines and controls

tinue to invest in the organic growth of our units in

Many of the above-mentioned initiatives are still

Asia, Switzerland, Austria and Liechtenstein, as well

ongoing and will be complemented with additional

as in our asset management business, and are still

projects. The quality of the execution will be the

interested in selective new acquisitions as well. As a

key success factor for their impact.

long-term-oriented, family-owned company with a strong capitalization, we see ourselves well positioned

Our asset management businesses – LGT Capital

to benefit from the opportunities that a changing

Partners and LGT Capital Management

industry environment offers. Our geographical diversi-

Over the past years LGT Capital Management and LGT

fication, our sustainable strategy, the quality and the

Capital Partners have built up an asset allocation and

commitment of our employees and first and foremost

manager selection competence that is unparalleled in its

the trust that our clients place in us are strengths

breadth, depth and track record. These core capabilities

which will allow us to shape a successful future.

in asset allocation and manager selection have allowed us to expand our competences in selective attractive direct investment management niches that have further enhanced our investment know-how and offering. The asset management industry is largely a long-term oriented industry serving clients that seek lasting rela-

Chairman’s report

7


Corporate governance LGT Group and its holding company, LGT Group

Internal Audit reports directly to the Group’s Board of

Foundation, are 100 percent controlled by the Prince

Trustees. In accordance with a general principle, the

of Liechtenstein Foundation (POLF). H.S.H. Reigning

external auditors are re-evaluated on a regular basis.

Prince Hans-Adam II. von und zu Liechtenstein is the main beneficiary of the POLF. The POLF names the

The consolidated LGT Group is supervised by the

Board of Trustees of LGT Group Foundation. The

Liechtenstein Financial Market Authority (FMA). Local

Group’s Board of Trustees meets at least four times

companies are supervised by their local authorities.

a year and has constituted two separate committees (Audit Committee; Management Development and

Although it is a privately held company, LGT aims to

Compensation Committee). The Chairman of the

follow the standard practices of public companies;

Group’s Board of Trustees is H.S.H. Prince Philipp von

therefore LGT applies a transparent and proactive

und zu Liechtenstein. The Group’s Board of Trustees

communication policy. LGT Bank in Liechtenstein Ltd.

has appointed the Group CEO, H.S.H. Prince Max

is rated by Moody’s and Standard & Poor’s. The LGT

von und zu Liechtenstein, who is responsible for the

Group has applied International Financial Reporting

strategic and operational management of the Group.

Standards (IFRS) since 1996.

The compensation system is supervised by the Man­ agement Development and Compensation Committee, and consists of a fixed salary component, a yearly bonus and a long-term incentive scheme (LTIS). As a privately held company, LGT has developed an internal LTIS based on an option scheme. Senior management and other key people are entitled to participate in the LTIS. The LTIS is calculated according to a predefined formula which includes, in particular, the result of operating activities, the investment performance of the Princely Portfolio and the Group’s cost of capital. LTIS options are granted yearly and can be exercised between three to seven years after grant. In addition to direct compensation, the management has the possibility to co-invest directly in client products. These co-investments are at the full risk/benefit of the subscribing employee.

8

Corporate governance


Consolidated financial statements

9


Report of the group auditors

10

Report of the group auditors


Consolidated income statement Consolidated income statement (TCHF)

Note

2011

2010

Change absolute

%

Net interest and similar income

1

107 245

95 773

11 472

12

Income from services

2

487 678

514 327

-26 649

-5

Income from trading activities

3

56 572

198 845

-142 273

-72

Other operating income

4

57 499

73 920

-16 421

-22

708 994

882 865

-173 871

-20

Total operating income

Personnel expenses

5

-392 109

-438 184

46 075

-11

Business and office expenses

6

-174 170

-245 083

70 913

-29

Other operating expenses

7

-47 736

-54 660

6 924

-13

-614 015

-737 927

123 912

-17

Total operating expenses

Operating profit before tax

94 979

144 938

-49 959

-34

-20 090

8 262

-28 352

-343

Net profit before minority interests

74 889

153 200

-78 311

-51

Minority interests

-4 548

-5 544

996

-18

Net profit of LGT Group

70 341

147 656

-77 315

-52

Tax expense

8

The accompanying notes form an integral part of the consolidated financial statements.

Consolidated income statement

11


Consolidated statement of comprehensive income Consolidated statement of comprehensive income (TCHF)

Note

Net profit before minority interests

2011

2010

Change absolute

%

74 889

153 200

-78 311

-51

14 351

-33 415

47 766

-143

-160 260

86 385

-246 645

-286

-146 836

81 995

-228 831

-279

-15 254

5 372

-20 626

-384

1 830

-982

2 812

-286

-145 909

52 970

-198 879

-375

-71 020

206 170

-277 190

-134

Other comprehensive income Changes in cumulative translation adjustments Net change in revaluation reserves, net of tax thereof investments in associates thereof available-for-sale securities thereof cash flow hedge Total other comprehensive income

Total comprehensive income before minority interests Minority interests Total comprehensive income of LGT Group The accompanying notes form an integral part of the consolidated financial statements.

12

Consolidated statement of comprehensive income

25

-4 548

-5 541

993

-18

-75 568

200 629

-276 197

-138


Consolidated balance sheet Consolidated balance sheet (TCHF)

Note

2011

2010

Change absolute

%

Assets Cash in hand, balances with central banks

9

2 619 966

291 495

2 328 471

799

Loans and advances to banks

10

6 530 566

5 316 583

1 213 983

23

Loans and advances to customers

11

6 288 793

5 383 600

905 193

17

Securities held for trading purposes

12

4 948

15 344

-10 396

-68

Derivative financial instruments

30

1 435 273

1 690 852

-255 579

-15

Financial assets designated at fair value

13

3 538 563

3 228 137

310 426

10

Other investment securities

14

2 220 926

4 917 781

-2 696 855

-55

Investments in associates

15

2 446 237

2 531 615

-85 378

-3

Property and equipment

16

181 280

187 792

-6 512

-3

Intangible assets

17

265 470

302 743

-37 273

-12

81 843

80 683

1 160

1

2 676

36 143

-33 467

-93

Prepayments and accrued income Deferred tax assets Other assets

8 18

Total assets

635 579

405 636

229 943

57

26 252 120

24 388 404

1 863 716

8

Liabilities Amounts due to banks

19

1 855 132

1 871 916

-16 784

-1

Amounts due to customers

20

17 253 591

14 239 473

3 014 118

21

Derivative financial instruments

30

1 512 064

1 937 856

-425 792

-22

Financial liabilities designated at fair value

21

659 520

805 791

-146 271

-18

Certificated debt

22

1 516 851

1 570 416

-53 565

-3

Accruals and deferred income

60 867

68 971

-8 104

-12

Current tax liabilities

10 194

19 097

-8 903

-47

Deferred tax liabilities

8

78 665

79 139

-474

-1

Other liabilities

23

302 339

630 233

-327 894

-52

Provisions

24

70 571

81 799

-11 228

-14

23 319 794

21 304 691

2 015 103

9

Foundation capital

339 044

339 044

0

0

Retained earnings

1 850 937

1 855 596

-4 659

-0

-52 297

-66 648

14 351

-22

789 112

949 372

-160 260

-17

2 926 796

3 077 364

-150 568

-5

Total liabilities

Group equity capital

Cumulative translation adjustments Other reserves

25

Total Group equity capital and reserves attributable to LGT’s equity holder  Minority interests Total Group equity capital

Total liabilities and Group equity capital

5 530

6 349

-819

-13

2 932 326

3 083 713

-151 387

-5

26 252 120

24 388 404

1 863 716

8

The accompanying notes form an integral part of the consolidated financial statements.

Consolidated balance sheet

13


Consolidated statement of changes in equity Consolidated statement Foundation Retained Cumulative Other Total Minority Total of changes in equity (TCHF) capital earnings translation reserves attribut- interests adjustments able to LGT’s equity 1 January 2011

339 044

1 855 596

-66 648

949 372

3 077 364

6 349

3 083 713

Appropriation of Foundation earnings and dividends

0

-75 000

0

0

-75 000

-5 316

-80 316

Net profit

0

70 341

0

0

70 341

4 548

74 889

Changes in cumulative translation adjustments

0

0

14 351

0

14 351

0

14 351

Net change in revaluation reserves, net of tax

0

0

0

-160 260

-160 260

0

-160 260

thereof investments in associates

0

0

0

-146 836

-146 836

0

-146 836

thereof available-for-sale securities

0

0

0

-15 254

-15 254

0

-15 254

thereof cash flow hedge

0 0 0 1 830 1 830

Other changes 31 December 2011

0 1 830

0 0 0 0 0 -51 -51 339 044

1 850 937

-52 297

789 112

2 926 796

5 530

2 932 326

Foundation Retained Cumulative Other Total Minority Total capital earnings translation reserves attribut- interests adjustments able to LGT’s equity 1 January 2010

339 044

1 782 940

-33 236

862 987

2 951 735

6 642

2 958 377

Appropriation of Foundation earnings and dividends

0

-75 000

0

0

-75 000

-5 239

-80 239

Net profit

0

147 656

0

0

147 656

5 544

153 200

Changes in cumulative translation adjustments

0

0

-33 412

0

-33 412

-3

-33 415

Net change in revaluation reserves, net of tax

0

0

0

86 385

86 385

0

86 385

thereof investments in associates

0

0

0

81 995

81 995

0

81 995

thereof available-for-sale securities

0

0

0

5 372

5 372

0

5 372

thereof cash flow hedge

0 0 0 -982 -982 0 -982

Changes through acquisitions

0 0 0 0 0 -595 -595

31 December 2010

14

Consolidated statement of changes in equity

339 044

1 855 596

-66 648

949 372

3 077 364

6 349

3 083 713


Consolidated cash flow statement Consolidated cash flow statement (TCHF)

Note

2011

2010

74 889

153 200

Cash flow from operating activities Profit after tax Impairment, depreciation, provisions

12 056

13 767

Impairment on available-for-sale securities

4

0

-830

Tax expense

8

20 090

-8 262

Changes in accrued income and expenses

-181 223

-27 493

185 398

170 614

Interest paid

-88 668

-87 178

Income tax paid

-26 830

18 810

Interest and similar income received

Cash flow from operating activities before changes in operating assets and liabilities Loans and advances to banks

-4 288

232 628

-1 218 166

2 899 087

Loans and advances to customers

-950 995

307 362

Trading securities and financial instruments designated at fair value

-470 659

-476 832

Amounts due to banks

-16 398

417 336

3 297 458

-1 970 578

-851 793

580 443

Cash flow from changes in operating assets and liabilities

-210 553

1 756 818

Net cash flow from operating activities

-214 841

1 989 446

Amounts due to customers Other assets and other liabilities

Cash flow from investing activities Proceeds from sales of property and equipment Purchase of property and equipment

16

Purchase of other intangible assets

17

Cash inflow from sale of other intangible assets Cash outflow on acquisition/foundation of subsidiaries Cash inflow from sale of subsidiaries

626

74

-15 443

-11 452

-1 214

-4 932

10 000

0

0

-237

21 412

1 287

-177 232

-110 405

Additions of share of investments in associates

15

Disposals of share of investments in associates

15

173 428

143 907

Proceeds from sales of investment securities

14

8 617 706

22 373 555

Purchase of investment securities

14

-5 972 093

-24 654 374

-51

0

2 657 139

-2 262 577

201 187

223 312

-254 752

-325 213

-5 316

-5 239

Change in minorities Net cash flow from investing activities

Cash flow from financing activities Issue of certificated debt Repayment of certificated debt Dividends paid to minority interests Dividends paid to beneficiary Net cash flow from financing activities

Effects of exchange rate changes on cash Change in cash in hand, balances with central banks

-75 000

-75 000

-133 881

-182 140

20 054

-8

2 328 471

-455 279

746 774

At the beginning of the period

9

291 495

At the end of the period

9

2 619 966

291 495

2 328 471

-455 279

Change in cash in hand, balances with central banks The accompanying notes form an integral part of the consolidated financial statements.

Consolidated cash flow statement

15


Notes to the consolidated financial statements Group accounting principles Introduction

Basis of consolidation

LGT Group Foundation, Herrengasse 12, Vaduz,

Subsidiaries are fully consolidated from the date on

Principality of Liechtenstein, is the holding company

which control is transferred to the Group. Inter-company

of LGT Group, a global financial services institution.

transactions, balances and unrealized gains on trans-

The beneficiary of LGT Group Foundation is the Prince

actions between Group companies are eliminated.

of Liechtenstein Foundation. The main economic

Subsidiaries are deconsolidated from the date that

beneficiary of the Prince of Liechtenstein Foundation

control ceases. The purchase method of accounting is

is the reigning prince of Liechtenstein, H.S.H. Prince

used to account for the acquisition of subsidiaries by

Hans-Adam II. of Liechtenstein.

the Group. The cost of an acquisition is measured at the fair value of the assets given, e­ quity instruments

The terms “LGT Group”, “LGT” or “Group” mean

issued and liabilities incurred or assumed at the date

LGT Group Foundation together with its subsidiary

of exchange, plus costs directly attributable to the

undertakings and the term “Company” refers to

acquisition. Identifiable assets acquired and liabilities

LGT Group Foundation.

and contingent liabilities a­ ssu­med in a business combination are measured i­nitially at their fair values at

Presentation of amounts

the acquisition date, i­rrespective of the extent of any

The Group publishes its financial statements in thou-

minority ­interest. The excess of the cost of acquisition

sand Swiss Francs (TCHF) unless otherwise stated.

over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If

Accounting principles

the cost of acquisition is less than the fair value of the

The consolidated financial statements for the financial

net assets of the subsidiary acquired, the difference is

year 2011 are prepared in accordance with Interna­

­recognized directly in the income statement.

tional Financial Reporting Standards (IFRS). LGT has

A list of the Group’s principal subsidiary undertakings

applied IFRS rules since 1996. The consolidated finan-

is provided in note 32.

cial statements are prepared on the historical cost convention, as modified by revaluation of available-

Investments in associates

for-sale financial assets, financial assets and liabilities

Investments in associates are investments in companies

held at fair value through profit or loss and all

over which the Group has significant influence but not

derivative instruments. A summary of the principal

control, generally accompanying a shareholding of

Group accounting policies is set out below.

between 20 percent and 50 percent of the economical rights. LGT associates are accounted for by the equity

The Group CEO and the Group CFO considered the

method of accounting and are initially recognized at

consolidated financial statements on 10 April 2012. They

fair value plus transaction costs. Unrealized gains on

were approved for issue by the Audit Committee of the

transactions between the Group and its associates are

LGT Group Foundation Board on 24 April 2012. The

eliminated unless the transaction provides evidence of

Foundation Board approved the consolidated financial

an impairment of the asset transferred. Accounting

statements for issue on 25 April 2012. The accounts

policies have been changed where necessary to ensure

were presented for approval at the Foundation Meeting

consistency with the policies adopted by the Group.

to the Supervisory Board on 25 April 2012. The Foun­

The investments in associates are reported in note 15.

dation Board proposed to the Foundation Meeting

16

of 25 April 2012 the payment of CHF 75 000 000 to

The Group’s share of its associates’ post-acquisition

the Prince of Liechtenstein Foundation. The accounts

profit or loss is recognized in the income statement,

on pages 11 to 71 were approved by the Foundation

or in other reserves. Its share of post-acquisition

Board on 25 April 2012 and are signed on its behalf

movements in reserves is recognized in reserves. The

by H.S.H. Prince Philipp of Liechtenstein, Chairman,

cumulative post-acquisition movements are adjusted

and Olivier de Perregaux, Group CFO.

against the carrying amount of the investment.

Notes to the consolidated financial statements


Foreign currencies

Goodwill and fair value adjustments arising on the

Functional and presentation currency

acquisition of a foreign entity are treated as assets

Items included in the financial statements of each of

and liabilities of the foreign entity and translated at

the Group’s entities are measured using the currency

the closing rate.

of the primary economic environment in which the entity operates (“the functional currency”).

Foreign exchange rates

The conso­lidated financial statements are presented in

The foreign exchange rates for the major currencies

Swiss Francs, which is the Group’s presentation currency.

which have been applied are as follows:

Transactions and balances

2011 Average rate Year-end rate

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the trans­lation at year-end ex­change rates of monetary assets and liabilities denomin­ated in foreign currencies are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

CHF per 1 USD

0.8847

0.9356

CHF per 1 EUR

1.2332

1.2151

CHF per 1 GBP

1.4201

1.4545

2010 Average rate Year-end rate CHF per 1 USD

1.0367

0.9367

CHF per 1 EUR

1.3782

1.2564

CHF per 1 GBP

1.6044

1.4629

Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are

Interest income and expense

reported as part of the fair value gain or loss. Trans­lation

Interest income and expense are recognized in the

differences on non-monetary items, such as equities

income statement for all instruments measured at

classified as available-for-sale financial assets, are includ-

amortized cost using the effective interest method.

ed in the fair value reserve in equity. The effective interest method is a method of calcula­ting Group companies

the amortized cost of a financial asset or a financial

The results and financial position of all the Group

liability and of allocating the interest income or interest

entities that have a functional currency different from

expense over the relevant period. The effective interest

the presentation currency are translated into the

rate is the rate that exactly discounts estimated future

presentation currency as follows:

cash payments or receipts through the expected life of

n

n

n

assets and liabilities for each balance sheet presented

the financial instrument or, when appropriate, a shorter

are translated at the closing rate on the date of

period to the net carrying amount of the financial asset

that balance sheet;

or financial liability. When calculating the effective inter­

income and expenses for each account of the income

est rate, the Group estimates cash flows considering

statement are translated at average exchange rates;

all contractual terms of the financial instrument (for

all resulting exchange differences are recognized as a separate component of equity.

example, prepayment options) but does not consider future credit losses. The calculation includes all fees and interest points paid or received between parties to

On consolidation, exchange differences arising from

the contract that are an integral part of the effective

the translation of the net investment in foreign entities,

interest rate, transaction costs and all other premiums

and of borrowings and other currency instruments

or discounts. Once a financial asset or a group of similar

designated as hedges of such investments, are taken

financial assets has been written down as a result of an

to shareholders’ equity. When a foreign operation is

impairment loss, interest income is recognized using the

sold, such exchange differences are recognized in the

rate of interest used to discount the future cash flows

income statement as part of the gain or loss on sale.

for the purpose of measuring the impairment loss.

Notes to the consolidated financial statements

17


Commission income

Intangible assets

Commission income and any associated expense ari­sing

Goodwill

from the provision of private banking and investment

Goodwill represents the excess of the cost of a business

management services, credit commissions and interest

combination over the fair value of the Group’s share of

are all accounted for using the accrual method. Fixed

the net identifiable assets of the acquired subsidiary/

commissions receivable and payable are accounted for

associate at the date of acquisition. Goodwill on a

evenly over the life of the relevant contract.

business combination of subsidiaries is included in “goodwill and other intangible assets”. Goodwill on

Performance fees are defined as management fees

a business combination of investments in associates

payable for the provision of investment management

is included in “investments in associates”. Goodwill is

services, but which are conditional on the performance

tested annually for impairment and c­ arried at cost less

of the fund or account under contract, c­ om­pared to

accumulated impairment losses. Gains and losses on

the performance of a specified benchmark. They are

the disposal of an entity in­clude the carrying amount

accrued according to the contract terms for the meas-

of goodwill relating to the entity sold.

urement period when they can be reliably measured, and are invoiced only after c­ onfirmation of the perfor-

Software

mance fee calculation.

Software acquired by the Group is stated at cost less accumulated amortization and accumulated i­mpairment

Property and equipment

losses. Subsequent expenditure on software assets is

Property and equipment and their subsequent costs

capitalized only when it increases the future economic

are stated at cost less accumulated depreciation and

benefits embodied in the specific asset to which it

accumulated impairment losses. All other repairs and

relates. All other expenditure is expensed as incurred.

maintenance are charged to the income statement

Amortization is recognized in the income statement on

during the financial period in which they are incurred.

a straight-line basis over the estimated useful life of the

Property and equipment are periodically reviewed for

software, from the date that it is available for use. The

impairment. An asset’s carrying amount is written

estimated useful life of software is three to ten years.

down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated

Other intangible assets

recoverable amount. The recoverable amount is the

Other intangible assets are recognized on the balance

higher of the asset’s fair value less costs to sell and

sheet at cost determined at the date of acquisition

value in use. Depreciation on it is provided, on a

and are amortized using the straight-line method over

straight-line basis, from the date of purchase, over the

their estimated useful economic life, not exceeding

estimated useful life of the asset. The assets’ residual

20 years. The amortization is recognized in other oper-

values and useful lives are reviewed, and adjusted if

ating expenses in the income statement.

appropriate, at each balance sheet date. Estimated asset lives vary in line with the following:

At each balance sheet date other intangible assets are reviewed for indications of impairment or changes in

18

Freehold buildings

50 years

estimated future benefits. If such indication exists, an

Leasehold improvements

period of lease

analysis is performed to assess whether the carrying

IT equipment

3–5 years

amount of other intangible assets is fully recoverable.

Office equipment

5 years

An impairment is charged if the carrying amount

Motor vehicles

4 years

exceeds the recoverable amount.

Notes to the consolidated financial statements


Financial instruments

Financial assets at fair value through profit or loss

Financial assets

This category has two sub-categories: financial assets

Purchases and sales of financial assets at fair value

held for trading, and those designated at fair value

through profit or loss, held to maturity and available

through profit or loss at inception. A financial asset is

for sale are recognized on the trade-date – the date

classified in this category if acquired principally for t­ he

on which the Group commits to purchase or sell the

purpose of selling in the short term or if so designated

asset. Loans are recognized when cash is advanced to

by management. Derivatives are also categorized as

the borrowers. Financial assets are initially recognized

held for trading unless they are designated as hedges.

at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.

The Group designates financial assets and liabilities at

Financial assets are derecognized when the rights

fair value through profit or loss when either

to receive cash flows from the financial assets have

n

ex­pired or where the Group has transferred substantially all risks and rewards of ownership.

the assets or liabilities are managed, evaluated and reported internally on a fair value basis;

n

the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise;

Loans and advances

n

the asset or liability contains an embedded derivative

Loans and receivables are non-derivative financial

that significantly modifies the cash flows that would

assets with fixed or determinable payments that are

otherwise be required under the contract.

not quoted in an active market. They arise when the Group provides money, goods or services directly to

Held-to-maturity securities

a debtor with no intention of trading the receivable.

Held-to-maturity securities are financial assets with fixed

Loans and advances to customers and to banks are

or determinable payments and fixed maturity that LGT

reported at their amortized cost less allowances for

has the positive intention and ability to hold to maturity.

any impairment or losses.

Held-to-maturity securities are carried at amortized cost subject to a test for impairment. The ­difference between

Investment securities

initial recognition and nominal value is amortized over

Investment securities are classified as financial assets

the period to maturity. This amount and interest income

at fair value through profit or loss, available-for-sale

are stated as net interest income.

and held-to-maturity securities. They are recognized on the balance sheet and initially measured at fair

Available-for-sale securities

value, which is the cost on the consideration given

Available-for-sale securities are those securities that do

or received to acquire them. Subsequent to initial

not properly belong in trading securities or held-to-

recognition, securities are remeasured to fair value,

maturity securities. They are initially recognized at

except held-to-maturity securities which are carried

fair value (plus transaction costs). Available-for-sale

at amortized cost subject to a test for impairment. To

securities are subsequently remeasured at fair value or

the extent that quoted prices are not readily available,

amounts derived from cash flow models. Fair values for

fair value is based on either internal valuation models

unlisted equity securities are estimated using applicable

or management’s estimate of amounts that could be

price/earnings or price/cash flow ratios refined to reflect

realized, based on observable market d ­ ata, assuming

the specific circumstances of the issuer. Unrealized

an orderly liquidation over a reasonable period of time.

gains and losses arising from changes in the fair value of securities classified as available-for-sale are recognized in equity. Equity securities for which fair values cannot be measured reliably are recognized at cost less impairment. When the securities are d ­ isposed of or im­paired, the related accumulated fair value adjustments are included in the income state­ment as income from investment securities.

Notes to the consolidated financial statements

19


Borrowings

A hedge is regarded as highly effective if actual results

Borrowings are recognized initially at fair value,

are within a range of 80 percent to 125 percent.

being their issue proceeds (fair value of consideration received) net of transaction cost incurred. Borrowings

Changes in the fair value of derivatives that are

are subsequently stated at amortized cost, any differ-

­designated and qualify as fair value hedges and that

ence between proceeds net of transaction costs and

prove to be highly effective in relation to hedged risk

the redemption value is recognized in the income

are recorded in the income statement, along with the

statement over the period of the borrowing using the

corresponding change in the fair value of the hedged

effective interest method.

asset or liability that is attributable to that specific hedged risk.

Other liabilities Other liabilities are reported at amortized cost.

If the hedge no longer meets the criteria for hedge

Interest and discounts are taken to net interest and

accounting, in the case of interest-bearing financial

similar income on an accrual basis.

instruments the difference between the carrying amount of the hedged position at that time and the

Derivative financial instruments and hedging

value that this position would have exhibited without

Derivatives are initially recognized at fair value on the

hedging is amortized to net profit or loss over the

date on which a derivative contract is entered into

remaining period to maturity of the original hedge. In

and are subsequently remeasured at their fair value.

the case of non-interest-bearing financial instruments,

Fair values are obtained from quoted market prices

on the other hand, this difference is immediately

in active markets and valuation techniques, including

recorded in the income statement.

discounted cash flow models and option pricing models, as appro­priate. All derivatives are carried

Changes in the fair value of derivatives that have been

as assets when fair value is positive and as liabilities

recorded as a cash flow hedge, that fulfill the crite-

when fair value is negative.

ria mentioned above and that prove to be effective in hedging risk are reported under other reserves in

In the case of hedging transactions involving derivative

Group equity capital. If a future financial transaction

financial instruments, on the inception of transaction it

or an obligation results in a balance sheet item, the

is determined whether the specific transaction is

gains or losses previously recorded in shareholders’

a hedge of the value of a balance sheet item

equity are derecognized and set off against the cost

n

(a fair value hedge), or n

a hedge of a future cash flow or obligation (a cash flow hedge).

of this ­balance sheet item. If the hedged cash flow or the obligation leads to direct recognition in the income statement, the hedging instrument’s cumulative gains or losses from previous periods in Group

Derivatives categorized in this manner are treated

equity ­capital are included in the income statement in

as hedging instruments in the financial statements if

the same period as the hedged transaction.

they fulfill the following criteria: n

n

n

existence of documentation that specifies the

hedging transactions and are in line with the risk

or cash flow), the hedging instrument as well as

management principles of the Group. However, in

the hedging strategy/relationship,

view of the strict and specific guidelines of IFRS, they

effective elimination of the hedged risks through

do not fulfill the criteria to be treated as hedging

the hedging transaction during the entire reporting

transactions for accounting purposes. They are there-

period (high correlation),

fore reported as trading positions. Changes in value

sustained high effectiveness of the hedging transaction.

20

Certain ­derivative transactions represent financial

under­lying transaction (balance sheet item

Notes to the consolidated financial statements

are recorded in the income statement in the corres­ ponding period.


Determination of fair values

the Group holds. Price data and parameters used in

For financial instruments traded in active markets, the

the measurement procedures applied are generally

determination of fair values of financial assets and

reviewed carefully and adjusted, if necessary – particu­

financial liabilities is based on quoted market prices

larly in view of the current market developments.

or dealer price quotations. This includes listed equity securities and quoted debt instruments on major

The fair value of over-the-counter (OTC) derivatives is

exchanges as well as exchange traded derivatives.

determined using valuation methods that are commonly accepted in the financial markets, such as present

A financial instrument is regarded as quoted on an

value techniques and option pricing models. The fair

active market if quoted prices are readily and regularly

value of foreign exchange forwards is generally based

available from an exchange, dealer, broker, industry

on current forward exchange rates.

group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market

Private equity investments for which market quotations

transactions on an arm’s length basis. If the above crite­

are not readily available are valued at their fair values

ria are not met, the market is regarded as being inactive.

as determined in good faith by the respective Board of Directors in consultation with the investment manager.

For all other financial instruments, fair value is deter-

In this respect, investments in other investment com-

mined using valuation techniques. In these techniques,

panies (fund investments) which are not publicly traded

fair values are estimated from observable data in

are normally valued at the underlying net asset value

respect of similar financial instruments, using models

as advised by the managers or administrators of these

to estimate the present value of expected future cash

investment companies, unless the respective Board of

flows or other valuation techniques, using inputs (for

Directors are aware of good reasons why such a valu-

example, LIBOR yield curve or FX rates) existing at the

ation would not be the most appropriate indicator of

consolidated balance sheet dates.

fair value.

The Group uses widely recognised valuation models for

In estimating the fair value of private equity fund in­­

determining fair values of non-standardized financial

vestments, the respective Board of Directors considers

instruments of lower complexity, such as options or

all appropriate and applicable factors (including a sen-

interest rate and currency swaps. For these financial

sitivity to non-observable market factors) relevant to

instruments, inputs into models are generally market-

their value, including but not limited to the following:

observable.

n

reference to the fund investment’s reporting informa­tion including consideration of any time lags between

For more complex instruments, the Group uses intern­ally

the date of the latest available reporting and the

developed models, which are usually based on valuation

balance sheet date of the respective Group entity in

methods and techniques generally recognised as stand­

those situations where no December valuation of the

ard within the industry. Valuation models are used pri­

underlying fund is available. This includes a detailed

marily to value derivatives transacted in the over-the-

analysis of exits (trade sales, initial public offerings,

counter market. Some of the inputs to these models

etc.) which the fund investments have gone through

may not be market observable and are therefore estima-

in the period between the latest available reporting

­ted based on assumptions. The impact on net profit of

and the balance sheet date of the respective Group

financial instrument valuations reflecting non-market ob-

entity, as well as other relevant valuation information.

­servable inputs (level 3 valuations) is disclosed in note 29.

This information is a result of continuous contact with the investment managers and, specifically, by

The output of a model is always an estimate or approxi­

monitoring calls made to the investment managers,

mation of a value that cannot be determined with

distribution notices received from the investment

certainty, and valuation techniques employed may

managers in the period between the latest available

not fully reflect all factors relevant to the positions

report and the balance sheet date of the respective

Notes to the consolidated financial statements

21


Group entity, as well as the monitoring of other finan­-

events that occurred after the initial recognition of the

cial information sources and the assessment thereof;

asset (a “loss event”) and that loss event (or events)

n

reference to transaction prices;

has an impact on the estimated future cash flows

n

result of operational and environmental assessments:

of the financial asset or group of financial assets that

periodic valuation reviews are made of the valua-

can be reliably estimated. Objective evidence that a

tions of the underlying investments as reported by

financial asset or group of assets is impaired includes

the investment managers to determine if the values

observable data that comes to the attention of the

are reasonable, accurate and reliable. These reviews

Group about the following loss events:

in­clude a fair value estimation using widely recog-

n

significant financial difficulty of the issuer or obligor;

nised valuation methods such as multiple analysis

n

a breach of contract, such as a default or delin-

n

the Group granting to the borrower, for economic

and discounted cash flow analysis; n

review of management information provided by the

quency in interest or principal payments;

managers/administrators of the fund investments

or legal reasons relating to the borrower’s financial

on a regular basis; and

difficulty, a concession that the lender would not

mark-to-market valuations for quoted investments held by the managers/administrators of the fund investments

otherwise consider; n

which make up a significant portion of the relevant

it becoming probable that the borrower will enter bankruptcy or other financial reorganization;

Group entity’s net asset value.

n

the disappearance of an active market for that

If the respective Board of Directors comes to the con-

n

observable data indicating that there is a measurable

financial asset because of financial difficulties; clusion upon recommendation of the investment man­

decrease in the estimated future cash flows from a

ager after applying the above-mentioned valuation

group of financial assets since the initial recognition

methods, that the most recent valuation reported by

of those assets, although the decrease cannot yet be

the manager/administrator of a fund investment is

identified with the individual f­ inancial assets in the

materially misstated, it will make the necessary adjust­

group, including:

ments using the results of its own review and analysis.

– adverse changes in the payment status of

Typically, the fair value of such investments are remeas-

borrowers in the group; or

­ured based on the receipt of periodic (usually quarterly)

– national or local economic conditions that

reporting provided to the investors in such vehicles by

correlate with defaults on the assets in the group.

the managers or administrators. For new investments in such vehicles, prior to the receipt of fund reporting,

The Group first assesses whether objective evidence of

the investments are usually valued at the amount con­

impairment exists individually for financial assets that are

tributed, which is considered to be the best indicator

individually significant, and individually or collectively

of fair value.

for financial assets that are not individually significant. If the Group determines that no objective evidence of

In cases when the fair value of unlisted equity instru-

impairment exists for an individually assessed finan-

ments cannot be determined reliably, the instruments

cial asset, whether significant or not, it includes the

are carried at cost less impairment.

asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for

Impairment of financial assets

impairment. Assets that are individually assessed for

Assets carried at amortized cost

impairment and for which an impairment loss is or

The Group assesses at each balance sheet date whether

continues to be recognized are not included in a

there is objective evidence that a financial asset or a

collective assessment of impairment.

group of financial assets is impaired. A financial asset or

22

a group of financial assets is impaired and impairment

If there is objective evidence that an impairment loss on

losses are incurred if, and only if, there is o ­ bjective

loans and receivables or held-to-maturity investments

evidence of impairment as a result of one or more

carried at amortized cost has been incurred, the amount

Notes to the consolidated financial statements


of the loss is measured as the difference between the

period (for example, changes in unemployment rates,

asset’s carrying amount and the present value of esti-

property prices, payment status, or other factors indica-

mated future cash flows (excluding future credit losses

tive of changes in the probability of losses in the group

that have not been incurred) discounted at the finan-

and their magnitude). The methodology and assump-

cial asset’s original effective interest rate. The carrying

tions used for estimating future cash flows are reviewed

amount of the asset is reduced through the use of

regularly by the Group to reduce any differences

an allowance account and the amount of the loss is

between loss estimates and actual loss experience.

recognized in the income statement. If a loan or heldto-maturity investment has a variable interest rate,

When a loan is uncollectible, it is written off against

the discount rate for measuring any impairment loss

the related provision for loan impairment. Such loans

is the current effective interest rate determined under

are written off after all the necessary procedures have

the contract. As a practical expedient, the Group may

been completed and the amount of the loss has been

measure impairment on the basis of an instrument’s

determined. Subsequent recoveries of amounts pre­

fair value using an observable market price.

viously written off decrease the amount of the provision for loan impairment in the income statement.

The calculation of the present value of the estimated future cash flows of a collateralized financial asset

If, in a subsequent period, the amount of the impair-

reflects the cash flows that may result from foreclo-

ment loss decreases and the decrease can be related

sure less costs for obtaining and selling the collateral,

objectively to an event occurring after the impair-

whether or not foreclosure is probable.

ment was recognized (such as an improvement in the debtor’s credit rating), the previously recognized

For the purposes of a collective evaluation of impair-

impairment loss is reversed by adjusting the allowance

ment, financial assets are grouped on the basis of

ac­count. The amount of the reversal is recognized in

similar credit risk characteristics (i.e. on the basis of

the income statement.

the Group’s grading process that considers asset type, industry, geographical location, collateral type, past-due

Assets carried at fair value

status and other relevant factors). Those characteristics

The Group assesses at each balance sheet date whether

are relevant to the estimation of future cash flows

there is objective evidence that a financial asset or a

for groups of such assets by being indicative of the

group of financial assets is impaired. In the case of

debtors’ ability to pay all amounts due according to

equity investments classified as available-for-sale, a

the contractual terms of the assets being evaluated.

signi­ficant or prolonged decline in the fair value of the security below its cost is considered in determining

Future cash flows in a group of financial assets that are

whet­her the assets are impaired. If any such evidence

collectively evaluated for impairment are estimated on

exists for available-for-sale financial assets, the cumu-

the basis of the contractual cash flows of the assets in

lative loss – measured as the difference between the

the group and historical loss experience for assets with

acquisition cost and the current fair value, less any

credit risk characteristics similar to those in the group.

impairment loss on that financial asset previously rec-

Historical loss experience is adjusted on the basis of

ognized in profit or loss – is removed from equity and

current observable data to reflect the effects of current

recognized in the income statement. Impairment losses

conditions that did not affect the period on which the

recognized in profit or loss on equity instruments are

historical loss experience is based and to remove the

not reversed through the income statement, they are

effects of conditions in the historical period that do

reversed through equity. If, in a subsequent period, the

not exist currently.

fair value of a debt instrument classified as availablefor-sale increases and the increase can be objectively

Estimates of changes in future cash flows for groups

related to an event occurring after the impairment

of assets should reflect and be directionally consistent

loss was recognized in profit or loss, the impairment

with changes in related observable data from period to

loss is reversed through the income statement.

Notes to the consolidated financial statements

23


Renegotiated loans

Leasing

Loans that are either subject to collective impairment

The leases entered into by the Group are operating

assessment or individually significant and whose terms

leases. The expenses from operating leases (the rights

have been renegotiated are no longer considered to be

and responsibilities of ownership remain with the ­lessor)

past due but are treated as new loans. In subsequent

are disclosed in business and office expenses.

years, the asset is considered to be past due and disclosed only if renegotiated.

Cash in hand For the purpose of the consolidated cash flow state-

Provisions

ment, cash in hand comprises liquid assets including

Provisions for restructuring costs, legal claims and other

cash and balances with central banks and post offices.

operational risk are recognized, when the Group has a present legal or constructive obligation as a result of

Taxation

past events, when it is more likely than not that an out­

Corporate tax payable is provided on the taxable profits

flow of resources will be required to settle the obliga-

of LGT Group companies at the applicable current rates.

tion and when the amount has been reliably estimated.

Deferred income tax is provided in full, using the liabil­ ity method, on temporary differences arising between

Fiduciary transactions

the tax bases of assets and liabilities and their carrying

The Group commonly acts as trustees and in other

amounts in the consolidated financial statements.

fiduciary capacities that result in the holding or placing

Deferred income tax is determined using tax rates (and

of assets on behalf of individuals, trusts, retirement

laws) that have been enacted or substantially enacted

benefit plans and other institutions. These assets and

by the balance sheet date and are expected to apply

income arising thereon are excluded from these finan-

when the related deferred income tax asset is realized

cial statements, as they are not assets of the Group.

or the deferred income tax liability is settled. Deferred tax assets are recognized where it is probable that

Repurchase and reverse repurchase transactions

future taxable profit will be available against which

(repo transactions)

the temporary differences can be utilized.

Repo transactions are used to refinance and fund money market transactions. They are entered in the balance

Employee benefits

sheet as advances against collateral and cash contribu­

Short-term benefits

tions or with pledging of securities held in the Group’s

Salaries are recognized in the income statement upon

own account. Securities provided to serve as collateral

payment. The amount for bonuses is accrued and will

thus continue to be posted in the corresponding balance

be paid at the beginning of the following year.

sheet positions – securities received to serve as collateral are not reported in the balance sheet. Interest resulting

Medium-term benefits

from the trans­actions is posted as net interest income.

Senior management and other key people of the Group are entitled to participate in a long-term incentive

24

Contingent liabilities

scheme. The incentive scheme gives the holder the possi­

A contingent liability is a possible obligation that arises

bility to participate in the development of the economic

from past events and whose existence will be confirmed

value added of the Group. In principle, the economic

only by the occurrence or non-occurrence of one or

value added represents the operating profit of the

more uncertain future events not wholly within the con­­

Group and the return on LGT’s Princely Portfolio after

trol of the entity. Or a contingent liability is a present

adjustments for capital and refinancing costs. Options

obligation that arises from past events but is not rec-

granted under the scheme will, in ­normal circumstances,

ognized because it is not probable that an out­­­­flow of

only be exercisable within 3 to 7 years from the date

resources embodying economic benefits will be required

of grant of option. The annual costs of the scheme are

to settle the obligation or the amount of the obligation

charged to the profit and loss account. The accruals

cannot be measured with sufficient reliability.

are shown as other liabilities until their realization.

Notes to the consolidated financial statements


Pension obligations

expense when they are due. Prepaid contributions are

Group companies operate various pension schemes.

recognized as an asset to the extent that a cash refund

The schemes are generally funded through payments

or a reduction in the future payments is available.

to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The

Client assets under administration

Group has both defined benefit and defined contribu­

Client assets under administration are stated according

tion plans. A defined benefit plan is a pension plan

to the provisions of the Liechtenstein banking law.

that defines an amount of pension benefit that an employee will receive on retirement, usually dependent

Events after the reporting period

on one or more factors such as age, years of service

There are no events to report that had an influence

and compensation. A defined contribution plan is a

on the balance sheet and income statement for 2011.

pension plan under which the Group pays fixed contributions into a separate entity.

Management’s judgements The Group makes estimates and assumptions that affect

The liability recognized in the balance sheet in respect

the reported amounts of assets and liabilities within the

of defined benefit pension plans is the present value

next financial year. Estimates and jud­gements are con­

of the defined benefit obligation at the balance sheet

tinually evaluated and are based on historical experi-

date less the fair value of plan assets, together with

ence and other factors, including expectations that are

adjustments for unrecognized actuarial gains or losses

believed to be reasonable under the circumstances.

and past service costs. The defined benefit obligation is calculated annually by independent actuaries using

Impairment losses on loans and advances

the projected unit credit method. The present value

The Group reviews its loan portfolios to assess impair­

of the defined benefit obligation is determined by

ment at least on a quarterly basis. In determining

­discounting the estimated future cash outflows using

whether an impairment loss should be recorded in the

interest rates of high-quality corporate bonds that are

income statement, the Group makes judgements as to

denominated in the currency in which the benefits will

whether there is any observable data indicating that

be paid, and that have terms to maturity approximating

there is a measurable decrease in the estimated future

to the terms of the related pension liability.

cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that port-

Based on the corridor approach, actuarial gains and loss-

folio. This evidence may include observable data indi-

es arising from experience adjustments and changes in

cating that there has been an adverse change in the

actuarial assumptions are charged or credited to income

payment status of borrowers in a group, or national or

over the employees expected remaining average work-

local economic conditions that correlate with defaults

ing lives if the net cumulative unrecognized actuarial

on assets in the group.

gains and losses exceed the greater of 10 percent of the defined benefit obligation and 10 percent of the fair

Management uses estimates based on historical loss

value of any pension plan assets. Past-service costs are

experience for assets with credit risk characteristics and

recognized immediately in income, unless the changes

objective evidence of impairment similar to those in the

to the pension plan are conditional on the employees

portfolio when scheduling its future cash flows. The

remaining in service for a specified period of time (the

methodology and assumptions used for estimating both

vesting period). In this case, the past-service costs are

the amount and timing of future cash flows are reviewed

amortized on a straight-line basis over the vesting period.

regularly to reduce any differences between loss estimates and actual loss experience. To the extent that the net

For defined contribution plans, the Group pays con-

present value of estimated cash flows differs by +5 per­

tributions to privately administered pension insurance

cent, the provision would be estimated 201 (2010: 271)

plans on a mandatory, contractual or voluntary basis.

lower. If the net present value d ­ iffers by –5 percent, the

The contributions are recognized as employee benefit

provision would be estimated 191 (2010: 271) higher.

Notes to the consolidated financial statements

25


Impairment of goodwill

Income taxes

The fair value of goodwill is reviewed annually and

The Group is subject to income taxes in numerous juris-

management assesses whether an impairment charge

dictions. Significant estimates are required in determin-

needs to be recognized.

ing the worldwide provision for income taxes. There are many transactions and calculations for which the

Fair value of derivatives

ultimate tax determination is uncertain during the ordi-

The fair value of financial instruments that are not

nary course of business. The Group recognizes liabilities

quoted in active markets are determined by using valu­

for anticipated tax audit issues based on estimates of

ation techniques. Where valuation techniques (for

whether additional taxes will be due. Where the final

example, models) are used to determine fair values,

tax outcome of these matters is differ­ent from the

they are validated and periodically reviewed by qualified

amounts that were initially recorded, such differences

personnel independent of the area that created them.

will impact the income tax and deferred tax provisions in the period in which such determination is made.

Changes in assumptions could affect reported fair value of financial instruments. For example, to the extent

Based on the final outcome of the above-mentioned

that management used a tightening of 20 basis points

judgement areas, the Group would need to decrease

in the credit spread, the fair value of derivative finan-

income tax by 3 373 (2010: 1 619), in case of favorable

cial instruments would be estimated at -81 507 (2010:

market conditions, and decrease income tax by 3 422

-250 776) as compared to their reported fair value of

(2010: 1 673), in case of unfavorable market conditions.

-76 791 (2010: -247 004) at the balance sheet date. Changes in accounting principles and presentation Impairment of available-for-sale equity

Standards and interpretations that have been

investments

adopted

The Group determines that available-for-sale equity

The Group applied the following new and revised

investments are impaired when there has been a

standards and interpretations for the first time in the

­significant or prolonged decline in the fair value below

financial year beginning on 1 January 2011:

their cost (cost is defined as historical cost). This deter­

n

mination of what is significant or prolonged requires

Amendment to IAS 32 Financial Instruments: Presentation – Classification of rights issues:

judgement. In making this judgement the Group

(effective 1 February 2010)

evaluates the following factors: (i) extent of the decline

n

is substantial (in excess of 20 percent of cost) or, (ii) the fair value is three balance sheet dates in succession

Instruments – (effective 1 July 2010) n

(on a semi-annual basis) or more below cost. In addition, impairment may be appropriate when there is

IFRIC19 Extinguishing Financial Liabilities with Equity IAS 24 Related Party Disclosures (revised 2009) (effective 1 January 2011)

n

Amendment to IFRIC 14: IAS 19 The limit on a de-

evidence of a deterioration in the financial health of the

fined benefit assets, minimum funding requirements

investee, industry and sector performance, changes in

and their interaction (effective 1 January 2011)

technology, and operational and financing cash flows.

n

IFRS 3 Business Combinations – Transition requirements for contingent consideration from a business

Had all the declines in fair value below cost been

combination that occurred before the effective date

­considered significant or prolonged, the Group would

of the revised IFRS (effective: Applicable to annual

suffer an additional 22 460 (2010: 12 686) loss in its

periods beginning on or after 1 July 2010. Applied

financial statements, being the transfer of the total

retrospectively)

fair value reserve to the income statement.

n

IFRS 3 Business Combinations – Measurement of noncontrolling interests (effective: Applicable to annual periods beginning on or after 1 July 2010. Applied prospectively from the date the entity applies IFRS 3)

26

Notes to the consolidated financial statements


n

IFRS 3 Business Combinations – Un-replaced and

n

Amendments to IAS 19 Employee Benefits

voluntarily replaced share- based payment awards

(effective 1 January 2013)

(effective: Applicable to annual periods beginning

These amendments eliminate the corridor approach

on or after 1 July 2010. Applied prospectively)

and calculate finance costs on a net funding basis.

n

IFRS 7 Financial Instruments – (effective 1 January

IFRS 9 Financial Instruments (effective 1 January 2015)

n

IAS 1 Presentation of Financial Statements –

n

IAS 27 Consolidated and Separate Financial Statements

primary measurement categories for financial assets:

– (effective: Applicable to annual periods beginning

amortised cost and fair value. The basis of classifica-

on or after 1 July 2010. Applied retrospectively)

tion depends on the entity’s business model and the

n

2011. Applied retrospectively)

IFRS 9 is the first standard issued as part of a wider project to replace IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes two

(effective 1 January 2011. Applied retrospectively)

n

contractual cash flow characteristics of the financial

IAS 34 Interim Financial Reporting – (effective 1 July

asset. The guidance in IAS 39 on impairment of finan­

2011. Applied retrospectively)

cial assets and hedge accounting continues to apply.

The adoption has not led to any changes in the Group Accounting Principles. The standards and interpreta-

n

IFRS 10 Consolidated Financial Statements

tions are not expected to have any impact on the

(effective 1 January 2013)

reported results or financial position of the Group.

The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated

Standards and interpretations that have not yet

financial statements when an entity controls one or

been adopted

more other entity (an entity that controls one or more

Numerous new and revised standards and interpreta-

other entities) to present consolidated financial state-

tions were published that must be applied for financial

ments. Defines the principle of control, and establishes

years beginning on or after 1 January 2012. The Group

controls as the basis for consolidation. Set out how

has chosen not to adopt these in advance.

to apply the principle of control to identify whether

The new and revised standards and interpretations that

an investor controls an investee and therefore must

will be relevant to the Group are as follows:

consolidate the investee. Sets out the accounting

n

requirements for the preparation of consolidated

Amendments to IFRS 7 Financial Instruments:

financial statements.

Disclosures’ on derecognition (effective 1 July 2011) This amendment will promote transparency in the

n

IFRS 12 Disclosures of Interests in other Entities

n

IFRS 13 Fair Value Measurement

n

IAS 27 (revised 2011) Separate Financial Statements

reporting of transfer transactions and improve users’ understanding of the risk exposures relating to trans-

(effective 1 January 2013)

fers of financial assets and the effect of those risks on an entity’s financial position, particularly those

(effective 1 January 2013)

involving securitisation of financial assets. Earlier application subject to EU endorsement is permitted. n

n

IAS 28 (revised 2011) Associates and Joint Ventures (effective 1 January 2013)

Amendments to IAS12 Income Taxes’ on Deferred Tax (effective 1 January 2012)

n

(effective 1 January 2013)

n

Amendment to IAS 32 Financial Instruments – Offsetting Financial Assets and Financial Liabilities

Amendments to IAS 1 Financial Statement Presenta­

(effective 1 January 2014)

tion’ regarding Other Comprehensive Income (effective 1 July 2012) The main change resulting from these amendments

Other new and revised standards and interpretations:

is a requirement for entities to group items present-

Based on initial analyses, the following new and revised

ed in “other comprehensive income” (OCI) on the

standards and interpretations which have to be applied

basis of whether they are potentially reclassifiable

for financial years beginning on or after 1 January 2012

to profit subsequently (reclassification adjustments).

are not expected to have any significant impact on the

The amendments do not address which items are

reported results or financial position of the Group:

presented in OCI.

n

IFRS 11 Joint Arrangements (effective 1 January 2013)

Notes to the consolidated financial statements

27


Details on the consolidated income statement

1 Net interest and similar income (TCHF) 2011 2010 Interest earned and similar income Banks

54 680

46 483

Customers

104 718

102 506

39 384

37 781

Interest income from investment securities Dividend income from investment securities Total interest earned and similar income

735

835

199 517

187 605

-9 397

-10 427

Interest on certificated debt

-37 820

-41 994

Customers

-45 055

-39 411

Total interest expense

-92 272

-91 832

Net interest and similar income

107 245

95 773

Interest expense Banks

2 Income from services (TCHF) 2011 2010 Commission income from securities and investment business Investment management fees

287 248

311 679

Brokerage fees

104 190

105 237

Honoraria and consulting

335

1 693

Administration fees and other income from investment business

94 851

93 664

Total 486 624 commission income from securities and investment business

512 273

Commission income from other services Lending business

3 825

3 953

Accounts and clearing business

10 136

11 130

Total commission income from other services

13 961

15 083

Commission expenses

-12 907

-13 029

Total income from services

487 678

514 327

3 Income from trading activities (TCHF) 2011 2010 Foreign exchange, notes Translation gain/(loss)

16 403

84 885

Transaction gain/(loss)

50 354

76 821

Interest and dividend income

54 098

45 410

Profit/(loss) on securities trading

682

6 722

Profit/(loss) on financial instruments designated at fair value

-39 076

-9 133

Other trading activities

-25 889

-5 860

56 572

198 845

Total income from trading activities

28

Notes to the consolidated financial statements


4 Other operating income (TCHF) 2011 2010 Income from investment securities Realized net result on available-for-sale securities

3 321

Release of impairment losses on available-for-sale securities

4 878

0 830

Total income from investment securities 3 321 5 708 Realized net result on disposals of subsidiaries

-21 559

2 298

Realized net result on investments in associates

57 654

53 219

18 083 12 695 Other Total other operating income

57 499

73 920

2011 2010 5 Personnel expenses (TCHF) Personnel expenses, including Directors’ emoluments, consisting of salaries

238 015

236 583

bonuses

103 249

109 754

pension costs

21 815

27 667

social security costs

26 171

24 781

20 834 other personnel expenses

24 326

Total personnel expenses before long-term incentive scheme

410 084

423 111

Long-term incentive scheme

-17 975

15 073

Total personnel expenses

392 109

438 184

1 779

1 889

Headcount at 31 December

2011 2010 6 Business and office expenses (TCHF) Business and office expenses, consisting of rents and office expenses

37 046

38 089

IT expenses

32 560

34 200

information and communication expenses

20 389

21 801

travel and entertainment expenses

13 132

13 785

legal and professional expenses

27 967

95 567 1

advertising expenses

21 413

23 045

general expenses

21 663

18 596

174 170

245 083

Total business and office expenses

1

In 2010 legal and professional expenses include EUR 50 million payment under agreement with the Bochum public prosecutor following the data theft case.

Notes to the consolidated financial statements

29


7 Other operating expenses (TCHF) Note Depreciation on property and equipment 16

2011

2010

20 017

22 366

Amortisation 27 411 of intangible assets 17

19 479

Other depreciation

3 984 771

Total 51 412 depreciation and amortisation

Credit losses 11

4 424

42 616 4 462

Recovery of credit losses 11

-1 636

-2 074

Total credit losses/(recoveries) 2 788 2 388 Provision for operational risks Other provisions

-6 545 81

Total changes in provisions and other losses -6 464 Total other operating expenses

47 736

8 958 698 9 656 54 660

8 Taxation (TCHF) 2011 2010 Tax expense 12 340 Current income tax expense

20 227

6 066 Deferred income tax expense

-34 590

18 406 Total income tax expense

-14 363

1 684 Capital tax expense

6 101

20 090 Total tax expense

-8 262

Reconciliation of the expected to the effective income tax expense Profit before tax

94 979

144 938

Income tax expense calculated at a tax rate of 12.5% 1 (2010: 10%) 2

11 872

14 494

Tax rate difference from local differences in domestic tax rates

-1 543

-26 278

Tax rate difference on income components subject to foreign taxes

13 730

-4 071

Income not subject to tax

-5 653

1 492

18 406 -14 363 Total income tax expense

30

1

The rate used is the domestic tax rate of Liechtenstein.

2

The rate used is the average income tax rate of the Group.

Notes to the consolidated financial statements


2011

2010

Deferred income tax expense comprises the following temporary differences Losses available for offset against future taxable income

5 872

Accelerated depreciation for tax purposes

-4 932

-312

-379

72 -29 856 Provisions Financial instruments

-2 158

-856

2 592 Other temporary differences

1 433

6 066 -34 590 Total deferred income tax expense

Deferred income tax assets and liabilities relate to the following items Deferred income tax liabilities Accelerated depreciation for tax purposes

-2 016

-1 704

Provisions

69 994

69 850

Financial instruments

-2 686

-23

Other temporary differences

13 373

11 016

Total deferred income tax liabilities

78 665

79 139

2 055

35 002

Deferred income tax assets Losses available for offset against future taxable income Accelerated depreciation for tax purposes

290

807

192 0 Provisions Other temporary differences

139

334

deferred income tax assets 2 676 36 143 Total

Movement on the deferred income tax assets and liabilities is as follows At 1 January

42 996

70 279

Income statement charge

6 066

-34 590

Available-for-sale securities: fair value measurement

-478

409

Other changes

26 833

922

Cumulative translation adjustments

573

5 976

75 990 42 996 At 31 December

2011 2010 Income tax on other Before tax Tax (expense) Net of tax Before tax Tax (expense) Net of tax comprehensive income /Tax benefit /Tax benefit Change in revaluation reserves Cumulative translation adjustments Other comprehensive income

-160 738 14 351 -146 387

478 -160 260

86 794

-409

86 385

0 14 351

-33 412

0

-33 412

478 -145 909

53 382

-409

52 973

Notes to the consolidated financial statements

31


Details on the consolidated balance sheet 9 Cash in hand, balances with central banks (TCHF) 2011 2010 Cash in hand

31 682

37 049

Balances with central banks

2 586 409

245 633

Balances with post offices

1 875

8 813

2 619 966

291 495

Total cash in hand, balances with central banks

10 Loans and advances to banks (TCHF) 2011 2010 Loans and advances to OECD banks

6 144 109

5 188 951

Loans and advances to non-OECD banks

386 457

127 632

6 530 566

5 316 583

Total loans and advances to banks

11 Loans and advances to customers 2011 2010 (TCHF) Gross Impairment Carrying Gross Impairment Carrying amount allowance amount amount allowance amount Mortgage-backed

2 920 302

-3 547

2 916 755

2 467 252

-4 060

2 463 192

Other collateral

3 243 341

-5 465

3 237 876

2 742 544

-2 828

2 739 716

145 577

-11 415

134 162

191 779

-11 087

180 692

6 309 220

-20 427

6 288 793

5 401 575

-17 975

5 383 600

Without collateral Total loans and advances to customers

32

Notes to the consolidated financial statements


Specific allowance 2011 2010 for impairment Mortgage- Other Without Total Mortgage- Other Without Total backed collateral collateral backed collateral collateral At 1 January

4 060

2 828

5 987

12 875

4 808

3 794

6 624

15 226

Charges to allowance 1 545

1 720

999

4 264

1 458

126

2 878

4 462

Addition through acquisition Release of allowance Allowance utilized Reclassifications Currency translation At 31 December

0 0 0 0

0 0 0 0

-1 353

-37

-246

-1 636

-642

-3

-909

-1 554

-84

-86

-83

-253

-1 826

0

-2 878

-4 704

-639 989 -350 0 965 -965 0 0 18

51

-152

-83

3 547 5 465 6 155 15 167

-703

-124

272

-555

4 060

2 828

5 987

12 875

0

0

5 620

5 620

Portfolio allowance for impairment At 1 January

0

0

5 100

5 100

Charges to allowance

0 0 160 160

0 0 0 0

Release of allowance

0 0 0 0

0 0 -520 -520

Currency translation 0 0 0 0

0 0 0 0

At 31 December

0

0

0

5 260 5 260

Total allowance for impairment

0

5 100

5 100

20 427

17 975

2011 2010 Additional information on credit risks Non-performing customers’ loans

101 541

48 663

Additional information about loans and advances is shown separately in the risk management notes.

Notes to the consolidated financial statements

33


12 Securities held for trading purposes (TCHF) 2011 2010 Total securities held for trading purposes

4 948

15 344

thereof listed

3 469

15 327

13 Financial assets designated at fair value (TCHF) 2011 2010 Securities designated at fair value to match financial liabilities through profit or loss

658 481

779 307

Loans and advances to customers designated at fair value to match financial liabilities through profit or loss

0

43 973

Other securities designated at fair value through profit or loss

2 880 082

2 404 857

Total financial assets designated at fair value

3 538 563

3 228 137

1,2

1

Thereof listed 2 210 109 (2010: 1 977 935)

2

Thereof subordinated securities 5 781 (2010: 15 147)

At 31 December 2011 the maximum exposure to credit risk on loans and advances at fair value through profit or loss was 0 (2010: 43 973).

14 Investment securities (TCHF) 2011 2010 Held-to-maturity securities At 1 January

0

1 998

Redemption

0

-2 000

Revaluations

0

2

At 31 December

0

0

Available-for-sale securities At 1 January

4 917 781

2 786 576

Currency translation

-39 895

-147 880

Additions

5 972 093

24 654 374

Disposals and redemption

-8 617 706

-22 373 555

Revaluations

-11 347

-2 564

Release of impairment

0

830

31 December At 2 220 926

4 917 781

investment securities Total 2 220 926

4 917 781

thereof fixed-income securities maturing within one year

1 298 766

3 796 465

thereof listed

1 182 544

1 144 692

4 040

4 920

Specific allowance for impairment on available-for-sale securities At 1 January Release of impairment Other changes At 31 December

34

Notes to the consolidated financial statements

0 0 4 040

-830 -50 4 040


2011 2010 15 Investments in associates (TCHF) At 1 January

2 531 615

2 419 334

177 232 110 405 Additions Disposals Revaluation through equity

-173 428

-143 907

-89 182

145 783

At 2 446 237 2 531 615 31 December

Details of investments in associates as open-end investment companies Fixed-income

575 957

725 934

Real estate investment trusts

38 958

50 214

Equities

520 176

608 065

Hedge fund investments

621 745

539 067

Private equity investments

600 752

575 465

88 649 Cash

32 870

Total 2 446 237 2 531 615 investments in associates

LGT’s investments in associates at 31 December 2011 Ownership interest in % of ordinary/participation Name Principal activity shares held LGT Capital Invest Limited, Grand Cayman Open-end investment company

28.72

LGT Portfolio Management Limited, Grand Cayman Open-end investment company

26.55

LGT’s investments in associates at 31 December 2010 Ownership interest in % of ordinary/participation Name Principal activity shares held LGT Capital Invest Limited, Grand Cayman Open-end investment company

41.32

Notes to the consolidated financial statements

35


16 Property and equipment (TCHF)

Freehold bank premises

Other Leasehold Office freehold improve- equipment property ments

Motor vehicles

Total

Cost 261 181 At 1 January 2011 Currency translation Additions Reclassifications Disposals Removal from scope of consolidation At 31 December 2011

1 900

31 306

69 082

695

364 164

5 0 -97 -116 0 -208 3 799

0

2 514

8 957

173

15 443

0 0 471 -471 0 0 -2 705

0

-2 838

-7 054

-387

-12 984

0

0

-471

-4 123

0

-4 594

262 280

1 900

30 885

66 275

481

361 821

108 288

811

14 981

51 787

505

176 372

Accumulated depreciation At 1 January 2011 Currency translation Charge for the year Reclassifications Disposals Removal from scope of consolidation At 31 December 2011

0 0 -65 -133 0 -198 6 536

38

2 967

10 411

65

20 017

0 0 348 -348 0 0 -2 705

0

-2 780

-6 581

-291

-12 357

0

0

-388

-2 905

0

-3 293

112 119

849

15 063

52 231

279

180 541

150 161

1 051

15 822

14 044

202

181 280

Net book value At 31 December 2011

Property and equipment (TCHF)

Freehold bank premises

Other Leasehold Office freehold improve- equipment property ments

Motor vehicles

Total

Cost 271 213 At 1 January 2010 Currency translation Additions Reclassifications Disposals At 31 December 2010

2 051

13 825

69 211

1 209

357 509

1

-476

-1 349

0

-1 824

0 1 828

0

45

9 579

0

11 452

-10 937

-152

19 177

-939

-149

7 000

-923

0

-1 265

-7 420

-365

-9 973

261 181

1 900

31 306

69 082

695

364 164

102 958

875

7 416

45 976

808

158 033

Accumulated depreciation At 1 January 2010 Currency translation Charge for the year Reclassifications Disposals At 31 December 2010

0 6 558

0 -224 -913 38

3 106

12 509

0 -1  137 155

22 366

-163 -103 8  066 -651 -149 7  000 -1 065

1

-3 383

-5 134

-309

-9 890

108 288

811

14 981

51 787

505

176 372

152 893

1 089

16 325

17 295

190

187 792

Net book value At 31 December 2010

Insurance 2011 2010 value of tangible assets 427  296 418  911 Insurance value

36

Notes to the consolidated financial statements


Goodwill Software 17 Intangible assets (TCHF)

Other intangible assets

Total

Cost 1 January 2011 At

141 628

155 046

337 499

Currency translation

0

Additions

0

1 214

0

1 214

Disposals

-10 000

-10 072

0

-20 072

Removal from scope of consolidation 31 December 2011 At

0

-19

40 825

-984

-264

-283

0

-984

131 628

145 185

40 561

317 374

211

28 659

5 886

34 756

Accumulated amortization and impairment 1 January 2011 At Currency translation

-1

Charge for the year

0

23 564

3 847

27 411

Disposals

0

-10 072

0

-10 072

Removal from scope of consolidation 31 December 2011 At book value at 31 December 2011 Net

0

-1

-189

0

-2

0

-189

210

41 961

9 733

51 904

131 418

103 224

30 828

265 470

Goodwill Software Intangible assets (TCHF)

Other intangible assets

Total

Cost 1 January 2010 At

148 002

150 284

47 926

346 212

-26

-170

-1 443

-1 639

Additions

237

4 932

0

5 169

Disposals

-6 585

0

-5 658

-12 243

141 628

155 046

40 825

337 499

0

13 274

2 035

15 309

Currency translation

31 December 2010 At Accumulated amortization and impairment 1 January 2010 At Currency translation

-26

Charge for the year

237

Disposals

4 3 847

-32 19 479

0 0 0 0

31 December 2010 211 At book value at 31 December 2010 Net

-10 15 395

141 417

28 659

5 886

34 756

126 387

34 939

302 743

Goodwill Goodwill is allocated to the following organizational units (cash-generating units; CGUs) based on the anticipated synergies: LGT Bank (Schweiz) AG, Basel

2011 124 155

2010 134 154

LGT Capital Partners AG, Pfäffikon

7 263

7 263

Total

131 418

141 417

The two organizational units represent the level at which the goodwill is monitored for internal management purposes. The calculation of the realizable amount of the units was based on the respective fair value less costs to sell. The value of client assets was determined on the market prices of companies with similar business activities, for 2011 in the range of 2–4%. The realizable amount exceeded the book value of all units, so that an impairment was considered unnecessary. An additional calculation of the realizable amount of the two organizational units based on their value in use was therefore not determined. Notes to the consolidated financial statements

37


18 Other assets (TCHF) Precious metals

2011

2010

562 932

335 246

Pensions 42 518

31 311

Other

30 129

39 079

635 579

405 636

Total other assets

19 Amounts due to banks (TCHF) 2011 2010 Deposits on demand

963 595

879 801

Time deposits

891 537

992 115

1 855 132

1 871 916

Total amounts due to banks

2011 2010 20 Amounts due to customers (TCHF) Deposits on demand

7 487 934

5 700 445

Time deposits

8 416 659

7 402 712

Savings deposits

1 348 998

1 136 316

17 253 591

14 239 473

Total amounts due to customers

2011 2010 21 Financial liabilities designated at fair value (TCHF) Bond issues designated at fair value Other liabilities designated at fair value Total financial liabilities designated at fair value

659 520 0

43 973

659 520

805 791

There were no gains or losses attributable to changes in the credit risk for those financial liabilities designated at fair value in 2011 (2010: 0).

38

Notes to the consolidated financial statements

761 818


Bond issues designated at fair value at 31 December (TCHF) Fair Fair Product Date of issue Nominal value Interest Maturity value value ‘000 rate % 2011 2010 up to 2004 EUR – 28.02.2012 51 309 LGT GIM Index Certificates 1

62 345

78 020

LGT GIM Index Certificates II 2 up to 2006 EUR 157 906 – 30.06.2014 191 870

227 270

LGT GIM Index Certificates II/2 3 43 304 52 618 2006 EUR – 31.03.2016

61 964

97 212 118 122 LGT GIM Index Certificates III up to 2008 EUR – 31.07.2016

153 718

4

687 LGT GIM Index Certificates IV 5 continuously EUR – 31.03.2018

835

4 568 5 551 Crown Absolute Return Index Certificates continuously EUR – 30.11.2013 6

Crown Absolute Return Index Certificates II continuously EUR 7

1 346 1 636 – 31.07.2014

46 881 Crown Alternative SV Index Certificates 8 continuously EUR – 30.06.2017

56 965

0 Crown Alternative Bond Index Certificates 9 continuously EUR – 30.11.2017 LGT GATS Index Certificates 10 continuously EUR

988 5 741 1 742 38 695

0

47 757 58 029 – 30.09.2014

143 70 546

44 855 LGT M-Smart Allocator Index Certificates 11 continuously EUR – 31.08.2017

54 503

45 699

LGT ex Equities Emerging Markets Leaders 12 2 522 Certificates continuously USD – 31.12.2027

2 359

6 980

2 969 LGT ex Equities GEM Index Certificates continuously USD – 31.12.2027

2 778

6 602

LGT ex Fixed Income Emerging Markets 12 606 continuously USD – 31.12.2027 Index Certificates 14

11 794

14 318

25 119 LGT ex Hedge Funds GIM Index Certificates continuously USD – 31.12.2027

23 500

28 947

17 760 LGT ex Hedge Funds GATS Index Certificates continuously USD – 31.12.2027

16 615

20 445

Total bond issues designated 659 520 at fair value at 31 December

761 818

13

15

16

Linked to the performance of LGT Premium Strategy GIM (EUR) index administered by LGT Capital Management Ltd. with a duration from 2002 to 2012

1

incl. two 5-year extension options. Linked to the performance of LGT Premium Strategy GIM II (EUR) index administered by LGT Capital Management Ltd. with a duration from 2004 to 2014

2

incl. two 5-year extension options.  Linked to the performance of LGT Premium Strategy GIM II (EUR) index administered by LGT Capital Management Ltd. with a duration from 2006 to 2016

3

incl. two 5-year extension options.  Linked to the performance of LGT Premium Strategy GIM III (EUR) index administered by LGT Capital Management Ltd. with a duration from 2006 to 2016

4

incl. two 5-year extension options. 5

Linked to the performance of LGT Premium Strategy GIM IV (EUR) index administered by LGT Capital Management Ltd. with a duration from 2008 to 2018 incl. two 5-year extension options.

6

 Linked to the Crown Absolute Return (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2003 to 2013 incl. two 5-year extension options.

7

Linked to the Crown Absolute Return II (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2004 to 2014 incl. two 5-year extension options.

8

Linked to the Crown Alternative SV (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2017 incl. two 5-year extension options.

9

 Linked to the Crown Alternative Bond (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2017 incl. two 5-year extension options.

Linked to the performance of LGT Premium Strategy GATS (EUR) index administered by LGT Capital Management Ltd. with a duration from 2004 to 2014

10 

incl. two 5-year extension options. Linked to the LGT M-Smart Allocator (EUR) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2017 incl. two 5-year extension options.

11  12

Linked to the LGT ex Equity Emerging Markets II (USD) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2027

incl. two 5-year extension options. 13

Linked to the LGT ex Equity Emerging Markets III (USD) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2027

incl. two 5-year extension options. 14

Linked to the LGT ex Fixed Income Emerging Markets II (USD) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2027

incl. two 5-year extension options. 15

Linked to the LGT ex Hedge Funds GIM IU (USD) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2027 incl. two 5-year extension options.

16

Linked to the LGT ex Hedge Funds GATS IU (USD) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2027 incl. two 5-year extension options.

Notes to the consolidated financial statements

39


2011 2010 22 Certificated debt (TCHF) 1 391 337 Bond issues (net book value)1

1 455 837

Subordinated cash bonds (fixed-rate medium term notes) 2

1 005

1 145

Other cash bonds (fixed-rate medium term notes)

124 509

113 434

1 516 851 1 570 416 Total certificated debt 1

Net book value of bond issues is calculated using the effective interest method. Bonds held by LGT Group companies are eliminated.

2

Interest 2011 is payable on the subordinated cash bonds at various rates ranging from 2.0625% to 3.0%. The interest charge for the year on these bonds

was 28 (2010: 112).

Bond issues at 31 December (TCHF) Issuer Date of issue Nominal value Interest Maturity Net book Net book rate % value value 2011 2010 LGT Finance Limited 11.02.2004 CHF 200 000 2.50 11.02.2011

0

199 561

LGT Finance Limited 18.05.2005 CHF 250 000 2.00 18.05.2012

232 707

249 046

LGT Finance Limited 08.10.2009 CHF 250 000 2.125 08.07.2013

223 515

243 334

LGT Finance Limited 10.02.2006 CHF 250 000 2.25 10.02.2014

224 480

226 123

LGT Finance Limited 25.05.2011 CHF 200 000 2.125 25.11.2015 190 633 0 LGT Finance Limited 08.12.2009 CHF 300 000 2.75 08.12.2016

285 050

293 544

LGT Finance Limited 12.05.2010 CHF 250 000 2.50 12.05.2017

234 952

244 229

Total bond issues at 31 December 1 391 337

1 455 837

2011 2010 23 Other liabilities (TCHF) Capital tax

2 262

5 680

Amounts due to long-term incentive scheme

9 565

28 931

Amounts due to bonuses

93 975

108 957

Other

196 537

486 665

Total other liabilities

302 339

630 233

2011 2010 24 Provisions (TCHF) At 1 January

81 799

108 272

Current year expense

6 012

11 029

Provisions released

-12 496

-1 354

Provisions utilized

-3 170

-35 572

Currency translation

-30

-2 163

Removal from scope of consolidation

-1 420

0

Reclassification At 31 December

40

Notes to the consolidated financial statements

-124

1 587

70 571

81 799


2011 2010 25 Other reserves (TCHF) Revaluation reserves – investments in associates

781 846

928 682

Revaluation reserves – available-for-sale securities

-3 650

11 604

Revaluation reserves – cash flow hedge

10 916

9 086

789 112

949 372

At 1 January

928 682

846 687

Disposals

-57 654

-52 589

Net gain/(loss) from change in fair value

-89 182

145 783

0

-11 199

781 846

928 682

11 604

6 232

Disposals

-3 966

-3 302

Net gain/(loss) from change in fair value

-11 766

9 083

Total other reserves

Revaluation reserves – investments in associates

Reclassification At 31 December

Revaluation reserves – available-for-sale securities At 1 January

Deferred income tax At 31 December

478

-409

-3 650

11 604

At 1 January

9 086

10 068

Net gain/(loss) from change in fair value

1 830

-982

10 916

9 086

Revaluation reserves – cash flow hedge

At 31 December

Notes to the consolidated financial statements

41


26 Contingent liabilities, commitments and fiduciary transactions (TCHF) 2011 2010 Contingent liabilities Credit guarantees and similar instruments

200 691

265 158

Other contingent liabilities

81 922

54 504

Total contingent liabilities

282 613

319 662

Committed credit lines and other commitments

335 870

351 814

of which irrevocable commitments

327 267

245 700

2 379 282

3 187 512

8 923

8 301

2 388 205

3 195 813

Fiduciary transactions Fiduciary investments Fiduciary loans and other financial transactions in a fiduciary capacity Total fiduciary transactions Information about derivative financial instruments is shown separately in note 30.

2011 2010 27 Pledged and assigned assets/assets subject to reservation of ownership, which are used to secure own liabilities (TCHF) 1 Book value of pledged and assigned assets (as collateral)

682 021

550 320

of which investment securities

325 939

216 515

of which financial assets designated at fair value

356 082

333 805

Actual commitments

375 539

253 253

1

There are no assets subject to reservation of ownership.

The assets are pledged for commitments in respect of Lombard limits at central banks, for securities deposits relating to X-Clear/Swiss Stock Exchange and limits for cash settlement of securities transactions with EUROCLEAR BANK SA.

28 Lending transactions and pension transactions with securities (TCHF) 1

2010

Claims from cash deposits in connection with securities borrowing and reverse repurchase transactions

0

0

Liabilities from cash deposits in connection with securities lending and repurchase transactions

0

0

Own securities lent or provided as collateral within the scope of securities lending or borrowing transactions, as well as own securities transferred from repurchase transactions

561 857

175 719

of which capable of being resold or further pledged without restrictions

561 857

175 719

Securities borrowed or accepted as collateral within the scope of securities lending or borrowing transactions, as well as securities received from reverse repurchase transactions, which are capable of being resold or further pledged without restrictions

1 854 652

633 424

of which resold or further pledged

414 128

165 752

1

These transactions are conducted under terms that are usual and customary to standard lending, and securities borrowing and lending activities, as well as

requirements determined by exchanges where the bank acts as an intermediary.

42

2011

Notes to the consolidated financial statements


29 Financial instruments measured at fair value (TCHF) Fair value hierarchy IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Group’s market assumptions. These two types of inputs have created the following fair value hierarchy: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities and debt instruments on exchanges and exchange traded derivatives. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). This level includes investments in hedge funds, mutual funds, the majority of OTC derivative contracts and structured debt. Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level includes mainly private equity investments, issued structured debt as well as equity investments with significant unobservable components. This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market prices in its valuations where possible. 2011 Fair value measurement at the end of the period Level 1 Level 2 Level 3 Total Assets

Securities held for trading purposes

Derivative financial instruments

Financial assets designated at fair value

Available-for-sale securities

3 468

1 480

0

4 948

0

1 435 273

0

1 435 273

2 313 172

1 216 139

9 252

3 538 563

925 637

1 283 565

11 724

2 220 926

3 242 277 3 936 457 20 976 7 199 710 Total assets measured at fair value Liabilities

Derivative financial instruments

0

1 509 829

2 235

1 512 064

Financial liabilities designated at fair value

0

659 520

0

659 520

Total liabilities measured at fair value

0 2 169 349 2 235 2 171 584

There have been no transfers from Level 2 to Level 1 and vice versa.

2010 Fair value measurement at the end of the period Level 1 Level 2 Level 3 Total Assets

Securities held for trading purposes

Derivative financial instruments

Financial assets designated at fair value

Available-for-sale securities

Total assets measured at fair value

15 327

17

0

15 344

0 2 133 753

1 690 852

0

1 690 852

1 084 652

9 732

3 228 137

1 144 692

3 766 704

6 385

4 917 781

3 293 772

6 542 225

16 117

9 852 114

Liabilities

Derivative financial instruments

0

1 935 921

1 935

1 937 856

Financial liabilities designated at fair value

0

805 791

0

805 791

Total liabilities measured at fair value

0

2 741 712

1 935

2 743 647

There have been no transfers from Level 2 to Level 1 and vice versa. Notes to the consolidated financial statements

43


Reconciliation of Level 3 items

Securities held Financial assets/ Available-for- 2011 for trading liabilities desig- sale securities Total purposes nated at fair value

Assets At 1 January

0 9 732 6 385 16 117

0

Total gains or losses

230

5 527

5 757

thereof in profit or loss

0 230 -304 -74

thereof in other comprehensive income

0

Purchases

0 0 0 0

Issues

0

0

7 476

7 476

Sales

0

0

-6 351

-6 351

Redemptions

0

-710

-1 313

-2 023

0

5 831

5 831

Transfers in/out of Level 3

0 0 0 0

At 31 December

0 9 252 11 724 20 976

Liabilities At 1 January

0 1 935

Total gains or losses

0 300

0 300

thereof in profit or loss

0 300

0 300

thereof in other comprehensive income

0 0 0 0

Purchases

0 0 0 0

Issues

0 0 0 0

Sales

0 0 0 0

Redemptions

0 0 0 0

Transfers in/out of Level 3

0 0 0 0

At 31 December

0 2 235

44

0 1 935

There have been no transfers either in or out of Level 3 in 2011.

Notes to the consolidated financial statements

0 2 235


Reconciliation of Level 3 items

Securities held Financial assets/ Available-for- 2010 for trading liabilities desig- sale securities Total purposes nated at fair value

Assets

At 1 January

250

9 715

4 130

14 095

Total gains or losses

-26 -29 232 177

thereof in profit or loss

-26 -29 829 774

thereof in other comprehensive income

0

Purchases

0

1 868

0

1 868

Issues

0

0

3 522

3 522

Sales

0

0 -477 -477

Redemptions

-224

0 -597 -597

-1 822

-1 022

-3 068

Transfers in/out of Level 3

0 0 0 0

0

9 732

6 385

16 117

0

1 670

0

1 670

At 31 December

Liabilities

At 1 January

Total gains or losses

0 265

0 265

thereof in profit or loss

0 265

0 265

thereof in other comprehensive income

0 0 0 0

Purchases

0 0 0 0

Issues

0 0 0 0

Sales

0 0 0 0

Redemptions

0 0 0 0

Transfers in/out of Level 3

0 0 0 0

At 31 December

0

There have been no transfers either in or out of Level 3 in 2010.

1 935

0

1 935

2011 2010 Gains or losses included in profit or loss for financial instruments measured at fair value based on Level 3 -374 509 Total gains or losses included in profit or loss for the period Total gains or losses for the period included in profit or loss -94 -322 for assets/liabilities held at the end of the reporting period

Notes to the consolidated financial statements

45


30 Derivative financial instruments In the normal course of business, LGT Group and its subsidiaries use various derivative financial instruments to meet the financial needs of their customers, to generate revenues through trading and market-making activities, and to manage their exposure to fluctuations in interest and foreign exchange rates. Derivatives used for trading purposes include foreign exchange forwards, stock options and warrants as well as forward rate agreements (FRAs). Within the context of asset and liability management, interest rate swaps are primarily employed. LGT Group controls the credit risk from derivative financial instruments through its credit approval process and the use of control limits and monitoring procedures. LGT Group uses the same credit procedures when entering into derivatives as it does for traditional lending products. The following table summarizes the total outstanding volumes in derivative financial instruments. Positive and negative replacement values are stated at gross values, without taking into consideration the effect of master netting agreements. Types of derivative 2011 2010 financial instruments held Notional Positive Negative Notional Positive Negative for trading (TCHF) amount replacement replacement amount replacement replacement value value value value

Interest rate products

Interest rate swaps

1 460 858

4 843

41 088

1 157 621

6 541

19 079

73 843 280

1 338 270

1 393 037

85 096 808

1 654 760

1 895 874

3 677 136

23 930

23 894

1 539 819

6 746

6 748

722 953

26 669

22 854

492 050

10 458

11 764

Foreign exchange products Foreign exchange forwards Foreign exchange OTC options

Precious metal products Precious metal forwards Precious metal swaps Precious metal OTC options

1  467 244 0 0 0 0 610 575

18 014

18 011

388 798

2 362

2 363

Derivatives on shares and indices OTC Options

8  552 22 22 0 0 0

Credit derivates Swaps

Other products

Total contracts

65 854

5 481

5 481

0

0

0

305 397

5 902

7 677

18 386

404

2 028

80 696 072 1 423 375 1 512 064

88 693 482

1 681 271

1 937 856

Types of derivative 2011 2010 financial instruments held Notional Positive Negative Notional Positive Negative for hedging (TCHF) amount replacement replacement amount replacement replacement value value value value

Interest rate products

Interest rate swaps

46

Notes to the consolidated financial statements

400 000

11 898

0

400 000

9 581

0


31 Capital resources Capital adequacy and the use of capital are monitored by the Group and by individual operating units, employing techniques based on the guidelines developed by the Basel Committee on Banking Supervision and implemented by the Liechtenstein Government for supervisory purposes. The Basel Committee guidelines require minimum risk ratios for all international banks of 8%. These ratios measure capital adequacy by comparing the Group’s eligible capital with balance sheet assets, off-balance sheet commitments and market positions at weighted amounts to reflect their relative risk. Assets are weighted according to broad categories of notional risk, first being multiplied by a conversion factor and then being assigned a risk weighting according to the amount of capital deemed to be necessary for them. Off-balance sheet commitments and default risk positions are also multiplied and risk-weighted. Market risk is calculated with the standard approach. The Group and its individually regulated operations have complied with all externally imposed capital requirements throughout the period. The following table analyzes the Group’s capital resources as defined for regulatory purposes. Capital resources (TCHF)

2011

2010

Capital resources

2 932 326

3 083 713

thereof minority interest

5 530

6 349

thereof “innovative” instruments Other deductions Net core capital before adjustments

0

0

-227 558

-350 540

2 704 768

2 733 173

upper tier 2 capital

0

0

lower tier 2 capital

362

559

tier 3 capital

0

0

Other deductions

-265 470

-302 743

Net capital resources

2 439 660

2 430 989

Risk-weighted assets (TCHF) Approach Credit risk Standard

877 574

823 097

On-balance sheet

863 033

808 035

Non-counterpart risks Market risk Standard thereof interest rate risks

14 541

15 062

112 122

65 755

59 075

38 640

thereof equity position risks

521

1 723

thereof foreign exchange risks

17 713

10 931

thereof commodities risks

34 811

14 461

thereof option risks

2

0

Operational risk Basic indicator

122 509

119 575

Total

1 112 205

1 008 427

Capital adequacy ratio

17.5%

19.3%

Net capital resources

2 439 660

2 430 989

Notes to the consolidated financial statements

47


32 Subsidiaries The Group’s principal subsidiary undertakings at 31 December 2011 were:

Name Principal activity Registered office

48

Ownership interest in % of ordinary shares held 1

LGT Bank in Liechtenstein Ltd.

Banking and investment management

Vaduz – Liechtenstein

100.0

LGT Swiss Life Non Traditional Advisers Ltd.

Investment advisers

Vaduz – Liechtenstein

61.8

LGT Private Equity Advisers Ltd.

Investment advisers

Vaduz – Liechtenstein

60.0

LGT Capital Management Ltd.

Investment management

Vaduz – Liechtenstein

100.0

LGT Funds Ltd.

Investment advisers

Vaduz – Liechtenstein

100.0 2

LGT Funds II Ltd.

Investment advisers

Vaduz – Liechtenstein

100.0 2

LGT Investments Ltd.

Investment advisers

Vaduz – Liechtenstein

100.0 2

LGT Premium Strategy Ltd.

Investment advisers

Vaduz – Liechtenstein

100.0 2

LGT Fondsleitung Ltd.

Investment advisers

Vaduz – Liechtenstein

100.0

LGT Capital Partners Advisers Ltd.

Investment advisers

Vaduz – Liechtenstein

100.0

LGT Financial Services Ltd.

Services company

Vaduz – Liechtenstein

100.0

LGT Audit Revisions AG

Audit services

Vaduz – Liechtenstein

100.0

LGT Bank (Switzerland) Ltd.

Banking and investment management

Basel and branches – Switzerland

100.0

Artinba Ltd.

Fine art services

Basel – Switzerland

100.0

Global Fine Art Services Ltd.

Fine art services

Basel – Switzerland

100.0

LGT Capital Management Ltd.

Investment advisers

Pfäffikon SZ – Switzerland

100.0

LGT Capital Partners Ltd.

Investment advisers

Pfäffikon SZ – Switzerland

100.0

LGT Investment Partners Ltd.

Investment advisers

Pfäffikon SZ – Switzerland

100.0

LGT Holding International Ltd.

Holding company

Pfäffikon SZ – Switzerland

100.0

LGT Financial Consulting GmbH

Consulting

Frankfurt – Germany

100.0

Crown Verwaltungsgesellschaft mbH

Investment advisers

Munich – Germany   50.0

LGT Bank (Österreich) AG

Banking and investment management

Vienna – Austria

100.0

LGT Capital Partners (U.K.) Ltd.

Fund distribution

London – United Kingdom

100.0

LGT Bank (Ireland) Ltd.

Banking

Dublin – Ireland

100.0

LGT Capital Partners (Ireland) Ltd.

Investment advisers

Dublin – Ireland

100.0

LGT Fund Managers (Ireland) Ltd.

Fund services

Dublin – Ireland

100.0

Notes to the consolidated financial statements


Name Principal activity Registered office

Ownership interest in % of ordinary shares held 1

LGT Holding Denmark ApS

Holding company

LGT Bank (Singapore) Ltd.

Banking and investment Singapore management

100.0

LGT Investment Management (Asia) Ltd.

Consulting and advisers

Hong Kong – China

100.0

LGT Capital Partners (Asia-Pacific) Ltd.

Investment management

Hong Kong – China

100.0

LGT Investment Management (Japan) KK

Consulting and advisers

Tokyo – Japan

100.0

LGT Holding (Malaysia) Ltd.

Holding company

Labuan – Malaysia

100.0

LGT Capital Partners (USA) Inc.

Research services

New York – USA

100.0

LGT Bank in Liechtenstein (Cayman) Ltd. Banking and investment management

Grand Cayman – Cayman Islands

100.0

LGT Finance Ltd.

Financing

Grand Cayman – Cayman Islands

100.0

LGT Investments Ltd.

Investment management

Grand Cayman – Cayman Islands

100.0

LGT Global Invest Ltd.

Investment management

Grand Cayman – Cayman Islands

100.0

LGT Participations Ltd.

Investment management

Grand Cayman – Cayman Islands

100.0

LGT Certificates Ltd.

Investment management

Grand Cayman – Cayman Islands

100.0

LGT (Uruguay) S.A.

Bank representation

Montevideo – Uruguay

100.0

1

Ownership interest equals voting interest.

2

Companies with variable share capital structure, only part of fund manager fully consolidated.

Copenhagen – Denmark

100.0

Fitrust, Fiduciaire et Trustee SA and LGT Bank Deutschland & Co. OHG were sold in 2011.

Notes to the consolidated financial statements

49


33 Operating segments Headquartered in Vaduz, Principality of Liechtenstein,

Operating segments at 31 December 2011 (TCHF)

LGT Group is the Private Banking and Asset Management

Total external operating income

Group of the Princely House of Liechtenstein. The Group’s

Total internal operating income 1

segmental reporting comprises the four operating busi-

Total segment operating income (total revenue)

ness units Private Banking, Traditional Asset Management,

Operating expenses

Alternative Asset Management and Operations & Techno­ logy. The remaining not directly connected revenue and expenses including consolidation adjustments are shown under Corporate Center.

Segment result before tax

Tax expense 2

Minority interests

Net profit of LGT Group

LGT’s reportable segments are strategic business units that

Net interest and similar income 3

offer different products and services to external and internal

Income from services

customers. They are managed separately because each business

Income from trading activities

unit requires different technology and marketing strategies.

Depreciation

Credit (losses) recoveries The segment reporting reflects the internal management

Change in provisions and other losses

structure. The segments are based upon the products and

Profit/(loss) of associates

services provided or the type of customer served, and they

Headcount

reflect the manner in which financial information is currently evaluated by management. Results of these lines of business are presented on a managed basis. Both the external and the internal reports are prepared in accordance with International Financial Reporting Standards (IFRS). Private Banking offers private clients comprehensive services

Assets under administration in CHFm 4 Segment assets Segment liabilities Investments in associates Goodwill and other intangible assets Capital expenditure

around the world. Traditional Asset Management (LGT Capital selection of investment managers, and manages and moni-

Operating segments at 31 December 2010 (TCHF)

tors a wide range of investment funds. Alternative Asset

Total external operating income

Management (LGT Capital Partners) is a specialist in the

Total internal operating income 1

alternative asset classes of hedge funds and private equity.

Total segment operating income (total revenue)

Operations & Technology (LGT Financial Services) is the IT

Operating expenses

Management) is a specialist in the allocation of assets and

and business service provider. The accounting policies of the operating segments are the same as those described in the summary of the Group accounting principles. Income and expenses are assigned to the individual business lines in accordance with current

Segment result before tax

Tax expense 2

Minority interests

Net profit of LGT Group Net interest and similar income 3

market prices and based on the client relationships.

Income from services

Indirect costs resulting from services provided internally

Income from trading activities

are accounted for according to the principle of causation

Depreciation

and are recorded as a revenue increase for the service

Credit (losses) recoveries

provider and as a cost increase for the service beneficiary.

Change in provisions and other losses

Depreciation and pro­visions are stated at effective costs.

Profit/(loss) of associates

Headcount Information about the revenues from external customers for each product and service, or group of similar products and services, is not available and the cost to develop it would be excessive.

Assets under administration in CHFm 4 Segment assets Segment liabilities Investments in associates Goodwill and other intangible assets Capital expenditure

50

1

Revenue from transactions with other segments at market prices.

2

The Group does not allocate tax expense (tax income) to reportable segments.

3

Management primarily relies on net interest income, not the gross income and expense, in managing the segments.

4

Assets under administration include double-counted assets and LGT’s Princely Portfolio.

5

Corporate Center includes the net result of the Princely Portfolio, net Group financing cost, the cost of all Group functions and consolidation adjustments.

Notes to the consolidated financial statements


Private Traditional Asset Alternative Asset Operations & Banking Management Management Technology

Corporate Center 5

Group 708 994

505 310

20 343

77 761

7 026

98 554

10 404

42 932

20 042

124 201

-197 579

0

515 714

63 275

97 803

131 227

-99 025

708 994

-449 744

-57 650

-71 915

-131 479

96 773

-614 015

65 970

5 625

25 888

-252

-2 252

94 979

-20  090

-4  548

70  341

131 169

-104

-33

2 537

-26 324

107 245

321 081

62 989

97 645

2 795

3 168

487 678

54 075

287

-1 765

459

3 516

56 572

-14 715

-19

-1 762

-29 679

-5 237

-51 412

-2  949 0 0 160 1 -2  788 -2 627

0

0

0

9 091

6 464

0 0 0 0 -146  836 -146  836 1  008 143 170 291 167 1  779 53 867

16 482

14 857

0

1 726

86 932

25 612 214

81 554

77 369

22 416 213

50 175

52 568

386 405

94 578

26 252 120

294 264

506 574

0

0

23 319 794

0

0

2 446 237

146 068

2 446 237

0

8 432

110 970

0

265 470

9 217

0

567

5 659

0

15 443

Corporate Center 5

Group

Private Traditional Asset Alternative Asset Operations & Banking Management Management Technology 693 749

15 193

92 484

5 499

75 940

882 865

13 705

42 522

21 634

126 025

-203 886

0

707 454

57 715

114 118

131 524

-127 946

882 865

-502 581

-58 543

-79 698

-125 965

28 860

-737 927

204 873

-828

34 420

5 559

-99 086

144 938

8  262

-5  544

147  656

217 259

-126

-44

2 771

-124 087

95 773

353 683

55 399

110 272

128 414

-133 441

514 327

132 440

1 970

1 599

449

62 387

198 845

-14 178

-37

-2 147

-22 437

-3 817

-42 616

-2  760 0 0 372 0 -2  388 -7 152

0

0

0

-2 504

-9 656

0 0 0 0 81  995 81  995 1  156 131 159 282 161 1  889 57 396

13 660

13 453

0

1 570

86 079

23 252 276

70 575

85 421

330 404

649 728

24 388 404

19 934 708

47 484

53 490

234 913

1 034 096

21 304 691

0

0

0

0

2 531 615

2 531 615

159 795

0

9 456

133 492

0

302 743

4 968

0

467

6 017

0

11 452

Notes to the consolidated financial statements

51


Geographical information at 31 December 2011 (TCHF)

Revenues 1

Capital expenditure

Liechtenstein

307 350

8 653

Switzerland

318 637

3 256

Other Europe

-78 712

93

Americas

95 002

230

Asia

66 717

3 211

708 994

15 443

2

Group

Geographical information at 31 December 2010 (TCHF) Liechtenstein

384 144

7 264

Switzerland

291 597

3 573

19 639

318

Other Europe Americas 2

Asia Group

52

1

Revenues are attributed to countries/regions on the basis of the LGT Group companies domicile.

2

Revenues: mainly fee income from Class Funds.

Notes to the consolidated financial statements

120 487

70

66 998

227

882 865

11 452


34 Client assets under administration (CHF m) Client assets under administration (excluding Princely Portfolio) which are stated according to the provisions of the Liechtenstein banking law are as follows:

2011

2010

Client assets in own-managed funds

20 122

19 925

Client assets under management

25 525

21 316

Other client assets under administration

38 839

42 306

Total client assets under administration (including double counting)

84 486

83 547

thereof double counting

11 413

13 011

Net asset inflow

5 758

3 102

thereof net new money

8 562

3 102

thereof through disposal

-2 804 0

Client assets in own-managed funds This item covers the assets of all the actively marketed investment funds of LGT Group. Client assets under management The calculation of assets with management mandate takes into account client deposits as well as the market value of securities, loan-stock rights, precious metals and fiduciary investments placed with third-party institutions. The information covers both assets deposited with Group companies and assets deposited at third-party institutions for which Group companies hold a discretionary mandate. Other client assets under administration The calculation of other client assets under administration takes into account client deposits as well as the market value of securities, loan-stock rights, precious metals and fiduciary investments placed with third-party institutions. The information covers assets for which an administrative or advisory mandate is exercised. Double counting This item covers investment fund units from own-managed funds as well as certain assets that are included in client assets under management. Custodian assets Custodian assets are excluded.

Notes to the consolidated financial statements

53


35 Pensions

2011

2010

Discount rate 2.50%

3.00%

Expected net return on plan assets 5.00%

5.00%

Average future salary increases 1.00%

1.00%

Future pension increases 0.00%

0.50%

Principal actuarial assumptions

Mortality tables used BVG 2010 GT Average retirement age 60/60

BVG 2000 60/60

Employees covered by the major plans 1 1 519 1 509 410 Retirees covered by the major plans

399

The average life expectancy in years of a pensioner retiring at age 60 is as follows: 24.0 21.8 Male 26.5 25.5 Female

Balance sheet (end of year) 775 440 Fair value of plan assets

811 631

-1 026 513 Defined benefit obligation

-917 694

Funded status

-106 063

-251 073

Unrecognized asset due to IAS 19.58

0

Unrecognized past service cost

0

0 0

293 591 Unrecognized actuarial (gain)/loss

137 374

42 518 Net asset/(liability)

31 311

Income statement -43 323 Service cost Past service cost

0

-41 714 0

-28 418 Interest cost

-28 819

39 836 Expected return on plan assets

35 610

-4 060 Net actuarial gain/(loss) recognized in year

-7 803

Curtailment

0

17 503 Employees’ contributions Net pension expenses

3 344 16 495

-18 462

-22 887

-55 853 Actual return on plan assets

53 498

Movement in the asset/(liability) recognized in the balance sheet 31 311 At 1 January Change in consolidation scope

0

19 255 0

-18 462 Net pension expenses

-22 887

29 669 Employer’s contributions

34 943

42 518 31 311 At 31 December 11 207 12 056 Prepaid/(accrued) pension cost 2

54

1

Apprentices, trainees and certain part-time employees are not covered by the plans.

2

i.e. the net of employer’s contributions and net pension expenses.

Notes to the consolidated financial statements


2011

2010

Movement in the defined benefit obligation At 1 January

-917 694

Change in consolidation scope

-813 508

0

0

Current service cost

-43 323

-41 714

Past service cost

0

16 746

Interest cost

-28 418

-28 819

Curtailment Actuarial gains/(losses)

0 -64 588

Benefits paid At 31 December

0 -62 767

27 510

12 368

-1 026 513

-917 694

Movement in the fair value of plan assets At 1 January

811 631

Change in consolidation scope

719 063

0

0

Expected return on plan assets

39 836

35 610

Actuarial gains/(losses)

-95 689

17 888

Employer’s contributions

29 669

34 943

Employees’ contributions

17 503

16 495

Benefits paid

-27 510

-12 368

At 31 775 440 December

811 631

Major categories of plan assets as a percentage of the fair value of total plan assets Equity instruments

22%

29%

Debt instruments

35%

33%

19% 18% Property Alternative investments

18%

18%

5% 1% Cash

1% 1% Other

The plan assets include property occupied by the Group with a fair value of 16 822 (2010: 16 822). The expected return on plan assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected returns on equity and property investments reflect long-term real rates of return experienced in the respective markets. 2011 2010 2009 2008 2007 The history of the plans for the current and prior periods is as follows: -1 026 513 -917 694 Present value of defined benefit obligation

-813 508

-736 398

-650 498

775 440 811 631 Fair value of plan assets

719 063

557 438

652 336

-251 073 -106 063 Surplus/(deficit) in the plan

-94 445

-178 960

1 838

-21 616 6 754 Experience adjustments on plan liabilities

16 009

-20 201

-43 355

-95 689 17 888 Experience adjustments on plan assets

78 902

-181 951

17 029

The Group expects to contribute 28 759 to its defined benefit pension plans in 2012 (2011: 26 135).

The measurement date for the Group’s defined benefit plans is 31 December.

Notes to the consolidated financial statements

55


36 Long-term incentive scheme Movements in the number of options outstanding

6 7 8 9 10 11 12 13 Total Number of series 2004 2005 2006 2007 2008 2009 2010 2011 Year of issue 1.4.04 1.4.05 1.4.06 1.4.07 1.4.08 1.4.09 1.4.10 1.4.11 Duration from to 1.4.11 1.4.12 1.4.13 1.4.14 1.4.15 1.4.16 1.4.17 1.4.18 Duration 1 January 2011 8 At

41

365

2 462

2 848

2 944

3 176

0

11 844

0 0 0 0 0 0 0 3  378 3  378 Granted -8 -7 -40 -262 0 0 0 0 -317 Exercised 0 0 0 -17 -54 -65 -68 -49 -253 Lapsed 0 At 31 December 2011

34

325

2 183 2 794 2 879 3 108 3 329 14 652

5 6 7 8 9 10 11 12 Total Number of series 2003 2004 2005 2006 2007 2008 2009 2010 Year of issue 1.4.03 1.4.04 1.4.05 1.4.06 1.4.07 1.4.08 1.4.09 1.4.10 Duration from 1.4.10 1.4.11 1.4.12 1.4.13 1.4.14 1.4.15 1.4.16 1.4.17 Duration to At 1 January 2010 Granted Exercised

14

26

96

670

2 906

2 942

3 033

0

9 687

0 0 0 0 0 0 0 3  244 3  244 -14 -18 -55 -302 -404 0 0 0 -793

Lapsed

0 0 0 -3 -40 -94 -89 -68 -294

At 31 December 2010

0

8

41

365

2 462

2 848

2 944

3 176

11 844

Options outstanding at the end of the year were as follows: 2011 2010 Number of series Year of issue Expiry date Exercise price (CHF) 0 8 6 2004 1.4.2011 22 541 34 41 7 2005 1.4.2012 25 769 325 365 8 2006 1.4.2013 28 194 2  183 2  462 9 2007 1.4.2014 32 634 2  794 2  848 10 2008 1.4.2015 37 061 2  879 2  944 11 2009 1.4.2016 32 859 3 108 12 2010 1.4.2017 34 760

3 176

3 329 0 13 2011 1.4.2018 13 841 14 652

11 844

In 2011, the fair value changes of the options of 17 975 were credited to personnel expenses (2010: 15 073 charged to personnel expenses). Significant inputs to determine the fair value of the options are the economic value added as described in the Group accounting principles under employee medium-term benefits and the exercise price shown above.

56

Notes to the consolidated financial statements


37 Related-party transactions (TCHF) 2011 2010 The following emoluments were made by the Group to the members of the Foundation Board and to Group and business unit executives during the year. Total emoluments of Foundation Board members 3 045

Salaries and bonuses Long-term incentive scheme Total emoluments of Group and business unit executives

3 045

13 462

13 083

0

985

13 462

14 068

The following loans, advances and commitments made by the Group to and on behalf of the above-mentioned related parties were outstanding at year-end

5 548 4 517 Advances Mortgages and other loans

2 507

3 050

Total

8 055

7 567

Hedge fund and private equity co-investment plan of senior LGT managers Each year the employees of LGT Capital Partners Ltd., which acts as investment manager for LGT’s alternative assets investment vehicles, and members of LGT Group’s management are invited to invest in the same private equity and hedge fund investments as LGT’s customers. At 31 December 2011, LGT’s employees had committed a total of USD 49.6 million (2010: USD 47.4 million) to the alternative investment co-investment plans. Transactions with the Prince of Liechtenstein Foundation A number of Group transactions were concluded with the Prince of Liechtenstein Foundation (POLF), the beneficiary of the LGT Group Foundation, in the normal course of business, including loans, deposits and other transactions. The transactions were carried out at commercial terms and market rates and were reported as follows:

2011

2010

553 1 438 Deposits Transactions with post-employment benefit plans A number of Group transactions were concluded with post-employment benefit plans in the normal course of business, including loans, deposits and other transactions. The transactions were carried out at commercial terms and market rates and were reported as follows:

2011 2010

35 933 14 250 Deposits Advances to and due to investments in associates A number of Group transactions were concluded with investments in associates in the normal course of business, including loans, deposits and other transactions. The transactions were carried out at commercial terms and market rates and were reported as follows: Loans

2011 16 993

Financial assets at fair value and investment securities

2 446 237

Deposits

517 351

2010 21 296 2 531 615 259 601

Notes to the consolidated financial statements

57


Risk management Risk management framework and process Risk is defined by the adverse impact on profitability of several distinct sources of uncertainty. Taking risk is inherent to the financial ­business and an inevitable consequence of being in business. This note presents information about the Group’s risk exposure and the objectives, policies and processes for measuring and managing the different risk categories. The risk policy of LGT Group comprises two key elements. The risk strategy, which details the overall approach to risk-taking desired by the Board, and risk principles, which translate the risk strategy into operating standards for both the risk organization and required risk processes. The Group is exposed to various risks. Risk control/containment Operational risk

Market risk/ financing

Credit risk

Corporate structure risk

Investment product risk

Wealth Mgt. risk client policies

Personnel risk

Fraud Equity Counterparty Legal structure Performance Client acceptance Key people retention Business practices Interest rates Concentration Tax Structures policy Incentives Physical damage Foreign exchange Collateral Formal requirements Commitments Education Execution, processes ALM Credit structures Asset management Succession Employment practices Dividends Compliance Contracts Workplace safety Equity capital Product concentration Business disruption Liquidity Liquidity Refinancing Financing structure Strategy/reputation/regulatory risk

The aim is to achieve an appropriate balance between risk and return and minimize potentially adverse effects on the financial per­ formance of the Group. Based on this general guideline several risk management policies are designed to identify and analyze the different risk categories, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Foundation Board is responsible for the Group’s risk policy and its regular review. On a daily basis risk management is conducted by the line management. The overall responsibility lies within the executive management teams of each business unit. The risk controlling unit oversees the risk-taking activities of the Group. The five equivalent key elements of the LGT Group risk process are:

Risk identification

Risk guidelines

Risk management

Risk control

Risk review

The control of risk is conducted outside of and independently of line management. LGT Group has one risk controlling team which is responsible for risk supervising and risk reporting for the whole Group. The most important types of risk LGT Group is exposed to are market risk, liquidity risk, credit risk and operational risk. Market risk includes currency risk, interest rate and other price risk.

58

Notes to the consolidated financial statements


Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in interest rate, currency and equity products, all of which are exposed to general and ­specific market movements and changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign exchange rates and equity prices. The Group separates exposures to market risk into either trading or non-trading portfolios. The market risk arising from trading and non-trading activities is monitored by Group Risk Controlling and for the trading portfolios by the Risk Management of the Trading Department. Regular reports are submitted to Group Management and the heads of the business units. Trading portfolios also include those positions arising from market-making transactions where the Group acts as principal in the m ­ arket. Non-trading portfolios primarily arise from the interest rate management of the Group’s banking assets and liabilities. Non-trading portfolios also consist of foreign exchange and equity risks arising from the Group’s held-to-maturity and available-for-sale investments. Market risk measurement As part of the management of market risk, the most important measurement category for the Group is the sensitivity analysis of its trading and non-trading portfolios, to estimate the market risk of positions held, based on assumptions for changes in interest rates, ­foreign exchange rates, equity prices and volatility. The Board sets limits on the total market value change that may be accepted for the Group, trading and non-trading separately. These limits are monitored by Group Risk Controlling for the trading portfolios on a daily basis, and for the non-trading portfolios on a monthly basis. On the basis of the sensitivity analysis the Group undertakes various ­hedging strategies and also enters into interest rate swaps to match the interest rate risk associated with the fixed-rate debt securities and loans to which the fair value option has been applied. In addition, market risks on the trading portfolios are managed by limiting the volume and maximum loss accepted overall and by ­position. LGT Group performs stress tests to get an indication of the potential size of losses that could arise in extreme conditions. The stress testing applies stress movements of each risk category and ad hoc stress testing, which includes applying possible stress events to ­specific positions or regions. The stress testing is tailored to the business and typically uses scenario analysis. Market risk organization and reporting Responsibility for risk control lies with the AL Committee which defines basic principles for the refinancing activity of the LGT Group (focussing on medium to long-term money) and advises the Group CEO on capital market transactions. The control of the ALM risks is primarily applied by way of an active management of the repricing gaps in the different time bands. Transactions carried out in the ALM area must be notified to the AL Committee by a representative of Group Risk Controlling at the next meeting.

Notes to the consolidated financial statements

59


Summary sensitivity analysis Negative fair value change at 31 December 2011 (TCHF)

Interest rate Foreign exchange +100 bp -20%

Equity price -10%

portfolio/designated at fair value Trading

11 850 316 011 785

Non-trading portfolios

21 513 216 048 20 377

Total

33 363 532 059 21 162

Negative fair value change at 31 December 2010 (TCHF)

Interest rate Foreign exchange +100 bp -20%

Trading portfolio/designated at fair value

Equity price -10%

9 433

268 279

1 574

Non-trading portfolios

27 301

280 164

19 612

Total

36 734

548 443

21 186

Foreign exchange risk The Group takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The Board sets limits on the level of exposure by currency and in aggregate for both overnight and intraday positions, which are monitored daily. Foreign exchange risk strategy and measurement Exchange rate risk control is implemented within the framework of LGT Group’s overall appetite for risk. The aim of an appropriate AL risk management system is to manage the exchange rate risk of LGT Group and the Group companies to optimum effect. The limits must be applied using appropriate limit types to reflect the risk. In this context gap limits for limiting matching maturities within specific maturity segments are used. The following table summarizes the Group’s exposure to foreign currency exchange rate risk at 31 December. Included in the table are the Group’s financial instruments at carrying amounts, categorized by currency.

60

Notes to the consolidated financial statements


Swiss Francs Euros US Dollars Other Total Foreign exchange exposure at 31 December 2011 (TCHF) 2 595 302 Cash in hand, balances with central banks

21 643

1 324

1 697

2 619 966

1 560 453

1 924 795

2 261 450

783 868

6 530 566

3 542 574 Loans and advances to customers

689 205

1 259 618

797 396

6 288 793

Loans and advances to banks

2 140 Securities held for trading purposes

1 480

1 328

0

4 948

1 302 833 Financial assets designated at fair value

1 141 432

492 805

601 493

3 538 563

1 140 687 Available-for-sale securities

416 151

205 300

458 788

2 220 926

0 0 0 0 0 Held-to-maturity securities Investments in associates Remaining assets Total assets

Amounts due to banks Amounts due to customers Financial liabilities designated at fair value

2 446 237

0

0

0

2 446 237

1 970 259

27 059

35 480

569 323

2 602 121

14 560 485

4 221 765

4 257 305

3 212 565

26 252 120

231 081

328 135

1 090 722

205 194

1 855 132

4 345 867

4 065 511

5 948 305

2 893 908

17 253 591

0

602 474

57 046

0

659 520

Certificated debt

1 513 622

3 229

0

0

1 516 851

Remaining liabilities

1 824 931

111 006

16 149

82 614

2 034 700

Total liabilities

7 915 501

5 110 355

7 112 222

3 181 716

23 319 794

Net foreign exchange exposure of balance sheet

6 644 984

-888 590

-2 854 917

30 849

2 932 326

-3 610 819

868 183

2 759 841

-32 919

-15 714

3 034 165

-20 407

-95 076

-2 070

2 916 612

Swiss Francs

Euros

US Dollars

Other

Total

Derivative financial instruments Total net foreign exchange exposure

Foreign exchange exposure at 31 December 2010 (TCHF)

257 665

30 507

1 702

1 621

291 495

Loans and advances to banks

Cash in hand, balances with central banks

1 775 777

1 458 006

1 218 781

864 019

5 316 583

Loans and advances to customers

3 278 956

647 343

814 738

642 563

5 383 600

12 122

17

3 205

0

15 344

Financial assets designated at fair value

1 066 682

1 063 380

304 072

794 003

3 228 137

Available-for-sale securities

3 516 962

200 995

360 734

839 090

4 917 781

Securities held for trading purposes

Held-to-maturity securities Investments in associates Remaining assets Total assets

Amounts due to banks Amounts due to customers Financial liabilities designated at fair value

0 0 0 0 0 2 531 615

0

0

0

2 531 615

2 305 398

45 858

16 318

336 275

2 703 849

14 745 177

3 446 106

2 719 550

3 477 571

24 388 404

317 360

453 416

909 407

191 733

1 871 916

3 827 409

3 892 711

4 478 301

2 041 052

14 239 473

0

728 500

77 291

0

805 791

Certificated debt

1 570 416

0

0

0

1 570 416

Remaining liabilities

2 784 302

17 621

9 241

5 931

2 817 095

Total liabilities

8 499 487

5 092 248

5 474 240

2 238 716

21 304 691

Net foreign exchange exposure of balance sheet Derivative financial instruments Total net foreign exchange exposure

6 245 690

-1 646 142

-2 754 690

1 238 855

3 083 713

-3 460 220

1 762 959

2 678 309

-1 217 068

-236 020

2 785 470

116 817

-76 381

21 787

2 847 693

Notes to the consolidated financial statements

61


Interest rate risk Interest rate risk associated with non-trading financial instruments (loans and advances, fixed-income securities, term deposits, certificated debt, and derivative financial instruments) is part of the Group‘s asset and liability management process. Interest rate risk is measured by the use of gap analysis and interest rate sensitivities. The Asset and Liability Committee decides on any appropriate use of derivative financial instruments. The principal interest-related derivatives used are interest rate swaps and forward rate agreements. Interest rate risk strategy and measurement Interest rate risk control is implemented within the framework of LGT Group’s overall appetite for risk. The aim of an appropriate AL risk management system is to manage the interest rate risk of LGT Group and the Group companies to optimum effect. The limits must be applied using appropriate limit types to reflect the risk. The following limit types are used in this context: n n

Gap limits for limiting matching maturities within specific maturity segments. Interest rate sensitivity limits for limiting the maximum potential loss on the market value of shareholders’ equity resulting from

detrimental market movements in interest rates. The analysis shows the absolute changes in market values given a change of the respective key rate by +100 basis points. Within More than Interest rate sensitivity analysis (CHF m) 6 months 6 and less than 12 months

More than 1 and less than 5 years

More than 5 years

Total

All currencies 2011

-1.3 -4.9 5.1 -3.1 -4.2

All currencies 2010

-5.8

CHF 2011

-3.2 25.0 10.1 -2.9 29.0

CHF 2010

1.8

-0.9

7.5

-15.8

-11.8

22.3

22.3

-0.2

19.8

USD 2011

-0.4 -9.8 -1.5 -0.1 -11.8

USD 2010

-5.0 -3.6 -0.6 -0.1 -9.3

EUR 2011

1.9

EUR 2010

-12.7

-3.1

0.0

-13.9

-1.9 -1.3 -3.1 0.0 -6.3

The table below summarizes the average interest rate by major currencies for monetary financial instruments not carried at fair value through profit or loss: CHF in %

31 December 2011 EUR in % USD in % CHF in %

31 December 2010 EUR in % USD in %

Assets Loans and advances to banks

0.22 0.65 0.60 0.16 0.67 0.60

Loans and advances to customers

1.59 2.45 1.79 1.81 1.97 1.65

Available-for-sale securities

2.31 1.32 1.88 0.76 1.26 1.77

Liabilities Amounts due to banks

0.18 0.72 0.19 0.35 0.70 0.12

0.15 0.31 0.15 0.26 0.23 0.11 Amounts due to customers 2.38 – – 2.47 – – Certificated debt

62

Notes to the consolidated financial statements


Liquidity risk Liquidity risk is the risk that an entity will be unable to meet a financial commitment to a customer, creditor or investor in whatever location or currency. The management of liquidity is primarily directed toward ensuring that local funding requirements can be met. The distribution of sources and maturities of deposits is managed actively in order to ensure access to funds and to avoid a concentration of funding demand at any one time or from any one source. Sources of liquidity are regularly reviewed by a separate team in Group Treasury to maintain a wide diversification by currency, geography, provider, product and term. Liquidity management is subject to the overall monitoring and control of Group Treasury, which also manages excess liquidity for individual entities. LGT Bank in Liechtenstein Ltd., Vaduz, which attracts the majority of customers’ cash deposits within the Group, also performs the Group Treasury function. The Group’s liquidity management process includes: n

day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. The Group maintains an

n

maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption

active presence in global money markets to enable this to happen; to cash flow;

monitoring balance sheet liquidity ratios against internal and regulatory requirements; and n managing the concentration and profile of debt maturities. n

Group Treasury also monitors unmatched medium-term assets, the level and type of undrawn lending commitments, the usage of overdraft facilities and the impact of contingent liabilities such as standby letters of credit and guarantees. The assumptions regarding gross loan commitments are based on expert opinions and also differentiated by the type of limit and the client type. In the following table, assets and liabilities are structured according to contractual terms. It summarizes the overall funding and investment structure of the Group.

Notes to the consolidated financial statements

63


Within More than More than More than Cash flow of assets and liabilities 1 month 1 and 3 and 1 and at 31 December 2011 (TCHF) less than less than less than 12 months 5 years 3 months

0

2 619 966

2 619 966

0

0

Loans and advances to banks

3 980 277

1 251 148

1 312 404

0

0

6 543 829

Loans and advances to customers

2 763 921

730 816

999 470

1 685 400

270 779

6 450 386

0

4 666

0

280

0

4 946

37 360 615

19 399 939

17 830 624

178 552

4 438

74 774 168

61 780

1 159 174

411 761

2 050 821

12 411

3 695 947

298 388

758 219

606 475

558 142

54 433

2 275 657

Derivative financial instruments Financial assets designated at fair value Available-for-sale securities Held-to-maturity securities

0 0 0 0 0 0

Investments in associates

0

Remaining assets Total assets Amounts due to banks

2 446 237

0

0

0

2 446 237

0

645 625

0

0

0

645 625

47 084 947

26 395 824

21 160 734

4 473 195

342 061

99 456 761

1 585 366

49 498

218 876

4 073

0

1 857 813

Amounts due to customers

15 745 453

582 605

662 457

291 136

0

17 281 651

Derivative financial instruments

37 280 827

19 401 136

17 928 352

197 870

6 700

74 814 885

Financial liabilities designated at fair value Certificated debt Remaining liabilities Total liabilities Commited credit lines

0

659 520

0

0

0

659 520

7 775

7 896

282 012

1 079 446

273 060

1 650 189

0

131 439

0

0

0

131 439

54 619 421

20 832 094

19 091 697

1 572 525

279 760

96 395 497

115 552

58 551

21 063

140 704

0

335 870

More than 5 years

Total

Within More than More than More than Cash flow of assets and liabilities 1 month 1 and 3 and 1 and at 31 December 2010 (TCHF) less than less than less than 12 months 5 years 3 months Cash in hand, balances with central banks

291 495

0

0

0

0

291 495

Loans and advances to banks

2 904 283

1 796 596

625 080

0

0

5 325 959

Loans and advances to customers

2 287 103

773 627

831 762

1 402 281

242 285

5 537 058

Securities held for trading purposes Derivative financial instruments Financial assets designated at fair value Available-for-sale securities

0

10 544

0

2 171

2 674

15 389

33 788 052

38 579 340

13 186 241

99 001

6 276

85 658 910

37 121

1 070 745

522 402

1 702 000

22 903

3 355 171

1 671 114

1 501 021

961 096

826 941

13 125

4 973 297

Held-to-maturity securities

0 0 0 0 0 0

Investments in associates

0

2 531 615

0

0

0

2 531 615

Remaining assets

0

416 816

0

0

0

416 816

40 979 168

46 680 304

16 126 581

4 032 394

Total assets Amounts due to banks

287 263 108 105 710

1 313 272

235 483

326 078

0

0

1 874 833

Amounts due to customers

12 814 883

464 412

640 158

332 811

0

14 252 264

Derivative financial instruments

33 817 660

38 618 915

13 352 034

102 080

6 575

85 897 264

0

805 791

0

0

0

805 791

4 146

227 287

50 524

874 388

566 912

1 723 257

0

150 770

Financial liabilities designated at fair value Certificated debt Remaining liabilities Total liabilities Commited credit lines

64

Total

Cash in hand, balances with central banks

Securities held for trading purposes

0

More than 5 years

Notes to the consolidated financial statements

0

150 770

0

0

47 949 961

40 502 658

14 368 794

1 309 279

54 504

92 738

65 307

136 963

573 487 104 704 179 2 302

351 814


Within More than More than More than Derivative cash flows 1 month 1 and 3 and 1 and at 31 December 2011 (TCHF) less than less than less than 3 months 12 months 5 years

More than 5 years

Total

Derivatives held for trading/hedging Foreign exchange derivatives Outflow

37 280 397

19 398 123

17 914 011

158 784

0

74 751 315

Inflow

37 360 506

19 397 077

17 820 984

157 034

0

74 735 601

Outflow

430

3 012

14 341

39 086

6 701

63 570

Inflow

108

2 861

9 640

21 518

4 439

38 566

Interest rate derivatives

Other derivatives

Outflow Inflow

0 0 0 0 0 0 0 0 0 0 0 0

Total outflow

37 280 827

19 401 135

17 928 352

197 870

6 701

74 814 885

Total inflow

37 360 614

19 399 938

17 830 624

178 552

4 439

74 774 167

More than 5 years

Total

Within More than More than More than Derivative cash flows 1 month 1 and 3 and 1 and at 31 December 2010 (TCHF) less than less than less than 3 months 12 months 5 years Derivatives held for trading/hedging Foreign exchange derivatives Outflow

33 816 899

38 616 547

13 339 844

61 337

0

85 834 627

Inflow

33 787 992

38 575 959

13 173 344

61 313

0

85 598 608

761

2 368

12 189

40 743

6 576

62 637

59

3 381

12 897

37 688

6 277

60 302

Interest rate derivatives Outflow Inflow Other derivatives Outflow

0 0 0 0 0 0

Inflow

0 0 0 0 0 0

Total outflow

33 817 660

38 618 915

13 352 033

102 080

6 576

85 897 264

Total inflow

33 788 051

38 579 340

13 186 241

99 001

6 277

85 658 910

Notes to the consolidated financial statements

65


Credit risk Credit risk is the risk that a counterparty of a financial instrument fails to meet its contractual obligation and causes LGT Group to incur a financial loss. Credit risk exposures arise principally in lending activities that lead to loans and advances, and investment activities that bring debt securities and other bills into the Group’s asset portfolio. Further there is also credit risk in derivative financial instruments and off-balance sheet financial instruments, such as loan commitments and financial guarantee contracts. Within LGT Group credit risk is primarily incurred by LGT Bank in Liechtenstein Ltd., Vaduz. Therefore the credit risk management and control are centralized in this unit. The conservative lending policy is established by internal directives, guidelines and written policy papers. These guidelines include: (i) limits on total commercial, mortgage and syndicated loan volume, (ii) limits on unsecured lending exposures to any one customer or customer group, (iii) percentage limits on borrower concentration within the Group’s credit portfolio and (iv) strict credit handling procedures and internal controls. Credit risk strategy Lending is an integrated part of the business philosophy of LGT Group and thus complementary to the wealth management s­ ervices offered. Any transaction must be viewed in the context of the whole client relationship. It is not the policy of LGT Group to extend credit facilities on a stand alone basis, but only in conjunction with assets deposited or to be deposited with LGT Group. The risk appetite of LGT is low to moderate. The center for lending business within LGT Group is the credit function at LGT Bank Vaduz. As part of its comprehensive system for monitoring lending exposures, regular reports are provided at a Group level to the Foundation Board on (i) credit risk ratings, (ii) allowances, (iii) country exposures and (iv) bank limits. Stress Testing on securities and property collateral is executed regularly and on an ad hoc basis if requested by management. In addition, ad hoc reports of special events, as well as daily reports of global exposures to specific customers, are also provided on request. Credit risk measurement Loans and advances In measuring credit risk of loans and advances to customers and to banks at a counterparty level, the Group assesses the probability of default of individual counterparties using internal rating tools. They have been developed internally and combine statistical analysis with credit officer judgement and are validated, where appropriate, by comparison with externally available rating data. The Group regularly validates the performance of the rating tools and their predictive power with regard to default events. Debt securities and other bills For debt securities and other bills, external ratings such as Standard & Poor’s or Moody’s are used for managing the credit risk exposures. The credit function at LGT Bank Vaduz is responsible for extending counterparty limits, while Treasury is managing the individual positions within these limits. The investments in those securities and bills are viewed as a way to gain a better credit quality mapping and maintain a readily available source to meet the funding requirement at the same time. Assets by countries In addition to the limitation of credit exposures of customers or customer groups, LGT Group has restricted the group of countries in which credit risks may be incurred. Limits are established for these countries which are reviewed by the Foundation Board at least annually. The table below shows the allocation of assets by countries: Assets by countries/country groups (TCHF) 1

2011

in %

2010

in %

Liechtenstein and Switzerland

8 790 719

33.5

9 616 816

39.4

Europe

9 185 065

35.0

7 432 771

30.5

Americas

4 706 616

17.9

4 381 021

18.0

Asia

1 611 204

6.1

1 316 979

5.4

Other countries

1 958 516

7.5

1 640 817

6.7

26 252 120

100.0

24 388 404

100.0

2

Total

66

1

Based on risk domicile of the assets

2

Mainly Class Funds

Notes to the consolidated financial statements


Derivative financial instruments The Group maintains strict control limits on net open derivative positions. At any one time, the amount subject to credit risk is limited to the current fair value of instruments that are favorable to the Group, which in relation to derivatives is only a small fraction of the contract, or notional values used to express the volume of instruments outstanding. This credit risk exposure is managed as part of the overall lending limits with customers, together with potential exposures from market movements (an add-on factor is calculated depending on underlying risks and time to maturity of the contract). Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a corresponding receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to cover the aggregate of all settlement risk arising from the Group’s market transactions on any single day. As member of the CLS (Continuous Linked Settlement) network LGT is able to mitigate major parts of its daily settlement risk via forex netting. Off-balance sheet financial instruments The primary purpose of off-balance sheet financial instruments is to ensure that funds are available to a customer as required. LGT Group has credit commitments in the form of guarantees and standby letters. These credit commitments carry the same credit risk as loans, and therefore the same lending criteria and identical limitation processes are applied. Risk limit control and mitigation policies LGT Group systematically manages, limits and controls concentrations of credit risk. As part of the credit risk management policy, exposures are structured by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers, and to geographical segments. The risks and their changes are closely monitored on a revolving basis and subject to an annual or more frequent review, when considered necessary. Centralized loan approval procedures ensure a consistent lending process. In line with the conservative credit policy a major part of the Group’s credit exposure is mitigated. The principal collaterals used within LGT Group are mortgages over residential properties and charges over financial instruments such as debt securities, equities and funds. Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly used for the c­ orresponding assets. In subsequent periods, the fair value is updated by reference to market prices or indexes of similar assets. Because of the fact that mortgages are granted primarily within Liechtenstein and Switzerland, LGT Group is exposed to the market trends of the real estate sector in these countries. Collateral accepted as security for assets (TCHF) 2011 2010 Fair value of financial assets accepted as collateral that the Group is permitted to sell or repledge in the absence of default

1 645 764

293 777

Notes to the consolidated financial statements

67


Impairment and provisioning policies The Group’s policy requires the review of individual financial assets that are above materiality thresholds at least annually or more regularly when individual circumstances require it. Impairment allowances on individually assessed accounts are determined by an evaluation of the incurred loss at balance-sheet date on a case-by-case basis, and are applied to all individually significant accounts. The assessment normally encompasses collateral held (including reconfirmation of its enforceability) and the anticipated receipts for that individual account. Assets are summarized separately if contractual interest or principal payments are past due but the Group believes that impairment is not appropriate yet. Distribution of loans and advances credit quality (TCHF) Loans and by advances to customers Neither past due nor impaired

2011 Loans and Loans and advances advances to banks to customers

2010 Loans and advances to banks

6 041 974

6 530 566

4 979 627

5 316 583

232 002

0

381 059

0

35 244

0

40 889

0

loans and advances (gross) 6 309 220 6 530 566 Total

due but not impaired Past Impaired

allowance for impairment Less loans and advances (net) Total

Distribution of loans and advances where past due which but not impaired (TCHF) due up to 30 days Past

5 401 575

5 316 583

0

17 975

0

6 288 793 6 530 566

5 383 600

5 316 583

20 427

Loans and advances to customers

2011 Loans and Loans and advances advances to banks to customers

2010 Loans and advances to banks

171 593

0

312 980

0

due 31–60 days Past

11 248

0

20 150

0

due more than 60 days Past

49 161

0

47 929

0

232 002

0

381 059

0

Total

Collectively assessed impairment allowances are provided for: (i) portfolios of homogenous assets that are individually below materiality thresholds; and (ii) losses that have been incurred but have not yet been identified, by using the available historical experience, experienced judgement and statistical techniques. 2011 Impaired loans and advances (TCHF) Loans and Loans and Loans and advances advances advances to customers to banks to customers

2010 Loans and advances to banks

Specific allowance for impairment

15 167

0

12 875

0

Portfolio allowance for impairment

5 260

0

5 100

0

20 427

0

17 975

0

Total

LGT Group obtained assets by taking possession of collateral held as security. Repossessed properties are sold as soon as practicable, with the proceeds used to reduce the outstanding indebtedness.

68

Carrying amount of collateral and other credit enhancements obtained (TCHF)

2011

2010

Residential, commercial and industrial property

481

481

Notes to the consolidated financial statements


Operational risk Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. By their nature, operational risks are difficult to identify, measure and manage. They can be caused deliberately or accidentally or be of natural origin and encompass all elements of the organization. Operational risks are inherent in all types of products, activities, processes and systems. LGT Group has established a group-wide Operational Risk Committee which provides the Group CEO with support in the early identification of these risks and in implementing appropriate measures. These tasks are based on the principles stipulated in the ‘Sound Practices for the Management and Supervision of Operational Risk’ issued by the Basel Committee on Banking Supervision. The set guidelines ensure that risk management takes care of all defined risk categories:

Internal and external fraud Employment practices and workplace safety n Customers, products and business practices n Damage to physical assets n Business disruption and system failures n Execution, delivery and process management. n n

Operational risk measurement The operational risk measurement approach is based on the one hand on appropriate measures adapted for business units, such as an internal monitoring system and on the other hand on three dimensions in which the above risk categories are assessed. Risk self-assessment The risk self-assessment represents a qualitative judgement of the risk situation. On a regular basis the group functions identify and measure operational risk through estimates based on the consensus opinion of members of the management and/or the staff. The main objective of this process is the identification, assessment and mitigation of operational risk. Key risk indicators Key risk indicators evaluated on a quantitative basis give insight into the extent of stress of an activity. These indicators are used to ­ monitor and foresee trends and serve as an early warning system. For monitoring operational efficiency and demonstrating the ­effectiveness of controls, every business unit has built up a selection of business data considered useful for the purpose of risk tracking. Error event data base Every business unit captures and accumulates individual error events across risk types. Such a data base is a tool to measure, quantify and provide financial operational risk data. Exception procedure The business units and group functions immediately inform Group Risk Controlling about essential operational risk events (e.g. essential error events, essential near-losses).

Notes to the consolidated financial statements

69


Operational risk organization and reporting The preparation, processing and analysis of relevant data are centralized, as in other risk categories, in Group Risk Controlling. Definition of the roles within the operational risk organization n

The Foundation Board has the overall responsibility for the management of operational risks and the constitution of the operational

n

The Group CEO/Senior Management Board are responsible for the establishment and maintenance of an appropriate risk organiza-

n

The Operational Risk Committee identifies and evaluates the operational risks and submits recommendations to Group Risk

n

Line management is responsible for the identification and assessment of operational risk in their business unit. This includes

risk policy. tion to m 足 anage operational risks for LGT Group. Controlling. (i) 足management of operational risk according to the operational risk principles, (ii) definition of appropriate standards for the management of operational risks, (iii) ensuring operational risk processes are efficiently documented, followed and reviewed, (iv) measuring and reporting operational risks on a timely basis to Risk Controlling, (v) determining and updating process and system requirements to maintain adequate risk management tools, (vi) identification and review of risk profiles, (vii) definition and implementation of actions. n

Group Risk Controlling is responsible for operational risk control. This includes (i) group-wide coordination of operational risk 足management issues and efforts, (ii) ensuring compliance of risk management with the operational risk principles, (iii) collecting and analyzing error events, assessments and risk indicators, (iv) regular reporting to the Audit Committee, the Group CEO and the Senior Management Board and (v) monitoring of actions taken.

70

Notes to the consolidated financial statements


Fair value of financial instruments not carried at fair value Fair value information is used for business purposes in determining an enterprise’s overall financial position. Fair value information permits comparisons of financial instruments having substantially the same economic characteristics. 2011 Financial assets (TCHF) Carrying amount Fair value Carrying amount

2010 Fair value

and advances to banks 6 530 566 Loans

6 538 994

5 316 583

5 321 963

and advances to customers Loans

6 409 725

5 383 600

5 465 646

6 288 793

Financial liabilities (TCHF) due to banks Amounts due to customers Amounts Certificated debt

1 855 132 1 856 680

1 871 916

1 873 412

17 253 591 17 256 411

14 239 473

14 240 735

1 516 851 1 626 117

1 570 416

1 652 739

Loans and advances to banks The estimated fair value of loans and advances to banks is based on discounted cash flows using prevailing market interest rates for debts with similar credit risk and remaining maturity. Loans and advances to customers Loans and advances are stated net of impairments. The estimated fair value of loans and advances to customers represents the discounted amount of estimated future cash flows expected to be received. Amounts due to banks or to customers The calculation of the fair values of the amounts due to banks or customers is based on the discounted cash flow method using interest rates for new debts with similar remaining maturity. Certificated debt The aggregated fair values are calculated under the discounted cash flow method. The model is based on a current yield curve appropriate for the remaining term to maturity.

Notes to the consolidated financial statements

71


Pillar III disclosures according to Basel II This section contains our Basel II Pillar III disclosures as of 31 December 2011 and consists only of quantitative disclosures. Qualitative disclosures related to our risk management and control can be found in section risk management of this report. Geographical credit risk Switzerland Oceania North America Liechtenstein Latin America at 31 December 2011 (TCHF) Loans and advances Liquid assets Loans and advances to banks Loans and advances to customers Mortgages Securities Other assets Replacement value after netting

2 595 244

48

1 440

58

0

844 206

2 406

307 031

182 731

43

279 054

111 400

121 376

598 866

51 208

1 376 856

5 082

0

1 273 011

0

66

459 626

744 708

18 351

29 003

30 553

2 288

4 206

62 011

148

701 000

353

20 717

127 101

1 091

5 826 979

581 203

1 199 478

2 262 129

81 493

Contingent liabilities

11 132

2 110

6 968

98 237

4 443

Commitments

14  312

Total Off-balance sheet

Deposit and reserve liabilities Add-ons Securities General allowance Total reporting period Total 2010

8 128 574

0

0 0 0 5  488 0 317 294

348

28 558

85 059

1 513

182 -210 0 0 0 -2 947

0

-218

-6 402

0

6 166 952

583 459

1 234 914

2 445 085

87 449

6 862 312

563 871

1 028 522

2 276 674

76 020

Impaired loans Impaired loans

9 619

127

255

30 582

9

Specific allowance

6 035

0

218

1 343

0

Europe

Caribbean

Asia

Africa

Total

Loans and advances Liquid assets

22 892

0

119

4

2 619 805

4 701 508

16 275

476 261

265

6 530 726

Loans and advances to customers

988 151

793 814

400 396

65 922

3 410 187

Mortgages

143 234

0

100 852

0

2 899 035

3 085 764

2 554 773

500 285

0

7 392 576

21 400

27 144

8 696

18

156 464

Loans and advances to banks

Securities Other assets Replacement value after netting Total

281 460

300 001

2 924

625

1 435 272

9 244 409

3 692 007

1 489 533

66 834

24 444 065

37 643

4 571

6 180

239 427

Off-balance sheet Contingent liabilities

68 143

Commitments

30 184

0

11

0

45 217

Deposit and reserve liabilities

98 365

132

0

0

103 985

303 642

91 602

2 695

368

831 079

1 610

513

1 450

24

3 569

Add-ons Securities General allowance

-10 678

-100

-3

0

-20 348

Total reporting period

9 735 675

3 821 797

1 498 257

73 406

25 646 994

Total 2010

7 923 901

3 360 884

1 252 715

71 884

23 416 783

Impaired loans Impaired loans Specific allowance 72

Notes to the consolidated financial statements

11  824 657 980 676 54  729 7 781

100

0

0

15 477


Segmentation of credit risk 0% 10% 20% 35% 50% at 31 December 2011 (TCHF) Loans and advances Liquid assets Loans and advances to banks Loans and advances to customers

2  619  805 0 0 0 0 392 544

0

5 185 417

0

934 023

2 228 207

0

51 331

4 147

35 842

Mortgages

109 199

0

0

1 924 084

235 872

Securities

770 199

0

1 566 872

0

2 178 146

260

0

19 418

0

2 025

426 076

0

348 998

13

203 314

6 546 290

0

7 172 036

1 928 244

3 589 222

Other assets Replacement value after netting Total

Off-balance sheet Contingent liabilities Commitments Deposit and reserve liabilities Add-ons

146 668

0

11 780

152

203

955

0

1 675

2 551

419

0 0 0 0 0 236 071

0

294 371

7

109 218

Securities

0 0 0 0 0

General allowance

-20  348 0 0 0 0

Total reporting period

6 909 636

0

7 479 862

1 930 954

3 699 062

Total 2010

5 552 369

0

6 812 644

1 707 752

4 486 167

Impaired loans Impaired loans

2 753

0

0

4 590

0

Specific allowance

3 425

0

3

2 748

0

75% 100% 150% ≥ 200% Total

Loans and advances Liquid assets

0 0 0 0 2  619  805

Loans and advances to banks

0

17 773

969

0

6 530 726

Loans and advances to customers

119 124

962 515

9 021

0

3 410 187

Mortgages

0

624 543

5 337

0

2 899 035

Securities

0

537 309

2 340 050

0

7 392 576

Other assets

0

134 761

0

0

156 464

Replacement value after netting Total

0

456 854

17

0

1 435 272

119 124

2 733 755

2 355 394

0

24 444 065

80 624

0

0

239 427

Off-balance sheet Contingent liabilities

0

Commitments

0

39 617

0

0

45 217

Deposit and reserve liabilities

0

103 985

0

0

103 985

Add-ons

0

191 412

0

0

831 079

Securities

0

0

3 569

0

3 569

General allowance Total reporting period

0 0 0 0 -20  348 119 124

3 149 393

2 358 963

0

25 646 994

Total 2010  110 852

2 587 953

2 159 046

0

23 416 783

Impaired loans Impaired loans

246

36 909

10 231

0

54 729

Specific allowance

271

9 030

0

0

15 477

Notes to the consolidated financial statements

73


Credit risk/credit risk reduction at 31 December 2011 (TCHF)

Covered by Covered by Mortgage- Other financial guarantees and backed collateral collateral credit derivatives

Total

Loans and advances Liquid assets

0 0 0 0 0

Loans and advances to banks

1 633 033

0

0

0

1 633 033

Loans and advances to customers

2 105 964

14 382

32 777

121 970

2 275 093

21 200

0

2 823 539

3 093

2 847 832

Mortgages Securities

0 0 0 0 0

Other assets

95 0 0 0 95

Replacement value after netting Total

404 364

0

13

8 150

412 527

4 164 656

14 382

2 856 329

133 213

7 168 580

Off-balance sheet Contingent liabilities Commitments Deposit and reserve liabilities Add-ons Securities General allowance

143 749

684

196

2 918

147 547

816

0

11 666

9

12 491

0 0 0 0 0 226 762

0

8

9 308

236 078

0 0 0 0 0 0 0 0 0 0

Total reporting period

4 535 983

15 066

2 868 199

Total 2010

2 231 671

137 704

2 445 703

145 448 93 507

7 564 696 4 908 585

Impaired loans

74

Impaired loans

2 543

0

34 576

210

37 329

Specific allowance

3 349

0

3 078

76

6 503

Notes to the consolidated financial statements


Credit risk/distribution according counter- party or sector at 31 December 2011 (TCHF)

States and central banks

Public authorities

2 619 805

0

Administrative facilities

Multilateral development banks

Loans and advances Liquid assets

0

0

Loans and advances to banks

17  913 0 0 0

Loans and advances to customers

43 175

Mortgages Securities Other assets Replacement value after netting Total

2 246

15 910

20 408

281 0 0 0 1 041 291 481

13 902 13

266 811 240

63 879 0

13 959

0

19 479

26

3 736 905

16 161

302 440

84 313

Off-balance sheet Contingent liabilities

9  468 185 698 444

Commitments

9

Deposit and reserve liabilities

0 0 0 0

Add-ons

5 791

0

0

1 676

13 156

0

193

Securities

0 0 0 0

General allowance

0 0 0 0

Total reporting period

3 752 173

16 346

317 970

84 950

Total 2010

3 572 812

14 826

173 782

65 017

Impaired loans Impaired loans

0 0 0 0

Specific allowance

0 0 3 0

International organizations

Banks

Corporates

Retail

Loans and advances Liquid assets

0 0 0 0

Loans and advances to banks

0

3 996 964

0

0

Loans and advances to customers

0

618 678

1 589 697

1 072 919

Mortgages

0

14 047

10 216

49 840

Securities

0

2 697 551

959 575

4 522

Other assets

0

17 866

7 928

129 686

Replacement value after netting

0

851 487

373 064

79 907

Total

0

8 196 593

2 940 480

1 336 874

125 568

53 669

Off-balance sheet Contingent liabilities

0

48 861

Commitments

0

26

3 992

27 848

Deposit and reserve liabilities

0

0

103 985

0

Add-ons

0

411 243

154 707

33 978

Securities

0 0 0 0

General allowance

0

-3

-1 632

Total reporting period

0

8 656 720

3 327 100

1 433 656

Total 2010

0

7 891 403

3 348 172

1 214 254

-18 713

Impaired loans Impaired loans

0

0

36

6 874

Specific allowance

0

0

3 659

5 014

Notes to the consolidated financial statements

75


Credit risk/distribution according counter- party or sector at 31 December 2011 (TCHF)

Mortgage- Overdue backed

Investment in associates

Covered notes

Loans and advances Liquid assets

0 0 0 0

Loans and advances to banks

0 0 0 0

Loans and advances to customers Mortgages

29 198

17 956

0

0

2 784 862

39 789

0

0

220

0

Securities

0

Other assets

0 0 0 0

Replacement value after netting Total

0

13 0 0 0 2 814 073

57 745

220

0

Off-balance sheet Contingent liabilities

196 0 0 0

Commitments

11  666 0 0 0

Deposit and reserve liabilities

0 0 0 0

Add-ons

8 0 0 0

Securities

0

General allowance

0 0 0 0

0

3 569

0

Total reporting period

2 825 943

57 745

3 789

0

Total 2010

2 415 454

58 357

949

0

Impaired loans Impaired loans

5 458

42 361

0

0

Specific allowance

3 078

3 723

0

0

Short-term

Investment fund shares

Other

Total

Loans and advances Liquid assets

0

0

0

2 619 805

2 515 849

0

0

6 530 726

Loans and advances to customers

0

0

0

3 410 187

Mortgages

0

0

0

2 899 035

0

2 344 825

0

7 392 576

Loans and advances to banks

Securities Other assets Replacement value after netting Total

250 0 0 156  464 97 337

0

0

1 435 272

2 613 436

2 344 825

0

24 444 065

Off-balance sheet Contingent liabilities

338 0 0 239  427

Commitments

0 0 0 45  217

Deposit and reserve liabilities

0 0 0 103  985

Add-ons Securities General allowance

212 003

0

0

831 079

0 0 0 3  569 0 0 0 -20  348

Total reporting period

2 825 777

2 344 825

0

25 646 994

Total 2010

2 500 854

2 160 903

0

23 416 783

Impaired loans Impaired loans

0 0 0 54  729

Specific allowance

0 0 0 15  477

In certain cases, our Pillar III disclosures can differ from the way we manage our risks and how these risks are disclosed in other sections of this annual report. 76

Notes to the consolidated financial statements


LGT Group Foundation

77


Report of the statutory auditors

78

LGT Group Foundation – report of the statutory auditors


Income statement

Income statement (TCHF) Note 2011 2010 Interest and dividend income Interest earned

5

-5 177 Interest paid and similar charges

6 -4 351

-5 172 -4 345 Net interest Current income from participations

75 717

160 230

70 545 155 885 Total interest and dividend income

Income from commission and service fee activities -134 Commission expenses 482 Income from financial transactions (all from trading activities) Other operating income 1

-211 2 080

47 094

49 281

117 987 Total operating income

207 035

Administrative expenses Personnel expenses 2

-7 689

-10 452

-12 369 Business and office expenses 3

-80 182

-20 058 -90 634 Total administrative expenses

-1 422 -1 Other operating expenses Allowances for impaired loans and increase of provisions for contingent liabilities and credit risk

-1 816 0

Depreciation, allowances and provision on subsidiary undertakings, affiliated companies and securities treated as current assets

-6 621

-3 352

Profit 88 070 113 048 for the period

Appropriation of available Foundation earnings 283 255 Balance at the beginning of the period

245 207

88 070 Profit for the period

113 048

371 325

358 255

The Foundation Board proposes to the Foundation Meeting of 25 April 2012: -75 000 Payment to the Prince of Liechtenstein Foundation

-75 000

Balance 296 325 283 255 to be carried forward The accounting principles and the notes on pages 81 to 89 form part of these accounts. The accounts on pages 81 to 89 were approved by the Foundation Board on 25 April 2012 and are signed on its behalf by H.S.H. Prince Philipp von und zu Liechtenstein, Chairman, and Olivier de Perregaux, CFO.

LGT Group Foundation – income statement

79


Balance sheet

Balance sheet (TCHF) Note 2011 2010 Assets Loans and advances to banks (subsidiary undertakings) 4

815

672

of which on demand

815

672

Other loans and advances to customers (subsidiary undertakings) 5

587 508

554 508

Participations (shares in associated companies) 6

1 387 850

1 067 862

Other assets 7

59 639

148 578

Total assets 2 035 812 1 771 620

Liabilities Amounts due to banks 8 of which due daily

1 280 500 0

1 022 000 0

of which other loans

1 280 500

1 022 000

Other liabilities 9

7 589

8 504

Accrued expenses and deferred income

3 432

2 146

Provisions 10

33 922

41 671

Foundation capital

339 044

339 044

Profit/loss to be carried forward

283 255

245 207

Profit for the period 11

88 070

113 048

Total liabilities

2 035 812

1 771 620

Collateralization guarantees and similar instruments

4 970

5 139

Guarantees and similar instruments

1 673 789

1 487 422

of which for affiliated companies

1 649 536

1 487 422

11 943

14 481

Off-balance sheet items (TCHF)

Put options 1 Contract volume

The guarantees and similar instruments are valued with the carrying amount except 2 (2010: except 3) guarantees without specified amount, which are valued with their pro memoria value. 1

Put option in favor of a Group company.

The accounting principles and the notes on pages 81 to 89 form part of these accounts.

80

LGT Group Foundation – balance sheet


Notes to the financial statements Accounting principles Introduction

Loans and advances

The accounting principles are in accordance with the

These items are calculated at nominal values. Value

Liechtenstein Law on Persons and Companies (PGR)

adjustments for identifiable individual risks are set off

and the Liechtenstein Banking Law and its directives.

against the corresponding asset positions.

A summary of the most important accounting prin­ ciples, which have been applied consistently, is set

Financial liabilities and provisions

out below.

These items are shown at nominal values. Provisions have been created for operational and other risks.

Basis of accounting The accounts are prepared using the historical cost

Derivative financial instruments

convention. All transactions are recorded on a trade

Derivative financial instruments that are held for trad-

date basis.

ing purposes are valued at their fair market value with changes in fair market value recognized in income from

Foreign currencies

trading activities. The related positive and negative

Revenue items denominated in foreign currencies are

replacement values are stated at gross values. Income

translated at the exchange rates ruling on the dates of

and expense arising on derivatives used in the context

the transactions. Assets and liabilities denominated in

of asset and liability management, primarily interest

foreign currencies are translated at the exchange rates

rate swaps and forward rate agreements, are recog-

ruling on the balance sheet date, except financial fixed

nized on an accrual basis, as this reflects the Group’s

assets, which are translated at historical rates. Exchange

risk management.

differences are entered in the income statement. Risk management Participations

Risks are defined by the adverse impact on profitability

Participations represent investments in subsidiary

of several distinct sources of uncertainty. LGT Group

undertakings and are stated at cost, less any provision

Foundation is exposed to market risks, credit risks,

for permanent diminution in value.

liquidity risks, operational and business event risks. The Foundation Board is responsible for the risk policy

Debt instruments and shares

and its regular review. The risk policy comprises two

Realized gains or losses arising from the disposal of

key elements:

securities are entered in the income statement.

n

Securities held as current assets (short-term assets) are shown at market value. Other securities are stated at the lower of cost or market value.

risk strategy, which details the overall approach to risk-taking desired by the Board; and

n

risk principles, which translate the risk strategy into operating standards for both the risk organization and required risk processes.

Dividends Proposed dividends from subsidiary undertakings are

Risk management on a daily basis is conducted by the

accrued as receivables in the accounts.

line management. The overall responsibility lies within the executive management teams of each business unit. The risk controlling unit oversees the risk-taking activities of LGT Group Foundation and reports directly to the Board.

LGT Group Foundation – notes to the financial statements

81


Details on the income statement and balance sheet Overview LGT Group Foundation was established on 20 July 2001 and is the top holding company of LGT Group. Its purpose is the holding of the majority of the subsidiaries of LGT Group. For a complete list of subsidiary undertakings see note 6 below. The profit for the business year 2011 amounts to 88 070. The balance sheet total increased by 264 192 or 14.9% to 2 035 812.

1 Other operating income (TCHF) 2011 2010 Income from subsidiary undertakings (licence fees, income from service level agreements and service charge for comfort letters) Realized net result from investment securities

37 207 0

45 061 -178

Others

9 887

4 398

Total other operating income

47 094

49 281

2 Personnel expenses (TCHF) 2011 2010 Personnel expenses, including Foundation Board members, consisting of salaries

3 440

3 883

bonuses

4 221

3 771

pension costs

302

420

social security costs

450

486

other personnel expenses

249

723

Personnel expenses before long-term incentive scheme Long-term incentive scheme Total personnel expenses

8 662

9 283

-973

1 169

7 689

10 452

3 Business and office expenses (TCHF) 2011

2010

Business and office expenses, consisting of information and communication expenses 60

42

travel and entertainment expenses 698

775

legal and professional expenses 1 6 874 74 513 advertising expenses other expenses

4 326

Total 12 369 business and office expenses 1

82

4 729

411

123 80 182

In 2010 legal and professional expenses include EUR 50 million payment under agreement with the Bochum public prosecuter following the data theft case.

LGT Group Foundation – notes to the financial statements


4

Loans and advances to banks (subsidiary undertakings) on demand The loans and advances to banks are bank accounts with LGT Bank in Liechtenstein Ltd., Vaduz.

5

Other loans and advances to customers The loans and advances are due from subsidiaries and are not secured by collateral.

6 Participations (TCHF) 2011 2010 Acquisition cost

1 175 515

1 177 727

Accumulated depreciation

-107 653

-109 832

Opening balance 1 067 862 1 067 895 Investments

320 315

559

Depreciation -327 -352 Disposals 0 -200 Liquidation

0

-40

Closing balance 1 387 850 1 067 862 All participations of LGT Group Foundation are unlisted.

LGT Group Foundation – notes to the financial statements

83


Name Principal activity The subsidiary undertakings of LGT Group Foundation at 31 December 2011 were:

LGT Bank in Liechtenstein Ltd. Banking and investment management

LGT Swiss Life Non Traditional Advisers Ltd. Investment advisers

LGT Private Equity Advisers Ltd. Investment advisers

LGT Capital Management Ltd. Investment management

LGT Funds Ltd. 1 Investment advisers

LGT Funds II Ltd. 1 Investment advisers

LGT Investments Ltd. 1 Investment advisers

LGT Premium Strategy Ltd. 1 Investment advisers

LGT Fondsleitung Ltd. Investment advisers

LGT Capital Partners Advisers Ltd. Investment advisers

LGT Financial Services Ltd. Services company

LGT Audit Revisions AG Audit services

LGT Bank (Singapore) Ltd. Banking and investment management

LGT Investment Management (Asia) Ltd. Consulting and advisers

LGT Holding (Malaysia) Ltd. Holding company

LGT Bank in Liechtenstein (Cayman) Ltd. Banking and investment management

LGT Finance Ltd. Financing

LGT Global Invest Ltd. Investment management

LGT Participations Ltd. 5 Investment management

LGT Certificates Ltd. 6 Investment management

LGT (Uruguay) S.A. 7 Bank representation

84

1

Companies with variable share capital structure, only part of fund manager held by LGT Group Foundation.

2

Partly held via LGT Global Invest Ltd., Grand Cayman.

3

Voting rights held via LGT Bank in Liechtenstein Ltd., Vaduz.

4

Partly held via LGT Bank in Liechtenstein Ltd., Vaduz.

5

Share capital increase of CHF 1.

6

Company with variable share capital structure, only founder’s shares held by LGT Group Foundation.

7

Share capital increase of UYU 6 824 116.

LGT Group Foundation – notes to the financial statements


Registered office % of voting rights % of capital Share capital (paid in) held held

Vaduz – Liechtenstein 100.0

Vaduz – Liechtenstein

61.8

100.0

CHF

291 200 800

61.8

CHF

Net profit of the subsidiary in business year 2011 (‘000) CHF

98 346

1 000 000

CHF

3 204

Vaduz – Liechtenstein 

60.0

60.0

CHF

1 000 000

CHF

8 855

Vaduz – Liechtenstein 

100.0

100.0

CHF

1 000 000

CHF

611

Vaduz – Liechtenstein

100.0

100.0

CHF

50 000

CHF

0

Vaduz – Liechtenstein

100.0

100.0

CHF

50 000

CHF

0

Vaduz – Liechtenstein

100.0

100.0

CHF

50 000

CHF

0

Vaduz – Liechtenstein

100.0

100.0

CHF

50 000

CHF

0

Vaduz – Liechtenstein 

100.0

100.0

CHF

1 000 000

CHF

0

Vaduz – Liechtenstein 

100.0

100.0

CHF

250 000

CHF

2 714

Vaduz – Liechtenstein

100.0

100.0

CHF

1 000 000

CHF

-1 236

Vaduz – Liechtenstein

100.0

100.0

CHF

100 000

CHF

-14

Singapore

100.0

100.0

SGD

370 000 000

CHF

3 029

Hong Kong – China

100.0 2 100.0 2

HKD

24 000 000

HKD

6 561

Labuan – Malaysia

100.0

100.0

CHF

100 000

CHF

Grand Cayman – Cayman Islands

3

4

100.0 100.0

USD

600 000

CHF

9 662

Grand Cayman – Cayman Islands

100.0

100.0

USD

50 001

CHF

1 120

Grand Cayman – Cayman Islands

100.0

100.0

CHF

4

CHF

44 326

Grand Cayman – Cayman Islands

100.0

100.0

CHF

8

CHF

287 298

Grand Cayman – Cayman Islands

100.0

100.0

CHF

1

CHF

Montevideo – Uruguay

100.0

100.0

UYU

9 647 616

USD

27

0 20

The book value of the participations in banks and finance companies is CHF 808 351 526.

LGT Group Foundation – notes to the financial statements

85


7 Other assets (TCHF) 2011 2010 Dividend proposed from LGT Bank in Liechtenstein Ltd., Vaduz 

48 048

128 128

Receivables from subsidiary undertakings

782

5 330

10 809

15 120

Receivables from others

Total 59 639 148 578

8 Amounts due to banks (TCHF) 2011 2010 Amounts due to LGT Bank in Liechtenstein Ltd., Vaduz 

1 280 500

1 022 000

Total 1 280 500 1 022 000

9 Other liabilities (TCHF) 2011 2010 Bonuses  Salaries  Long-term incentive scheme

4 268 986 1 725

4 296 987 2 698

Social security costs

148

14

Others 

462

509

Total 7 589 8 504

10 Provisions (TCHF) 2011 2010 Opening balance  

41 671

43 327

Current year expenses 

1 422

0

Provisions released 

-9 171

-1 656

Closing balance  

33 922

41 671

11 Statement of changes in equity (TCHF) 2011 Equity at the beginning of the business year 

697 299

659 251

Payment to the Prince of Liechtenstein Foundation 

-75 000

-75 000

Profit for the period 

88 070

113 048

Total 710 369 equity at the end of the business year 

697 299

12 Headcount

86

2010

2011

2010

Headcount at 31 December 8

7

LGT Group Foundation – notes to the financial statements


Foreign % Domestic % Total % 13 Analysis of balance sheet by origin at 31 December 2011 (TCHF) Assets 0 0.00 815 100.00 815 100.00 Loans and advances to banks 587 508 Other loans and advances

100.00

0

0.00

865 925 62.39 521 925 37.61 Participations

587 508

100.00

1 387 850

100.00

719 Other assets

1.21

58 920

98.79

59 639

100.00

1 454 152 Total assets

71.43

581 660

28.57

2 035 812

100.00

0 Amounts due to banks

0.00

1 280 500

100.00

1 280 500

100.00

0 Other liabilities

0.00

7 589

100.00

7 589

100.00

47.41

1 805

52.59

Liabilities

Accrued expenses and deferred income

1 627

1 422 4.19 32 500 95.81 Provisions

3 432

100.00

33 922

100.00

0 Foundation capital

0.00

710 369

100.00

710 369

100.00

3 049 Total liabilities

0.15

2 032 763

99.85

2 035 812

100.00

Analysis of balance sheet by origin at 31 December 2010 (TCHF)

Foreign % Domestic % Total %

Assets Loans and advances to banks

0 0.00 672 100.00 672 100.00

Other loans and advances

554 508

100.00

Participations

0

0.00

554 508

100.00

545 925

51.12

521 937

48.88

1 067 862

100.00

Other assets

2 312

1.56

146 266

98.44

148 578

100.00

Total assets

1 102 745

62.25

668 875

37.75

1 771 620

100.00

100.00

1 022 000

100.00

Liabilities Amounts due to banks Other liabilities Accrued expenses and deferred income

0

0.00

1 022 000

52

0.61

8 452

99.39

8 504

100.00

1 243

57.92

903

42.08

2 146

100.00

Provisions

0

0.00

41 671

100.00

41 671

100.00

Foundation capital

0

0.00

697 299

100.00

697 299

100.00

1 295

0.07

1 770 325

99.93

1 771 620

100.00

Total liabilities

LGT Group Foundation – notes to the financial statements

87


14 Breakdown of assets according to country/country group (TCHF) Liechtenstein

2011

%

2010

%

581 659

28.57

668 875

37.75

Europe excl. Liechtenstein 719

0.03

2 165

0.12

Americas 575 224 28.26 255 224

14.41

Asia Total assets

Foreign exchange exposure 15 31 December 2011 (TCHF) at

878 210

43.14

845 356

47.72

2 035 812

100.00

1 771 620

100.00

Swiss Francs

US Dollars

Euros

Other

Total

Assets Loans and advances to banks Other loans and advances Participations

815 0 0 0 815 587  508 0 0 0 587  508 1 097 024

224

0

290 602

1 387 850

Other assets

58 984

0

0

655

59 639

Total assets

1 744 331

224

0

291 257

2 035 812

1 280 500

0

0

0

1 280 500

Liabilities Amounts due to banks Other liabilities

7  589 0 0 0 7  589

Accrued expenses and deferred income

3  432 0 0 0 3  432

Provisions Foundation capital Total liabilities

Foreign exchange exposure 31 December 2010 (TCHF) at

32 500

0

1 422

0

33 922

710  369 0 0 0 710  369 2 034 390

0

1 422

0

2 035 812

Swiss Francs

US Dollars

Euros

Other

Total

Assets Loans and advances to banks Other loans and advances

672 0 0 0 672 554  508 0 0 0 554  508

Participations 777 036 Other assets Total assets

224

0

290 602

1 067 862

148  578 0 0 0 148  578 1 480 794

224

0

290 602

1 771 620

1 022 000

0

0

0

1 022 000

Liabilities Amounts due to banks Other liabilities

8  504 0 0 0 8  504

Accrued expenses and deferred income

2  146 0 0 0 2  146

Provisions 41  671 0 0 0 41  671 Foundation capital Total liabilities

88

LGT Group Foundation – notes to the financial statements

697  299 0 0 0 697  299 1 771 620

0

0

0

1 771 620


On demand Within More than 3 More than Total 16 Analysis of current assets 3 months and less than 12 months and liabilities by maturity 12 months at 31 December 2011 (TCHF) Current assets Loans and advances to banks Other loans and advances

815 0 0 0 815 587  508 0 0 0 587  508

assets Other current assets Total

0

5 591

48 048

6 000

59 639

588 323

5 591

48 048

6 000

647 962

Current liabilities Amounts due to banks

0

220 000

0

1 280 500

liabilities Other

0

1 060 500 609

6 980

0

7 589

Accrued expenses and deferred income

0

3 316

116

0

3 432

current liabilities Total

0

1 064 425

227 096

0

1 291 521

On demand Within More than 3 More than Total Analysis of current assets 3 months and less than 12 months and liabilities by maturity 12 months at 31 December 2010 (TCHF) Current assets Loans and advances to banks Other loans and advances

672 0 0 0 672 554  508 0 0 0 554  508

assets Other current assets Total

0

10 450

128 128

10 000

148 578

555 180

10 450

128 128

10 000

703 758

720 000

302 000

0

1 022 000

Current liabilities Amounts due to banks

0

liabilities Other

0

523

7 981

0

8 504

Accrued expenses and deferred income

0

2 044

102

0

2 146

current liabilities Total

0

722 567

310 083

0

1 032 650

17 Emoluments to members of the management The emoluments to the members of the Foundation Board and to the Group and business unit executives employed by the Foundation are disclosed under note 37 in the consolidated financial statements of LGT Group Foundation.

LGT Group Foundation – notes to the financial statements

89


International presence and imprint Austria Vienna

Media relations

Christof Buri

Bahrain Manama

Phone +423 235 23 03

Germany

Frankfurt am Main

christof.buri@lgt.com

Hong Kong

Hong Kong

Ireland Dublin

Dispatch

Iris Dreier

Japan Tokyo

Phone +423 235 20 51

Liechtenstein Vaduz

iris.dreier@lgt.com

Singapore Singapore Spain Madrid Switzerland Basel Berne Chur Davos Geneva Lausanne Lucerne Lugano Pf채ffikon Zurich United Kingdom London United States of America

New York

Uruguay Montevideo

90

International presence and imprint


Portrait of the architect Charles de Moreau In Waldmüller’s 1822 portrait of the architect Charles de Moreau (1758–1841), we have a record of one of the most important architects of the age, who was responsible, above all, for the building projects undertaken by the Esterházy family, to whom the Liechtensteins were at this time closely related. Moreau was the architect of the planned, albeit only partly executed, re-building of the palace at Eisenstadt, where the aim was to create a truly princely residence complete with library and theatre. Posed frontally, the sitter looks directly at the spectator, in a manner that seems to reflect his style as an architect, which was characterized by a certain rigidity and severity. At the same time, we do not feel that we are here encountering a closed and secretive face; its seeming openness invites us, even challenges us, to engage in dialog.

© LIECHTENSTEIN. The Princely Collections, Vaduz–Vienna The illustrations in this brochure are details from Ferdinand Georg Waldmüller, “Portrait of the architect Charles de Moreau”, 1822.


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Annual Report 2011 - LGT Group  

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