Schroder & Co Bank AG | Annual Report 2015
2015
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
Content
Management report
5
1 Balance sheet
6
2 Income statement
7
3 Statement of changes in equity
8
4Notes
9
4.8 Information on the balance sheet
16
4.9
26
4.10 Information on the income statement
Information on the off-balance-sheet business
27
5 Disclosures regarding capital adequacy
29
Report of the statutory auditor on the financial statements
31
3
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
Management report
2015 was a challenging year marked by the volatile perfor-
The Board of Directors proposes to the General Meeting
mance of financial markets. The Swiss National Bank’s
the distribution of an ordinary dividend of CHF 5 million.
unexpected decision to abandon the minimum exchange
It also proposes the allocation of CHF 0.2 million to the
rate of the Swiss franc to the euro in January took the mar-
“Statutory retained earnings reserve”, CHF 10.2 million to
kets by surprise. At the same time, the Greek crisis, the
“Voluntary retained earnings reserves” and that the profit
performance of the emerging markets and the slowdown in
remaining of CHF 66.157 be carried forward. As a result,
Chinese growth weighed down further on the stock markets.
the Bank’s reported equity capital after payment of the divi-
Investor sentiment was additionally clouded by geopolitical
dend will rise to CHF 138.2 million.
problems in the Middle East and Russia. Although low interest rates and quantitative easing programmes of the central
The Board of Directors of Schroder & Co Bank AG has the
banks helped to mask the slowdown of the global economy,
ultimate responsibility for the Bank’s risk framework, risk
it still remains necessary to address the fundamental chal-
assessment and internal controls. It approves the risk policy
lenges.
and is responsible for supervising its implementation. The
duty to implement the risk policy sits with the Executive
In this challenging environment, Schroder & Co Bank AG
Board. The independent risk control function monitors the
continued to develop results-oriented investment and IT
risk profile of the Bank. Further detailed information on the
solutions to better serve its clients and business partners.
risk management of the Bank is available in the section “Risk
Management” (pages 13 – 14).
In 2015, the bank’s assets under management declined from
CHF 6.8 billion in the previous year to CHF 6.1 billion. This
Barring unforeseen circumstances, we are well positioned
was due to outflows and to the negative foreign currency
to grow our business in 2016 thanks to our focus on core
effect which resulted from the aforementioned Swiss Na­
markets, our long-term business approach and our financial
tional Bank’s decision taken in January 2015. The decreased
stability.
level of assets under management had an adverse impact
on the bank’s revenues. Income from the Bank’s insourcing
On behalf of the entire Board of Directors, I would like to
activities developed positively and grew from CHF 30.1 mil-
express my sincere thanks to our clients for the trust they
lion in the previous year to CHF 33.7 million.
place in us and to our employees for their efforts and personal commitment.
The profit after tax for the year was CHF 15.5 million – nearly
5% up on the previous year. This was partially due to the
release of the provision made in the previous years with regard to the U.S. Department of Justice’s Program for Swiss
banks. In September 2015, the Bank reached an agree-
Philip Mallinckrodt
ment with the U.S. Department of Justice and paid a fine of
Chairman of the Board of Directors
USD 10.354 million. Year-on-year, oper­a ting and personnel
expenses were lower although the number of employees
increased slightly to an average of 219.2 full time equivalent employees (including trainees, interns and temporary
employees). At CHF 65.8 million, total expenses were 3.5%
lower than in the previous year (CHF 68.1 million).
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S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
1 Balance sheet
as at 31 December 2015
CHFNote20152014
Assets
Liquid assets
691 077 806
909 585 517
Amounts due from banks
439 574 231
563 315 961
Amounts due from securities financing transactions
4.8.1
329 233 275
303 032 750
Amounts due from customers
4.8.2
159 649 863
169 370 330
Positive replacement values of derivative financial instruments
4.8.3
14 314 605
25 997 320
Financial investments
4.8.4, 4.8.8
36 494 621
69 095 808
Accrued income and prepaid expenses
12 170 305
13 349 441
Participations
4.8.5
1 100 000
1 100 000
Tangible fixed assets
4.8.6
1
62 040
Intangible assets10
Other assets
4.8.7
395 472
861 070
Total assets 1 684 010 180 2 055 770 237
Liabilities
Amounts due to banks
Amounts due to customers
Negative replacement values of derivative financial instruments
4.8.3
Accrued expenses and deferred income
Other liabilities
4.8.7
Provisions
4.8.11
Share capital
3, 4.8.12
Statutory retained earnings reserve
3
Voluntary retained earnings reserves
3
Profit carried forward
3
Profit
Total liabilities
12 377 728
1 498 627 979
4 896 821
18 290 412
1 318 221
5 332 862
60 000 000
29 100 000
38 600 000
10 290
15 455 867
1 684 010 180
27 913 349
1 828 997 744
9 289 838
20 936 877
2 950 738
30 971 401
60 000 000
28 700 000
28 100 000
3 172 226
14 738 064
2 055 770 237
Off-balance-sheet transactions
Contingent liabilities
Irrevocable committments
6
4.8.2, 4.9.1
4.8.2
12 632 706
2 546 000
15 381 519
2 848 000
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
2 Income statement
for the period from 1 Januar y to 31 December 2015
CHFNote20152014
Result from interest operations
Interest and discount income
4.10.2
Interest and dividend income from financial investments
Interest expense
4.10.2
Gross result from interest operations
Changes in value adjustments for default risks
and losses from interest operations
4.8.11
Subtotal net result from interest operations
Result from commission business and services
Commission income from securities trading
and investment activities
Commission income from lending activities
Commission income from other services
Commission expense
Subtotal result from commission business and services
Result from trading activities and the fair value option
4.10.1
Other result from ordinary activities
Result from the Bank’s insourcing activities
Other ordinary expenses
Subtotal other result from ordinary activities
Operating expenses
Personnel expenses
4.10.3
General and administrative expenses
4.10.4
Subtotal operating expenses
Value adjustments on participations and depreciation and
amortisation of tangible fixed assets and intangible assets
4.8.5, 4.8.6
Changes to provisions and other value adjustments,
and losses
4.8.11
Operating result
Extraordinary income
4.10.5
Taxes
4.10.6
Profit (result of the period)
4 924 616
843 466
(1 175 440)
4 592 642
5 496 406
1 428 841
(1 644 928)
5 280 319
0
4 592 642
11 401 661
16 681 980
39 598 882
236 041
883 331
(12 280 138)
28 438 116
5 936 731
47 229 677
464 036
1 021 069
(10 648 455)
38 066 327
7 414 273
33 707 758
(7 580)
33 700 178
30 079 402
(13 760)
30 065 642
(48 889 770)
(16 878 492)
(65 768 262)
(50 699 949)
(17 439 697)
(68 139 646)
(17 043)
(99 996)
10 431 699
17 314 061
17 302
(1 875 496)
15 455 867
(4 519 038)
19 469 542
56 379
(4 787 858)
14 738 064
15 455 867
10 290
15 466 157
14 738 064
3 172 226
17 910 290
(200 000)
(10 200 000)
(5 000 000)
66 157
(400 000)
(10 500 000)
(7 000 000)
10 290
Appropriation of profit
Profit
Profit carried forward
Distributable profit at the disposal of the General Meeting
3
Appropriation of profit
Allocation to statutory retained earnings reserve
Allocation to voluntary retained earnings reserves
Distributions from distributable profit
New amount carried forward
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3 Statement of changes in equity
CHF 1000
Share capital
Statutory
Voluntary
Result
retainedretained of the
earningsearnings period
reserve
reserves and
profit carried
forward
Equity at the beginning of 2015
60 000
28 700
31 272
14 738
Total
134 710
Allocations to the voluntary
retained earnings reserves
0
0
7 338
(7 338)
0
Allocations to the statutory
retained earnings reserve
0
400
0
(400)
0
Dividends000
(7 000)
(7 000)
Profit 2015
0
0
0
15 456
15 456
Equity at the end of 2015
60 000
8
29 100
38 610
15 456
143 166
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4Notes
4.1 General
Outsourcing
Schroder & Co Bank AG is a wholly owned subsidiary of
The Bank has an outsourcing agreement with the company
Schroder Wealth Holdings Limited, London, whose parent
D + H Financial Technologies (D + H) for running the interbank
company is a wholly owned subsidiary of Schroders plc,
applications SIC, EuroSIC, Swift and Secom. D + H’s role
London. In addition to the head office in Zurich, the Bank
is limited to providing electronic access to the above-men-
has a branch office in Geneva.
tioned interbank services.
The business activities of the Bank are described below.
Staff
There are no further business activities that would
At the end of the business year, the Bank had 193 full- and
significantly impact the Bank’s risk and income situation.
36 part-time employees, plus 6 trainees/interns, for a total
of 235 (or 226.6 full-time equivalent positions; prior year:
Fee and commission business
199 plus 9 trainees/interns and 4.4 temporary employees).
The Bank’s principal line of business is investment manage4.2 Accounting and valuation policies
ment for both domestic and foreign clients.
General principles
Asset management, trustee, custodian and credit operations
The accounting and valuation principles are based on the
are the main contributors to commission and service fee
Code of Obligations, the Banking Act and its related Ordi-
revenues.
nance as well as the accounting rules for banks, securities
dealers, financial groups and conglomerates according to
Banking activities
FINMA circular 2015/1 applied by Schroder & Co Bank AG
The Bank’s main balance-sheet activities are the client-
beginning with the year 2015 with reclassification of 2014
lending business and interbank operations.
comparative figures. The accompanying reliable assessment
statutory single-entity financial statements present the eco-
Loans to clients are mainly granted on the basis of Lombard
nomic situation of the Bank such that a third party can form
coverage.
a reliable opinion. The financial statements are allowed to
include hidden reserves.
Trading activities
Trading comprises mainly trading for the accounts of clients
In the notes, the individual figures are rounded for publica-
in interest rate products, securities and foreign exchange
tion, but the calculations are based on the non-rounded
and to a limited extent proprietary trading.
figures, thus small rounding differences can arise.
Insourcing business
As allowed by Article 35 of the Swiss Banking Ordinance,
The Bank renders securities administration, funds transfer,
consolidated financial statements have not been prepared.
accounting and IT services centrally. These services are
being offered to other Schroder Group companies (currently
Accounting and valuation policies
Schroder & Co. Limited, London, Schroders (C.I.) Limited,
The financial statements are prepared on the assumption of
Guernsey, Schroder & Co. (Asia) Limited, Singapore and
an ongoing concern. The accounting is, therefore, based on
Schroder Investment Management (Switzerland) AG, Zurich).
going-concern values.
These services are charged at market rates.
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S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
The disclosed balance sheet items are valued individual-
Securities received and delivered are not recognised or
ly. The transitional provision, which requires the individual
derecognised in the balance sheet until the economic con-
valuation of equity participations, tangible fixed assets and
trol of the contractual rights comprised in the securities is
intangible assets as of 1 January 2020, is not applied.
transferred. Interest amounts collected or paid are recorded
in the corresponding lines of the income statement.
There has not been any offsetting or netting of assets and
liabilities or income and expenses with the exception of
c) Amounts due from banks and due from customers
the deduction of value adjustments from the corresponding
Amounts due from banks and amounts due from customers
asset item.
are recognised at their nominal value less any value adjustments required.
Business risks are covered by adequate provisions.
Amounts due in respect of precious metal account deposits
Recording of transactions
are valued at fair value if the precious metal concerned is
All business transactions concluded up to the balance sheet
traded on a price-efficient, liquid market.
date are recorded as of their trade date (trade date accounting) and valued according to the above-mentioned princi-
Doubtful receivables, i.e. obligations entered into with clients
ples. Any money market, foreign exchange spot transactions
for whom the debtor is unlikely to meet its future obligations,
and foreign exchange forwards entered into but not yet
are valued individually and depreciated by means of individ-
fulfilled are recorded in accordance with the settlement date
ual value adjustments. The depreciation of doubtful receiva-
accounting method. Between the trade date and the settle-
bles is determined by the difference between the book value
ment date, these transactions are disclosed at replacement
of the receivable and the anticipated recoverable amount.
value via the item “Positive replacement values of derivative
The anticipated recoverable amount is the liquidation value
financial instruments” or “Negative replacement values of
(estimated net realisable value minus the costs of retention
derivative financial instruments”.
and liquidation).
Valuation principles
Impaired loans, i.e. loans that are unlikely to be repaid by the
The most important accounting policies and valuation princi-
debtor, are valued individually. A specific value adjustment
ples are shown below.
is made for the estimated shortfall against nominal value in
capital and interest. Loans are considered as impaired at
a) Liquid assets
the latest when the contractual payments for capital and/or
Liquid assets are recognized at their nominal value.
interest are overdue for more than 90 days. Interest accrual
is suspended if recovering interest is so unlikely that an accrual no longer makes sense.
b) Securities financing transactions
Repurchase transactions (repos) are recorded as cash deposits with own securities as collateral. Reverse-repurchase
If a receivable is classed as entirely or partially irrecoverable
transactions (reverse repos) are treated as receivables
or a receivable is waived, the receivable is derecognised by
against collateral in the form of securities. The exchanged
booking it against the corresponding value adjustment.
cash amounts are recorded at nominal value on the balance
If recovered amounts from receivables written off in earlier
sheet.
periods cannot be used immediately for other value adjust-
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S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
ments of the same type, they are recognised in “Change in
f) Tangible fixed assets
value adjustments for default risk and losses from interest
Tangible fixed assets are recognised at cost less accu-
operations” in the income statement.
mulated depreciation. Depreciation is calculated using the
straight-line method over the useful life.
Doubtful receivables are reclassified as performing if the
outstanding amount of capital and interest are paid again
Each tangible fixed asset is tested for impairment as of
on time according to the contractual agreements and other
the balance sheet date. This test is based on indicators
creditworthiness criteria. Value adjustments are released
reflecting a possible impairment of individual assets im-
with an effect on income via the item “Change in value
paired. If any such indicators exist, the recoverable amount
adjustments for default risk and losses from interest opera-
is calculated. The recoverable amount is calculated for each
tions”.
individual asset. An asset is impaired if its carrying amount
exceeds its recoverable amount.
d) Financial investments
Debt securities to be held until maturity are valued at amor-
If the asset is impaired, the book value is reduced to match
tised cost. Any premium or discount is amortised over the
the recoverable value and the impairment is charged via the
life of the security. The valuation is based on the acquisition
item “Value adjustments on participations and amortisation
cost principle with the agio/disagio (premium/discount)
of tangible fixed assets and intangible assets”.
accrued/deferred over the residual term to maturity (accrual method) via the position “Financial Investments”. Value
If the impairment test shows that the operating life of an
adjustments for default risk are recorded immediately under
intangible asset has changed, the residual carrying amount
“Changes in value adjustments for default risk and losses
should be depreciated systematically over the newly estimat-
from interest operations”.
ed useful life.
If held-to-maturity financial investments are sold or reim-
Realised gains from the sale of tangible fixed assets are
bursed early, the realised gains and losses, which corre-
recorded via the item “Extraordinary income” and realised
spond to the interest component, are accrued/deferred
losses are recorded via the item “Extraordinary expense”.
over the residual term to maturity of the transaction.
Useful life of the various fixed assets:
Own physical stocks of precious metals that serve as collat-
Information technology (hardware and software): 3 years
eral for liabilities from precious metals trading accounts
Cars:4 years
are valued at fair value. The value adjustments arising from
a subsequent valuation are recorded for each balance
g) Amounts due to banks and amounts due to customers
via the item “Other ordinary expenses” or “Other ordinary
Amounts due to banks are valued at their nominal value.
income”.
Precious metals customer accounts are valued at fair value if
the precious metal concerned is traded on a price-efficient,
liquid market.
e)Participations
Participations are valued at historical cost less any impairment. Realised gains from the sale of participations are
h) Foreign currencies
recorded via the item “Extraordinary income” and realised
Transactions in foreign currencies are converted at the mid
losses are recorded via the item “Extraordinary expense”.
exchange rates ruling at the daily balance sheet date. For-
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S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
eign exchange positions in the balance sheet are translated
exchange dealing. They are used both for proprietary trading
at the closing exchange rates at the balance sheet date
and for trading for the accounts of clients. Valuation is in
and revalued against the income statement. Forward foreign
accordance with the purposes for which they were originally
exchange transactions are valued at the forward market
acquired.
rates prevailing at the balance sheet date. The result of the
revaluation is taken to the income statement.
Derivatives for trading purposes
The main conversion rates applied are listed below:
ative replacement values are included within “Positive / Neg-
These derivatives are valued at fair value. Positive and neg
EUR
2014
ative replacement values of derivative financial instruments”.
1.08791.2024
Gains/losses are included within “Result from trading activities and the fair value option”.
2015
GBP
1.47721.5478
USD
1.00190.9936
JPY
0.83310.8289
Derivatives for hedging purposes
The Bank may use derivatives for hedging purposes in the
i)Provisions
Asset & Liability Management process in order to protect
Legal and factual obligations are valued regularly. If an
itself against interest and foreign exchange risks. Hedging
outflow of resources is likely and can be reliably estimated,
transactions are valued in the same way as the hedged item.
a corresponding provision must be created.
The gain/loss of the hedging transaction is booked in the
same income statement account as the hedged item’s
Existing provisions are reassessed at each balance sheet
result. The result of the hedging transaction is booked
date. Based on this reassessment, the provisions are in-
against the compensation account, in case that the hedged
creased, left unchanged or released. Positions are recorded
item should not be revalued during the lifetime, of the hedg-
via the account “Changes to provisions and other value
ing contract. The net balance of the compensation account
adjustments, and losses”.
is included in “Other assets/liabilities”.
Based on the principle of prudence, the Bank establishes
Hedges and the goals and strategies of hedging operations
provisions within liabilities for contingent risks. The provi-
are documented by the Bank at the conclusion of a deriv-
sions may contain hidden reserves.
ative hedging transaction. The effectiveness of the hedge
is regularly reviewed. If the hedge is no longer or only par-
j)Taxes
tially effective, the part of the hedging transaction that is no
Current income taxes are recurring, usually annual, taxes
longer effective is treated like a trading operation.
on profits and capital. Transaction-related taxes are not included in current taxes.
l) Pension benefit obligations
The employees of Schroder & Co Bank AG benefit from two
Liabilities from current income and capital tax are disclosed
pension plans. The BVG pension fund provides the minimum
via the item “Accrued liabilities and deferred income”.
benefits mandated by law. The Pension Plan Foundation
(Vorsorgestiftung) of Schroder & Co Bank AG grants benefits
k) Derivative financial instruments
for that part of the salary above the requirements set out in
Derivative financial instruments are used by the Bank for
the BVG law.
asset and liability management and for securities and foreign
12
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The pension fund liabilities and the assets serving as cover-
The Equity Incentive Plan (EIP) is an additional deferred re-
age are separated out into legally independent foundations.
muneration plan, used to recognise exceptional performance
The organisation, management and financing of the pension
and potential. EIP awards do not give rise to any immediate
funds comply with the legal requirements, the deeds of foun-
entitlement and require the participant to be employed
dation and the current pension fund regulations. The Bank’s
continuously by the Group until the fifth anniversary of grant.
pension funds are defined contribution plans.
Malus and clawback terms apply in a similar way to ECP and
EIP.
The employer contributions arising from the pension funds
are included in “Personnel expenses” on an accrual basis.
These deferred remuneration plans are centrally adminis-
The Bank assesses whether there is an economic benefit
tered and settled by the Schroder Group. These liabilities
or economic obligation arising from the pension funds as
are valued at their fair value at the grant date. Schroder &
of the balance sheet date. The assessment is based on the
Co Bank AG then records them in the items “Personnel
contracts and the most recent financial statements of the
ex­p enses” and “Accrued expenses and deferred income”
pension funds (established under Swiss GAAP FER 26) as
over the vesting period. As the market risk is borne by the
well as the actual over- or underfunding for each pension
employee and the total amount is known and hedged, the
fund.
Bank does not revalue the liability. Any adjustments (termination of employment etc.) are recorded through income.
Should a pension plan be underfunded, an economic obliga-
Comprehensive details of the design of the equity-based
tion would arise where the conditions exist for the creation
compensation scheme can be found in the Schroder Group’s
of a provision. The Bank refers to a pension fund expert to
Financial Statement.
assess whether a benefit or an obligation exists for each
4.3 Risk management
pension fund.
Risk assessment
The BVG pension fund of Schroder & Co Bank AG has in­
The Board of Directors reassesses the Bank’s risks each
surance to cover the longevity risk of its members. Further-
year (in particular with respect to credit, market, liquidity and
more, the BVG pension fund of Schroder & Co Bank AG
operational risks). The effectiveness of the limit system and
has received a guarantee from the Pension Plan Foundation
the controls are also evaluated. The Organisation and Man-
(Vorsorgestiftung) of Schroder & Co Bank AG in order to
agement Regulations ensure that the Board of Directors is
protect itself against any possible underfunding.
always adequately informed of the risk situation and that the
authority for decisions in this area remains within the Board
of Directors’ responsibility.
m) Equity-based compensation schemes
The Equity Compensation Plan (ECP) is the Group’s main
deferral arrangement for annual bonus awards. ECP awards
Details on risk management
relate to the past year’s performance and are not subject to
The risk management procedures and the ongoing moni-
any further performance conditions. In order to provide an
toring are delegated to committees. The Asset & Liability
incentive to stay at Schroders, ECP awards do not give rise
Management Committee is responsible for monitoring mar-
to any immediate entitlement and normally require the par-
ket risk, interest rate risk and liquidity risk. This includes the
ticipant to be employed continuously by the Group until the
selection and monitoring of banks, brokers and custodians.
third anniversary of grant in order to vest in full.
In addition it monitors the adherence to the capital and large
exposure regulations.
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The interest rate risk arising out of the balance sheet and
In connection with the local capital adequacy calculation
off-balance sheet positions is monitored and managed cen-
and reporting, the Bank applies the Basis Indicator Ap-
trally. It is managed using calculations of the net present val-
proach and holds relevant capital to cover operational risks
ue effect on shareholders equity and the net income effect
closely linked to the revenues generated by the Bank. The
under various interest rate assumptions. The ability to meet
Bank uses a variety of instruments for identification, meas-
obligations is monitored and ensured within the framework
urement and management with the following being the main
defined in the bank law and by the Group. Internal audit
instruments: Internal Capital Adequacy Process (ICAAP),
regularly audits internal controls and issues reports to the
Risk Control Assessments (RCA), Fraud Risk Assessments,
Board of Directors.
Risk Event Policy, Business Continuity Concept, International
Standards on Assurance Engagement 3402 reporting (ISAE
3402 Type II).
Credit risks are subject to specific monitoring by the Credit
Committee and the Credit Department. Loan collateral is
valued at fair value. The collateral rates are set forth in pre-
The Bank has defined procedures, responsibilities and im-
defined procedures.
plementation in the policy “Operational Risk Management
Framework”.
Operational risk
Operational risks are defined as the risks of losses due to
Liquidity risk
the inadequacy or failure of internal policies, people and sys-
Liquidity risk is the risk that the Bank might not be able to
tems or due to external events. The Bank identifies, meas-
meet its present and future payment obligations on a timely
ures and manages the following categories of operational
basis under either normal or stressed conditions or fails to
risk: Internal/External Fraud; Clients, Products and Business
meet the liquidity requirements imposed by banking regula-
Practice; Execution, Delivery and Process Management;
tions.
Business Disruption and System Failures; Employment PracThe Bank and its subsidiaries take a prudent approach to
tices and Workplace Safety.
cash management by choosing first-class counterparties.
The Bank employs a “three lines of defence model” to direct
Our emphasis is on safeguarding our commitments to cli-
its internal control framework, ensure its effective operation
ents, in normal and stress situations alike. We moreover
and facilitate appropriate escalation.
seek to match resources to their use, in terms of both duration and maturities.
As the first line of defence, the Executive Board and all
levels of management take the lead role with respect to
The Bank has a “Treasury Liquidity and Dealing Policy” as
implementing appropriate controls across the business to
well as a “Business & Risk Policy” which define the risk
maintain the quality standards expected by clients and reg-
governance principles, the calculation methodology and
ulators. Line management is supplemented by internal or
the respective limits which take account of the qualitative
Group-internal oversight functions (i. e. Risk, Financial Con-
and quantitative requirements of Basel III and FINMA. Man-
trol, Compliance and Legal both at local and Group level)
agement conducts a yearly Individual Liquidity Adequacy
that provide a second line of defence. Finally, Group Internal
Assessment (ILAA) which covers different aspects of quali-
Audit has a dedicated audit team for the Wealth Manage-
tative and quantitative liquidity risk.
ment Division as a third line of defence.
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The Bank also calculates the standardized Liquidity Cover-
4.6 Business policy regarding the use of derivative
age Ratio (LCR) on a daily basis and additionally runs a set
financial instruments
of liquidity stress test scenarios. The results of these tests
Derivative financial instruments are used for trading and are
are reported regularly to the Asset Liability Management
traded exclusively by specially trained traders. The Bank
Committee (ALMC).
does not have any market-making activities. Standardised
and OTC instruments are traded on behalf of clients, es-
4.4 Methods used for measuring Counterparty
pecially interest-, currency- and equity/index-based instru-
risks and assessment of required loan value
ments and, to a limited extent, those based on commodities.
adjustments
There is no trading in credit derivatives.
Lombard loans
Credit exposures and the value of related collaterals are
Derivative financial instruments can be used by the Bank for
monitored daily. Should any loan value fall below its col-
risk management purposes, mainly to hedge against interest
lateral value, further collateral or a reduction of the loan is
rate and foreign currency risks. Hedging transactions are
required. Should net exposure increase or market conditions
concluded exclusively with external counterparties.
in collateral markets deteriorate significantly, collaterals will
4.7 Material events after the balance sheet date
be realised and the loan will be recovered.
No events occurred after the balance sheet date that could
Process for determining value adjustments
have a material impact on the financial position of the Bank
Loans deemed to be non-performing are valued individually
as of 31 December 2015.
and specific loan value adjustments are established based
on the above mentioned procedures. Existing value adjustments are subjected to a reassessment on each balance
sheet date. Based on this assessment, they are increased,
remain unchanged or released. The Credit Committee assesses and approves the value adjustments. In accordance
with the approval hierarchy, value adjustments are approved
by the Executive Directors or the Board of Directors.
4.5 Valuation of collateral of Lombard loans
Primarily, transferable financial instruments that are liquid
and actively traded are used for Lombard loans. Transferable
structured products, for which there is regular market information and a market maker, are also accepted.
The Bank applies a discount to the market value in order to
cover the market risk relating to marketable liquid securities
and to calculate the value of the collateral. For structured
products and products with long residual terms to maturity,
the closing out period can be significantly longer, hence,
higher discounts are applied to them than those applied to
liquid instruments.
15
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8 Information on the balance sheet
4.8.1 Securities financing transactions (assets and liabilities)
CHF 1000
2015
Book value of receivables from cash collateral delivered in connection with
reverse repurchase transactions
329 233
Fair value of securities received and serving as collateral in connection with
reverse repurchase agreements with an unrestricted right to resell or re-pledge
329 378
–
of which, re-pledged securities0
–
of which, resold securities0
4.8.2 Collateral for loans and off-balance-sheet transactions, as well as impaired loans
Collateral for loans and off-balance-sheet transactions
Type of collateral
CHF 1000
Secured by
Other
Unsecured
Total
mortage
collateral
Loans (before netting with value adjustments)
Amounts due from customers
0
158 788
1 070
159 858
Total loans (before netting with value adjustments)
31.12.15
31.12.14
0
0
158 788
164 814
1 070
4 765
159 858
169 579
Total loans (after netting with value adjustments)
31.12.15
31.12.14
0
0
158 788
164 814
862
4 556
159 650
169 370
0
0
0
0
12 625
0
12 625
15 378
8
2 546
2 554
2 852
Off-balance sheet
Contingent liabilities
Irrevocable commitments
Total
31.12.15
31.12.14
12 633
2 546
15 179
18 230
CHF 1000
Gross debt
Estimated
Net debt
Individual
amount
liquidationamount value
value of
adjustments
collateral
Impaired loans
31.12.15
31.12.14
16
208
211
0
3
208
208
208
208
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8.3 Derivative financial instruments (assets and liabilities)
CHF 1000
Positive
Negative
Contract
replacement
replacement
volume
values
values
Foreign exchange/precious metals
Forward contracts
14 185
4 767
880 246
Options (OTC)
130
130
6 008
Total 31.12.15
14 315
4 897
886 254
31.12.14
25 997
9 290 1 516 860
The above outstanding derivative instruments are held for trading purposes. Market/counterparties’ prices are used for valuation purposes. External OTC derivative financial
instruments’ valuations are periodically checked against own valuations. No netting agreements are in place.
Breakdown by counterparty
CHF 1000
Banks and
Other
Total
securities dealers
customers
Positive replacement values
10 490
3 825
14 315
4.8.4 Financial investments
Breakdown of financial investments
CHF 1000
Book value
Book value
Fair Value
Fair Value
2015201420152014
Debt securities
15 077
45 389
– of which, intended to be held to maturity
15 077
45 389
Precious metals
21 418
23 707
Total
36 495
69 096
of which, securities eligible for repo transactions
in accordance with liquidity requirements
15 093
15 093
21 418
36 511
45 437
45 437
23 707
69 144
15 093
45 437
Unrated
Total
Breakdown of counterparties by rating
CHF 1000
AAA to AA–
A+ to A–
BBB+ to BBB–
BB+ to BB–
Below B–
Debt securities (book value) 15 07700000
15 077
The Bank applies a combination of three major rating companies’ ratings and displays them using the Standard & Poor’s nomenclature.
17
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8.5 Participations
31.12.14
31.12.15
CHF 1000
Acquisition Accumulated
Book
Additions
Disposals
Value
Book
costvaluevalue
adjustmentsvalue
adjustments
Participations without market value
1 100
0
1 100
0
0
0
1 100
Total
1 1000
1 100000
1 100
Additional information on significant participations
Company Name
Business activities
Share
Share of
Share of
capital
capital
votes
Schroder Trust AG, Geneva
Trust and offshore
company administrationCHF 100 000
Schroder Cayman BankBanking services,
and Trust Company Ltd.,
trust and offshore
Cayman Islands
company administrationUSD 633 714
100%
100%
100%
100%
Both companies are being liquidated and are therefore not consolidated based on Art. 35 Bank Ordinance. Both are directly held subsidiaries. Recognition on Schroder & Co
Bank AG’s balance sheet is based on liquidation value. Unwinding costs have been charged and adequate provisions have been created in the individual balance sheets.
4.8.6 Tangible fixed assets
31.12.14
31.12.15
CHF 1000
Acquisition Accumulated
Book
Additions
Disposals
Depreciation
Book value
cost
depreciation
value
Other tangible fixed assets
Total
3 135
3 135
(3 073)
(3 073)
62
62
0
0
(45)
(45)
(17)
(17)
0
0
The depreciation method applied and the range used for the expected useful lives are explained in the accounting and valuation policies.
The bank currently does not have any intangible assets.
Operating lease contracts maturities
CHF 1000
3 to 12
months
12 months
up to 3 years
3 years to
5 years
over
5 years
Total
31.12.15
of which, may be terminated within one year
31.12.14
0
0
0
274
0
303
7 750
485
9 325
6 727
0
7 991
14 751
485
17 619
18
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8.7 Other assets and other liabilities
CHF 1000
Other assets
Other assets
Other liabilities
Other liabilities
2015201420152014
Indirect taxes and stock exchange fees
Other assets and liabilities
Total
179
216
395
503
358
861
1 255
63
1 318
2 566
385
2 951
4.8.8 Assets pledged or ceded to secure own liabilities and assets subject
to ownership reservation
Assets pledged or ceded
2015
2014
CHF 1000
Assets pledged
Effective
Assets pledged
Effective
(Book value)
liability
(Book value)
liability
Liquid assets
Financial investments
21 238
12 910
2 030
0
0
37 259
0
16 230
4.8.9 Liabilities relating to own pension schemes, and number and nature
of equity instruments of the Bank held by own pension schemes
CHF 1000
2015
2014
Amounts due to customers
Negative replacement values of derivative financial instruments
Total liabilities relating to own pension schemes
The Bank’s pension funds did not hold any shares of the Bank in 2015 or 2014.
19
5 235
79
5 315
10 492
469
10 961
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8.10 Economic situation of own pension schemes
Employer contribution reserves (ECR)
Schroder & Co Bank AG’s employees participate in two defined contribution pension funds. The BVG pension fund provides the minimum
benefits required by the law. The Pension Plan Foundation (Vorsorgestiftung) provides benefits on that portion of the salaries that exceed
the BVG legal minimum. Due to the external insurance and the guarantee from the Pension Plan Foundation (Vorsorgestiftung), there are
neither employer contribution reserves nor fluctuation reserves nor an under- or overfunding.
Economic benefit / obligation and pension expenses
As neither under- nor overfunding exist, the Bank, according to RS FINMA 15/1 margin 496, has neither an economic benefit nor an
obligation towards the pension funds or their members.
CHF 1000
Contributions paid
Pension expenses
Pension expenses
in personnel
in personnel
expenses
expenses
201520152014
Pension plans without over-/underfunding
5 200
7 425
6 697
According to the pension fund regulations, the employer pays total contributions and benefits equivalent to 15 % of the relevant salary whereas the employees contribute 5 %
of that salary. The column “Contributions paid” includes the Bank’s total contributions to both pension plans for the year.
The columns “Pension expenses in personnel expenses” include the Bank’s total pension and related benefit expenses (including old age and survivors’ insurance, disability
insurance, unemployment insurance and other mandatory contributions).
4.8.11 Valuation adjustments, provisions and reserves for general banking risks
CHF 1000
Balance
Use in confor-
Recoveries,
New creations
Releases
Balance
31.12.14 mity with desig-
overdue
charged to
to income
31.12.15
nated purpose
interest
income
Other provisions
Total provisions
Value adj. for default and country risks
30 972
30 972
208
(15 191)
(15 191)
(12)
(15)
(15)
12
345
345
0
(10 778)
(10 778)
0
5 333
5 333
208
In September 2015, the Bank signed a non-prosecution agreement with the U. S. Department of Justice in connection with the U. S. Program and paid a penalty of
USD 10.354 m. As per 31 December 2015, CHF 1.4 m remain as other provision for further legal fees in connection with the U. S. Program. The remainder of CHF 10.625 m
was released to the income statement.
20
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8.12 Capital structure and shareholders
The share capital amounts to CHF 60 m and is split into 60 000 registered shares of CHF 1000 nominal value each. The company’s share
capital is fully paid in. No special rights are conferred by the share capital.
The distributable profit of CHF 15 466 157 is available for distribution by the shareholders, subject to legal requirements. The non-distributable “Statutory retained earnings reserve” amounts to CHF 29 100 000; distributable “Voluntary retained earnings reserves” amount to
CHF 38 600 000, subject to legal requirements.
As at 8 December 2015, all shares of Schroder & Co Bank AG have been transferred from Schroder Finance Netherland B. V. to Schroder
Wealth Holdings Limited, London, which is a 100 % subsidiary of Schroders Plc.
As at 4 March 2015, Schroders plc had received notifications, in accordance with rule 5.1.2 R of the Disclosure and Transparency Rules,
of interests in three per cent. or more of the voting rights attaching to the Company’s issued share capital, as set out in the table below.
There had been no changes to these notifications as at the date of this report.
04.03.15
05.03.14
Schroder shares
Percent
Schroder shares
Percent
Vincitas Limited
Veritas Limited
Flavida Limited
Fervida Limited
Harris Associates L.P.
60 724 609
36 795 041
60 951 886
40 188 706
15 969 200
26.87 %
16.28 %
26.97 %
17.78 %
7.07 %
60 724 609
36 795 041
60 951 886
40 188 706
15 969 200
26.87 %
16.28 %
26.97 %
17.78 %
7.07 %
Vincitas Limited and Veritas Limited act as trustees of certain settlements made by members of the Schroder family and are party to the Relationship Agreement. The interests
of Flavida Limited and Fervida Limited include interests in voting rights in respect of all the shares in which Vincitas Limited and Veritas Limited are interested as trustees. Flavida
Limited and Fervida Limited are party to the Relationship Agreement.
4.8.13 Amounts due from / to related parties
CHF 1000
Amounts due from
Amounts due from
Amounts due to
Amounts due to
2015201420152014
Holders of qualified participations
0
10 214
12 844
465
Group companies
0
0
2 362
8 624
Linked companies
8 961
2 590
2 663
4 667
Transactions with members of governing bodies
1
4
1 597
0
Other related parties0000
With related parties, the Bank engages in securities and money market transactions and applies interest rates at conditions applicable to third parties. Members of the Executive
Board and of the Board of Directors generally are granted the conditions and tariffs applicable to staff members of the Bank.
21
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8.14 Employee participation schemes
Equity Compensation Plan (ECP)
The ECP is the Group’s main deferral arrangement for annual bonus awards. Comprehensive details of the design of the ECP scheme can
be found in the Schroders plc Group Financial Statements.
Equity Incentive Plan (EIP)
The EIP is an additional deferred remuneration plan used to recognise exceptional performance and potential. Comprehensive details of
the design of the EIP scheme can be found in the Schroders plc Group Financial Statements.
Please refer to the notes “Accounting and valuation policies” for further details.
4.8.15 Maturity structure of financial instruments
At sight
CancellableDueDueDueTotal
CHF 1000withinwithinwithin
3 months
3 to 12
12 months
months
to 5 years
Assets / financial instruments
Liquid assets
691 0770000
691 077
Amounts due from banks
87 120
0
199 782
152 672
0
439 574
Amounts due from securities
financing transactions
0
0
314 204
15 029
0
329 233
Amounts due from customers
2
31 494
90 293
36 862
1 000
159 651
Positive replacement values of
derivative financial instruments
0
0
11 673
2 641
0
14 314
Financial investments
21 418
0
15 077
0
0
36 495
Total 31.12.15
799 617
31 494
631 029
207 204
1 000 1 670 344
31.12.14 1 067 209
66 351
616 364
274 008
16 466 2 040 398
Debt capital / financial instruments
Amounts due to banks
Amounts due to customers
Negative replacement values of
derivative financial instruments
Total 31.12.15
31.12.14
12 378
1 498 533
0
0
0
95
0
0
0
0
12 378
1 498 628
0
1 510 911
1 838 762
0
0
357
3 312
3 407
24 411
1 585
1 585
2 671
0
0
0
4 897
1 515 903
1 866 201
22
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8.16 Assets and liabilities by domestic and foreign origin in accordance
with the domicile principle
CHF 1000
2015
2014
Domestic ForeignDomestic Foreign
Assets
Liquid assets
Amounts due from banks
Amounts due from securities financing transactions
Amounts due from customers
Positive replacement values of
derivative financial instruments
Financial investments
Accrued income and prepaid expenses
Participations
Tangible fixed assets
Other assets
Total
691 078
274 635
178 085
20 714
0
164 939
151 148
138 936
909 586
227 078
178 839
24 702
0
336 238
124 194
144 668
4 886
36 495
11 768
100
0
395
1 218 156
9 429
0
402
1 000
0
0
465 854
8 222
69 096
12 830
100
62
861
1 431 376
17 775
0
519
1 000
0
0
624 394
874
246 866
11 504
1 251 762
717
313 766
27 197
1 515 231
545
18 290
1 318
5 333
60 000
29 100
38 600
10
15 456
416 392
4 352
0
0
0
0
0
0
0
0
1 267 618
3 895
20 936
2 951
30 971
60 000
28 700
28 100
3 172
14 738
507 946
5 395
1
0
0
0
0
0
0
0
1 547 824
Liabilities
Amounts due to banks
Amounts due to customers
Negative replacement values of
derivative financial instruments
Accrued expenses and deferred income
Other liabilities
Provisions
Share capital
Statutory retained earnings reserve
Voluntary retained earnings reserves
Profit carried forward / loss carried forward
Profit / loss (result of period)
Total
23
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8.17 Assets by country / country groups
2015
2014
CHF 1000
in %
CHF 1000
in %
Assets
Europe
– Germany
54 718
3.3 %
34 186
1.7 %
– United Kingdom
38 803
2.3 %
159 320
7.7 %
– Switzerland
1 218 157
72.3 %
1 431 375
69.6 %
– Rest of Europe
273 645
16.3 %
285 157
13.9 %
Total Europe
1 585 323
94.1 %
1 910 038
92.9 %
North America
4 350
0.3 %
6 060
0.3 %
Asia
20 989
1.3%
18 438
0.9 %
Other countries
73 348
4.4 %
121 234
5.9 %
Total
1 684 010
100.0 %
2 055 770
100.0 %
4.8.18 Assets by credit rating of country groups
The breakdown of assets by credit rating of country groups is based on the risk relating to the underlying asset and not the domicile of
the debtor. For secured assets, the risk domicile is determined by taking into consideration the respective collateral (due from customers,
reverse repos).
The Bank applies a combination of three major rating companies’ ratings and displays them using the Standard & Poor’s nomenclature.
Standard & Poor’s
Net foreign exposure / 31.12.15
CHF 1000
Share as %
AAA to AA–
580 023
98.5 %
A+ to A–
2 102
0.4 %
BBB+ to BBB–
4 744
0.8 %
BB+ to B–
20
0.0 %
Lower than B–
13
0.0 %
No rating available
1 963
0.3 %
Total
588 865
100.0 %
24
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.8.19 Assets and liabilities by the most significant currencies
2015
CHF 1000
CHF
EUR
USD
Precious
metals
Other
Total
Assets
Liquid assets
690 286
609
107
0
76
691 078
Amounts due from banks
75 379
153 483
112 476
8 184
90 052
439 574
Amounts due from securities
financing transactions
0
10 879
303 583
0
14 772
329 234
Amounts due from customers
20 360
45 848
51 869
0
41 571
159 648
Positive replacement values of
derivative financial instruments
14 184
0
130
0
0
14 314
Financial investments
15 077
0
0
21 418
0
36 495
Accrued income and prepaid expenses
11 310
92
344
0
425
12 171
Participations
1 1000000
1 100
Other assets
37761300
396
Total assets shown in balance sheet
828 073
210 917
468 522
29 602
146 896 1 684 010
Delivery entitlements from spot exchange,
forward forex and forex options transactions
Total assets
59 022
887 095
256 612
467 529
417 580
886 102
0
29 602
153 041
299 937
886 255
2 570 265
Liabilities and shareholders’ equity
Amounts due to banks
526
4 687
1 932
0
5 233
12 378
Amounts due to customers
174 713
383 578
731 468
29 602
179 269 1 498 630
Negative replacement values of
derivative financial instruments
4 766
0
130
0
0
4 896
Accrued expenses and deferred income
18 165
5
93
0
27
18 290
Other liabilities
1 3150003
1 318
Provisions
4 819
0
240
0
273
5 332
Share capital
60 0000000
60 000
Statutory retained earnings reserve
29 100
0
0
0
0
29 100
Voluntary retained earnings reserves
38 600
0
0
0
0
38 600
Profit carried forward10000010
Profit
15 4560000
15 456
Total liabilities shown in balance sheet
347 470
388 270
733 863
29 602
184 805 1 684 010
Delivery obligations from spot exchange,
forward forex and forex options transactions
Total liabilities
Net position per currency
529 408
876 878
10 217
79 237
467 507
22
25
152 185
886 048
54
0
29 602
0
115 107
299 912
25
875 937
2 559 947
10 318
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.9 Information on the off-balance-sheet business
4.9.1 Contingent liabilities and assets
CHF 1000
2015
2014
Credit guarantees
Irrevocable commitments arising from documentary letters of credit
Total
11 631
1 002
12 633
15 382
0
15 382
4.9.2 Fiduciary transactions
CHF 1000
2015
2014
Fiduciary placements with third-parties
Fiduciary loans
Total
229 880
0
229 880
530 848
2 881
533 729
4.9.3 Funds Under Management
Private Banking
CHF 1000
2015
2014
Assets in collective investment schemes managed by the Bank
Assets under discretionary asset management agreements
Other managed assets
Total Private Banking Funds Under Management (including double counting)
of which double counting
7 355
1 262 945
4 823 402
6 093 702
7 355
10 288
1 535 333
5 219 466
6 765 087
10 288
Total managed assets (including double counting) at beginning
+/– Net new money inflow or net new money outflow
+/– Price gains / losses, interest, dividends and currency gains / losses
Total managed assets (including double counting) at end
6 765 087
(462 196)
(209 189)
6 093 702
6 450 285
(125 886)
440 688
6 765 087
The Bank does not hold any custody-only assets. Debit interest on current account overdrafts is treated as negative performance, while interest charged on Lombard loans
is a cash outflow. The Bank calculates performance according to the direct method.
4.9.4 Funds administered by the Bank
CHF 1000
2015
2014
Assets administered banking activities (see 4.9.3)
Assets administered in connection with the insourcing for Schroder Group’s companies
Total assets administered by the Bank
6 086 347
40 199 316
46 285 663
6 754 799
42 281 074
49 035 873
The Bank renders administrative services to other Schroder Group’s companies in the areas of custody, operations and finance. For this insourcing business, the Bank charges
fees which are reflected in the profit and loss account under the position “Other ordinary income” (see explanation in 4.1 General – Insourcing Business).
26
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.10 Information on the income statement
4.10.1 Result from trading operations and the fair value option
CHF 1000
2015
2014
Foreign exchange trading operations with clients
Total
5 937
5 937
7 414
7 414
4.10.2 Refinancing income and income from negative interest
Negative interest on credit operations are disclosed as a reduction in interest and discount income.
Negative interest on deposits are disclosed as a reduction in interest expense.
CHF 1000
2015
2014
Negative interest on credit operations (reduction in interest and discount income)
Negative interest on deposits (reduction in interest expense)
( 4 236 )0
14
0
4.10.3 Personnel expenses
CHF 1000
2015
2014
Salaries (meeting attendance fees and fixed compensation to
members o f the Bank’s governing bodies, salaries and benefits)
– of which, expenses relating to share-based compensation
and alternative forms of variable compensation
Social insurance benefits
Other personnel expenses
Total
39 495
41 750
119
7 424
1 971
48 890
323
6 697
2 253
50 700
Salaries include expenses related to share-based and alternative forms of variable compensation (as explained in Note 4.8.14). In 2015, 12 930 shares were granted
(4550 shares for governing bodies, 8380 for employees) for a total value of CHF 593k.
27
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
4.10.4 General and administrative expenses
CHF 1000
2015
2014
Office space expenses
Expenses for information and communications technology
Expenses for vehicles, equipment, furniture and
other fixtures, as well as operating lease expenses
Fees of audit firm
– of which, for financial and regulatory audits
– of which, for other services
Other operating expenses
Telephone, telex, postage, electronic information systems,
legal and other consulting fees, stationery and printing,
courier services, property insurance, travel and entertainment,
publication and advertising, other costs
Total
2 949
4 438
4 871
4 325
268
505
409
96
675
600
450
150
8 718
16 878
6 969
17 440
4.10.5 Explanations regarding material losses, extraordinary income and expenses,
as well as material releases of hidden reserves, reserves for general banking risks,
and value adjustments and provisions no longer required
Please refer to Note 4.8.11 for information on the Bank’s settlement with the U.S. Department of Justice.
4.10.6 Current taxes, deferred taxes, and disclosure of tax rate
CHF 1000
2015
2014
Expenses for current taxes
Average tax rate weighted on the basis of the operating result
28
(1 875)
10.8 %
(4 788)
24.6 %
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
5 Disclosures regarding capital adequacy
5.1 Eligible equity
CHF 1000
2015
2014
Eligible adjusted common equity Tier 1 capital (CET1)
Eligible additional Tier 1 capital (AT1)
Total Tier 1 capital (T1)
Total Tier 2 capital (T2)
Total eligible capital
126 610 0
126 610 0
126 610 118 872
0
118 872
0
118 872
5.2 Minimum required equity
CHF 1000
2015
2014
Credit risk
Valuation adjustments
Non-counterparty related risks
Market risk
Operational risk
Total minimum capital requirement
27 900 100 0
1 213 10 656 39 869 30 555
237
5
3 584
10 354
44 735
5.3 Capital adequacy ratios
2015
2014
CET1 ratio
25.4 %
21.3 %
T1 ratio
25.4 %
21.3 %
Total equity ratio
25.4 %
21.3 %
Leverage ratio exposure (CHF 1000)
1 705 761
2 088 303
Leverage ratio
7.4 %
5.7 %
FINMA defined minimum CET1 ratio
7.4 %
7.4 %
FINMA defined minimum T1 ratio
9.0 %
9.0 %
FINMA defined minimum total equity ratio
11.2 %
11.2 %
29
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
5.4 Liquidity Coverage Ratio (LCR)
CHF 1000
2015
2014
Total stock of category 1 assets
Total stock of category 2 assets before applying the cap Total stock of category 2 assets after applying the cap
Total stock of high quality liquid assets plus usage of alternative treatment
Total cash inflows before applying the cap Total cash inflows after applying the cap
Total cash outflows
Liquidity coverage ratio (LCR)
761 064 181 559 181 559 942 623 127 774 127 774 442 462 299.5 %
1 044 428
26 005
26 005
1 070 433
296 130
296 130
620 260
330.2 %
Liquidity Coverage Ratio (LCR) quarterly average (based on month end figures)
CHF 1000
2015
Q1
391.82 %
Q2
341.91 %
Q3
278.41 %
Q4
259.02 %
For consolidated figures of the Schroder Group please refer to the Group’s website at
http://www.schroders.com/en/investor-relations/shareholders-and-governance/disclosures/pillar-3-disclosures/
30
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the financial
presentation of the financial statements. We believe that the
statements of Schroder & Co Bank AG, which comprise
audit evidence we have obtained is sufficient and appropri-
the balance sheet, income statement, statement of
ate to provide a basis for our audit opinion.
changes in equity and notes (pages 6 – 28 ), for the
year ended 31 December 2015.
Opinion
In our opinion, the financial statements for the year ended
Board of Directors’ responsibility
31 December 2015 comply with Swiss law and the compa-
The Board of Directors is responsible for the preparation
ny’s articles of incorporation.
of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorpo-
Report on other legal requirements
ration. This responsibility includes designing, implementing
We confirm that we meet the legal requirements on licensing
and maintaining an internal control system relevant to the
according to the Auditor Oversight Act (AOA) and independ-
preparation of financial statements that are free from mate-
ence (art. 728 CO and art. 11 AOA) and that there are no
rial misstatement, whether due to fraud or error. The Board
circumstances incompatible with our independence.
of Directors is further responsible for selecting and applying
appropriate accounting policies and making accounting
In accordance with art. 728a para. 1 item 3 CO and Swiss
estimates that are reasonable in the circumstances.
Auditing Standard 890, we confirm that an internal control
system exists which has been designed for the preparation
Auditor’s responsibility
of financial statements according to the instructions of the
Our responsibility is to express an opinion on these financial
Board of Directors.
statements based on our audit. We conducted our audit in
accordance with Swiss law and Swiss Auditing Standards.
We further confirm that the proposed appropriation of avail-
Those standards require that we plan and perform the audit
able earnings complies with Swiss law and the company’s
to obtain reasonable assurance whether the financial state-
articles of incorporation. We recommend that the financial
ments are free from material misstatement.
statements submitted to you be approved.
An audit involves performing procedures to obtain audit evi-
PricewaterhouseCoopers AG
dence about the amounts and disclosures in the financial
Stefan Keller Wyss,
statements. The procedures selected depend on the au-
Daniel Müller,
Audit expert, Auditor in charge
Audit expert
ditor’s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether
Zurich, 11 March 2016
due to fraud or error. In making those risk assessments, the
auditor considers the internal control system relevant to the
entity’s preparation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control system.
An audit also includes evaluating the appropriateness of the
accounting policies used and the reasonableness of
accounting estimates made, as well as evaluating the overall
31
S c h r o d e r & C o B a n k AG — A n n u a l R e p o r t 2 015
Board and senior staff
(as of 11 March 2016 )
Board of Directors
Executive Board
External Auditors
Philip Mallinckrodt
Adrian Nösberger
PricewaterhouseCoopers AG, Zurich
Chairman
Chairman,
Dr Stefan Mäder
Vice-Chairman
Marc Brodard
Dr Martin Eckert
Jean-Claude Marchand
Markus Rütimann
Chief Executive Officer
Member, Head Private Clients Geneva
David Dowse
Member, Chief Financial Officer
Dr Ariel Sergio Goekmen
Member, Head Private Clients Zurich
Oliver Oexl
Member, Head Legal, Compliance and Risk
Peter Thüring
Member, Chief Operating Officer
32
Head Office
Branch Office
Subsidiary Companies
Schroder & Co Bank AG
Schroder & Co Banque SA
Schroder Trust SA
Central 2, 8001 Zürich
8, rue d’Italie, 1204 Genève
8, rue d’Italie, 1204 Genève
Postfach, 8021 Zürich
Case postale 3655, 1211 Genève 3
Case postale 3655, 1211 Genève 3
Tel +41 (0)22 818 41 11
Tel +41 (0)22 818 41 22
Fax +41 (0)22 818 41 12
Fax +41 (0)22 818 41 28
Schroder & Co Bank AG
Pfingstweidstrasse 60, 8005 Zürich
Postfach 2222, 8031 Zürich
Schroder Cayman Bank and
Trust Company Limited
Tel +41 (0)44 250 11 11
P. O. Box 1040, Harbour Centre
Fax +41 (0)44 250 13 12
Grand Cayman KY1-1102, B.W.I.
www.schroders.ch
Tel +1 345 949 28 49
contact@schroders.ch
Fax +1 345 949 54 09