Schroder & Co Bank AG
Annual Report 2004
Head Office
Schroder & Co Bank AG
Central 2, 8001 Zürich
Postfach 1820, 8021 Zürich
Phone +41 (0)44 250 11 11
Fax
+41 (0)44 250 13 12
www.schroders.ch
E-Mail: contact@schroders.ch
Branch Office
Schroder & Co Banque SA
8, rue d’Italie, 1204 Genève
Case postale 3655, 1211 Genève 3
Phone +41 (0)22 818 41 11
Fax
+41 (0)22 818 41 12
Subsidiary companies
Schroder Cayman Bank and Trust Company Limited
PO Box 1040, Harbour Centre
Grand Cayman, B.W.I.
Phone +1 (345) 949 28 49
Fax
+1 (345) 949 54 09
Schroder Trust AG
Central 2, 8001 Zürich
Phone +41 (0)44 250 11 11
Fax
+41 (0)44 250 13 12
Content
Board and Senior Staff
3
Chairman’s Statement
4
Executive Board’s Statement
6
Balance Sheet
10
Off-Balance Sheet Transactions
11
Profit and Loss Account
12
Comments on Business Activities
14
Principal Accounting Policies and Valuation Principles
15
Information on the Balance Sheet
18
Information on Off-Balance Sheet Transactions
28
Information on the Profit and Loss Account
30
Report of the Statutory Auditors
31
Main Schroder Branches
32
Schroders Milestones
34
Board and Senior Staff
Board of Directors
Jonathan Asquith, Chairman
Sally Tennant, Deputy Chairman
Dr François R. Bochud
Dr Martin K. Eckert
Peter P. Hügle
(until 10 March 2005)
Jean-Claude Marchand
(as of 10 March 2005)
George W. Mallinckrodt, KBE, Honorary Chairman
Executive Board
Luc Denis, Chairman, Head of Private Banking
Heinz Scheiwiller, Deputy Chairman, Head of Finance & Administration
Rudolf Stäger, Member, Head of Private Banking Zurich
Stephen J. Mills, Member, Head of Schroder Investment Management (SIM) Switzerland
Bruno Schmidt, Secretary
Senior Management
Otto J. Amberg
Bernhard H. Leibkutsch
Norbert Brestel
Gordon F. Matthew
Pierre Antoine Carron
Samuel Moulin
Beat Cassani
Werner Niedermann
Reto Dietrich
Stephan Ochsner
Markus Engeler
Christian Schmid
Slavica J. Barovic Esnault-Pelterie
Dino Teitler
Pierre-Louis Favre
Eric C. Thelwell
Rolf Fischer
Ulysse-Oliver Traub
Stefan Frischknecht
Christian Trixl
Karl Gallmann
Marcel Wäspi
Roland Heule
Urs Winiger
Jean-Jacques Hunziker
Antonio Winspeare Guiccardi
Jürg Klingler
Compliance
Jean-Jacques Hunziker
External Auditors
PricewaterhouseCoopers AG, Zürich
Schroder & Co Bank AG
3
Chairman’s Statement
2004 was another eventful
In 2004 we saw our investment in information tech-
year from both a political and
nology and infrastructure, as well as our continued
economic standpoint. The US
investment in attracting highly qualified staff, begin
elections, the expansion of
to pay off. Indeed, we have received feedback from
the
our clients to endorse our focus on investing in the
European
Union
and
continuing conflicts in the
growth of our business.
Middle East all left their mark
Jonathan Asquith
Chairman of the Board
on world history, as did the
Work on the implementation of the European Union’s
tragedy of the Asian Tsunami.
interest taxation directive is well advanced. This re-
In 2005 numerous problems, both political and eco-
quires a substantial investment of both time and
nomic, remain unsolved.
money. We are confident that we will be in a position
to implement the directive as negotiated between
In this challenging environment our Bank once again
Switzerland and the EU.
produced very positive results. We increased net
income after tax, from CHF 11 million to CHF 13.5
Following the Bank’s strong growth in 2004, the
million – an improvement of 20%. All of our business
Board of Directors proposes to strengthen our
units – private banking, institutional investment man-
equity base further by allocating CHF 13.5 million of
agement and investment funds – contributed to this
the net income to other reserves. This means that
development, generating higher profits in their
stated equity for the Bank reaches CHF 104.3 million
respective fields. This success made an important
at the end of 2004 – a solid foundation for future
contribution to the overall success of Schroders plc
growth.
in its 200th anniversary year.
4
Schroder & Co Bank AG
On behalf of the Board of Directors, I would like to
Board Changes
thank all of our clients for their continued support.
At this year’s Annual General Meeting, Mr Peter
At the same time my thanks also goes to all of our
P. Hügle stepped down from the Board of Directors
employees for their commitment and hard work.
after more than 17 years of service. The Board of
Directors thanks him for his contribution to the Bank
over all of these years.
Jonathan Asquith
We are pleased to announce that Mr Jean-Claude
Chairman of the Board of Directors
Marchand, Collonge-Bellerive / Geneva, joined the
Board of Directors on 10 March 2005. Mr Marchand,
a respected expert in finance and banking, has
worked in leading positions at Reuters for more than
30 years and is now Chief Operating Officer of
Edipresse Group.
Schroder & Co Bank AG
5
Executive Board’s Statement
2004 was a good year for
Private Banking
financial markets, the banking
2004 was a good year for
industry benefited from this
Private Banking. Driven by net
environment. Financial mar-
inflows of CHF 1 billion and
kets remained strong in 2004
good investment performance,
despite a number of economic
private clients’ assets under
challenges. The US economy
Luc Denis
Chairman
lost steam and this inevitably
management rose to approxHeinz Scheiwiller
Deputy Chairman
imately CHF 5.5 billion. Invest-
impacted other regions. More-
ment performance continued
over, the rapid increase in the price of oil dampened
to be strong as a result of consistent processes and
hopes of a fast and sustainable global economic
the quality of our investment funds. It was also ac-
upswing. Consequently in Switzerland, and across
celerated by an increased use of alternative invest-
Europe, growth forecasts were repeatedly revised
ment opportunities such as hedge funds. Commis-
downward during the year. Nevertheless, most com-
sion income, our main revenue source, rose once
panies, large and small, were able to increase prof-
again.
its in 2004.
Low interest rate levels had a negative impact on loan
The world’s major equity markets rose more or less
volumes and therefore income from our credit
in line with their long-term averages, i.e. between 5
business. Nevertheless, we were able to generate a
and 10%. As always, a number of regions, particu-
marginal increase in results from interest rate activ-
larly emerging markets, significantly outperformed
ities compared to the previous year. Commission
the rest. Bond markets also fared better than many
income from guarantees, documentary credits and
experts had forecast as interest rates failed to rise to
fiduciary loans also improved slightly.
anticipated levels. Due to the continuing weakness
of the dollar, investors in some currencies were confronted with painful losses. In the fourth quarter alone
the dollar lost 5% against the Swiss franc and
reached new lows against the Euro.
6
Schroder & Co Bank AG
Rudolf Stäger
Head of Private
Banking Zurich
Trading volumes and net in-
Our core focus is on providing asset management
come from trading operations
services to our clients but we also partner with other
increased further. In foreign
advisers to provide advice in related areas. In spe-
exchange, our broad range of
cialist legal, or tax situations and in real estate trans-
products and services re-
actions, we have cooperated with leading external
mained popular amongst our
specialists who provide our clients with best practice
clients, not least because of
advice. Our clients benefit from this approach and
the uncertain currency out-
this strategy also allows us to constantly expand our
look. Currency risks received
increasingly important network of specialist partners.
even more attention with a
demand for currency hedges and a heightened
Thanks to our own expertise and our external net-
importance placed on currency components in asset
work, as well as our efficient cost structure and first-
allocation.
class IT support, we continue to expand our family
office services. Here we offer wealthy individuals and
Private Banking clients continue to seek a more
families comprehensive services under one roof.
specialist and sophisticated service and competition
in the market is increasingly fierce. Clients are demanding a solution led service on a highly individual
basis. We believe that clients are better informed
than ever and inevitably therefore they are both price
and performance-conscious. Whilst loyalty towards
particular banks or bank advisors remains an important factor, clients are becoming more discerning. We
are focused on offering our clients the service they
require with the products to meet their needs.
Schroder & Co Bank AG
7
Executive Board’s Statement
Stephen J. Mills
Head of
SIM Switzerland
Institutional Investment
Institutional Marketing
Management & Fund Sales
During the past year, we continued to build our
– SIM Switzerland
business with Swiss pension funds, corporations
Strong growth in business
and financial institutions. We saw a net inflow of
volumes in 2004 led to our
client assets, primarily as a result of substantial new
Institutional Investment Man-
institutional mandates. Meanwhile, we have become
agement & Fund Sales division
one of the largest foreign-owned providers of
recording improved results for
products and services for the management of insti-
the ninth consecutive year.
tutional assets in Switzerland. We manage countryspecific, regional, global and balanced mandates on
The activities of the division can be divided into three
a segregated, unitized or sub-advisory (white label)
parts or functions: asset management, institutional
basis.
marketing and client servicing, and the distribution
of Schroders’ range of Luxembourg-domiciled
Distribution of mutual funds (Retail)
SICAV funds.
Our mutual fund sales business saw robust net
inflows underpinned by our broad client base
Fund Management
(Swiss-based banks, insurance companies and fund
Our Swiss-based team of fund managers and
distributors), high level of client service as well as
analysts is responsible for the management of Swiss
the strong investment performance of our funds.
equity and balanced pension fund mandates. The
80% of our Luxembourg-based SICAV funds out-
team draws on the extensive global research of the
performed other funds in their peer group in 2004.
Schroders Group as well as its own local research
efforts. More than 300 company visits are undertaken in Switzerland every year to facilitate local
research. We are recognised as a leader amongst
Swiss equity managers both in the institutional and
mutual fund markets.
8
Schroder & Co Bank AG
Finance and Administration
Striving for the best possible services for our clients,
Our new IT platform, introduced in 2003, proved its
we attach great importance to the quality of our em-
worth in its first full year of operation. It facilitated
ployees. It is their commitment, morale, teamwork
improvements in service quality and significant
and loyalty – as well as their sense of humour – that
progress in reporting to clients. Our renovated and
creates the right atmosphere to successfully work for
newly furnished reception area and meeting rooms
the benefit of all. We would therefore like to thank all
are much appreciated by our clients. Our significant
our employees for the fantastic job they once again
investments over the past years have already paid off
did last year.
and will allow us to build the business in the future.
Further improvements are planned for 2005 to
On behalf of all the members of the Executive Board
improve technical support for our products and
we would like to thank our clients for the continued
services. Moreover, new programmes for the imple-
trust they place in our Bank.
mentation of the EU interest taxation directive are
being developed and introduced.
Subsidiaries
Our wholly-owned subsidiary Schroder Cayman
Bank & Trust Company Ltd offers our clients services
Luc Denis
Heinz Scheiwiller
Chairman
Deputy Chairman
in the establishment and management of trusts and
foreign-domiciled corporations.
Schroder Trust AG, Zurich, mainly acts as a trustee
for trusts formed under Anglo-Saxon law. It is also
active in the establishment and administration of
foundations. Both companies produced positive
results in 2004.
Schroder & Co Bank AG
9
Balance Sheet
as of 31 December 2004
CHF
Notes
31.12.2004
31.12.2003
16,763,311
17,541,128
136,799,240
179,310,161
Assets
Liquid assets
Due from banks
Due from clients
3.1
302,281,783
373,307,132
Mortgages
3.1
623,924
629,557
Securities and precious metals trading portfolios
3.2
27,347,340
28,057,100
Participations
3.3
1,100,000
1,100,000
Fixed assets
3.5
546,703
581,209
11,733,052
7,183,119
9,601,530
8,923,460
506,796,883
616,632,866
Due to banks
170,619,731
244,118,014
Due to clients
185,237,189
231,140,535
18,436,577
17,855,374
Accrued income and prepaid expenses
Other assets
3.4
Total assets
Liabilities and shareholders’ equity
Accrued expenses and deferred income
Other liabilities
3.4
11,709,923
10,307,853
Valuation adjustments and provisions
3.8
16,490,182
13,369,313
Reserve for general banking risks
3.8
18,000,000
18,000,000
3.9, 3.10
20,000,000
20,000,000
General legal reserve
3.10
17,500,000
16,700,000
Other reserves
3.10
35,300,000
34,000,000
Share capital
Retained earnings brought forward
Net income
Total liabilities and shareholders’ equity
Total due to Group entities and significant shareholders
10
Schroder & Co Bank AG
41,778
140,580
13,461,503
11,001,197
506,796,883
616,632,866
14,115,984
14,871,701
Off-Balance Sheet Transactions
as of 31 December 2004
CHF
Notes
31.12.2004
31.12.2003
Contingent liabilities
3.1, 4.1
61,669,770
55,850,143
Confirmed credits
3.1, 4.2
550,812
62,000
– positive replacement values
9,319,496
8,614,358
– negative replacement values
9,188,300
8,385,042
713,950,537
575,628,189
3,021,866,977
1,508,118,154
27,160,020
57,184,808
Derivative instruments
4.3
– notional amounts
Fiduciary transactions
– Fiduciary placements with third parties
– Fiduciary credits
4.4
Schroder & Co Bank AG
11
Profit and Loss Account
for the period from 1 January to 31 December 2004
CHF
Notes
2004
2003
Interest and discount income
11,413,440
10,715,972
Interest expenses
(4,484,887)
(3,973,560)
6,928,553
6,742,412
1,079,393
1,091,204
60,838,455
50,013,560
656,084
551,150
a) Revenues and expenses from ordinary banking activities
Results from interest activities
Total
Results from commission and service fee activities
Commission income on lending activities
Commission income on securities and investment transactions
Commission income on other services
Commission expenses
(5,356,444)
(5,384,594)
Total
57,217,488
46,271,320
5,008,026
4,579,485
Results from the sale of financial investments
—
(458,750)
Total
—
(458,750)
(32,181,799)
(28,699,065)
Results from trading operations
5.1
Other ordinary results
Operating expenses
Personnel expenses
5.2
Other operating expenses
5.3
Total
Gross profit
12
Schroder & Co Bank AG
(13,501,347)
(12,438,563)
(45,683,146)
(41,137,628)
23,470,921
15,996,839
CHF
Notes
2004
2003
23,470,921
15,996,839
(473,072)
(436,854)
Valuation adjustments, provisions and losses
(7,132,050)
(5,410,330)
Results before extraordinary items and taxes
15,865,799
10,149,655
2,203,500
4,870,591
—
—
Taxes
(4,607,796)
(4,019,049)
Net income
13,461,503
11,001,197
13,461,503
11,001,197
41,778
140,580
Total
13,503,281
11,141,777
Retained earnings at the end of the period
13,503,281
11,141,777
—
(9,000,000)
b) Net income
Gross profit
Depreciation and write-offs of non-current assets
Extraordinary income
Extraordinary expenses
3.5
5.4
c) Allocation of retained earnings
Net income
Retained earnings carried forward
Allocation of retained earnings
Ordinary dividend
Allocation to general legal reserve
Allocation to other reserves
Retained earnings carried forward
—
(800,000)
(13,500,000)
(1,300,000)
3,281
41,778
Schroder & Co Bank AG
13
1. Comments on Business Activities
General
Other risks
Schroder & Co Bank AG is a wholly owned subsidiary
The Bank’s liquidity is monitored and ensured in
of Schroders plc, London. In addition to the
accordance with Swiss banking legislation and group
head office in Zurich the Bank has a branch office
regulations.
in Geneva.
Credit risk is monitored separately by the banking diThe business activities of the Bank are described
vision. The securities underlying the loans are valued
below. There are no further business activities
at market prices. The lending values are established
that would significantly impact the Bank’s risk and
based on predefined directives.
income situation.
Operational risks are limited through internal guideFee and commission business
lines regarding organisation and controls. Internal
The Bank’s principal line of business is investment
audit periodically reviews the internal controls and
management for both domestic and foreign clients.
reports to the Board of Directors.
Asset management, trustee, custodian and credit
Outsourcing
operations are the main contributors to commission
The Bank has an outsourcing agreement with the
and service fee revenues.
company Biveroni Batschelet Partners AG (BBP) for
running the interbank applications SIC, EuroSIC,
Banking activities
Swift and Secom. BBP’s role is limited to providing
The Bank’s main balance sheet activities are the
electronic access to the above mentioned interbank
client lending business and interbank operations.
services.
Loans to clients are mainly granted on the basis of
Staff
Lombard coverage.
In 2004, there were 117 full-time and 11 part-time
employees, equalling a total of 128 (124.4 full-time
Trading activities
Trading comprises mainly trading for the accounts of
clients in interest rate products, securities and foreign exchange and proprietary trading.
Risk management
Interest rate risk
On- and off-balance sheet interest rate risk is monitored and managed centrally by the market risk committee. It is managed based on the computation of
the impact of potential interest rate changes on the
discounted net value of the shareholders’ equity and
on the projected net income effect.
14
Schroder & Co Bank AG
positions, accounting for part-time positions).
2. Principal Accounting Policies and Valuation Principles
Basis of preparation
If an outstanding loan is classified as entirely or par-
The accounts are prepared in accordance with the
tially irrecoverable or if a renunciation of outstand-
Swiss Code of Obligations, the Swiss Federal Law
ings is granted, the outstanding loan is written off by
Governing Banks and Savings Banks, including its
debiting the respective loss provision.
directives, and the Swiss Federal Banking Commission's regulations and directives.
Troubled loans are reclassified as being of full value
when outstanding amounts of capital and interest are
All transactions are recorded in the Bank’s books
again paid on time according to the conditions fixed
at the trade date and valued from that date for the
by contract.
profit and loss account. Money market and foreign
exchange transactions are reported off-balance
sheet until the settlement date. As from the settlement date, these transactions are included in the
balance sheet.
Securities and precious metals trading portfolio
Actively traded positions which are either traded on
a recognised stock exchange or for which a representative market exists are valued at market value.
Refinancing costs are charged against trading in-
Business risks are covered by adequate value adjustments and provisions.
Detailed principles
The most important accounting policies and valuation principles are shown below.
come. All other trading positions are valued at the
lower of cost or net realisable value.
Financial Investments
Securities held to generate income in the medium
term are valued at the lower of cost or net realisable
value. Realised profits or losses from sales of these
Liquid assets, receivables from and liabilities to
securities are included within “Results from the sale
banks
of financial investments”. Unrealised profits or loss-
Items are stated in the balance sheet at their nomi-
es are included within “Other ordinary income” or
nal value or, respectively, at cost less any individual
“Other ordinary expenses”. Debt securities held for
valuation adjustments required for impaired assets.
investment are stated at cost adjusted for possible
premiums or discounts. Precious metals are valued
Loans
at market value.
Impaired loans, i.e. loans that are unlikely to be
repaid by the debtor, are valued individually. A spe-
Participations
cific provision is made for the estimated shortfall
Participations are stated at cost less any impair-
against nominal value in capital and interest. Off-bal-
ment.
ance sheet exposure, such as commitments, guarantees or derivative instruments, are also taken into
consideration for this valuation. Loans are considered as impaired at the latest when the contractual
payments for capital and/or 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.
Schroder & Co Bank AG
15
Principal Accounting Policies and Valuation Principles
Tangible fixed assets
Taxes
Tangible fixed assets are valued at cost less
Current tax is generally tax on profit and recurs on an
accumulated depreciation. Depreciation is calcu-
annual basis. One-off or transaction taxes are not
lated using the straight-line method based on the
considered as current tax.
useful life.
Current tax on earnings is included as expense of
The recoverability is reconsidered each year. Should
the period in which the earnings are recognized. Tax
the useful life change or the value decrease upon re-
liabilities are shown under “Accrued expenses and
considering the recoverability, the remaining book
deferred income”.
value will be depreciated according to the revised
plan or an extraordinary depreciation can be made.
Derivative financial instruments
In accordance with tax regulations smaller items may
Derivative financial instruments are used by the Bank
be charged directly to the profit and loss account.
for asset and liability management and for securities
and foreign exchange dealing. They are used both for
Useful life of the various fixed assets:
proprietary trading and for trading for the accounts
EDP equipment (hardware): 3 years
of clients. Valuation is in accordance with the pur-
Cars:
poses for which they were originally acquired.
4 years
Foreign currencies
1) Derivative trading positions
Foreign currency transactions are translated at the
These derivatives are marked to market. Positive and
average exchange rates ruling at the balance sheet
negative replacement values are included within
date. Foreign exchange positions in the balance
“Other assets” or “Other liabilities”. Profits and loss-
sheet are translated at the average exchange rates
es are included within “Result from trading opera-
at the balance sheet date and taken to the profit and
tions”.
loss account. Forward foreign exchange transactions
are valued at the forward market rates ruling at the
2) Derivative financial investments
balance sheet date. The valuation result is taken to
These derivatives are acquired by the Bank instead
the profit and loss account.
of direct investments. In accordance with the
accounting policy for financial investments, these
The main conversion rates applied are listed below:
2004
2003
isable value. Any interest income components are
EUR
1.5450
1.5590
included within “Interest and dividend income from
GBP
2.1830
2.2120
financial investments”. Realised profits or losses are
USD
1.1375
1.2400
included within “Result from the sale of financial
JPY
1.1100
1.1550
investments”.
Valuation adjustments and provisions
Based on the principle of prudence, the Bank establishes valuation adjustments and provisions within
liabilities for contingent risks. The valuation adjustments and provisions may contain undisclosed
reserves.
16
positions are valued at the lower of cost or net real-
Schroder & Co Bank AG
3) Derivatives for hedging purposes
Derivative transactions concluded for hedging purposes are valued and booked on a basis consistent
with the underlying transactions.
Liabilities to own pension plans
The employees of Schroder & Co Bank AG benefit
from two defined contribution pension plans. The
“BVG Stiftung” grants at least the benefits mandatory by law. The “Vorsorgestiftung” of Schroder & Co
Bank AG grants benefits for that part of the salary
above the limit of the BVG law. The employer’s contributions according to the defined contribution pension plans are included within “Personnel expenses”.
Schroder & Co Bank AG
17
3. Information on the Balance Sheet
3.1
Schedule of collateral for loans and off-balance sheet transactions
CHF 1,000
Type of collateral
Mortgage
collateral
Other
collateral
Without
collateral
Total
—
294,477
7,805
302,282
624
—
—
624
31.12.2004
624
294,477
7,805
302,906
31.12.2003
630
370,543
2,764
373,937
Contingent liabilities
—
56,785
4,885
61,670
Confirmed credits
—
—
551
551
31.12.2004
—
56,785
5,436
62,221
31.12.2003
—
53,270
2,642
55,912
Gross
amount
Estimated
proceed from
collateral
realisation
Net
amount
Specific
provision
31.12.2004
862
—
862
862
31.12.2003
944
—
944
944
Loans
Due from clients
Mortgages
– Residential real estate
Total
Off-balance sheet transactions
Total
Impaired loans
Total
3.2
Securities and precious metals trading portfolios
CHF 1,000
31.12.2004
31.12.2003
– Exchange listed
27,347
28,057
Total
27,347
28,057
of which securities acceptable to central banks
27,347
28,057
Interest bearing securities and rights
(Trading positions in derivatives are included under 4.3)
18
Schroder & Co Bank AG
3.3
Participations
CHF 1,000
31.12.2004
31.12.2003
Without market value
1,100
1,100
Total
1,100
1,100
Notes to significant participations
CHF 1,000
Name of the company
31.12.2004
Business activities
Schroder Trust AG, Zürich Trust and offshore company
administration
Schroder Cayman Bank
and Trust Company Ltd,
Cayman Islands
3.4
Banking services
and trust and offshore
company administration
31.12.2003
Share capital
Ownership
proportion
Ownership
proportion
100
100%
100%
1,000
100%
100%
Other assets and other liabilities
CHF 1,000
31.12.2004
31.12.2003
Other
Assets
Other
Liabilities
Other
Assets
Other
Liabilities
9,319
9,188
8,614
8,385
274
2,213
276
1,708
8
309
33
215
9,601
11,710
8,923
10,308
Replacement costs of derivative instruments
Trading operations
Indirect taxes and stock exchange fees
Other assets and liabilities
Total
Schroder & Co Bank AG
19
Information on the Balance Sheet
3.5
Assets and participations
CHF 1,000
31.12.2003
Historical
costs
Write-offs/
accumulated
depreciation
Book
value
Total majority participations 1,100
31.12.2004
Additions
Disposals
Write-offs/
depreciation
Book
value
—
1,100
—
—
—
1,100
Other fixed assets
4,228
(3,647)
581
470
(31)
( 473)
547
Total
5,328
(3,647)
1,681
470
(31)
(473)
1,647
Fire insurance value of other fixed assets
3.6
14,001
Assets pledged or ceded to secure own liabilities
and assets subject to ownership reservation
CHF 1,000
Own securities
31.12.2004
Due amount
(book value)
whereof
claimed
Due amount
( book value)
whereof
claimed
27,347
13,957
28,057
16,980
There are no loans nor pension transactions with securities.
20
Schroder & Co Bank AG
31.12.2003
3.7
Liabilities to own pension plans
CHF 1,000
31.12.2004
31.12.2003
1,888
3,456
The liablities due to own pension plans amounted to
According to the pension fund regulations, the employer pays
a total contribution of 15% of the relevant salary whereas the
employees pay 5%. According to the last audited statements
as at 31.12. 2003 of the “Vorsorgestiftung” and the “BVGStiftung” of Schroder & Co Bank AG the employer’s reserves
amount to CHF 4.2m (previous year CHF 5.5m).
3.8
Valuation adjustments and provisions / Reserve for general banking risks
CHF 1,000
Balance
31.12.2003
Specific usage
and reversals
Change in
definition
of purpose
(reclassifications)
Recoveries
of doubtful
interests,
differences
New creation
charged to
profit & loss
statement
Reversals
credited to
profit & loss
statement
Balance
31.12.2004
944
—
—
—
—
—
944
Other provisions
12,425
(1,676)
—
—
7,000
(2,203)
15,546
Valuation adjustments and provisions
13,369
(1,676)
—
—
7,000
(2,203)
16,490
—
—
—
—
—
18,000
Loan losses
(credit and country risk)
Reserve for general
banking risks (fully taxed) 18,000
Schroder & Co Bank AG
21
Information on the Balance Sheet
3.9
Capital structure
The whole share capital amounts to CHF 20 million and is split into
20,000 shares of CHF 1,000 nominal value each. At 31 December
2004 all shares are held directly by Schroder Nederland Finance BV,
Amsterdam. This company is ultimately wholly owned by Schroders
plc, London.
On 19th February 2004 Schroders plc has been notified pursuant to
“Section 198 of the Companies Act 1985” of the following interests
of 3% or more in the ordinary shares:
Shares Schroders plc
Stake
Vincitas Limited
62,341,233
27.58%
Veritas Limited
37,308,464
16.51%
7,125,346
3.15%
Legal & General Group plc
and/or its subsidiaries
Vincitas Limited and Veritas Limited held their interests as trustees
of certain settlements made by members of the Schroder family.
22
Schroder & Co Bank AG
3.10
Statement of changes in shareholders’ equity (before profit distribution)
CHF 1,000
Shareholders’ equity at the beginning of 2004
– Share capital
20,000
– General legal reserve
16,700
– Other reserves
34,000
– Reserves for general banking risks
18,000
– Retained earnings brought forward
11,142
Total shareholders’ equity at the beginning of 2004
99,842
Allocations
– Allocation to general legal reserve
– Allocation to other reserves
– Allocation from profit
800
1,300
(2,100)
– Dividend 2003
(9,000)
– Net income
13,462
Total shareholders’ equity at the end of 2004
104,304
– Share capital
20,000
– General legal reserve
17,500
– Other reserves
35,300
– Reserves for general banking risks
18,000
– Retained earnings brought forward
13,504
Schroder & Co Bank AG
23
Information on the Balance Sheet
3.11
Maturity structure of current assets, financial investments and borrowed funds
CHF 1,000
At sight Redeemable
by notice
Maturities
Total
Within
3 months
Within
3 to 12
months
Within
12 months
to 5 years
After
5 years
—
—
—
—
95,392 26,000
—
— 136,799
101,772 117,175 83,120
175
— 302,283
Current Assets
Cash
16,763
—
Due from banks
15,407
—
Due from clients
41
Mortgages
—
624
—
—
—
—
624
27,347
—
—
—
—
—
27,347
Securities and precious
metals trading portfolios
Total
16,763
31.12.2004
59,558
102,396 212,567 109,120
175
— 483,816
31.12.2003
100,380
137,412 233,216 124,849
2,988
— 598,845
—
— 170,620
Borrowed funds
Due to banks
8,013
Due to clients
166,093
3,040
—
—
— 185,237
31.12.2004
174,106
3,040 118,762 59,949
—
— 355,857
31.12.2003
248,251
3,307 142,474 81,227
—
— 475,259
Total
3.12
— 102,658 59,949
16,104
Amounts due from and due to affiliated companies as well as loans
and exposures to members of the Bank’s governing bodies
CHF 1,000
Due from affiliated companies
Due to affiliated companies
31.12.2004
31.12.2003
1,553
1,057
860
47
With related parties (especially affiliated companies) 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 are granted the conditions and tariffs applicable to staff members of
the Bank.
24
Schroder & Co Bank AG
3.13
Assets and liabilities by domestic and foreign origin
CHF 1,000
31.12.2004
31.12.2003
Domestic
Foreign
Domestic
Foreign
Cash
16,763
—
17,541
—
Due from banks
11,328
125,471
39,449
139,861
Due from clients
110,952
191,330
109,224
264,084
Assets
Mortgages
—
624
—
630
27,347
—
28,057
—
Participations
100
1,000
100
1,000
Fixed assets
547
—
581
—
10,864
869
5,933
1,250
7,328
2,274
5,795
3,128
185,229
321,568
206,680
409,953
Due to banks
27,299
143,321
32,115
212,003
Due to clients
86,361
98,875
96,168
134,972
Accrued expenses and deferred income
17,810
627
16,946
910
5,023
6,687
4,162
6,146
Securities and precious metals trading portfolios
Accrued income and prepaid expenses
Other assets
Total
Liabilities and shareholders’ equity
Other liabilities
Valuation adjustments and provisions
16,490
—
13,369
—
Reserve for general banking risks
18,000
—
18,000
—
Share capital
20,000
—
20,000
—
General legal reserve
17,500
—
16,700
—
Other reserves
35,300
—
34,000
—
42
—
141
—
13,462
—
11,001
—
257,287
249,510
262,602
354,031
Retained earnings brought forward
Net income
Total
Schroder & Co Bank AG
25
Information on the Balance Sheet
3.14
Assets by countries / country groups
CHF 1,000
31.12.2004
31.12.2003
Total
in %
Total
in %
Germany
41,130
8.1%
44,566
7.2%
Great Britain
55,636
11.0%
28,208
4.6%
185,230
36.6%
207,680
33.7%
95,991
18.9%
133,356
21.6%
377,987
74.6%
413,810
67.1%
29,585
5.8%
36,266
5.9%
4,062
0.8%
30,180
4.9%
95,163
18.8%
136,377
22.1%
506,797
100.0%
616,633
100.0%
Assets
Europe
Switzerland
Rest of Europe
Total Europe
North America
Asia
Other countries
Total
26
Schroder & Co Bank AG
3.15
Assets by currencies
CHF 1,000
Currencies
31.12.2004
CHF
EUR
USD
Precious
metals
Other
Total
Cash
15,925
647
119
—
71
16,762
Due from banks
77,124
21,271
30,000
3,047
5,357
136,799
Due from clients
79,514
93,686
82,953
—
46,131
302,284
—
624
—
—
—
624
27,347
—
—
—
—
27,347
Assets
Mortgages
Securities and precious
metals trading portfolios
Financial investments
—
—
—
—
—
—
1,100
—
—
—
—
1,100
547
—
—
—
—
547
10,887
401
257
—
188
11,733
9,377
—
29
—
195
9,601
Total
221,821
116,629
113,358
3,047
51,942
506,797
Assets deriving from FX spot,
FX forward and FX option transactions
112,744
214,377
299,922
-
36,908
663,951
Total assets
334,565
331,006
413,280
3,047
Due to banks
25,696
66,870
54,337
—
23,718
170,621
Due to clients
64,865
46,257
59,198
3,047
11,867
185,234
Accrued expenses and deferred income
17,436
329
354
—
317
18,436
Other liabilities
11,308
90
102
—
211
11,711
Valuation adjustments and provisions
16,436
—
—
—
55
16,491
Reserve for general banking risks
18,000
—
—
—
—
18,000
Share capital
20,000
—
—
—
—
20,000
General legal reserve
17,500
—
—
—
—
17,500
Other reserves
35,300
—
—
—
—
35,300
42
—
—
—
—
42
13,462
—
—
—
—
13,462
240,045
113,546
113,991
3,047
36,168
506,797
94,776
217,049
299,230
—
52,786
663,841
334,821
330,595
413,221
3,047
(256)
411
59
—
Participations
Fixed assets
Accrued income and prepaid expenses
Other assets
88,850 1,170,748
Liabilities and shareholders’ equity
Retained earnings brought forward
Net income
Total balance sheet liabilities
Liabilities deriving from FX spot,
FX forward and FX option transactions
Total liabilities
Net position per currency
88,954 1,170,638
(104)
110
Schroder & Co Bank AG
27
4. Information on Off-Balance Sheet Transactions
4.1
Contingent liabilities
CHF 1,000
31.12.2004
31.12.2003
56,630
44,695
5,040
11,155
61,670
55,850
31.12.2004
31.12.2003
551
62
Positive
replacement values
Negative
replacement values
Contract
volume
—
—
50,000
9,096
8,965
663,196
223
223
755
31.12.2004
9,319
9,188
713,951
31.12.2003
8,614
8,385
575,628
Credit guarantees
Irrevocable commitments
Total
4.2
Confirmed credits
CHF 1,000
Obligations under deferred payments
4.3
Outstanding derivative instruments
CHF 1,000
Interest rate instruments
Options (OTC)
Foreign exchange
Forward contracts
Options (OTC)
Total
The above outstanding derivative instruments are held for trading purposes.
There are no netting agreements in place.
28
Schroder & Co Bank AG
Outstanding derivative instruments by counterparties
CHF 1,000
31.12.2004
31.12.2003
Positive
replacement
values
Negative
replacement
values
Contract
volume
Positive
replacement
values
Negative
replacement
values
Contract
volume
Banks
6,886
1,159
285,618
5,716
1,664
268,188
Non banks
2,433
8,029
428,333
2,898
6,721
307,440
Total
9,319
9,188
713,951
8,614
8,385
575,628
4.4
Fiduciary transactions
CHF 1,000
31.12.2004
31.12.2003
56,660
43,908
2,262,767
665,355
697,555
795,921
4,885
2,934
3,021,867
1,508,118
600
—
Fiduciary deposits
Fiduciary deposits in CHF
Fiduciary deposits in European currencies
Fiduciary deposits in USD
Fiduciary deposits in other currencies
Total
Fiduciary credits
Fiduciary credits in CHF
Fiduciary credits in European currencies
6,986
6,553
Fiduciary credits in USD
19,574
50,632
Total
27,160
57,185
31.12.2004
31.12.2003
882,414
853,657
Assets under discretionary management
3,034,583
2,434,496
Other assets
6,313,331
3,777,711
10,230,328
7,065,864
of which double counting
82,362
114,295
Net in/-outflow of assets
2,928,345
All fiduciary deposits at year-end were concluded with banks
outside of the Schroder Group.
4.5
Clients’ assets
CHF 1,000
Assets of investment funds managed
Total (incl. double counting)
Schroder & Co Bank AG
29
5. Information on the Profit and Loss Account
5.1
Results from trading operations
CHF 1,000
Securities
Foreign exchange
Financial instruments
Total
5.2
2003
109
228
4,899
4,351
—
—
5,008
4,579
2004
2003
90
129
26,676
23,786
Personnel expenses
CHF 1,000
Authorities, meeting compensations and fixed compensations
Salaries and extras
Social security contributions
1,182
1,394
Pension plan contributions
3,305
2,591
Other personnel expenses
929
799
32,182
28,699
CHF 1,000
2004
2003
Occupancy expenses
2,617
2,502
Expenses for EDP, machinery, fixtures and fittings,
vehicles and other equipment
3,274
2,941
Other operating expenses including:
Telephone, telex, postage, electronic information systems,
legal and other consulting fees, stationery and printing,
courier services, property insurance, travel and entertainment,
publication and advertising, audit, other costs
7,610
6,996
13,501
12,439
Total
5.3
Operating expenses
Total
5.4
Extraordinary income
Extraordinary income consists of the release of value adjustments
and provisions of CHF 2.2m which were no longer required.
30
2004
Schroder & Co Bank AG
Report of the Statutory Auditors
Report of the statutory auditors
to the general meeting of Schroder & Co Bank AG, Zurich
As statutory auditors, we have audited the accounting records and
the financial statements (balance sheet, income statement and
notes, pages 10 – 30) of Schroder & Co Bank AG for the year ended
31 December 2004.
These financial statements are the responsibility of the Board of
Directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence.
Our audit was conducted in accordance with auditing standards
promulgated by the Swiss profession, which require that an audit be
planned and performed to obtain reasonable assurance about
whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the
amounts and disclosures in the financial statements. We have also
assessed the accounting principles used, significant estimates
made and the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the accounting records and financial statements and
the proposed appropriation of available earnings comply with Swiss
law and the company’s articles of incorporation.
We recommend that the financial statements submitted to you be
approved.
Zurich, 28 February 2005
PricewaterhouseCoopers AG
Rolf Birrer
Carole Wiederkehr Müller
Schroder & Co Bank AG
31
Main Schroder Branches
Head Office
Denmark
Netherlands
Schroders plc
Schroder Investment Management
Schroder Investment Management
31 Gresham Street, London EC2V 7QA
Fondsmæglerselskabet A/S
Benelux N.V.
Phone: +44 207 658 6000
Store Strandstræde 21
Aert van Nesstraat 25R,
www.schroders.com
1255 Copenhagen K
3012 CA Rotterdam
Phone: +45 33 15 18 22
Phone: +31 10 275 71 11
Germany
Austria
Schroder Investment Management GmbH
Schroder Investment Management GmbH
Mainzer Landstrasse 16
Representative Office
United Kingdom
60325 Frankfurt am Main
P.O.Box 622, 1011 Wien
Schroder Investment Management Limited
Phone: +49 (0)69 975717-0
Phone: +43 1 990 63 84
Schroder & Co Limited
Portugal
Mainzer Landstrasse 16
Schroder Investment Management Limited
Schroder & Co. Limited
60325 Frankfurt am Main
Avenida da Liberdade 180 E
100 Wood Street, London EC2V 7ER
Phone: +49 (0)69 975717-5
Edificio Tivoli Forum, 1250–146 Lisboa
Europe
31 Gresham Street, London EC2V 7QA
Phone: +44 207 658 6000
Phone: +351 21 330 8900
Phone: +44 207 658 6000
France
Schroder Investments Limited
Schroder Investment Management Limited
Spain
33 Gutter Lane, London EC2V 8AS
27, quai Anatole, France, 75007 Paris
Schroder Investment Management Limited
Phone: +44 207 658 6000
Phone: +33 (0)1 53 85 85 85
Calle Pinar 7, 28006 Madrid
Channel Islands
Italy
Schroder Investment Management
Schroder Investment Management
Switzerland
(Guernsey) Limited
(Italy) SIM S.p.A.
Schroder & Co Bank AG
Trafalgar Court, Les Banques,
Via della Spiga 30, 20121 Milano
Central 2, 8021 Zurich
St. Peter Port
Phone: +39 02 763771
Phone: +41 (0)44 250 11 11
Schroder Investment Management
Schroder & Co Banque SA
(Italy) SIM S.p.A.
8, rue d’ltalie, 1211 Geneva
Schroders (C.I.) Limited
Piazzetta Bettiol 15, 35137 Padova
Phone: +41 (0)22 818 41 11
Sarnia House, Le Truchot, St. Peter Port
Phone: +39 049 876 5776
Phone: +34 91 590 9541
Guernsey, GY1 3QL
Phone: +44 1481 710651
Sweden
Guernsey, GY1 3UF
Schroder Investment Management
Schroder Investment Management
(Italy) SIM S.p.A.
Fondsmæglersgelskab A/S
Schroders (C.I.) Limited
Via del Babuino 169, 00187 Roma
Birger Jarlsgatan 12, 114 34 Stockholm
2–6 Church Street, St. Helier
Phone: +39 06 321 8368
Phone: +46 8 678 4010
Phone: +44 1481 703700
Jersey, JE4 9WB
Phone: +44 1534 756600
Luxembourg
Schroder Investment Management
(Luxembourg) S.A.
5 rue Höhenhof, 1736 Senningerberg
Phone: +352 341 342 202
32
Schroder & Co Bank AG
Asia / Pacific
Korea
Argentina
Schroders Korea Limited
Schroder Investment Management S.A.
Australia
Seoul Finance Centre, 84 Taepyungro
Representative Office
Schroder Investment Management
1ga Chung-gu, Seoul 100-768
Ing. Enrique Butty 220
Australia Limited
Phone: +82 23783 0500
C1001AFB Buenos Aires
Phone: +54 11 4317 1300
123 Pitt Street, Sydney, NSW 2000
Phone: +61 (0)2 9210 9200
Singapore
Schroder Investment Management
Bermuda
China
(Singapore) Limited
Schroders (Bermuda) Limited
Schroders plc
65 Chulia Street, #47–01, OCBC Centre
22 Church Street, Hamilton HM 11
Landmark Building
Singapore 049513
Phone: +1 441 292 4995
8 Nth Dongsannuan Road
Phone: +65 6535 3411
Brazil
Beijing 100004
Taiwan
Schroder Investment Management
Schroders Taiwan Limited
Brasil S.A.
Schroders plc
Bank Tower, 205 Tun Hwa North Road,
Rua Joaquim Floriano, 72
202 Hu Bin Road
Taipei, 10592, ROC
São Paulo, SP, Brazil 04534-000
Shanghai 200021
Phone: +866 2 2719 6061
Phone: +55 11 3849 1890
Phone: +86 10 6590 7791
Phone: +86 21 5383 5858
Cayman Islands
Schroder Investment Management
(Hong Kong) Ltd
Schroder Cayman Bank and Trust
Americas
Company Limited
PO Box 1040 GT, Harbour Centre
Two Exchange Square
8 Connaught Place, Central
USA
Grand Cayman, British West Indies
Hong Kong SAR
Schroder Investment Management
Phone: +1 345 949 2849
Phone: +852 2521 1633
North America Inc.
875 Third Avenue
Mexico
Indonesia
New York, NY 10022–6225
Schroder Investment Management
PT Schroder Investment Management
Phone: +1 212 641 3830
North America Inc.
Monte Pelvoux 111 – despacho 404
Indonesia
Lippo Plaza Building
Schroder Investment Management
Lomas de Chapultepec
Jl. Jend. Sudirman Kav. 25, Jakarta 12920
The Curtis Centre
México, D.F., 11000
Phone: +62 21 520 4550
Independence Square West
Phone: +52 55 2623 0202
Philadelphia, PA 19106
Japan
Phone: +1 215 861 0997
Schroder Investment Management
(Japan) Limited
Canada
Pacific Century Place Marunouchi
Schroder Investment Management
1–11–1 Marunouchi, Chiyoda-ku,
North America Limited
Tokyo 100–6224
Canada Trust Tower, BCE Place
Phone: +81 (0)3 5293 1500
Toronto M5J 2S1
Phone: +1 416 360 1200
Schroder & Co Bank AG
33
Schroders Milestones
34
1804
Johann Heinrich Schröder from Hamburg became a partner in his brother’s
London based merchant company.
1850’s – 1860’s
J. Henry Schröder & Co. evolved from an anglo-german merchant company
to a renowned merchant bank.
1870
Schroders introduced the Japanese Government’s first foreign loan to the
London Market.
1923
J. Henry Schröder Banking Corporation, known as Schrobanco, was launched
and traded on Wall Street.
1957
The name of J. Henry Schröder & Co. was anglicised and the partnership was
converted into a private company.
1959
Schroders became a quoted public company and was listed on the London
Stock Exchange. Helmut Schroder was Chairman until 1965.
1960’s – 1970’s
Schroders developed a presence in each of the major financial markets of the world.
Subsidiary and associated companies were established to undertake investment
banking activities in Hong Kong, Japan, Singapore, Switzerland and other Continental
European countries.
1962
Schroders merged with Helbert, Wagg & Co., a stock broking firm founded in 1823,
which specialised in issues for domestic clients and contributed greatly to the
development of the investment advisory side.
1986
Schroders acquired a 50% interest in Wertheim & Co. Inc., a leading New York investment bank and securities firm and Schrobanco was sold to the Industrial Bank of Japan.
1994
Schroders acquired the remaining 50% of Wertheim which it later renamed
Schroder & Co. Inc.
2000
Schroders sold its investment banking business to Salomon Smith Barney.
Asset management and related businesses now comprise the whole of
Schroders plc’s business.
2001
Schroders acquired Beaumont, an absolute return asset management
business, focussing on high net worth individuals, family offices and professional
investors.
2004
Schroders plc celebrates 200 years history.
Schroder & Co Bank AG
This annual report is also published in German.
The German version is prevailing.
www.schroders.ch