Annual Report 2012
LGT Group
Contents
Corporate bodies
4
Financial highlights
5
Chairman’s report
6
Corporate governance
8
Consolidated financial statements
9
LGT Group Foundation
79
International presence and imprint
92
Contents
3
Corporate bodies as of April 2013
Foundation Board
H.S.H. Prince Philipp von und zu Liechtenstein, Chairman
Dr. Rodolfo Bogni 1
K B Chandrasekar 2
Dr. Phillip Colebatch 1
Sir Ronald Grierson 2
Dr. Dominik Koechlin 1, 2
Prof. Dr. Conrad Meyer 2
Senior Management Board
H.S.H. Prince Max von und zu Liechtenstein, CEO LGT Group
Dr. André Lagger, CEO LGT Financial Services
Dr. Roberto Paganoni, CEO LGT Capital Partners
Olivier de Perregaux, CFO LGT Group
Thomas Piske, CEO LGT Private Banking
Internal Audit
Daniel Hauser
External Audit
PricewaterhouseCoopers Ltd., Zurich
4
Corporate bodies as of April 2013
1
2
Member of the Human Resources and Compensation Committee
Member of the Audit Committee
Financial highlights
Assets under administration
2012
2011
2010
2009
2008
CHF m
102 118
86 932
86 079
89 023
78 030
of which client assets under administration
CHF m
99 448
84 486
83 547
86 604
75 912
of which LGT’s Princely Portfolio
CHF m
2 670
2 446
2 532
2 419
2 118
CHF m
12 342
5 758
3 102
4 550
-1 265
of which net new money
CHF m
10 515
8 562
3 102
-3 651
-1 265
of which through acquisition
CHF m
1 827
0
0
8 201
0
of which through disposal
CHF m
0
-2 804
0
0
0
Total operating income
CHF m
957
709
883
779
788
Group profit
CHF m
216
70
148
106
163
Appropriation of Foundation earnings and dividends
CHF m
-150 1
-75
-75
-75
-75
Group equity capital
CHF m
3 345
2 932
3 084
2 958
2 561
Total assets
CHF m
27 192
26 252
24 388
24 793
22 795
Net asset inflow
Ratios
Tier 1
%
21.5
17.5
19.3
18.5
16.5
Cost/income
%
64
75 2
70 3
74
68
Performance of LGT’s Princely Portfolio
%
11.5
-1.7
13.3
15.7
-24.1
1 830
1 779
1 889
1 985
1 870
Aa3
Aa3
Aa3
Aa3
Aa3
A+
A+
A+
A+
A+
Headcount at 31 December
Rating 4
Moody’s
Standard & Poor’s
1
Proposed
2
Excluding charges in connection with the sale of LGT Bank in Liechtenstein & Co. OHG in 2011
3
Excluding payment to German authorities in 2010
4
LGT Bank Ltd., Vaduz (formerly LGT Bank in Liechtenstein Ltd., Vaduz)
Financial highlights
5
Chairman’s report
thanks to good cost management, although the company continued to selectively invest in the expansion
of its business in 2012. The cost-income ratio improved
to 64%, compared to 75% the prior year.
Depreciation, amortization and provisions were up by
80% to CHF 86 million in the year under review. This
increase was primarily due to write-downs on goodwill.
LGT Group posted group profit of CHF 216 million for
the 2012 financial year. The group profit of CHF 70 mil­ .S.H. Prince Philipp von und zu Liechtenstein, Chairman LGT Group
H
(left) and H.S.H. Prince Max von und zu Liechtenstein, CEO LGT
Group (right)
lion in 2011 was net of one-off costs of CHF 50 million
associated with exiting the private banking business in
Germany. In consideration of this special item in the
prior year, profits increased by 80% in 2012.
2012 was once again characterized by an unsettled
LGT Group is very well capitalized and maintains a high
economic climate and low interest rates for the whole
level of liquidity. By December 31, 2012, its tier 1 capital
financial services industry. In this challenging environ-
ratio increased to 21.5%, compared to 17.5% at the
ment, LGT Group made considerable progress in the
end of 2011.
implementation of its strategy in all of its business
areas and markets.
Higher asset base thanks to strong net new
money inflows and solid investment performance
Strong profit growth
LGT Group attracted net new money inflows of CHF
Supported by the larger asset base compared to the
10.5 billion in 2012, compared to CHF 8.6 billion in
prior year, income from services increased by 15% in
the prior year. These inflows in 2012 represented an
2012, while net interest and similar income increased
excellent 12% growth on the assets managed at the
by 4%. Income from trading activities and other income
end of 2011. Both the private banking business, with
was up by almost 150%, reflecting valuation adjust-
its platforms in Liechtenstein, Switzerland, Austria,
ments on high quality bonds held in LGT’s securities
Singapore and Hong Kong, and the institutional asset
portfolio to maintain liquidity as well as hedging trans-
management business, recorded very good inflows.
actions. Overall, LGT achieved a total operating income
of CHF 957 million, up 35% on the prior year.
On December 31, 2012, assets under management
amounted to CHF 102.1 billion, up 18% on CHF 86.9
Total operating expenses increased by 9% to CHF 615
billion as at the end of the prior year. In addition to
million in the period under review, whereof personnel
the strong net inflows, a solid investment performance
expenses rose by 12%. This increase was due to higher
in a good trading year contributed to this result.
performance-related compensation resulting from the
6
growth of the business, which was partially offset by
Long-term strategic focus
the positive effects of a change to the LGT pension fund
For over twelve years we have pursued two major stra­
plan. Business and office expenses remained stable
tegic objectives: building up a world class investment
Chairman’s report
management capability also for the institutional client
have identified as particularly attractive. In 2012 we
base and expanding our private banking business inter-
completed two important acquisitions: In March we
nationally to broaden and diversify our markets. The
bought from Credit Suisse the highly rated insurance-
challenging last years have shown that our priorities
linked investment team (ILS) of Clariden Leu bank. ILS
are right.
manages assets of around USD two billion mainly for
institutional investors and is one of the top five providers
Today our business and client mix is well diversified and
in this line of business. Insurance-linked investment
predominantly located in the stable regions of Europe
offer low correlation with traditional asset classes and
and in growing emerging markets with a particular
are therefore very well suited to enhance diversification
strength in Asia where we have two strong hubs in
of more traditional portfolios. In December LGT Capital
Singapore and Hong Kong. In Europe we were also
Partners acquired Clerestory Capital Advisors, LLC,
able to strengthen our market shares by taking advan-
a New York-based investment and advisory firm that
tage of attractive consolidation opportunities.
provides investors with global access to real estate
via funds, co-investments and secondary investments.
Growing Private Banking platform
Both acquisitions ideally complement our core compe­
Our focus in 2012 was to build and grow our platforms
tencies in asset allocation, alternative investments and
in Austria, the Middle East and Asia. We also intend to
manager selection. Our growing institutional client base
strengthen our focus on the important UHNWI client
and good investment track record confirm that we are
segment with a new family office unit. We have intro-
heading in the right direction. Alternative asset classes
duced a Customer Relation Management system across
continue to gain market share as more clients diversify
all markets. This will allow us to align clients’ needs
out of traditional fixed income and equity markets,
and our solutions even better.
a trend which should benefit our asset management
efforts at LGT Capital Partners.
Overall we are very well positioned to take advantage
of the ongoing consolidation in the private banking and
Outlook
asset management industries and we have a platform
LGT Group started well into the current year, and re-
that is extremely attractive for clients and top client-
mains confident about the further development of its
advisors. This is thanks to our simple and effective own-
business. However, it expects the economic environment
ership structure, that sets us apart from most of our
to remain unpredictable, and markets to be character-
competitors, our strong balance sheet, a clearly defined
ized by volatility. The company also intends to continue
and pursued long-term strategy and a client-centric
investing in the expansion of its business.
advisory model.
Asset Management: Inhouse investment expertise
The more challenging the investment environment, the
more important it is to have deep investment expertise
in-house. In order to build a world class investment
management capability we have invested in further
strengthening our asset allocation know-how and our
global manager selection competence across all asset
classes. We focus on alternative asset classes that we
Chairman’s report
7
Corporate governance
LGT Group and its holding company, LGT Group
Internal Audit reports directly to the Group’s Board of
Foundation, are 100 percent controlled by the Prince
Trustees. In accordance with a general principle, the
of Liechtenstein Foundation (POLF), the beneficiary
external auditors are re-evaluated on a regular basis.
of which is H.S.H. Reigning Prince Hans-Adam II. von
und zu Liechtenstein. The POLF names the Founda­
The consolidated LGT Group is supervised by the
tion Board of LGT Group Foundation. The Group’s
Liechtenstein Financial Market Authority (FMA). Local
Foundation Board meets at least four times a year
companies are supervised by their local authorities.
and has constituted two separate committees (Audit
Committee; Human Resources and Compensation
Although it is a privately held company, LGT aims to
Committee). The Chairman of the Group’s Foundation
follow the standard practices of public companies;
Board is H.S.H. Prince Philipp von und zu Liechtenstein.
therefore LGT applies a transparent and proactive
The Group’s Foundation Board has appointed the
communication policy. LGT Bank Ltd. (formerly LGT
Group CEO, H.S.H. Prince Max von und zu Liechtenstein,
Bank in Liechtenstein Ltd.) is rated by Moody’s and
who is responsible for the strategic and operational
Standard & Poor’s. The LGT Group has applied Interna­
management of the Group.
tional Financial Reporting Standards (IFRS) since 1996.
The compensation system is supervised by the Human
Resources and Compensation Committee, and consists
of a fixed salary component, a yearly bonus and a
long-term incentive scheme (LTIS). As a privately held
company, LGT has developed an internal LTIS based
on an option scheme. Senior management and other
key people are entitled to participate in the LTIS. The
LTIS is calculated according to a predefined formula
which includes, in particular, the result of operating
activities, the investment performance of the Princely
Portfolio and the Group’s cost of capital. LTIS options
are granted yearly and can be exercised between three
to seven years after grant. In addition to direct compensation, the management has the possibility to coinvest directly in client products. These co-investments
are at the full risk/benefit of the subscribing employee.
8
Corporate governance
Consolidated financial statements
9
Report of the group auditors
10
Report of the group auditors
Consolidated income statement
Consolidated income statement (TCHF)
Note
2012
2011
Change
absolute
%
Interest earned and similar income
203 784
199 517
4 267
2
Interest expense
-92 645
-92 272
-373
0
Net interest and similar income
1
111 139
107 245
3 894
4
Income from services
2
562 062
487 678
74 384
15
Income from trading activities
3
255 065
56 572
198 493
351
Other operating income
4
29 150
57 499
-28 349
-49
957 416
708 994
248 422
35
-47 487
12
Total operating income
Personnel expenses
5
-439 596
-392 109
Business and office expenses
6
-175 701
-174 170
-1 531
1
Other operating expenses
7
-85 557
-47 736
-37 821
79
-700 854
-614 015
-86 839
14
256 562
94 979
161 583
170
-33 539
-20 090
-13 449
67
223 023
74 889
148 134
198
215 969
70 341
145 628
207
7 054
4 548
2 506
55
Total operating expenses
Operating profit before tax
Tax expense
Profit for the year
8
Attributable to:
Equity holders of the parent entity
Non-controlling interests
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated income statement
11
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income (TCHF)
Note
Profit for the year
2012
2011
Change
absolute
%
223 023
74 889
148 134
198
10 433
14 351
-3 918
-27
259 802
-160 260
420 062
-262
223 534
-146 836
370 370
-252
thereof available-for-sale securities
40 578
-15 254
55 832
-366
thereof cash flow hedge
-4 310
1 830
-6 140
-336
Total other comprehensive income
270 235
-145 909
416 144
-285
Total comprehensive income for the year
493 258
-71 020
564 278
-795
486 204
-75 568
561 772
-743
7 054
4 548
2 506
55
Other comprehensive income
Changes in cumulative translation adjustments
Net change in revaluation reserves, net of tax
thereof investments in associates
25
Attributable to:
Equity holders of the parent entity
Non-controlling interests
The accompanying notes form an integral part of the consolidated financial statements.
12
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated balance sheet (TCHF)
Note
2012
2011
Change
absolute
%
Assets
Cash in hand, balances with central banks
9
5 903 959
2 619 966
3 283 993
125
Loans and advances to banks
10
4 010 212
6 530 566
-2 520 354
-39
Loans and advances to customers
11
7 243 838
6 288 793
955 045
15
Securities held for trading purposes
12
8 935
4 948
3 987
81
Derivative financial instruments
30
756 918
1 435 273
-678 355
-47
Financial assets designated at fair value
13
3 442 402
3 538 563
-96 161
-3
Other investment securities
14
1 962 237
2 220 926
-258 689
-12
Investments in associates
15
2 671 693
2 446 237
225 456
9
Property and equipment
16
180 928
181 280
-352
0
Intangible assets
17
272 882
265 470
7 412
3
88 981
81 843
7 138
9
6 976
2 676
4 300
161
Prepayments and accrued income
Deferred tax assets
Other assets
8
18
Total assets
642 273
635 579
6 694
1
27 192 234
26 252 120
940 114
4
Liabilities
Amounts due to banks
19
1 231 402
1 855 132
-623 730
-34
Amounts due to customers
20
19 094 587
17 253 591
1 840 996
11
Derivative financial instruments
30
805 327
1 512 064
-706 737
-47
Financial liabilities designated at fair value
21
590 047
659 520
-69 473
-11
Certificated debt
22
1 572 986
1 516 851
56 135
4
Accruals and deferred income
85 892
60 867
25 025
41
Current tax liabilities
10 277
10 194
83
1
Deferred tax liabilities
8
103 925
78 665
25 260
32
Other liabilities
23
274 121
302 339
-28 218
-9
Provisions
24
78 234
70 571
7 663
11
23 846 798
23 319 794
527 004
2
Foundation capital
339 044
339 044
0
0
Retained earnings
1 991 906
1 850 937
140 969
8
-41 864
-52 297
10 433
-20
1 048 914
789 112
259 802
33
3 338 000
2 926 796
411 204
14
Total liabilities
Group equity capital
Cumulative translation adjustments
Other reserves
25
Total Group equity capital and reserves
attributable to LGT’s equity holder Non-controlling interests
Total Group equity capital
Total liabilities and Group equity capital
7 436
5 530
1 906
34
3 345 436
2 932 326
413 110
14
27 192 234
26 252 120
940 114
4
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated balance sheet
13
Consolidated statement of changes in equity
Consolidated statement
Foundation
Retained
Cumulative
Other
Total
Non-
capital 1
earnings
translation
reserves
attribut-
controlling
adjust-
able to
interests
ments
LGT’s equity
of changes in equity
(TCHF)
1 January 2012
339 044
1 850 937
-52 297
789 112
2 926 796
5 530
Total
2 932 326
Appropriation of Foundation
earnings and dividends
0
-75 000
0
0
-75 000
-5 105
-80 105
Net profit
0
215 969
0
0
215 969
7 054
223 023
0
0
10 433
0
10 433
0
10 433
0
0
0
259 802
259 802
0
259 802
0
0
0
223 534
223 534
0
223 534
Changes in cumulative
translation adjustments
Net change in revaluation
reserves, net of tax
thereof investments
in associates
thereof available-for-sale
securities
0
0
0
40 578
40 578
0
40 578
thereof cash flow hedge
0
0
0
-4 310
-4 310
0
-4 310
Change in non-controlling
interests
0
0
0
0
0
-43
-43
339 044
1 991 906
-41 864
1 048 914
3 338 000
7 436
3 345 436
Foundation
Retained
Cumulative
Other
Total
Non-
Total
capital 1
earnings
translation
reserves
attribut-
controlling
adjust-
able to
interests
ments
LGT’s equity
31 December 2012
1 January 2011
339 044
1 855 596
-66 648
949 372
3 077 364
6 349
3 083 713
earnings and dividends
0
-75 000
0
0
-75 000
-5 316
-80 316
Net profit
0
70 341
0
0
70 341
4 548
74 889
0
0
14 351
0
14 351
0
14 351
0
0
0
-160 260
-160 260
0
-160 260
0
0
0
-146 836
-146 836
0
-146 836
Appropriation of Foundation
Changes in cumulative
translation adjustments
Net change in revaluation
reserves, net of tax
thereof investments in
associates
thereof available-for-sale
securities
0
0
0
-15 254
-15 254
0
-15 254
thereof cash flow hedge
0
0
0
1 830
1 830
0
1 830
0
0
0
0
0
-51
-51
339 044
1 850 937
-52 297
789 112
2 926 796
5 530
2 932 326
Change in non-controlling
interests
31 December 2011
1
Foundation capital is fully paid and cannot be broken down to units.
The accompanying notes form an integral part of the consolidated financial statements.
14
Consolidated statement of changes in equity
Consolidated cash flow statement
Consolidated cash flow statement (TCHF)
Note
2012
2011
223 023
74 889
Cash flow from operating activities
Profit after tax
Impairment, depreciation, provisions
69 429
12 056
Impairment on available-for-sale securities
4
0
0
Tax expense
8
33 539
20 090
Changes in accrued income and expenses
162 263
-181 223
Interest and similar income received
209 219
185 398
Interest paid
-72 491
-88 668
Income tax paid
-14 924
-26 830
Cash flow from operating activities before changes in operating assets and liabilities
Loans and advances to banks
Loans and advances to customers
Trading securities and financial instruments designated at fair value
Amounts due to banks
610 058
-4 288
2 545 790
-1 218 166
-958 011
-950 995
18 064
-470 659
-623 635
-16 398
1 848 879
3 297 458
-339 737
-851 793
Cash flow from changes in operating assets and liabilities
2 491 350
-210 553
Net cash flow from operating activities
3 101 408
-214 841
Amounts due to customers
Other assets and other liabilities
Cash flow from investing activities
Proceeds from sales of property and equipment
1 033
626
Purchase of property and equipment
16
-20 627
-15 443
Purchase of other intangible assets
17
-49 378
-1 214
Cash inflow from sale of other intangible assets
17
0
10 000
Cash outflow on acquisition/foundation of subsidiaries
-19 836
0
Cash inflow from sale of subsidiaries
32
0
21 412
Additions of share of investments in associates
15
-8 336
-177 232
Disposals of share of investments in associates
15
265
173 428
Proceeds from sales of investment securities
14
2 715 823
8 617 706
Purchase of investment securities
14
-2 423 571
-5 972 093
195 373
2 657 190
Net cash flow from investing activities
Cash flow from financing activities
Issue of certificated debt
Repayment of certificated debt
Dividends paid to non-controlling interests
Dividends paid to beneficiary
Change in non-controlling interests
Net cash flow from financing activities
Effects of exchange rate changes on cash
Change in cash in hand, balances with central banks
At the beginning of the period
9
At the end of the period
9
Change in cash in hand, balances with central banks
340 489
201 187
-284 354
-254 752
-5 105
-5 316
-75 000
-75 000
-43
-51
-24 013
-133 932
11 225
20 054
3 283 993
2 328 471
2 619 966
291 495
5 903 959
2 619 966
3 283 993
2 328 471
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated cash flow statement
15
Notes to the consolidated financial statements
Group accounting principles
Introduction
Basis of consolidation
LGT Group Foundation, Herrengasse 12, Vaduz,
Subsidiaries are fully consolidated from the date on
Principality of Liechtenstein, is the holding company
which control is transferred to the Group. Inter-company
of LGT Group, a global financial services institution.
transactions, balances and unrealized gains on trans-
The beneficiary of LGT Group Foundation is the Prince
actions between Group companies are eliminated.
of Liechtenstein Foundation. The main economic
Subsidiaries are deconsolidated from the date that
beneficiary of the Prince of Liechtenstein Foundation
control ceases. The acquisition method of accounting
is the reigning prince of Liechtenstein, H.S.H. Prince
is used to account for the acquisition of subsidiaries
Hans-Adam II. of Liechtenstein.
by the Group. The cost of an acquisition is measured
at the fair value of the assets given, e­ quity instruments
The terms “LGT Group”, “LGT” or “Group” mean
issued and liabilities incurred or assumed at the date
LGT Group Foundation together with its subsidiary
of exchange. Costs directly attributable to the acquisi-
undertakings and the term “Company” refers to
tion are expensed through income statement. Identi­
LGT Group Foundation.
fiable assets acquired and liabilities and contingent
liabilities a­ ssu­med in a business combination are
Presentation of amounts
measured ­initially at their fair values at the acquisition
The Group publishes its financial statements in thou-
date, ­irrespective of the extent of any minority i­nterest.
sand Swiss Francs (TCHF) unless otherwise stated.
The excess of the cost of acquisition over the fair value
of the Group’s share of the identifiable net assets
Accounting principles
acquired is recorded as goodwill. If the cost of acqui-
The consolidated financial statements for the financial
sition is less than the fair value of the net assets of
year 2012 are prepared in accordance with Interna­
the subsidiary acquired, the difference is r­ ecognized
tional Financial Reporting Standards (IFRS). LGT has
directly in the income statement.
applied IFRS rules since 1996. The consolidated finan-
A list of the Group’s principal subsidiary undertakings
cial statements are prepared on the historical cost
is provided in note 32.
convention, as modified by revaluation of availablefor-sale financial assets, financial assets and liabilities
Investments in associates
held at fair value through profit or loss and all
Investments in associates are investments in companies
derivative instruments. A summary of the principal
over which the Group has significant influence but not
Group accounting policies is set out below.
control, generally accompanying a shareholding of
between 20 percent and 50 percent of the economical
The Group CEO and the Group CFO considered the
rights. LGT associates are accounted for by the equity
consolidated financial statements on 10 April 2013.
method of accounting and are initially recognized at
They were approved for issue by the Audit Committee
fair value plus transaction costs. Unrealized gains on
of the LGT Group Foundation Board on 24 April 2013.
transactions between the Group and its associates are
The Foundation Board approved the consolidated
eliminated unless the transaction provides evidence of
financial statements for issue on 25 April 2013. The
an impairment of the asset transferred. Accounting
accounts were presented for approval at the Founda­
policies have been changed where necessary to ensure
tion Meeting to the Foundation Supervisory Board on
consistency with the policies adopted by the Group.
25 April 2013. The Foundation Board proposed to the
The investments in associates are reported in note 15.
Foundation Meeting of 25 April 2013 the payment
16
of CHF 150 000 000 to the Prince of Liechtenstein
The Group’s share of its associates’ post-acquisition
Foundation. The accounts on pages 11 to 73 were
profit or loss is recognized in the income statement,
approved by the Foundation Board on 25 April 2013
or in other reserves. Its share of post-acquisition
and are signed on its behalf by H.S.H. Prince Philipp
movements in reserves is recognized in reserves. The
of Liechtenstein, Chairman, and Olivier de Perregaux,
cumulative post-acquisition movements are adjusted
Group CFO.
against the carrying amount of the investment.
Notes to the consolidated financial statements
Foreign currencies
Goodwill and fair value adjustments arising on the
Functional and presentation currency
acquisition of a foreign entity are treated as assets
Items included in the financial statements of each of
and liabilities of the foreign entity and translated at
the Group’s entities are measured using the currency
the closing rate.
of the primary economic environment in which the
entity operates (“the functional currency”).
Foreign exchange rates
The conso­lidated financial statements are presented in
The foreign exchange rates for the major currencies
Swiss Francs, which is the Group’s presentation currency.
which have been applied are as follows:
Transactions and balances
2012
Average rate
Year-end rate
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing
on the dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of such transactions and from the trans­lation at year-end ex­change
rates of monetary assets and liabilities denomin­ated in
foreign currencies are recognized in the income statement, except when deferred in equity as qualifying cash
flow hedges and qualifying net investment hedges.
CHF per 1 USD 0.9327
0.9148
CHF per 1 EUR
1.2047
1.2068
CHF per 1 GBP
1.4826
1.4863
2011
Average rate
Year-end rate
CHF per 1 USD 0.8847
0.9356
CHF per 1 EUR
1.2332
1.2151
CHF per 1 GBP
1.4201
1.4545
Translation differences on non-monetary items, such
as equities held at fair value through profit or loss, are
Interest income and expense
reported as part of the fair value gain or loss. Trans­lation
Interest income and expense are recognized in the
differences on non-monetary items, such as equities
income statement for all instruments measured at
classified as available-for-sale financial assets, are includ-
amortized cost using the effective interest method.
ed in the fair value reserve in equity.
The effective interest method is a method of calcula­ting
Group companies
the amortized cost of a financial asset or a financial
The results and financial position of all the Group
liability and of allocating the interest income or interest
entities that have a functional currency different from
expense over the relevant period. The effective interest
the presentation currency are translated into the
rate is the rate that exactly discounts estimated future
presentation currency as follows:
cash payments or receipts through the expected life of
n
n
n
assets and liabilities for each balance sheet presented
the financial instrument or, when appropriate, a shorter
are translated at the closing rate on the date of
period to the net carrying amount of the financial asset
that balance sheet;
or financial liability. When calculating the effective inter­
income and expenses for each account of the income
est rate, the Group estimates cash flows considering
statement are translated at average exchange rates;
all contractual terms of the financial instrument (for
all resulting exchange differences are recognized as
a separate component of equity.
example, prepayment options) but does not consider
future credit losses. The calculation includes all fees
and interest points paid or received between parties to
On consolidation, exchange differences arising from
the contract that are an integral part of the effective
the translation of the net investment in foreign entities,
interest rate, transaction costs and all other premiums
and of borrowings and other currency instruments
or discounts. Once a financial asset or a group of similar
designated as hedges of such investments, are taken
financial assets has been written down as a result of an
to equity. When a foreign operation is sold, such
impairment loss, interest income is recognized using the
exchange differences are recognized in the income
rate of interest used to discount the future cash flows
statement as part of the gain or loss on sale.
for the purpose of measuring the impairment loss.
Notes to the consolidated financial statements
17
Commission income
Intangible assets
Commission income and any associated expense ari­sing
Goodwill
from the provision of private banking and investment
Goodwill represents the excess of the cost of a business
management services, credit commissions and interest
combination over the fair value of the Group’s share of
are all accounted for using the accrual method. Fixed
the net identifiable assets of the acquired subsidiary/
commissions receivable and payable are accounted for
associate at the date of acquisition. Goodwill on a
evenly over the life of the relevant contract.
business combination of subsidiaries is included in
“goodwill and other intangible assets”. Goodwill on
Performance fees are defined as management fees
a business combination of investments in associates
payable for the provision of investment management
is included in “investments in associates”. Goodwill is
services, but which are conditional on the performance
tested annually for impairment and c­ arried at cost less
of the fund or account under contract, c­ om­pared to
accumulated impairment losses. Gains and losses on
the performance of a specified benchmark. They are
the disposal of an entity in­clude the carrying amount
accrued according to the contract terms for the meas-
of goodwill relating to the entity sold.
urement period when they can be reliably measured,
and are invoiced only after c­ onfirmation of the perfor-
Software
mance fee calculation.
Software acquired by the Group is stated at cost less
accumulated amortization and accumulated i­mpairment
Property and equipment
losses. Subsequent expenditure on software assets is
Property and equipment and their subsequent costs
capitalized only when it increases the future economic
are stated at cost less accumulated depreciation and
benefits embodied in the specific asset to which it
accumulated impairment losses. All other repairs and
relates. All other expenditure is expensed as incurred.
maintenance are charged to the income statement
Amortization is recognized in the income statement on
during the financial period in which they are incurred.
a straight-line basis over the estimated useful life of the
Property and equipment are periodically reviewed for
software, from the date that it is available for use. The
impairment. An asset’s carrying amount is written
estimated useful life of software is three to ten years.
down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated
Other intangible assets
recoverable amount. The recoverable amount is the
Other intangible assets are recognized on the balance
higher of the asset’s fair value less costs to sell and
sheet at cost determined at the date of acquisition
value in use. Depreciation on it is provided, on a
and are amortized using the straight-line method over
straight-line basis, from the date of purchase, over the
their estimated useful economic life, not exceeding
estimated useful life of the asset. The assets’ residual
20 years. The amortization is recognized in other oper-
values and useful lives are reviewed, and adjusted if
ating expenses in the income statement.
appropriate, at each balance sheet date. Estimated
asset lives vary in line with the following:
At each balance sheet date other intangible assets are
reviewed for indications of impairment or changes in
18
Freehold buildings
50 years
estimated future benefits. If such indication exists, an
Leasehold improvements
period of lease
analysis is performed to assess whether the carrying
IT equipment
3–5 years
amount of other intangible assets is fully recoverable.
Office equipment
5 years
An impairment is charged if the carrying amount
Motor vehicles
4 years
exceeds the recoverable amount.
Notes to the consolidated financial statements
Financial instruments
Financial assets at fair value through profit or loss
Financial assets
This category has two sub-categories: financial assets
Purchases and sales of financial assets at fair value
held for trading, and those designated at fair value
through profit or loss, held to maturity and available
through profit or loss at inception. A financial asset is
for sale are recognized on the trade-date – the date
classified in this category if acquired principally for t­ he
on which the Group commits to purchase or sell the
purpose of selling in the short term or if so designated
asset. Loans are recognized when cash is advanced to
by management. Derivatives are also categorized as
the borrowers. Financial assets are initially recognized
held for trading unless they are designated as hedges.
at fair value plus transaction costs for all financial
assets not carried at fair value through profit or loss.
The Group designates financial assets and liabilities at
Financial assets are derecognized when the rights
fair value through profit or loss when either
to receive cash flows from the financial assets have
n
ex­pired or where the Group has transferred substantially all risks and rewards of ownership.
the assets or liabilities are managed, evaluated
and reported internally on a fair value basis;
n
the designation eliminates or significantly reduces an
accounting mismatch which would otherwise arise;
Loans and advances
n
the asset or liability contains an embedded derivative
Loans and receivables are non-derivative financial
that significantly modifies the cash flows that would
assets with fixed or determinable payments that are
otherwise be required under the contract.
not quoted in an active market. They arise when the
Group provides money, goods or services directly to
Held-to-maturity securities
a debtor with no intention of trading the receivable.
Held-to-maturity securities are financial assets with fixed
Loans and advances to customers and to banks are
or determinable payments and fixed maturity that LGT
reported at their amortized cost less allowances for
has the positive intention and ability to hold to maturity.
any impairment or losses.
Held-to-maturity securities are carried at amortized cost
subject to a test for impairment. The ­difference between
Investment securities
initial recognition and nominal value is amortized over
Investment securities are classified as financial assets
the period to maturity. This amount and interest income
at fair value through profit or loss, available-for-sale
are stated as net interest income.
and held-to-maturity securities. They are recognized
on the balance sheet and initially measured at fair
Available-for-sale securities
value, which is the cost on the consideration given
Available-for-sale securities are those securities that do
or received to acquire them. Subsequent to initial
not properly belong in trading securities or held-to-
recognition, securities are remeasured to fair value,
maturity securities. They are initially recognized at
except held-to-maturity securities which are carried
fair value (plus transaction costs). Available-for-sale
at amortized cost subject to a test for impairment. To
securities are subsequently remeasured at fair value or
the extent that quoted prices are not readily available,
amounts derived from cash flow models. Fair values for
fair value is based on either internal valuation models
unlisted equity securities are estimated using applicable
or management’s estimate of amounts that could be
price/earnings or price/cash flow ratios refined to reflect
realized, based on observable market d
­ ata, assuming
the specific circumstances of the issuer. Unrealized
an orderly liquidation over a reasonable period of time.
gains and losses arising from changes in the fair
value of securities classified as available-for-sale are
recognized in equity. Equity securities for which fair
values cannot be measured reliably are recognized at
cost less impairment. When the securities are d
­ isposed
of or im­paired, the related accumulated fair value
adjustments are included in the income state­ment as
income from investment securities.
Notes to the consolidated financial statements
19
Borrowings
A hedge is regarded as highly effective if actual results
Borrowings are recognized initially at fair value,
are within a range of 80 percent to 125 percent.
being their issue proceeds (fair value of consideration
received) net of transaction cost incurred. Borrowings
Changes in the fair value of derivatives that are
are subsequently stated at amortized cost, any differ-
­designated and qualify as fair value hedges and that
ence between proceeds net of transaction costs and
prove to be highly effective in relation to hedged risk
the redemption value is recognized in the income
are recorded in the income statement, along with the
statement over the period of the borrowing using the
corresponding change in the fair value of the hedged
effective interest method.
asset or liability that is attributable to that specific
hedged risk. The fair value change of the hedged item
Other liabilities
in a portfolio hedge of interest rate risks is reported
Other liabilities are reported at amortized cost.
separately from the hedged portfolio in other assets
Interest and discounts are taken to net interest and
or other liabilities as appropriate.
similar income on an accrual basis.
If the hedge no longer meets the criteria for hedge
Derivative financial instruments and hedging
accounting, in the case of interest-bearing financial
Derivatives are initially recognized at fair value on the
instruments the difference between the carrying
date on which a derivative contract is entered into
amount of the hedged position at that time and the
and are subsequently remeasured at their fair value.
value that this position would have exhibited without
Fair values are obtained from quoted market prices
hedging is amortized to net profit or loss over the
in active markets and valuation techniques, including
remaining period to maturity of the original hedge. In
discounted cash flow models and option pricing
the case of non-interest-bearing financial instruments,
models, as appro­priate. All derivatives are carried
on the other hand, this difference is immediately
as assets when fair value is positive and as liabilities
recorded in the income statement.
when fair value is negative.
Changes in the fair value of derivatives that have been
In the case of hedging transactions involving derivative
recorded as a cash flow hedge, that fulfill the criteria
financial instruments, on the inception of transaction it
mentioned above and that prove to be effective in
is determined whether the specific transaction is
hedging risk are reported under other reserves in
n
a hedge of the value of a balance sheet item
(a fair value hedge), or
n
a hedge of a future cash flow or obligation
(a cash flow hedge).
Group equity capital. If the hedged cash flow or the
obligation leads to direct recognition in the income
statement, the hedging instrument’s cumulative gains
or losses from previous periods in Group equity c­ apital
are included in the income statement in the same
Derivatives categorized in this manner are treated
period as the hedged transaction.
as hedging instruments in the financial statements if
they fulfill the following criteria:
n
n
n
existence of documentation that specifies the
hedging transactions and are in line with the risk
under­lying transaction (balance sheet item
management principles of the Group. However, in
or cash flow), the hedging instrument as well as
view of the strict and specific guidelines of IFRS, they
the hedging strategy/relationship,
do not fulfill the criteria to be treated as hedging
effective elimination of the hedged risks through
transactions for accounting purposes. They are there-
the hedging transaction during the entire reporting
fore reported as trading positions. Changes in value
period (high correlation),
are recorded in the income statement in the corres­
sustained high effectiveness of the hedging
transaction.
20
Certain ­derivative transactions represent financial
Notes to the consolidated financial statements
ponding period.
Determination of fair values
the Group holds. Price data and parameters used in
For financial instruments traded in active markets, the
the measurement procedures applied are generally
determination of fair values of financial assets and
reviewed carefully and adjusted, if necessary – particu­
financial liabilities is based on quoted market prices
larly in view of the current market developments.
or dealer price quotations. This includes listed equity
securities and quoted debt instruments on major
The fair value of over-the-counter (OTC) derivatives is
exchanges as well as exchange traded derivatives.
determined using valuation methods that are commonly
accepted in the financial markets, such as present
A financial instrument is regarded as quoted on an
value techniques and option pricing models. The fair
active market if quoted prices are readily and regularly
value of foreign exchange forwards is generally based
available from an exchange, dealer, broker, industry
on current forward exchange rates.
group, pricing service or regulatory agency, and those
prices represent actual and regularly occurring market
Private equity investments for which market quotations
transactions on an arm’s length basis. If the above crite­
are not readily available are valued at their fair values
ria are not met, the market is regarded as being inactive.
as determined in good faith by the respective Board of
Directors in consultation with the investment manager.
For all other financial instruments, fair value is deter-
In this respect, investments in other investment com-
mined using valuation techniques. In these techniques,
panies (fund investments) which are not publicly traded
fair values are estimated from observable data in
are normally valued at the underlying net asset value
respect of similar financial instruments, using models
as advised by the managers or administrators of these
to estimate the present value of expected future cash
investment companies, unless the respective Board of
flows or other valuation techniques, using inputs (for
Directors are aware of good reasons why such a valu-
example, LIBOR yield curve or FX rates) existing at the
ation would not be the most appropriate indicator of
consolidated balance sheet dates.
fair value.
The Group uses widely recognized valuation models for
In estimating the fair value of private equity fund in­­
determining fair values of non-standardized financial
vestments, the respective Board of Directors considers
instruments of lower complexity, such as options or
all appropriate and applicable factors (including a sen-
interest rate and currency swaps. For these financial
sitivity to non-observable market factors) relevant to
instruments, inputs into models are generally market-
their value, including but not limited to the following:
observable.
n
reference to the fund investment’s reporting informa­tion including consideration of any time lags between
For more complex instruments, the Group uses intern­ally
the date of the latest available reporting and the
developed models, which are usually based on valuation
balance sheet date of the respective Group entity in
methods and techniques generally recognized as stand­
those situations where no December valuation of the
ard within the industry. Valuation models are used pri­
underlying fund is available. This includes a detailed
marily to value derivatives transacted in the over-the-
analysis of exits (trade sales, initial public offerings,
counter market. Some of the inputs to these models
etc.) which the fund investments have gone through
may not be market observable and are therefore estima-
in the period between the latest available reporting
­ted based on assumptions. The impact on net profit of
and the balance sheet date of the respective Group
financial instrument valuations reflecting non-market ob-
entity, as well as other relevant valuation information.
­servable inputs (level 3 valuations) is disclosed in note 29.
This information is a result of continuous contact
with the investment managers and, specifically, by
The output of a model is always an estimate or approxi­
monitoring calls made to the investment managers,
mation of a value that cannot be determined with
distribution notices received from the investment
certainty, and valuation techniques employed may
managers in the period between the latest available
not fully reflect all factors relevant to the positions
report and the balance sheet date of the respective
Notes to the consolidated financial statements
21
Group entity, as well as the monitoring of other finan­-
events that occurred after the initial recognition of the
cial information sources and the assessment thereof;
asset (a “loss event”) and that loss event (or events)
n
reference to transaction prices;
has an impact on the estimated future cash flows
n
result of operational and environmental assessments:
of the financial asset or group of financial assets that
periodic valuation reviews are made of the valua-
can be reliably estimated. Objective evidence that a
tions of the underlying investments as reported by
financial asset or group of assets is impaired includes
the investment managers to determine if the values
observable data that comes to the attention of the
are reasonable, accurate and reliable. These reviews
Group about the following loss events:
in­clude a fair value estimation using widely recog-
n
significant financial difficulty of the issuer or obligor;
nised valuation methods such as multiple analysis
n
a breach of contract, such as a default or delin-
n
the Group granting to the borrower, for economic
and discounted cash flow analysis;
n
review of management information provided by the
quency in interest or principal payments;
managers/administrators of the fund investments
or legal reasons relating to the borrower’s financial
on a regular basis; and
difficulty, a concession that the lender would not
mark-to-market valuations for quoted investments held
by the managers/administrators of the fund investments
otherwise consider;
n
which make up a significant portion of the relevant
it becoming probable that the borrower will enter
bankruptcy or other financial reorganization;
Group entity’s net asset value.
n
the disappearance of an active market for that
If the respective Board of Directors comes to the con-
n
observable data indicating that there is a measurable
financial asset because of financial difficulties;
clusion upon recommendation of the investment man­
decrease in the estimated future cash flows from a
ager after applying the above-mentioned valuation
group of financial assets since the initial recognition
methods, that the most recent valuation reported by
of those assets, although the decrease cannot yet be
the manager/administrator of a fund investment is
identified with the individual f­ inancial assets in the
materially misstated, it will make the necessary adjust­
group, including:
ments using the results of its own review and analysis.
– adverse changes in the payment status of
Typically, the fair value of such investments are remeas-
borrowers in the group; or
­ured based on the receipt of periodic (usually quarterly)
– national or local economic conditions that
reporting provided to the investors in such vehicles by
correlate with defaults on the assets in the group.
the managers or administrators. For new investments
in such vehicles, prior to the receipt of fund reporting,
The Group first assesses whether objective evidence of
the investments are usually valued at the amount con­
impairment exists individually for financial assets that are
tributed, which is considered to be the best indicator
individually significant, and individually or collectively
of fair value.
for financial assets that are not individually significant.
If the Group determines that no objective evidence of
In cases when the fair value of unlisted equity instru-
impairment exists for an individually assessed finan-
ments cannot be determined reliably, the instruments
cial asset, whether significant or not, it includes the
are carried at cost less impairment.
asset in a group of financial assets with similar credit
risk characteristics and collectively assesses them for
Impairment of financial assets
impairment. Assets that are individually assessed for
Assets carried at amortized cost
impairment and for which an impairment loss is or
The Group assesses at each balance sheet date whether
continues to be recognized are not included in a
there is objective evidence that a financial asset or a
collective assessment of impairment.
group of financial assets is impaired. A financial asset or
22
a group of financial assets is impaired and impairment
If there is objective evidence that an impairment loss on
losses are incurred if, and only if, there is o
­ bjective
loans and receivables or held-to-maturity investments
evidence of impairment as a result of one or more
carried at amortized cost has been incurred, the amount
Notes to the consolidated financial statements
of the loss is measured as the difference between the
period (for example, changes in unemployment rates,
asset’s carrying amount and the present value of esti-
property prices, payment status, or other factors indica-
mated future cash flows (excluding future credit losses
tive of changes in the probability of losses in the group
that have not been incurred) discounted at the finan-
and their magnitude). The methodology and assump-
cial asset’s original effective interest rate. The carrying
tions used for estimating future cash flows are reviewed
amount of the asset is reduced through the use of
regularly by the Group to reduce any differences
an allowance account and the amount of the loss is
between loss estimates and actual loss experience.
recognized in the income statement. If a loan or heldto-maturity investment has a variable interest rate,
When a loan is uncollectible, it is written off against
the discount rate for measuring any impairment loss
the related provision for loan impairment. Such loans
is the current effective interest rate determined under
are written off after all the necessary procedures have
the contract. As a practical expedient, the Group may
been completed and the amount of the loss has been
measure impairment on the basis of an instrument’s
determined. Subsequent recoveries of amounts pre­
fair value using an observable market price.
viously written off decrease the amount of the provision for loan impairment in the income statement.
The calculation of the present value of the estimated
future cash flows of a collateralized financial asset
If, in a subsequent period, the amount of the impair-
reflects the cash flows that may result from foreclo-
ment loss decreases and the decrease can be related
sure less costs for obtaining and selling the collateral,
objectively to an event occurring after the impair-
whether or not foreclosure is probable.
ment was recognized (such as an improvement in
the debtor’s credit rating), the previously recognized
For the purposes of a collective evaluation of impair-
impairment loss is reversed by adjusting the allowance
ment, financial assets are grouped on the basis of
ac­count. The amount of the reversal is recognized in
similar credit risk characteristics (i.e. on the basis of
the income statement.
the Group’s grading process that considers asset type,
industry, geographical location, collateral type, past-due
Assets carried at fair value
status and other relevant factors). Those characteristics
The Group assesses at each balance sheet date whether
are relevant to the estimation of future cash flows
there is objective evidence that a financial asset or a
for groups of such assets by being indicative of the
group of financial assets is impaired. In the case of
debtors’ ability to pay all amounts due according to
equity investments classified as available-for-sale, a
the contractual terms of the assets being evaluated.
signi­ficant or prolonged decline in the fair value of the
security below its cost is considered in determining
Future cash flows in a group of financial assets that are
whet­her the assets are impaired. If any such evidence
collectively evaluated for impairment are estimated on
exists for available-for-sale financial assets, the cumu-
the basis of the contractual cash flows of the assets in
lative loss – measured as the difference between the
the group and historical loss experience for assets with
acquisition cost and the current fair value, less any
credit risk characteristics similar to those in the group.
impairment loss on that financial asset previously rec-
Historical loss experience is adjusted on the basis of
ognized in profit or loss – is removed from equity and
current observable data to reflect the effects of current
recognized in the income statement. Impairment losses
conditions that did not affect the period on which the
recognized in profit or loss on equity instruments are
historical loss experience is based and to remove the
not reversed through the income statement, they are
effects of conditions in the historical period that do
reversed through equity. If, in a subsequent period, the
not exist currently.
fair value of a debt instrument classified as availablefor-sale increases and the increase can be objectively
Estimates of changes in future cash flows for groups
related to an event occurring after the impairment
of assets should reflect and be directionally consistent
loss was recognized in profit or loss, the impairment
with changes in related observable data from period to
loss is reversed through the income statement.
Notes to the consolidated financial statements
23
Renegotiated loans
Leasing
Loans that are either subject to collective impairment
The leases entered into by the Group are operating
assessment or individually significant and whose terms
leases. The expenses from operating leases (the rights
have been renegotiated are no longer considered to be
and responsibilities of ownership remain with the ­lessor)
past due but are treated as new loans. In subsequent
are disclosed in business and office expenses.
years, the asset is considered to be past due and disclosed only if renegotiated.
Cash in hand
For the purpose of the consolidated cash flow state-
Provisions
ment, cash in hand comprises liquid assets including
Provisions for restructuring costs, legal claims and other
cash and balances with central banks and post offices.
operational risk are recognized, when the Group has a
present legal or constructive obligation as a result of
Taxation
past events, when it is more likely than not that an out­
Corporate tax payable is provided on the taxable profits
flow of resources will be required to settle the obliga-
of LGT Group companies at the applicable current rates.
tion and when the amount has been reliably estimated.
Deferred income tax is provided in full, using the liabil­
ity method, on temporary differences arising between
Fiduciary transactions
the tax bases of assets and liabilities and their carrying
The Group commonly acts as trustees and in other
amounts in the consolidated financial statements.
fiduciary capacities that result in the holding or placing
Deferred income tax is determined using tax rates (and
of assets on behalf of individuals, trusts, retirement
laws) that have been enacted or substantially enacted
benefit plans and other institutions. These assets and
by the balance sheet date and are expected to apply
income arising thereon are excluded from these finan-
when the related deferred income tax asset is realized
cial statements, as they are not assets of the Group.
or the deferred income tax liability is settled. Deferred
tax assets are recognized where it is probable that
Repurchase and reverse repurchase transactions
future taxable profit will be available against which
(repo transactions)
the temporary differences can be utilized.
Repo transactions are used to refinance and fund money
market transactions. They are entered in the balance
Employee benefits
sheet as advances against collateral and cash contribu­
Short-term benefits
tions or with pledging of securities held in the Group’s
Salaries are recognized in the income statement upon
own account. Securities provided to serve as collateral
payment. The amount for bonuses is accrued and will
thus continue to be posted in the corresponding balance
be paid at the beginning of the following year.
sheet positions – securities received to serve as collateral
are not reported in the balance sheet. Interest resulting
Medium-term benefits
from the trans­actions is posted as net interest income.
Senior management and other key people of the Group
are entitled to participate in a long-term incentive
24
Contingent liabilities
scheme. The incentive scheme gives the holder the possi­
A contingent liability is a possible obligation that arises
bility to participate in the development of the economic
from past events and whose existence will be confirmed
value added of the Group. In principle, the economic
only by the occurrence or non-occurrence of one or
value added represents the operating profit of the
more uncertain future events not wholly within the con­­
Group and the return on LGT’s Princely Portfolio after
trol of the entity. Or a contingent liability is a present
adjustments for capital and refinancing costs. Options
obligation that arises from past events but is not rec-
granted under the scheme will, in ­normal circumstances,
ognized because it is not probable that an out­­­­flow of
only be exercisable within 3 to 7 years from the date
resources embodying economic benefits will be required
of grant of option. The annual costs of the scheme are
to settle the obligation or the amount of the obligation
charged to the profit and loss account. The accruals
cannot be measured with sufficient reliability.
are shown as other liabilities until their realization.
Notes to the consolidated financial statements
Pension obligations
expense when they are due. Prepaid contributions are
Group companies operate various pension schemes.
recognized as an asset to the extent that a cash refund
The schemes are generally funded through payments
or a reduction in the future payments is available.
to insurance companies or trustee-administered funds,
determined by periodic actuarial calculations. The
Client assets under administration
Group has both defined benefit and defined contribu­
Client assets under administration are stated according
tion plans. A defined benefit plan is a pension plan
to the provisions of the Liechtenstein banking law.
that defines an amount of pension benefit that an
employee will receive on retirement, usually dependent
Events after the reporting period
on one or more factors such as age, years of service
There are no events to report that had an influence
and compensation. A defined contribution plan is a
on the balance sheet and income statement for 2012.
pension plan under which the Group pays fixed contributions into a separate entity.
Management’s judgments
The Group makes estimates and assumptions that affect
The liability recognized in the balance sheet in respect
the reported amounts of assets and liabilities within the
of defined benefit pension plans is the present value
next financial year. Estimates and judgments are con­
of the defined benefit obligation at the balance sheet
tinually evaluated and are based on historical experi-
date less the fair value of plan assets, together with
ence and other factors, including expectations that are
adjustments for unrecognized actuarial gains or losses
believed to be reasonable under the circumstances.
and past service costs. The defined benefit obligation
is calculated annually by independent actuaries using
Impairment losses on loans and advances
the projected unit credit method. The present value
The Group reviews its loan portfolios to assess impair­
of the defined benefit obligation is determined by
ment at least on a quarterly basis. In determining
­discounting the estimated future cash outflows using
whether an impairment loss should be recorded in the
interest rates of high-quality corporate bonds that are
income statement, the Group makes judgments as to
denominated in the currency in which the benefits will
whether there is any observable data indicating that
be paid, and that have terms to maturity approximating
there is a measurable decrease in the estimated future
to the terms of the related pension liability.
cash flows from a portfolio of loans before the decrease
can be identified with an individual loan in that port-
Based on the corridor approach, actuarial gains and loss-
folio. This evidence may include observable data indi-
es arising from experience adjustments and changes in
cating that there has been an adverse change in the
actuarial assumptions are charged or credited to income
payment status of borrowers in a group, or national or
over the employees expected remaining average work-
local economic conditions that correlate with defaults
ing lives if the net cumulative unrecognized actuarial
on assets in the group.
gains and losses exceed the greater of 10 percent of the
defined benefit obligation and 10 percent of the fair
Management uses estimates based on historical loss
value of any pension plan assets. Past-service costs are
experience for assets with credit risk characteristics and
recognized immediately in income, unless the changes
objective evidence of impairment similar to those in the
to the pension plan are conditional on the employees
portfolio when scheduling its future cash flows. The
remaining in service for a specified period of time (the
methodology and assumptions used for estimating both
vesting period). In this case, the past-service costs are
the amount and timing of future cash flows are reviewed
amortized on a straight-line basis over the vesting period.
regularly to reduce any differences between loss estimates and actual loss experience. To the extent that the net
For defined contribution plans, the Group pays con-
present value of estimated cash flows differs by +5 per­
tributions to privately administered pension insurance
cent, the provision would be estimated 96 (2011: 201)
plans on a mandatory, contractual or voluntary basis.
lower. If the net present value d
­ iffers by -5 percent, the
The contributions are recognized as employee benefit
provision would be estimated 96 (2011: 191) higher.
Notes to the consolidated financial statements
25
Impairment of goodwill
Income taxes
The fair value of goodwill is reviewed annually and
The Group is subject to income taxes in numerous juris-
management assesses whether an impairment charge
dictions. Significant estimates are required in determin-
needs to be recognized.
ing the worldwide provision for income taxes. There
are many transactions and calculations for which the
Fair value of derivatives
ultimate tax determination is uncertain during the ordi-
The fair value of financial instruments that are not
nary course of business. The Group recognizes liabilities
quoted in active markets are determined by using valu­
for anticipated tax audit issues based on estimates of
ation techniques. Where valuation techniques (for
whether additional taxes will be due. Where the final
example, models) are used to determine fair values,
tax outcome of these matters is differ­ent from the
they are validated and periodically reviewed by qualified
amounts that were initially recorded, such differences
personnel independent of the area that created them.
will impact the income tax and deferred tax provisions
in the period in which such determination is made.
Changes in assumptions could affect reported fair value
of financial instruments. For example, to the extent
Based on the final outcome of the above-mentioned
that management used a tightening of 20 basis points
judgment areas (impairment losses on loans and
in the credit spread, the fair value of derivative finan-
advances, fair value of derivatives and impairment
cial instruments would be estimated at -52 903 (2011:
of afs equity investments), the Group would need to
-81 507) as compared to their reported fair value of
decrease income tax by 932 (2011: 3 373), in case of
-48 409 (2011: -76 791) at the balance sheet date.
favorable market conditions, and decrease income tax
by 956 (2011: 3 422), in case of unfavorable market
Impairment of available-for-sale equity
conditions.
investments
The Group determines that available-for-sale equity
Changes in accounting principles and presentation
investments are impaired when there has been a
Standards and interpretations that have been
­significant or prolonged decline in the fair value below
adopted
their cost (cost is defined as historical cost). This deter­
The Group applied the following new and revised
mination of what is significant or prolonged requires
standards and interpretations for the first time in the
judgment. In making this judgment the Group evalu-
financial year beginning on 1 January 2012:
ates the following factors: (i) extent of the decline is
n
substantial (in excess of 20 percent of cost) or, (ii) the
fair value is three balance sheet dates in succession
2011. Applied retrospectively)
n
(on a semi-annual basis) or more below cost. In addition, impairment may be appropriate when there is
technology, and operational and financing cash flows.
Amendments to IFRS 7 Financial Instruments:
Disclosures on derecognition (effective 1 July 2011)
n
Amendments to IFRS 7 Disclosures – Transfers of
n
Amendments to IAS12 Income Taxes on Deferred
evidence of a deterioration in the financial health of the
investee, industry and sector performance, changes in
IAS 34 Interim Financial Reporting – (effective 1 July
financial assets (effective 1 July 2011)
Tax (effective 1 January 2012)
The adoption has not led to any changes in the Group
Had all the declines in fair value below cost been
­considered significant or prolonged, the Group would
suffer an additional 3 058 (2011: 22 460) loss in its
financial statements, being the transfer of the total
fair value reserve to the income statement.
26
Notes to the consolidated financial statements
Accounting Principles.
Standards and interpretations that have not yet
n
been adopted
Numerous new and revised standards and interpreta-
(effective 1 January 2013)
n
tions were published that must be applied for financial
years beginning on or after 1 January 2013. The Group
This new standard will lead to additional disclosures
regarding fair value measurement.
n
IAS 27 (revised 2011) Separate Financial Statements
n
IAS 28 (revised 2011) Associates and Joint Ventures
will be relevant to the Group are as follows:
n
Amendments to IAS 1 Financial Statement
(effective 1 January 2013)
Presentation regarding Other Comprehensive Income
(effective 1 July 2012)
n
IFRS 13 Fair Value Measurement
(effective 1 January 2013)
has chosen not to adopt these in advance.
The new and revised standards and interpretations that
IFRS 12 Disclosures of Interests in other Entities
(effective 1 January 2013)
n
Amendment to IAS 32 Financial Instruments –
Offsetting Financial Assets and Financial Liabilities
Amendments to IAS 19 Employee Benefits
(effective 1 January 2014)
(effective 1 January 2013)
These amendments eliminate the corridor approach
Other new and revised standards and interpretations:
and calculate finance costs on a net funding basis.
Based on initial analyses, the following new and revised
Actuarial gains/losses have to be recognized through
standards and interpretations which have to be applied
other comprehensive income starting 1 January 2013.
for financial years beginning on or after 1 January 2013
In accordance we are expecting slightly higher services
are not expected to have any significant impact on the
costs then in the past.
reported results or financial position of the Group:
IFRS 9 Financial Instruments (effective 1 January 2015)
n
IFRS 11 Joint Arrangements (effective 1 January 2013)
n
IFRS 9 is the first standard issued as part of a wider
project to replace IAS 39. IFRS 9 retains but simplifies
the mixed measurement model and establishes two
primary measurement categories for financial assets:
amortized cost and fair value. The basis of classification depends on the entity’s business model and the
contractual cash flow characteristics of the financial
asset. The guidance in IAS 39 on impairment of finan­
cial assets and hedge accounting continues to apply.
n
IFRS 10 Consolidated Financial Statements
(effective 1 January 2013)
The objective of IFRS 10 is to establish principles for
the presentation and preparation of consolidated
financial statements when an entity controls one or
more other entity (an entity that controls one or more
other entities) to present consolidated financial statements. Defines the principle of control, and establishes
controls as the basis for consolidation. Sets out how
to apply the principle of control to identify whether
an investor controls an investee and therefore must
consolidate the investee. Sets out the accounting
requirements for the preparation of consolidated
financial statements.
LGT is continuing to analyze the implications.
Currently LGT is not expecting significant impact.
Notes to the consolidated financial statements
27
Details on the consolidated income statement
1
Net interest and similar income (TCHF)
2012
2011
63 536
54 680
108 576
104 718
31 672
39 384
0
735
203 784
199 517
Interest earned and similar income
Banks
Customers
Interest income from investment securities
Dividend income from investment securities
Total interest earned and similar income
Interest expense
Banks
-15 413
-9 397
Interest on certificated debt
-37 759
-37 820
Customers
2
-39 473
-45 055
Total interest expense
-92 645
-92 272
Net interest and similar income
111 139
107 245
2012
2011
Investment management fees
315 336
287 248
Brokerage fees
102 088
104 190
349
335
Income from services (TCHF)
Commission income from securities and investment business
Honoraria and consulting
Administration fees and other income from investment business
135 705
94 851
Total commission income from securities and investment business
553 478
486 624
4 418
3 825
Commission income from other services
Lending business
3
Accounts and clearing business
18 691
10 136
Total commission income from other services
23 109
13 961
Commission expenses
-14 525
-12 907
Total income from services
562 062
487 678
2012
2011
Translation gain/(loss)
18 505
16 403
Trading gain/(loss)
59 767
50 354
43 810
54 098
2 319
682
Income from trading activities (TCHF)
Foreign exchange, notes
Interest and dividend income
Profit/(loss) on securities trading
Profit/(loss) on financial instruments designated at fair value
Other trading activities
Total income from trading activities
28
Notes to the consolidated financial statements
122 846
-39 076
7 818
-25 889
255 065
56 572
4
Other operating income (TCHF)
2012
2011
15 713
3 321
Income from investment securities
Realized net result on available-for-sale securities
Release of impairment losses on available-for-sale securities
Total income from investment securities
Realized net result on disposals of subsidiaries
Realized net result on investments in associates
5
0
0
15 713
3 321
-150
-21 559
-437
57 654
Other
14 024
18 083
Total other operating income
29 150
57 499
2012
2011
salaries
228 407
238 015
bonuses
148 744
103 249
pension costs / benefits
-51 629
21 815
social security costs
27 987
26 171
other personnel expenses
20 875
20 834
374 384
410 084
65 212
-17 975
Personnel expenses (TCHF)
Personnel expenses, including Directors’ emoluments, consisting of
Total personnel expenses before long-term incentive scheme
Long-term incentive scheme
6
Total personnel expenses
439 596
392 109
Headcount at 31 December
1 830
1 779
Business and office expenses (TCHF)
2012
2011
rents and office expenses
33 559
37 046
IT expenses
34 860
32 560
information and communication expenses
20 019
20 389
travel and entertainment expenses
12 632
13 132
legal and professional expenses
23 329
27 967
advertising expenses
36 220
21 413
Business and office expenses, consisting of
general expenses
Total business and office expenses
15 082
21 663
175 701
174 170
Notes to the consolidated financial statements
29
7
Other operating expenses (TCHF)
Note
2011
Depreciation on property and equipment
16
19 903
20 017
Amortization of intangible assets
17
41 861
27 411
Impairment on investment in associates
15
Other depreciation
Total depreciation and amortization and impairment
5 593
0
2 012
3 984
69 369
51 412
Credit losses
11
2 102
4 424
Recovery of credit losses
11
-663
-1 636
Total credit losses/(recoveries)
Provision for operational risks
Other provisions
8
2012
1 439
2 788
12 371
-6 545
2 378
81
Total changes in provisions and other losses
14 749
-6 464
Total other operating expenses
85 557
47 736
2012
2011
12 385
12 340
Taxation (TCHF)
Tax expense
Current income tax expense
Deferred income tax expense
19 827
6 066
Total income tax expense
32 212
18 406
Capital tax expense
1 327
1 684
Total tax expense
33 539
20 090
256 562
94 979
Reconciliation of the expected to the effective income tax expense
Profit before tax
Income tax expense calculated at a tax rate of 12.5% 1 (2011: 12.5%)
32 070
11 872
Tax rate difference on income components subject to foreign taxes
18 581
13 730
-18 439
-7 196
32 212
18 406
Income not subject to tax
Total income tax expense
1
30
The rate used is the domestic tax rate of Liechtenstein.
Notes to the consolidated financial statements
2012
2011
2 158
5 872
Deferred income tax expense comprises the following temporary differences
Losses available for offset against future taxable income
-98
-312
Provisions
Accelerated depreciation for tax purposes
5 226
72
Financial instruments
1 278
-2 158
Other temporary differences
11 263
2 592
Total deferred income tax expense
19 827
6 066
1 442
-2 016
75 220
69 994
1 952
-2 686
Deferred income tax assets and liabilities relate to the following items
Deferred income tax liabilities
Accelerated depreciation for tax purposes
Provisions
Financial instruments
Other temporary differences
Total deferred income tax liabilities
25 311
13 373
103 925
78 665
Deferred income tax assets
Losses available for offset against future taxable income
Accelerated depreciation for tax purposes
Provisions
Financial instruments
Other temporary differences
0
2 055
3 555
290
0
192
3 253
0
168
139
6 976
2 676
At 1 January
75 990
42 996
Income statement charge
19 827
6 066
Available-for-sale securities: fair value measurement
257
-478
Other changes
873
26 833
2
573
96 949
75 990
Before tax Tax (expense)
Net of tax
Total deferred income tax assets
Movement on the deferred income tax assets and liabilities is as follows
Cumulative translation adjustments
At 31 December
Income tax on other
comprehensive income
2012
Before tax Tax (expense)
Net of tax
2011
/Tax benefit
Change in revaluation reserves
Cumulative translation adjustments
Other comprehensive income
/Tax benefit
260 059
-257
259 802
-160 738
478
-160 260
10 433
0
10 433
14 351
0
14 351
270 492
-257
270 235
-146 387
478
-145 909
Notes to the consolidated financial statements
31
Details on the consolidated balance sheet
9
Cash in hand, balances with central banks (TCHF)
2012
Cash in hand
Balances with central banks
29 010
31 682
5 872 476
2 586 409
Balances with post offices
Total cash in hand, balances with central banks
10
2 473
1 875
5 903 959
2 619 966
Loans and advances to banks (TCHF)
Loans and advances to OECD banks
2012
2011
3 730 205
6 144 109
Loans and advances to non-OECD banks
Total loans and advances to banks
11
Loans and advances
2011
280 007
386 457
4 010 212
6 530 566
2012
to customers (TCHF)
2011
Gross
Impairment
Carrying
Gross
Impairment
Carrying
amount
allowance
amount
amount
allowance
amount
Mortgage-backed
3 181 005
-4 841
3 176 164
2 920 302
-3 547
2 916 755
Other collateral
3 626 836
-5 395
3 621 441
3 243 341
-5 465
3 237 876
457 764
-11 531
446 233
145 577
-11 415
134 162
7 265 605
-21 767
7 243 838
6 309 220
-20 427
6 288 793
Without collateral
Total loans and advances
to customers
Specific allowance
for impairment
2012
Mortgage-
Other
Without
backed collateral collateral
At 1 January
3 547
Charges to allowance
1 326
-30
0
0
Release of allowance
Allowance utilized
Reclassifications
5 465
2011
Total Mortgage-
Other
Without
Total
backed collateral collateral
6 155
15 167
4 060
2 828
15
298
-109
-524
-52
5 987
12 875
1 639
1 545
1 720
999
4 264
-663
-1 353
-37
-246
-1 636
-52
-84
-86
-83
-253
0
0
0
0
-639
989
-350
0
-2
-8
-36
-46
18
51
-152
-83
4 841
5 363
5 841
16 045
3 547
5 465
6 155
15 167
0
0
5 260
5 260
0
0
5 100
5 100
Charges to allowance
0
33
430
463
0
0
160
160
Release of allowance
0
0
0
0
0
0
0
0
Currency translation
At 31 December
Portfolio allowance
for impairment
At 1 January
Currency translation
0
-1
0
-1
0
0
0
0
At 31 December
0
32
5 690
5 722
0
0
5 260
5 260
Total allowance
for impairment
21 767
20 427
2012
2011
76 558
101 541
Additional information on credit risks
Non-performing customers’ loans
Additional information about loans and advances is shown separately in the risk management notes.
32
Notes to the consolidated financial statements
12
Securities held for trading purposes (TCHF)
2012
2011
Total securities held for trading purposes
8 935
4 948
8 931
3 469
thereof listed
13
Financial assets designated at fair value (TCHF)
Securities designated at fair value to match financial liabilities through profit or loss
14
2012
2011
595 902
658 481
Other securities designated at fair value through profit or loss 1, 2
2 846 500
2 880 082
Total financial assets designated at fair value
3 442 402
3 538 563
2012
2011
2 220 926
4 917 781
-22 984
-39 895
2 423 571
5 972 093
-2 715 823
-8 617 706
56 547
-11 347
At 31 December
1 962 237
2 220 926
Total investment securities
1 962 237
2 220 926
403 273
1 298 766
1 151 081
1 182 544
4 040
4 040
0
0
4 040
4 040
1
Thereof listed 1 552 258 (2011: 2 210 109)
2
Thereof subordinated securities 5 709 (2011: 5 781)
Investment securities (TCHF)
Available-for-sale securities
At 1 January
Currency translation
Additions
Disposals and redemption
Revaluations
thereof fixed-income securities maturing within one year
thereof listed
Specific allowance for impairment on available-for-sale securities
At 1 January
Release of impairment
At 31 December
Notes to the consolidated financial statements
33
15
Investments in associates (TCHF)
At 1 January
Additions
Disposals
Revaluation through other comprehensive income
At 31 December
2012
2011
2 446 237
2 531 615
0
177 232
-265
-173 428
223 534
-89 182
2 669 506
2 446 237
801 393
575 957
66 152
38 958
Details of investments in associates
Fixed-income
Real estate investment trusts
Equities
610 011
520 176
Hedge fund investments
585 026
621 745
Private equity investments
569 833
600 752
37 091
88 649
2 669 506
2 446 237
Cash
Total investments in associates
LGT’s investments in associates at 31 December 2012
Ownership interest in %
of ordinary/participation
Name
Principal activity
shares held
LGT Capital Invest Limited, Grand Cayman
Investment company
32.75
LGT Portfolio Management Limited, Grand Cayman
Investment company
29.76
LGT’s investments in associates at 31 December 2011
Ownership interest in %
of ordinary/participation
Name
34
Principal activity
shares held
LGT Capital Invest Limited, Grand Cayman
Investment company
28.72
LGT Portfolio Management Limited, Grand Cayman
Investment company
26.55
Notes to the consolidated financial statements
Investments in other associates (TCHF)
2012
At 1 January
Additions
Income
Dividends
Impairment
Currency translation
At 31 December
2011
0
0
8 336
0
-437
0
0
0
-5 593
0
-119
0
2 187
0
Details of investments in other associates
Assets
5 019
0
Liabilities
2 956
0
Operating income
Net profit/(loss)
LGT’s investments in other associates at 31 December 2012
3 846
0
-1 327
0
Ownership interest in %
of ordinary/participation
Name
Peak Holdings S.a.r.l., Luxembourg
Quantis Investment Management Zrt., Budapest
Principal activity
shares held
Clearing services/startup
30.20
Investment management company
30.00
Notes to the consolidated financial statements
35
16
Property and equipment
(TCHF)
Freehold
Other
Leasehold
Office
Motor
bank
freehold
improve-
equipment
vehicles
premises
property
ments
262 280
1 900
30 885
66 275
481
Total
Cost
At 1 January 2012
Currency translation
361 821
-22
0
-21
-58
0
-101
Additions
4 205
0
4 591
11 703
128
20 627
Disposals
-2 069
-1 900
-2 131
-5 296
-248
-11 644
0
0
15
44
0
59
264 394
0
33 339
72 668
361
370 762
112 119
849
15 063
52 231
279
180 541
-2
0
-13
-31
0
-46
Addition to scope of consolidation
At 31 December 2012
Accumulated depreciation
At 1 January 2012
Currency translation
Charge for the year
Disposals
Addition to scope of consolidation
At 31 December 2012
6 581
19
4 069
9 128
106
19 903
-2 069
-868
-2 131
-5 296
-247
-10 611
0
0
11
36
0
47
116 629
0
16 999
56 068
138
189 834
147 765
0
16 340
16 600
223
180 928
Freehold
Other
Leasehold
Office
Motor
Total
bank
freehold
improve-
equipment
vehicles
premises
property
ments
261 181
1 900
31 306
69 082
695
364 164
5
0
-97
-116
0
-208
3 799
0
2 514
8 957
173
15 443
0
0
471
-471
0
0
-2 705
0
-2 838
-7 054
-387
-12 984
0
0
-471
-4 123
0
-4 594
262 280
1 900
30 885
66 275
481
361 821
Net book value
at 31 December 2012
Property and equipment
(TCHF)
Cost
At 1 January 2011
Currency translation
Additions
Reclassifications
Disposals
Removal from scope of consolidation
At 31 December 2011
Accumulated depreciation
108 288
811
14 981
51 787
505
176 372
Currency translation
At 1 January 2011
0
0
-65
-133
0
-198
Charge for the year
6 536
38
2 967
10 411
65
20 017
0
0
348
-348
0
0
-2 705
0
-2 780
-6 581
-291
-12 357
0
0
-388
-2 905
0
-3 293
112 119
849
15 063
52 231
279
180 541
150 161
1 051
15 822
14 044
202
181 280
2012
2011
377 802
427 296
Reclassifications
Disposals
Removal from scope of consolidation
At 31 December 2011
Net book value
at 31 December 2011
Insurance value of tangible assets
Insurance value
36
Notes to the consolidated financial statements
17
Intangible assets (TCHF)
Goodwill
Software
Other in-
Total
tangible assets
Cost
At 1 January 2012
131 628
Currency translation
Additions
Disposals
Addition to scope of consolidation
At 31 December 2012
145 185
40 561
317 374
-59
0
-52
-111
0
0
0
0
0
0
0
0
28 428
0
20 950
49 378
159 997
145 185
61 459
366 641
Accumulated amortization and impairment
210
41 961
9 733
51 904
Currency translation
At 1 January 2012
-6
0
0
-6
Charge for the year
20 143
14 518
7 200
41 861
0
0
0
0
20 347
56 479
16 933
93 759
139 650
88 706
44 526
272 882
Goodwill
Software
Other in-
Total
Disposals
At 31 December 2012
Net book value at 31 December 2012
Intangible assets (TCHF)
tangible assets
Cost
At 1 January 2011
141 628
155 046
40 825
337 499
Currency translation
0
-19
-264
-283
Additions
0
1 214
0
1 214
Disposals
-10 000
-10 072
0
-20 072
Removal from scope of consolidation
At 31 December 2011
0
-984
0
-984
131 628
145 185
40 561
317 374
211
28 659
5 886
34 756
Accumulated amortization and impairment
At 1 January 2011
Currency translation
-1
-1
0
-2
Charge for the year
0
23 564
3 847
27 411
Disposals
0
-10 072
0
-10 072
Removal from scope of consolidation
0
-189
0
-189
210
41 961
9 733
51 904
131 418
103 224
30 828
265 470
2012
2011
104 155
124 155
9 995
7 263
At 31 December 2011
Net book value at 31 December 2011
Goodwill
Goodwill is allocated to the following organizational units
(cash-generating units; CGUs) based on the anticipated synergies:
LGT Bank (Schweiz) AG, Basel
LGT Capital Partners AG, Pfäffikon
LGT Capital Management AG, Pfäffikon
Total
25 500
0
139 650
131 418
The three organizational units represent the level at which the goodwill is monitored for internal management purposes.
The calculation of the realizable amount of the units was based on the respective fair value less costs to sell. The enterprise value
was determined on the market prices of companies with similar business activities. The goodwill was reduced in 2012 in the
amount of 20 143.
Notes to the consolidated financial statements
37
18
Other assets (TCHF)
2012
2011
Precious metals
444 101
562 932
Pensions
124 509
42 518
Other
Total other assets
19
Amounts due to banks (TCHF)
Deposits on demand
Time deposits
Total amounts due to banks
20
Amounts due to customers (TCHF)
Deposits on demand
30 129
635 579
2012
2011
774 396
963 595
457 006
891 537
1 231 402
1 855 132
2012
2011
9 758 402
7 487 934
Time deposits
7 746 355
8 416 659
Savings deposits
1 589 830
1 348 998
19 094 587
17 253 591
Total amounts due to customers
21
73 663
642 273
2012
2011
Certificate issues designated at fair value
Financial liabilities designated at fair value (TCHF)
590 047
659 520
Total financial liabilities designated at fair value
590 047
659 520
There were no gains or losses attributable to changes in the credit risk for those financial liabilities designated at fair value in 2012 (2011: 0).
38
Notes to the consolidated financial statements
Certificate issues designated at fair value at 31 December (TCHF)
Product
Nominal Interest Maturity 16 Fair value Fair value
Date of
2012
2011
LGT GIM Index Certificates 1
up to 2004
issue
EUR
51 131
– 28.02.2012
61 704
62 345
LGT GIM Index Certificates II 2
up to 2006
LGT GIM Index Certificates II/2 3
LGT GIM Index Certificates III
4
LGT GIM Index Certificates IV 5
value ’000
rate %
EUR 137 924
– 30.06.2014
166 445
191 870
2006
EUR
34 659
– 31.03.2016
41 826
52 618
up to 2008
EUR
87 356
– 31.07.2016
105 420
118 122
continuously
EUR
128
– 31.03.2018
155
835
continuously
EUR
4 664
– 30.11.2013
5 628
5 551
Crown Absolute Return Index Certificates II 7
continuously
EUR
1 231
– 31.07.2014
1 486
1 636
Crown Alternative SV Index Certificates
continuously
EUR
47 735
– 30.06.2017
57 606
56 965
continuously
EUR
45 489
– 30.09.2014
54 895
58 029
continuously
EUR
47 577
– 31.08.2017
57 415
54 503
continuously
USD
1 964
– 31.12.2027
1 797
2 359
continuously
USD
2 179
– 31.12.2027
1 993
2 778
continuously
USD
12 057
– 31.12.2027
11 029
11 794
continuously
USD
15 976
– 31.12.2027
14 614
23 500
continuously
USD
8 783
– 31.12.2027
8 034
16 615
590 047
659 520
Crown Absolute Return Index Certificates
LGT GATS Index Certificates
6
8
9
LGT M-Smart Allocator Index Certificates 10
LGT ex Equities Emerging Markets Leaders IU Certificates
11
LGT ex Equities GEM IU Index Certificates 12
LGT ex Fixed Income Emerging Markets IU Index Certificates
LGT ex Hedge Funds GIM IU Index Certificates 14
LGT ex Hedge Funds GATS IU Index Certificates
15
13
Total certificate issues designated at fair value
at 31 December
Linked to the performance of LGT Premium Strategy GIM (EUR) index administered by LGT Capital Management Ltd. with a duration from 2002 to 2012
incl. two 5-year extension options.
2
Linked to the performance of LGT Premium Strategy GIM II (EUR) index administered by LGT Capital Management Ltd. with a duration from 2004 to 2014
incl. two 5-year extension options.
1
3
Linked to the performance of LGT Premium Strategy GIM II (EUR) index administered by LGT Capital Management Ltd. with a duration from 2006 to 2016
incl. two 5-year extension options.
4
Linked to the performance of LGT Premium Strategy GIM III (EUR) index administered by LGT Capital Management Ltd. with a duration from 2006 to 2016
incl. two 5-year extension options.
Linked to the performance of LGT Premium Strategy GIM IV (EUR) index administered by LGT Capital Management Ltd. with a duration from 2008 to 2018
incl. two 5-year extension options.
6
Linked to the Crown Absolute Return (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2003 to 2013 incl. two 5-year extension options.
7
Linked to the Crown Absolute Return II (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2004 to 2014 incl. two 5-year extension options.
5
8
9
Linked to the Crown Alternative SV (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2017 incl. two 5-year extension options.
Linked to the performance of LGT Premium Strategy GATS (EUR) index administered by LGT Capital Management Ltd. with a duration from 2004 to 2014
incl. two 5-year extension options.
Linked to the LGT M-Smart Allocator (EUR) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2017 incl. two 5-year extension options.
11
Linked to the LGT ex Equity Emerging Markets II (USD) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2027
10
incl. two 5-year extension options.
12
Linked to the LGT ex Equity Emerging Markets III (USD) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2027
incl. two 5-year extension options.
Linked to the LGT ex Fixed Income Emerging Markets II (USD) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2027
incl. two 5-year extension options.
14
Linked to the LGT ex Hedge Funds GIM IU (USD) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2027 incl. two 5-year extension options.
15
Linked to the LGT ex Hedge Funds GATS IU (USD) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2027 incl. two 5-year extension options.
13
16
Maturity represents the earliest possible notice.
Notes to the consolidated financial statements
39
22
Certificated debt (TCHF)
Bond issues (net book value)
1
2012
2011
1 441 845
1 391 337
920
1 005
Subordinated cash bonds (fixed-rate medium term notes) 2
Other cash bonds (fixed-rate medium term notes)
Total certificated debt
130 221
124 509
1 572 986
1 516 851
1
Net book value of bond issues is calculated using the effective interest method. Bonds held by LGT Group companies are eliminated.
2
Interest 2012 is payable on the subordinated cash bonds at various rates ranging from 2.0625% to 2.9375%. The interest charge for the year on these bonds
was 25 (2011: 28).
Bond issues at 31 December (TCHF)
Issuer
LGT Finance Ltd.
Date of
Nominal
Interest
issue
value
rate %
18.05.2005
CHF 250 000
2.00
0
232 707
08.10.2009
CHF 250 000
2.125
08.07.2013
242 062
223 515
10.02.2006
CHF 250 000
2.25
10.02.2014
231 712
224 480
LGT Finance Ltd.
25.05.2011
CHF 200 000
2.125
25.11.2015
189 586
190 633
LGT Finance Ltd.
08.12.2009
CHF 300 000
2.75
08.12.2016
290 884
285 050
LGT Finance Ltd.
12.05.2010
CHF 250 000
2.50
12.05.2017
242 963
234 952
LGT Bank Ltd.
02.07.2012
CHF 250 000
2.00
02.07.2019
244 638
0
1 441 845
1 391 337
2012
2011
Other liabilities (TCHF)
Capital tax
Amounts due to bonuses
46
2 262
74 047
9 565
135 613
93 975
64 415
196 537
274 121
302 339
2012
2011
At 1 January
70 571
81 799
Current year expenses
17 830
6 012
Provisions released
-3 081
-12 496
Provisions utilized
-7 025
-3 170
Other
Total other liabilities
Provisions (TCHF)
Currency translation
Removal from scope of consolidation
Reclassification
At 31 December
40
Net book
value 2011
LGT Finance Ltd.
Amounts due to long-term incentive scheme
24
18.05.2012
Net book
value 2012
LGT Finance Ltd.
Total bond issues at 31 December
23
Maturity
Notes to the consolidated financial statements
-61
-30
0
-1 420
0
-124
78 234
70 571
25
Other reserves (TCHF)
Revaluation reserves – investments in associates
Revaluation reserves – available-for-sale securities
Revaluation reserves – cash flow hedge
Total other reserves
2012
2011
1 005 380
781 846
36 928
-3 650
6 606
10 916
1 048 914
789 112
781 846
928 682
Revaluation reserves – investments in associates
At 1 January
Disposals
Net gain/(loss) from change in fair value
At 31 December
0
-57 654
223 534
-89 182
1 005 380
781 846
-3 650
11 604
Revaluation reserves – available-for-sale securities
At 1 January
Disposals
-15 713
-3 966
56 548
-11 766
-257
478
36 928
-3 650
At 1 January
10 916
9 086
Net gain/(loss) from change in fair value
-4 310
1 830
6 606
10 916
Net gain/(loss) from change in fair value
Deferred income tax
At 31 December
Revaluation reserves – cash flow hedge
At 31 December
Notes to the consolidated financial statements
41
26
Contingent liabilities, commitments and fiduciary transactions (TCHF)
2012
2011
227 532
200 691
Contingent liabilities
Credit guarantees and similar instruments
Other contingent liabilities
Total contingent liabilities
Committed credit lines and other commitments
of which irrevocable commitments
80 474
81 922
308 006
282 613
313 008
335 870
306 526
327 267
1 139 702
2 379 282
0
8 923
1 139 702
2 388 205
2012
2011
361 307
682 021
0
325 939
Fiduciary transactions
Fiduciary investments
Fiduciary loans and other financial transactions in a fiduciary capacity
Total fiduciary transactions
Information about derivative financial instruments is shown separately in note 30.
27
Pledged and assigned assets/assets subject to reservation of ownership,
which are used to secure own liabilities (TCHF) 1
Book value of pledged and assigned assets (as collateral)
of which investment securities
of which financial assets designated at fair value
Actual commitments
1
361 307
356 082
43 815
375 539
There are no assets subject to reservation of ownership.
The assets are pledged for commitments in respect of Lombard limits at central banks, for securities deposits relating to X-Clear/Swiss Stock Exchange and limits
for cash settlement of securities transactions with EUROCLEAR BANK SA.
28
Lending transactions and pension transactions with securities (TCHF) 1
Claims from cash deposits in connection with securities borrowing and reverse repurchase transactions
Liabilities from cash deposits in connection with securities lending and repurchase transactions
2012
2011 2
1 135 885
1 633 033
0
452 484
0
315 369
0
315 369
1 349 277
1 854 652
101 620
414 128
Own securities lent or provided as collateral within the scope of securities lending or borrowing
transactions, as well as own securities transferred from repurchase transactions
of which capable of being resold or further pledged without restrictions
Securities borrowed or accepted as collateral within the scope of securities lending or borrowing
transactions, as well as securities received from reverse repurchase transactions, which are capable
of being resold or further pledged without restrictions
of which resold or further pledged
1
These transactions are conducted under terms that are usual and customary to standard lending, and securities borrowing and lending activities, as well as
2
Previous year figures restated.
requirements determined by exchanges where the bank acts as an intermediary.
42
Notes to the consolidated financial statements
29 Financial instruments measured at fair value (TCHF)
Fair value hierarchy
IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or
unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Group’s
market assumptions. These two types of inputs have created the following fair value hierarchy:
Level 1
Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities and debt
instruments on exchanges and exchange traded derivatives.
Level 2
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices). This level includes investments in hedge funds, mutual funds, the majority of OTC
derivative contracts and structured debt.
Level 3
Inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level includes mainly
private equity investments, issued structured debt as well as equity investments with significant unobservable components.
This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market
prices in its valuations where possible.
Fair value measurement at the end
of the period
2012
Level 1
Level 2
Level 3
Total
8 931
4
0
8 935
Assets
Securities held for trading purposes
Derivative financial instruments
0
756 918
0
756 918
Financial assets designated at fair value
1 807 864
1 628 628
5 910
3 442 402
Available-for-sale securities
1 657 762
282 448
22 027
1 962 237
Total assets measured at fair value
3 474 557
2 667 998
27 937
6 170 492
Derivative financial instruments
0
802 876
2 451
805 327
Financial liabilities designated at fair value
0
590 047
0
590 047
Total liabilities measured at fair value
0
1 392 923
2 451
1 395 374
Level 1
Level 2
Level 3
Total
3 468
1 480
0
4 948
Liabilities
There have been no transfers from Level 2 to Level 1 and vice versa.
Fair value measurement at the end
of the period
2011
Assets
Securities held for trading purposes
Derivative financial instruments
Financial assets designated at fair value
Available-for-sale securities
0
1 435 273
0
1 435 273
2 313 172
1 216 139
9 252
3 538 563
925 637
1 283 565
11 724
2 220 926
3 242 277
3 936 457
20 976
7 199 710
Derivative financial instruments
0
1 509 829
2 235
1 512 064
Financial liabilities designated at fair value
0
659 520
0
659 520
Total liabilities measured at fair value
0
2 169 349
2 235
2 171 584
Total assets measured at fair value
Liabilities
There have been no transfers from Level 2 to Level 1 and vice versa.
Notes to the consolidated financial statements
43
Reconciliation of Level 3 items
Securities held Financial assets/
for trading
purposes
liabilities
Available-for-
2012
sale securities
Total
designated
at fair value
Assets
At 1 January
0
9 252
11 724
20 976
0
401
-634
-233
thereof in profit or loss
0
401
2 316
2 717
thereof in other comprehensive income
0
0
-2 950
-2 950
Purchases
0
832
18 176
19 008
Issues
0
0
0
0
Sales
0
0
-3 600
-3 600
Redemptions
0
-4 575
-3 639
-8 214
Transfers in/out of Level 3
0
0
0
0
0
5 910
22 027
27 937
At 1 January
0
2 235
0
2 235
Total gains or losses
0
216
0
216
0
216
0
216
Total gains or losses
At 31 December
Liabilities
thereof in profit or loss
thereof in other comprehensive income
Purchases
0
0
0
0
0
0
Issues
0
0
0
0
Sales
0
0
0
0
Redemptions
0
0
0
0
Transfers in/out of Level 3
0
0
0
0
At 31 December
0
2 451
0
2 451
There have been no transfers either in or out of Level 3 in 2012.
44
0
0
Notes to the consolidated financial statements
Reconciliation of Level 3 items
Securities held Financial assets/
for trading
purposes
liabilities
Available-for-
2011
sale securities
Total
designated
at fair value
Assets
At 1 January
0
9 732
6 385
16 117
Total gains or losses
0
230
5 527
5 757
thereof in profit or loss
0
230
-304
-74
thereof in other comprehensive income
0
0
5 831
5 831
Purchases
0
0
0
0
Issues
0
0
7 476
7 476
Sales
0
0
-6 351
-6 351
Redemptions
0
-710
-1 313
-2 023
Transfers in/out of Level 3
0
0
0
0
At 31 December
0
9 252
11 724
20 976
At 1 January
0
1 935
0
1 935
Total gains or losses
0
300
0
300
0
300
0
300
Liabilities
thereof in profit or loss
thereof in other comprehensive income
Purchases
0
0
0
0
0
0
0
0
Issues
0
0
0
0
Sales
0
0
0
0
Redemptions
0
0
0
0
Transfers in/out of Level 3
0
0
0
0
At 31 December
0
2 235
0
2 235
2012
2011
1 507
-374
195
-94
There have been no transfers either in or out of Level 3 in 2011.
Gains or losses included in profit or loss for financial instruments
measured at fair value based on Level 3
Total gains or losses included in profit or loss for the period
Total gains or losses for the period included in profit or loss
for assets/liabilities held at the end of the reporting period
Notes to the consolidated financial statements
45
30 Derivative financial instruments
In the normal course of business, LGT Group and its subsidiaries use various derivative financial instruments to meet the financial
needs of their customers, to generate revenues through trading and market-making activities, and to manage their exposure to
fluctuations in interest and foreign exchange rates. Derivatives used for trading purposes include foreign exchange forwards,
stock options and warrants as well as forward rate agreements (FRAs). Within the context of asset and liability management,
interest rate swaps are primarily employed. LGT Group controls the credit risk from derivative financial instruments through its
credit approval process and the use of control limits and monitoring procedures. LGT Group uses the same credit procedures
when entering into derivatives as it does for traditional lending products.
The following table summarizes the total outstanding volumes in derivative financial instruments. Positive and negative replacement values are stated at gross values, without taking into consideration the effect of master netting agreements.
Types of derivative financial
instruments held for trading
(TCHF)
2012
Notional
Positive
Negative
amount replacement replacement
value
value
302 039
3 796
7 192
769
10
74 400 598
Foreign exchange swaps
Foreign exchange OTC options
2011
Notional
Positive
Negative
amount replacement replacement
value
value
1 460 858
4 843
41 088
10
0
0
0
679 286
693 242
73 843 280
1 338 270
1 393 037
1 221 769
2 770
6 786
0
0
0
2 870 471
31 735
31 724
3 677 136
23 930
23 894
829 490
21 257
21 295
722 953
26 669
22 854
Interest rate products
Interest rate swaps
OTC options
Foreign exchange products
Foreign exchange forwards
Precious metal products
Precious metal forwards
Precious metal swaps
227
0
1
1 467
244
0
363 416
6 435
6 599
610 575
18 014
18 011
109 957
1 210
1 332
8 552
22
22
68 705
832
832
65 854
5 481
5 481
Other products
412 068
1 998
3 971
305 397
5 902
7 677
Total contracts
80 579 509
749 329
772 984
80 696 072
1 423 375
1 512 064
Notional
Positive
Negative
Notional
Positive
Negative
Precious metal OTC options
Derivatives on shares and indices
OTC Options
Credit derivates
Swaps
Types of derivative financial
instruments held for hedging
(TCHF)
2012
amount replacement replacement
value
2011
amount replacement replacement
value
value
value
Interest rate products
Interest rate swaps (Cash flow hedges)
380 000
7 589
0
400 000
11 898
0
Interest rate swaps (Fair value hedges) 1
750 030
0
32 343
0
0
0
1 130 030
7 589
32 343
400 000
11 898
0
Total contracts
1
LGT Group applied fair value hedge accounting for a portfolio hedge of interest rate risk for the first time in the 2012 reporting period by using interest rate
swaps to hedge its exposure to market fluctuations of fixed-rate instruments. The fair value adjustment of the underlying instruments related to interest rate risk
was 4 837. A matching amount of -4 863 is included in the replacement value attributable to derivative hedging instruments.
46
Notes to the consolidated financial statements
31 Capital resources
Capital adequacy and the use of capital are monitored by the Group and by individual operating units, employing techniques
based on the guidelines developed by the Basel Committee on Banking Supervision and implemented by the Liechtenstein
Government for supervisory purposes.
The Basel Committee guidelines require minimum risk ratios for all international banks of 8%. These ratios measure capital adequacy by comparing the Group’s eligible capital with balance sheet assets, off-balance sheet commitments and market positions
at weighted amounts to reflect their relative risk. Assets are weighted according to broad categories of notional risk, first being
multiplied by a conversion factor and then being assigned a risk weighting according to the amount of capital deemed to be
necessary for them. Off-balance sheet commitments and default risk positions are also multiplied and risk-weighted. Market risk
is calculated with the standard approach.
The Group and its individually regulated operations have complied with all externally imposed capital requirements throughout
the period.
The following table analyzes the Group’s capital resources as defined for regulatory purposes.
Capital resources (TCHF)
Capital resources
thereof non-controlling interests
thereof “innovative” instruments
Other deductions
Net core capital before adjustments
2012
2011
3 345 436
2 932 326
7 436
5 530
0
0
-463 214
-227 558
2 882 222
2 704 768
upper tier 2 capital
0
0
lower tier 2 capital
178
362
tier 3 capital
0
0
-272 882
-265 470
2 609 518
2 439 660
789 607
877 574
774 521
863 033
15 086
14 541
53 948
112 122
11 280
59 075
586
521
thereof foreign exchange risks
14 997
17 713
thereof commodities risks
27 070
34 811
Other deductions (intangible assets)
Net capital resources
Required capital (TCHF)
Approach
Credit risk
Standard
On-balance sheet
Non-counterpart risks
Market risk
Standard
thereof interest rate risks
thereof equity position risks
thereof option risks
Operational risk
Total
Capital adequacy ratio
Net capital resources
Basic indicator
15
2
127 464
122 509
971 019
1 112 205
21.5%
17.5%
2 609 518
2 439 660
Notes to the consolidated financial statements
47
32Subsidiaries
The Group’s principal subsidiary undertakings at 31 December 2012 were:
Name
Principal activity
Registered office
LGT Bank Ltd.
Banking and investment management
Vaduz – Liechtenstein
100.0
LGT Swiss Life Non Traditional Advisers Ltd.
Investment advisers
Vaduz – Liechtenstein
62.8
LGT Private Equity Advisers Ltd.
Investment advisers
Vaduz – Liechtenstein
60.0
LGT Capital Management Ltd.
Investment management
Vaduz – Liechtenstein
100.0
LGT Funds SICAV
Investment advisers
Vaduz – Liechtenstein
100.0
LGT Funds II SICAV
Investment advisers
Vaduz – Liechtenstein
100.0
LGT Investments AGmvK
Investment advisers
Vaduz – Liechtenstein
100.0
LGT Premium Strategy AGmvK
Investment advisers
Vaduz – Liechtenstein
100.0
LGT Fondsleitung Ltd.
Investment advisers
Vaduz – Liechtenstein
100.0
LGT Capital Partners Advisers Ltd.
Investment advisers
Vaduz – Liechtenstein
100.0
LGT Strategy Units (Liec) AGmvK Investment advisers
Vaduz – Liechtenstein
100.0
LGT Financial Services Ltd.
Services company
Vaduz – Liechtenstein
100.0
LGT Audit Revisions AG Audit services
Vaduz – Liechtenstein
100.0
LGT Bank (Switzerland) Ltd. Banking and investment management
Basel – Switzerland
100.0
Artinba Ltd. Fine art services
Basel – Switzerland
100.0
Global Fine Art Services Ltd.
Fine art services
Basel – Switzerland
100.0
LGT Capital Management Ltd.
Investment advisers
Pfäffikon SZ – Switzerland
100.0
LGT Capital Partners Ltd.
Investment advisers
Pfäffikon SZ – Switzerland
100.0
LGT Investment Partners Ltd. Investment advisers
Pfäffikon SZ – Switzerland
100.0
LGT Holding International Ltd.
Holding company
Pfäffikon SZ – Switzerland
100.0
LGT Financial Consulting GmbH
Consulting
Frankfurt – Germany
100.0
Crown Verwaltungsgesellschaft mbH
Investment advisers
Munich – Germany
LGT Capital Partners (U.K.) Ltd.
Fund distribution
London – United Kingdom
100.0
LGT Bank (Ireland) Ltd.
Banking
Dublin – Ireland
100.0
LGT Capital Partners (Ireland) Ltd. Investment advisers
Dublin – Ireland
100.0
LGT Fund Managers (Ireland) Ltd.
Fund services
Dublin – Ireland
100.0
4
48
Ownership
interest in %
of ordinary
shares held 1
Notes to the consolidated financial statements
50.0
Name
Principal activity
Registered office
Ownership
interest in %
of ordinary
shares held 1
LGT Holding Denmark ApS Holding company
Copenhagen – Denmark
100.0
LGT Fund Management (Lux) S.A. 5
Investment advisers
Luxembourg – Luxembourg
100.0
LGT Bank (Singapore) Ltd.
Banking and investment
Singapore
management
100.0
LGT Investment Management (Asia) Ltd.
Consulting and advisers
Hong Kong – China
100.0
LGT Capital Partners (Asia-Pacific) Ltd.
Investment management
Hong Kong – China
100.0
LGT (Middle East) Ltd. Investment advisers
Dubai – United Arab Emirates
100.0
LGT Investment Management (Japan) KK
Consulting and advisers
Tokyo – Japan 100.0
LGT Holding (Malaysia) Ltd.
Holding company
Labuan – Malaysia
100.0
2
LGT Capital Partners (USA) Inc.
Research services
New York – USA
100.0
LGT Capital Partners Holding (USA) Inc. 2
Holding company
New York – USA
100.0
LGT Clerestory LLC 3
Investment advisers
New York – USA
100.0
LGT Bank (Cayman) Ltd. (formerly
LGT Bank in Liechtenstein (Cayman) Ltd.)
Banking and investment
management
Grand Cayman – Cayman Islands
100.0
LGT Finance Ltd.
Financing
Grand Cayman – Cayman Islands
100.0
LGT Investments Ltd.
Investment management
Grand Cayman – Cayman Islands
100.0
LGT Global Invest Ltd.
Investment management
Grand Cayman – Cayman Islands
100.0
LGT Participations Ltd.
Investment management
Grand Cayman – Cayman Islands
100.0
LGT Certificates Ltd.
Investment management
Grand Cayman – Cayman Islands
100.0
LGT (Uruguay) S.A. Bank representation
Montevideo – Uruguay
100.0
1
Ownership interest equals voting interest.
2
have been established during 2012
3
has been acquired as per 30 November 2012
4
has been acquired as per 1 June 2012
5
has been acquired as per 28 September 2012
LGT Bank (Österreich) AG, Vienna has been liquidated as per September 2012.
Notes to the consolidated financial statements
49
33 Operating segments
Headquartered in Vaduz, Principality of Liechtenstein,
LGT Group is the Private Banking and Asset Management
Group of the Princely House of Liechtenstein. The Group’s
segmental reporting comprises the four operating business units Private Banking, Traditional Asset Management,
Alternative Asset Management and Operations & Techno­
logy. The remaining not directly connected revenue and
expenses including consolidation adjustments are shown
under Corporate Center.
Operating segments at 31 December 2012 (TCHF)
Total external operating income
Total internal operating income 1
Total segment operating income (total revenue)
Operating expenses
Segment result before tax
Tax expense 2
Non-controlling interests
Net profit of LGT Group
LGT’s reportable segments are strategic business units that
Net interest and similar income 3
offer different products and services to external and internal
Income from services
customers. They are managed separately because each business
Income from trading activities
unit requires different technology and marketing strategies.
Depreciation
Credit (losses) recoveries
The segment reporting reflects the internal management
Change in provisions and other losses
structure. The segments are based upon the products and
Profit/(loss) of associates
services provided or the type of customer served, and they
Headcount
reflect the manner in which financial information is currently
evaluated by management. Results of these lines of business are presented on a managed basis. Both the external
and the internal reports are prepared in accordance with
International Financial Reporting Standards (IFRS).
Private Banking offers private clients comprehensive services
around the world. Traditional Asset Management (LGT Capital
Assets under administration in CHFm 4
Segment assets
Segment liabilities
Investments in associates
Property and equipment
Goodwill and other intangible assets
Capital expenditure
Management) is a specialist in the allocation of assets and
selection of investment managers, and manages and moni-
Operating segments at 31 December 2011 (TCHF)
tors a wide range of investment funds. Alternative Asset
Management (LGT Capital Partners) is a specialist in the
Total external operating income
alternative asset classes of hedge funds and private equity.
Total internal operating income 1
Operations & Technology (LGT Financial Services) is the IT
Total segment operating income (total revenue)
and business service provider.
Operating expenses
Segment result before tax
The accounting policies of the operating segments are
Tax expense 2
the same as those described in the summary of the Group
Non-controlling interests
accounting principles. Income and expenses are assigned
Net profit of LGT Group
to the individual business lines in accordance with current
market prices and based on the client relationships.
Indirect costs resulting from services provided internally
are accounted for according to the principle of causation
and are recorded as a revenue increase for the service
provider and as a cost increase for the service beneficiary.
Depreciation and pro­visions are stated at effective costs.
Net interest and similar income 3
Income from services
Income from trading activities
Depreciation
Credit (losses) recoveries
Change in provisions and other losses
Profit/(loss) of associates
Information about the revenues from external customers for
Headcount
each product and service, or group of similar products and
Assets under administration in CHFm 4
services, is not available and the cost to develop it would
Segment assets
be excessive.
Segment liabilities
Investments in associates
Property and equipment
Goodwill and other intangible assets
Capital expenditure
1
Revenue from transactions with other segments at market prices.
2
The Group does not allocate tax expense (tax income) to reportable segments.
3
Management primarily relies on net interest income, not the gross income and expense,
in managing the segments.
50
Notes to the consolidated financial statements
Private
Banking
Traditional Asset
Management
Alternative Asset
Management
690 057
32 205
112 989
10 815
43 251
22 281
Operations &
Technology
Corporate
Center 5
Group
12 178
109 987
957 416
119 869
-196 216
0
700 872
75 456
135 270
132 047
-86 229
957 416
-455 292
-80 115
-100 838
-133 674
69 065
-700 854
245 580
-4 659
34 432
-1 627
-17 164
256 562
-33 539
-7 054
215 969
136 456
-71
-104
4 382
-29 524
111 139
340 272
75 290
132 942
3 685
9 873
562 062
216 145
-419
-992
625
39 706
255 065
-16 741
-24
-1 270
-20 757
-30 577
-69 369
-1 439
0
0
0
0
-1 439
-3 469
0
0
0
-11 280
-14 749
0
563
0
0
222 534
223 097
1 047
135
178
291
179
1 830
61 195
20 649
18 211
0
2 063
102 118
26 192 373
136 261
126 704
573 513
163 383
27 192 234
22 889 652
63 856
71 944
488 127
333 219
23 846 798
0
869
0
0
2 670 824
2 671 693
167 603
21
1 134
12 170
0
180 928
121 263
45 225
9 996
96 398
0
272 882
10 609
22
521
9 475
0
20 627
Private
Banking
Traditional Asset
Management
Alternative Asset
Management
Operations &
Technology
Corporate
Center 5
Group
505 310
20 343
77 761
7 026
98 554
708 994
10 404
42 932
20 042
124 201
-197 579
0
515 714
63 275
97 803
131 227
-99 025
708 994
-449 744
-57 650
-71 915
-131 479
96 773
-614 015
65 970
5 625
25 888
-252
-2 252
94 979
-20 090
-4 548
70 341
131 169
-104
-33
2 537
-26 324
107 245
321 081
62 989
97 645
2 795
3 168
487 678
54 075
287
-1 765
459
3 516
56 572
-14 715
-19
-1 762
-29 679
-5 237
-51 412
-2 949
0
0
160
1
-2 788
-2 627
0
0
0
9 091
6 464
0
0
0
0
-146 836
-146 836
1 008
143
170
291
167
1 779
53 867
16 482
14 857
0
1 726
86 932
25 612 214
81 554
77 369
386 405
94 578
26 252 120
22 416 213
50 175
52 568
294 264
506 574
23 319 794
0
0
0
0
2 446 237
2 446 237
170 452
0
1 880
8 948
0
181 280
146 068
0
8 432
110 970
0
265 470
9 217
0
567
5 659
0
15 443
4
Assets under administration include double-counted assets and LGT’s Princely Portfolio.
5
Corporate Center includes the net result of the Princely Portfolio, net Group financing cost, the cost of all Group functions and consolidation adjustments.
Notes to the consolidated financial statements
51
Geographical information at 31 December 2012 (TCHF)
Revenues 1
Capital expenditure
Non-current assets
Liechtenstein
486 908
12 316
194 436
Switzerland
503 349
825
169 203
Other Europe
-81 405
5 110
83 114
66 696
20
3 041
Asia
-18 132
2 356
4 016
Group
957 416
20 627
453 810
Liechtenstein
307 350
8 653
211 068
Switzerland
318 637
3 256
130 564
Other Europe
-78 712
93
99 264
Americas 2
Geographical information at 31 December 2011 (TCHF)
Americas
2
Asia
Group
52
95 002
230
2 763
66 717
3 211
3 092
708 994
15 443
446 751
1
Revenues are attributed to countries/regions on the basis of the LGT Group companies domicile.
2
Revenues: mainly fee income from Class Funds.
Notes to the consolidated financial statements
34 Client assets under administration (CHF m)
Client assets under administration (excluding Princely Portfolio) which are stated according to the provisions of the Liechtenstein
banking law are as follows:
2012
2011
Client assets in own-managed funds
23 018
20 122
Client assets under management
24 803
25 525
Other client assets under administration
51 627
38 839
Total client assets under administration (including double counting)
99 448
84 486
12 416
11 413
12 342
5 758
10 515
8 562
1 827
0
0
-2 804
thereof double counting
Net asset inflow
thereof net new money
thereof through acquisition
thereof through disposal
Client assets in own-managed funds
This item covers the assets of all the actively marketed investment funds of LGT Group.
Client assets under management
The calculation of assets with management mandate takes into account client deposits as well as the market value of securities,
loan-stock rights, precious metals and fiduciary investments placed with third-party institutions. The information covers both assets
deposited with Group companies and assets deposited at third-party institutions for which Group companies hold a discretionary
mandate.
Other client assets under administration
The calculation of other client assets under administration takes into account client deposits as well as the market value of securities,
loan-stock rights, precious metals and fiduciary investments placed with third-party institutions. The information covers assets for
which an administrative or advisory mandate is exercised.
Double counting
This item covers investment fund units from own-managed funds as well as certain assets that are included in client assets under
management.
Custodian assets
Custodian assets are excluded.
Notes to the consolidated financial statements
53
35
Pensions
2012
2011
2.0%
2.50%
Principal actuarial assumptions
Discount rate
Expected net return on plan assets
5.00%
5.00%
Average future salary increases
1.00%
1.00%
Future pension increases
0.00%
0.00%
Mortality tables used
BVG 2010 GT BVG 2010 GT
Average retirement age
Employees covered by the major plans
1
Retirees covered by the major plans
60/60
60/60
1 507
1 519
424
410
The average life expectancy in years of a pensioner retiring at age 60 is as follows:
Male
26.0
24.0
Female
28.6
26.5
855 337
775 440
-1 059 570
-1 026 513
-204 233
-251 073
Balance sheet (end of year)
Fair value of plan assets
Defined benefit obligation
Funded status
Unrecognized asset due to IAS 19.58
0
0
Unrecognized past service cost
0
0
Unrecognized actuarial (gain)/loss
328 742
293 591
Net asset/(liability)
124 509
42 518
Income statement
Service cost
-46 043
-43 323
Interest cost
-26 439
-28 418
37 976
39 836
Expected return on plan assets
Net actuarial gain/(loss) recognized in year
-18 233
-4 060
Plan amendment
106 500
0
Past service cost
-16 800
0
Employees’ contributions
16 571
17 503
Net pension expenses
53 532
-18 462
Actual return on plan assets
64 834
-55 853
42 518
31 311
Net pension expenses
53 532
-18 462
Employer’s contributions
28 459
29 669
124 509
42 518
81 991
11 207
Movement in the asset/(liability) recognized in the balance sheet
At 1 January
At 31 December
Prepaid/(accrued) pension cost
54
2
1
Apprentices, trainees and certain part-time employees are not covered by the plans.
2
i.e. the net of employer’s contributions and net pension expenses.
Notes to the consolidated financial statements
2012
2011
-1 026 513
-917 694
Movement in the defined benefit obligation
At 1 January
Current service cost
-46 043
-43 323
Past service cost
-16 800
0
Interest cost
-26 439
-28 418
Plan amendment
106 500
0
Actuarial gains/(losses)
-80 242
-64 588
Benefits paid
At 31 December
29 967
27 510
-1 059 570
-1 026 513
775 440
811 631
37 976
39 836
Movement in the fair value of plan assets
At 1 January
Expected return on plan assets
Actuarial gains/(losses)
26 858
-95 689
Employer’s contributions
28 459
29 669
Employees’ contributions
16 571
17 503
Benefits paid
-29 967
-27 510
At 31 December
855 337
775 440
Major categories of plan assets as a percentage of the fair value of total plan assets
Equity instruments
22%
22%
Debt instruments
35%
35%
Property
16%
19%
Alternative investments
22%
18%
Cash
4%
5%
Other
1%
1%
The plan assets include property occupied by the Group with a fair value of 16 822 (2011: 16 822).
The expected return on plan assets is determined by considering the expected returns available on the assets underlying the current
investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date.
Expected returns on equity and property investments reflect long-term real rates of return experienced in the respective markets.
The history of the plans for the current
2012
2011
2010
2009
2008
-1 059 570
-1 026 513
-917 694
-813 508
-736 398
and prior periods is as follows:
Present value of defined benefit obligation
Fair value of plan assets
Surplus/(deficit) in the plan
Experience adjustments on plan liabilities
Experience adjustments on plan assets
855 337
775 440
811 631
719 063
557 438
-204 233
-251 073
-106 063
-94 445
-178 960
990
-21 616
6 754
16 009
-20 201
26 858
-95 689
17 888
78 902
-181 951
The Group expects to contribute 31 368 to its defined benefit pension plans in 2013 (2012: 28 759).
The measurement date for the Group’s defined benefit plans is 31 December.
Notes to the consolidated financial statements
55
36
Long-term incentive scheme
Movements in the number of options outstanding
Number of series
Year of issue
7
8
9
10
11
12
13
14
2005
2006
2007
2008
2009
2010
2011
2012
Total
Duration from
1.4.05
1.4.06
1.4.07
1.4.08
1.4.09
1.4.10
1.4.11
1.4.12
Duration to
1.4.12
1.4.13
1.4.14
1.4.15
1.4.16
1.4.17
1.4.18
1.4.19
34
325
2 183
2 794
2 879
3 108
3 329
0
14 652
At 1 January 2012
Granted
Exercised
0
0
0
0
0
0
0
3 312
3 312
-34
-50
-15
0
-74
0
0
0
-173
Lapsed
0
0
-20
-37
-39
-38
-73
-16
-223
At 31 December 2012
0
275
2 148
2 757
2 766
3 070
3 256
3 296
17 568
Total
Number of series
Year of issue
6
7
8
9
10
11
12
13
2004
2005
2006
2007
2008
2009
2010
2011
Duration from
1.4.04
1.4.05
1.4.06
1.4.07
1.4.08
1.4.09
1.4.10
1.4.11
Duration to
1.4.11
1.4.12
1.4.13
1.4.14
1.4.15
1.4.16
1.4.17
1.4.18
8
41
365
2 462
2 848
2 944
3 176
0
11 844
At 1 January 2011
Granted
0
0
0
0
0
0
0
3 378
3 378
Exercised
-8
-7
-40
-262
0
0
0
0
-317
Lapsed
0
0
0
-17
-54
-65
-68
-49
-253
At 31 December 2011
0
34
325
2 183
2 794
2 879
3 108
3 329
14 652
2012
2011
Options outstanding at the end of the year were as follows:
Number of series
Year of issue
Expiry date
Exercise price (CHF)
7
2005
1.4.2012
25 769
0
34
8
2006
1.4.2013
28 194
275
325
9
2007
1.4.2014
32 634
2 148
2 183
10
2008
1.4.2015
37 061
2 757
2 794
11
2009
1.4.2016
32 859
2 766
2 879
12
2010
1.4.2017
34 760
3 070
3 108
13
2011
1.4.2018
13 871
3 256
3 329
14
2012
1.4.2019
12 877
3 296
0
17 568
14 652
In 2012, the fair value changes of the options of 65 212 were charged to personnel expenses (2011: 17 975 credited to personnel
expenses). Significant inputs to determine the fair value of the options are the economic value added as described in the Group
accounting principles under employee medium-term benefits and the exercise price shown above.
56
Notes to the consolidated financial statements
37
Related-party transactions (TCHF)
2012
2011
3 045
3 045
15 463
13 462
The following emoluments were made by the Group to the members of the Foundation Board
and to Group and business unit executives during the year.
Total emoluments of Foundation Board members
Salaries and bonuses
Long-term incentive scheme
Total emoluments of Group and business unit executives
0
0
15 463
13 462
The following loans, advances and commitments made by the Group to and on behalf
of the above-mentioned related parties were outstanding at year-end
Advances
4 136
5 548
Mortgages and other loans
3 409
2 507
Total
7 545
8 055
Hedge fund and private equity co-investment plan of senior LGT managers
Each year the employees of LGT Capital Partners Ltd., which acts as investment manager for LGT’s alternative assets investment
vehicles, and members of LGT Group’s management are invited to invest in the same private equity and hedge fund investments
as LGT’s customers. At 31 December 2012, LGT’s employees had committed a total of USD 51.0 million (2011: USD 49.6 million)
to the alternative investment co-investment plans.
Transactions with the Prince of Liechtenstein Foundation
A number of Group transactions were concluded with the Prince of Liechtenstein Foundation (POLF), the beneficiary of the
LGT Group Foundation, in the normal course of business, including loans, deposits and other transactions. The transactions were
carried out at commercial terms and market rates and were reported as follows:
Deposits
2012
2011
1 178
553
Transactions with post-employment benefit plans
A number of Group transactions were concluded with post-employment benefit plans in the normal course of business, including
loans, deposits and other transactions. The transactions were carried out at commercial terms and market rates and were reported
as follows:
Deposits
2012
2011
34 812
35 933
Advances to and due to investments in associates
A number of Group transactions were concluded with investments in associates in the normal course of business, including loans,
deposits and other transactions. The transactions were carried out at commercial terms and market rates and were reported as
follows:
2012
Loans
Financial assets at fair value and investment securities
Deposits
2011
102 809
16 993
2 669 506
2 446 237
264 410
517 351
Notes to the consolidated financial statements
57
38
Operating lease commitments (TCHF)
The group leases various offices and warehouses under non-cancellable operating lease agreements.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
2012
2011
Not later than one year
26 225
24 786
Later than one year and not later than five years
76 145
76 565
Later than five years
Subtotal
Less sublease rentals received under non-cancellable leases
Total
29 725
39 515
132 095
140 866
16 401
24 273
115 694
116 593
Operating leasing expenses in the gross amount of 30 064 are included in operating expenses. (2011: 27 246).
58
Notes to the consolidated financial statements
39
Business combinations (TCHF)
Insurance-linked business
On 1 June 2012, LGT acquired the insurance-linked securities business and the respective assets under management from
Clariden Leu AG. Since this date the insurance-linked business, which has become part of LGT Capital Management AG, Pfäffikon,
has been fully consolidated according to the acquisition method.
The business contributed 11 998 to operating income and 4 989 to LGT‘s Group profit in the period from 1 June to 31 December
2012. If the business had been already purchased on 1 January 2012, the operating income of LGT Group would have been
amounted to 965 985 and the Group profit to 220 600.
Details of the net assets acquired and goodwill are as follows:
Cash paid
Deferred payment
42 450
4 000
Total purchase price
46 450
Fair value of net assets acquired
20 950
Total goodwill
25 500
The goodwill arising from the acquisition consists largely of the synergies expected from combining the operations as well as the
personnel know-how.
The assets and liabilities arising from the acquisition are as follows:
Fair value
Intangible assets
20 950
Net assets
20 950
Minority interests
0
Net assets acquired
20 950
Purchase price paid in cash or cash equivalents
42 450
Cash and cash equivalents in purchased business
Cash outflow on acquisition
0
-42 450
Clariden Leu Fund Management (Lux) S.A., Luxembourg
On 28 September 2012, 100% of the share capital of LGT Fund Management (Lux) S.A., Luxembourg (formerly Clariden Leu Fund
Management (Lux) S.A.) was acquired. Since this date, LGT Fund Management (Lux) S.A. has been fully consolidated according to
the acquisition method.
The entity contributed 19 to operating income and -95 to LGT‘s Group profit in the period from 28 September to 31 December
2012. If LGT Fund Management (Lux) S.A. had been already purchased on 1 January 2012, the operating income of LGT Group
would have been amounted to 963 420 and the Group profit to 220 583.
Details of the net assets acquired and goodwill are as follows:
Cash paid
Deferred payment
928
0
Total purchase price
928
Fair value of net assets acquired
785
Total goodwill
143
The entire goodwill arising from the acquisition has been written-off as per year-end 2012.
Notes to the consolidated financial statements
59
The assets and liabilities arising from the acquisition are as follows:
Fair value
Loans and advances to banks
1 978
Other assets
Other liabilities
34
1 227
Net assets
785
Minority interests
0
Net assets acquired
785
Purchase price paid in cash or cash equivalents
928
Cash and cash equivalents in purchased entity
0
Cash outflow on acquisition
-928
Clerestory Capital Advisors LLC, New York
On 30 November 2012, 100% of the rights of LGT Clerestory LLC, New York (formerly Clerestory Capital Advisors LLC) was
acquired. Since this date, LGT Clerestory LLC has been fully consolidated according to the acquisition method.
The entity contributed 1 485 to operating income and -209 to LGT‘s Group profit in the period from 1 to 31 December 2012.
If LGT Clerestory LLC had been already purchased on 1 January 2012, the operating income of LGT Group would have been
amounted to 958 556 and the Group profit to 216 493.
Details of the net assets acquired and goodwill are as follows:
Cash paid
Deferred payment
Total purchase price
Fair value of net assets acquired
Total goodwill
2 669
0
2 669
-116
2 785
The goodwill arising from the acquisition consists largely of the synergies expected from combining the operations as well as the
personnel know-how.
The assets and liabilities arising from the acquisition are as follows:
Fair value
Property and equipment
Other assets
Other liabilities
Net assets
Minority interests
Net assets acquired
Purchase price paid in cash or cash equivalents
Cash and cash equivalents in purchased entities
Cash outflow on acquisition
12
57
185
-116
0
-116
2 669
0
-2 669
Acquisition-related costs of 1 212 have been charged to business and office expenses in the consolidated income statement for the
year ended 31 December 2012.
60
Notes to the consolidated financial statements
Risk management
Risk management framework and process
Risk is defined by the adverse impact on profitability of several distinct sources of uncertainty. Taking risk is inherent to the financial
­business and an inevitable consequence of being in business. This note presents information about the Group’s risk exposure and the
objectives, policies and processes for measuring and managing the different risk categories.
The risk policy of LGT Group comprises two key elements. The risk strategy, which details the overall approach to risk-taking desired
by the Board, and the risk principles, which translate the risk strategy into operating standards for both the risk organization and the
required risk processes.
Consistent with the overall business strategy, the aim of risk management
is to achieve an appropriate balance between risk and return and minimize
LGT Group employs the “Internal Capital Adequacy Assessment Process”
(ICAAP), based on the standards of the Basel Committee on Banking Super­
n
tio
ica
tif
2. Risk
gui
de
lin
es
3. Risk managem
en
t
1. R
isk
id
en
potentially adverse effects on the financial performance of the Group.
vision, to ensure a capital basis appropriate to its risk situation. Several risk
management policies are designed to identify and analyze the different risk
v
re
sk
5. Ri
categories, to set guidelines, appropriate risk limits and controls, to monitor
the risks and adherence to limits with reliable and up-to-date information
ie
systems and to regularly review the risk categories. The figure illustrates the
w
five equivalent key elements of the LGT Group risk process.
4 . R i s k c o n t ro
The Foundation Board is responsible for the Group’s risk policy and its regular
l
review. On a daily basis risk monitoring is conducted by the line management.
The overall responsibility lies within the executive management teams of each
business unit. The risk controlling unit oversees the risk-taking activities of the
Group. The control of risk is thus conducted outside of and independently
of line management. LGT Group’s risk controlling unit is responsible for risk
supervising and risk reporting for the whole Group.
LGT Group has identified several types of risk to which it is exposed to and applied them in ICAAP.
Strategic and business risk
Market risk
Liquidity and funding risk
Credit risk
Operational risk
Pension risk
Interest rates
Currency
Equity prices
Asset and liability
management
Counterparty default
Concentration
Collateral
Processes
Employees
Technology
External
Funding status of pension
liabilities
Regulatory and reputational risk
Strategic risk
Strategic risk is the danger of losses arising from strategic decisions, changes in the economic and competitive environment, inadequate
or insufficient implementation of strategic objectives, or lack of capability to adjust to changing economic needs. Moreover, it comprises
the danger of losses resulting from the dependency on highly qualified staff.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risks arise from open positions in interest rate, currency and equity products, all of which are exposed to general and
­specific market movements and changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign
exchange rates and equity prices. The Group separates exposures to market risk into either trading or non-trading portfolios.
The market risk arising from trading and non-trading activities is monitored by Group Risk Controlling and for the trading portfolios by the
Risk Management of the Trading Department. Regular reports are submitted to Group Management and the heads of the business units.
Notes to the consolidated financial statements
61
Trading portfolios also include those positions arising from market-making transactions where the Group acts as principal in the m
­ arket.
Non-trading portfolios primarily arise from the interest rate management of the Group’s banking assets and liabilities. Non-trading
portfolios also consist of foreign exchange and equity risks arising from the Group’s held-to-maturity and available-for-sale investments.
Market risk measurement
As part of the management of market risk, the most important measurement category for the Group is the sensitivity analysis of its
trading and non-trading portfolios, to estimate the market risk of positions held, based on assumptions for changes in interest rates,
foreign exchange rates, equity prices and volatility. The Board sets limits on the total market value change that may be accepted for the
Group, trading and non-trading separately. These limits are monitored by Group Risk Controlling for the trading portfolios on a daily
basis, and for the non-trading portfolios on a monthly basis. On the basis of the sensitivity analysis the Group undertakes various
hedging strategies and also enters into interest rate swaps to match the interest rate risk associated with loans to which the fair value
option has been applied. The table on the next page shows a summary of LGT Group’s sensitivity analysis.
In addition, market risks on the trading portfolios are managed by limiting the volume and maximum loss accepted overall and by p
­ osition.
LGT Group performs stress tests to get an indication of the potential size of losses that could arise in extreme conditions. The stress
testing applies stress movements of each risk category and ad hoc stress testing, which includes applying possible stress events to
­specific positions or regions. The stress testing is tailored to the business and typically uses scenario analysis.
Market risk organization and reporting
Responsibility for risk control lies with the Asset and Liability Committee (ALCO) which defines basic principles for the refinancing
activity of the LGT Group (focusing on medium to long-term money) and advises the Group CEO on capital market transactions.
The control of the ALM risks is primarily applied by way of an active management of the repricing gaps in the different time bands.
Transactions carried out in the ALM area must be notified to the ALCO by a representative of Group Risk Controlling at the next meeting.
Moreover, the Group Trading and Investment Committee (GTIC) is responsible for the regular review of all trading activities and to
ensure the effectiveness of the risk policy, risk processes and the risk organization.
62
Notes to the consolidated financial statements
Summary sensitivity analysis
Negative fair value change at 31 December 2012 (TCHF)
Interest rate
Currency
Equity price
+100 bp
-20%
-10%
9 641
274 077
574
14 231
230 436
704
0
0
266 951
23 872
504 513
268 229
Interest rate
Currency
Equity price
+100 bp
-20%
-10%
Trading portfolio/designated at fair value
11 850
316 011
785
Non-trading portfolios
21 513
216 048
20 377
0
0
244 624
33 363
532 059
265 786
Trading portfolio/designated at fair value
Non-trading portfolios
Investment in associates
Total
Negative fair value change at 31 December 2011 (TCHF)
Investment in associates
Total
Effects on Group net profit and equity
n
Currency risk: The price gains resulting from the valuation are booked to profit and loss. Currency changes for non-trading nonmonetary items are booked directly to equity.
n
Interest rate risk: The financial investments are assigned to the category “Financial investments at fair value through profit and loss”.
Changes in the value of interest rate instruments contained in financial investments are reported in the income statement. In the case
of derivative hedging transactions (cash flow hedges), changes in the fair value of the effective component of the hedging transaction
are recorded directly in equity.
n
Equity price risk: The valuation is carried out at current market prices. The equity price risk is fully reflected in the income statement.
Foreign exchange risk
The Group takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position
and cash flows. The Group CEO sets limits on the level of exposure by currency and in aggregate for both overnight and intraday positions, which are monitored daily.
Foreign exchange risk strategy and measurement
Exchange rate risk control is implemented within the framework of LGT Group’s overall appetite for risk. The aim of an appropriate
AL risk management system is to manage the exchange rate risk of LGT Group and the Group companies to optimum effect.
The limits must be applied using appropriate limit types to reflect the risk. In this context gap limits for limiting matching maturities
within specific maturity segments are used.
The following table summarizes the Group’s exposure to foreign currency exchange rate risk at 31 December. Included in the table are
the Group’s financial instruments at carrying amounts, categorized by currency.
Notes to the consolidated financial statements
63
Foreign exchange exposure
Swiss Francs
Euros
US Dollars
Other
Total
at 31 December 2012 (TCHF)
Cash in hand, balances with central banks
Loans and advances to banks
Loans and advances to customers
Securities held for trading purposes
Financial assets designated at fair value
Available-for-sale securities
5 877 613
24 251
898
1 197
5 903 959
508 833
780 011
1 796 596
924 772
4 010 212
3 699 558
1 083 389
1 512 326
948 565
7 243 838
793
0
2 137
6 005
8 935
1 484 254
1 130 421
231 491
596 236
3 442 402
810 057
180 264
243 739
728 177
1 962 237
Investments in associates
2 671 693
0
0
0
2 671 693
Remaining assets
1 450 192
39 484
23 982
435 300
1 948 958
16 502 993
3 237 820
3 811 169
3 640 252
27 192 234
63 476
398 503
367 366
402 057
1 231 402
4 761 128
4 451 573
6 893 586
2 988 300
19 094 587
0
552 579
37 468
0
590 047
Total assets
Amounts due to banks
Amounts due to customers
Financial liabilities designated at fair value
Certificated debt
1 562 705
10 281
0
0
1 572 986
Remaining liabilities
1 307 804
19 268
13 560
17 144
1 357 776
Total liabilities
7 695 113
5 432 204
7 311 980
3 407 501
23 846 798
Net foreign exchange exposure of balance sheet
8 807 880
-2 194 384
-3 500 811
232 751
3 345 436
-5 398 529
2 176 384
3 463 205
-227 728
13 332
3 409 351
-18 000
-37 606
5 023
3 358 768
Swiss Francs
Euros
US Dollars
Other
Total
2 595 302
21 643
1 324
1 697
2 619 966
Loans and advances to banks
1 560 453
1 924 795
2 261 450
783 868
6 530 566
Loans and advances to customers
3 542 574
689 205
1 259 618
797 396
6 288 793
Derivative financial instruments
Total net foreign exchange exposure
Foreign exchange exposure
at 31 December 2011 (TCHF)
Cash in hand, balances with central banks
Securities held for trading purposes
2 140
1 480
1 328
0
4 948
1 302 833
1 141 432
492 805
601 493
3 538 563
Available-for-sale securities
1 140 687
416 151
205 300
458 788
2 220 926
Investments in associates
2 446 237
0
0
0
2 446 237
Financial assets designated at fair value
Remaining assets
Total assets
Amounts due to banks
Amounts due to customers
Financial liabilities designated at fair value
Certificated debt
27 059
35 480
569 323
2 602 121
4 221 765
4 257 305
3 212 565
26 252 120
231 081
328 135
1 090 722
205 194
1 855 132
4 345 867
4 065 511
5 948 305
2 893 908
17 253 591
0
602 474
57 046
0
659 520
1 513 622
3 229
0
0
1 516 851
Remaining liabilities
1 824 931
111 006
16 149
82 614
2 034 700
Total liabilities
7 915 501
5 110 355
7 112 222
3 181 716
23 319 794
Net foreign exchange exposure of balance sheet
6 644 984
-888 590
-2 854 917
30 849
2 932 326
-3 610 819
868 183
2 759 841
-32 919
-15 714
3 034 165
-20 407
-95 076
-2 070
2 916 612
Derivative financial instruments
Total net foreign exchange exposure
64
1 970 259
14 560 485
Notes to the consolidated financial statements
Interest rate risk
Interest rate risk associated with non-trading financial instruments (loans and advances, fixed-income securities, term deposits, certificated
debt, and derivative financial instruments) is part of the Group‘s asset and liability management process. Interest rate risk is measured
by the use of gap analysis and interest rate sensitivities. The Asset and Liability Committee decides on any appropriate use of derivative
financial instruments. The principal interest-related derivatives used are interest rate swaps and forward rate agreements. LGT Group
also applies fair value hedge accounting to mortgage loan portfolio interest rate risk.
Interest rate risk strategy and measurement
Interest rate risk control is implemented within the framework of LGT Group’s overall appetite for risk. The aim of an appropriate AL risk
management system is to manage the interest rate risk of LGT Group and the Group companies to optimum effect. The limits must be
applied using appropriate limit types to reflect the risk. The following limit types are used in this context:
n
n
Gap limits for limiting matching maturities within specific maturity segments.
Interest rate sensitivity limits for limiting the maximum potential loss on the market value of equity resulting from detrimental market
movements in interest rates.
The following analysis shows the absolute changes in market values given a change of the respective key rate by +100 basis points.
Interest rate sensitivity analysis (CHF m)
All currencies 2012
Within
More than
More than
More than
6 months
6 and
1 and
5 years
less than
less than
12 months
5 years
Total
2.1
-4.5
-1.5
2.4
-1.5
-1.3
-4.9
5.1
-3.1
-4.2
CHF 2012
5.4
25.2
4.7
3.2
38.5
CHF 2011
-3.2
25.0
10.1
-2.9
29.0
USD 2012
-1.8
-14.5
-1.0
-0.5
-17.8
All currencies 2011
USD 2011
-0.4
-9.8
-1.5
-0.1
-11.8
EUR 2012
0.6
-6.8
-2.4
-0.3
-8.9
EUR 2011
1.9
-12.7
-3.1
0.0
-13.9
The table below summarizes the average interest rate by major currencies for monetary financial instruments not carried at fair value
through profit or loss:
31 December 2012
31 December 2011
CHF in %
EUR in %
USD in %
CHF in %
EUR in %
USD in %
Loans and advances to banks
0.16
0.27
0.49
0.22
0.65
0.60
Loans and advances to customers
1.46
1.70
1.87
1.59
2.45
1.79
Available-for-sale securities
2.42
0.84
1.58
2.31
1.32
1.88
Amounts due to banks
0.22
0.15
0.33
0.18
0.72
0.19
Amounts due to customers
0.15
0.02
0.14
0.15
0.31
0.15
Certificated debt
2.20
1.05
–
2.38
–
–
Assets
Liabilities
Notes to the consolidated financial statements
65
Liquidity risk
Liquidity risk is the risk that an entity will be unable to meet a financial commitment to a customer, creditor or investor in whatever
location or currency. The management of liquidity is primarily directed toward ensuring that local funding requirements can be met.
The distribution of sources and maturities of deposits is managed actively in order to ensure access to funds and to avoid a concentration of funding demand at any one time or from any one source. Sources of liquidity are regularly reviewed by a separate team in
Group Treasury to maintain a wide diversification by currency, geography, provider, product and term.
Liquidity management is subject to the overall monitoring and control of Group Treasury, which also manages excess liquidity for
individual entities. LGT Bank Ltd., Vaduz, which attracts the majority of customers’ cash deposits within the Group, also performs the
Group Treasury function.
The Group’s liquidity management process includes:
n
day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. The Group maintains an
n
maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption
active presence in global money markets to enable this to happen;
to cash flow;
monitoring balance sheet liquidity ratios against internal and regulatory requirements; and
n managing the concentration and profile of debt maturities.
n
Group Treasury also monitors unmatched medium-term assets, the level and type of undrawn lending commitments, the usage of
overdraft facilities and the impact of contingent liabilities such as standby letters of credit and guarantees. The assumptions regarding
gross loan commitments are based on expert opinions and also differentiated by the type of limit and the client type.
In the following table, assets and liabilities are structured according to contractual terms. It summarizes the overall funding and
investment structure of the Group.
66
Notes to the consolidated financial statements
Cash flow of assets and liabilities
at 31 December 2012 (TCHF)
Within
More than
More than
More than
More than
1 month
1 and
3 and
1 and
5 years
less than
less than
less than
3 months
12 months
5 years
0
0
Cash in hand, balances with central banks
5 903 959
0
Loans and advances to banks
2 105 387
1 142 713
771 234
Loans and advances to customers
3 703 380
796 014
940 370
0
2 816
0
42 822 779
20 890 100
4 666
1 721 817
302 936
0
Securities held for trading purposes
Derivative financial instruments
Financial assets designated at fair value
Available-for-sale securities
Investments in associates
Remaining assets
Total assets
Amounts due to banks
Total
0
5 903 959
0
0
4 019 334
1 602 689
358 557
7 401 011
6 130
0
8 946
12 583 856
207 652
6 487
76 510 874
499 365
1 265 080
0
3 490 928
514 345
269 558
870 678
40 738
1 998 255
2 671 693
0
0
0
2 671 693
0
533 918
0
0
0
533 918
54 843 108
28 273 416
15 064 382
3 952 230
405 782
102 538 918
1 027 153
136 439
65 563
3 939
0
1 233 094
Amounts due to customers
17 345 109
733 199
712 777
316 518
0
19 107 603
Derivative financial instruments
42 802 609
20 848 470
12 638 762
228 054
7 600
76 525 495
0
590 047
0
0
0
590 047
6 767
10 228
291 230
1 112 214
284 958
1 705 397
0
164 128
0
0
0
164 128
61 181 638
22 482 511
13 708 332
1 660 725
292 558
99 325 764
17 899
48 074
28 783
164 372
53 880
313 008
Within
More than
More than
More than
More than
Total
1 month
1 and
3 and
1 and
5 years
Financial liabilities designated at fair value
Certificated debt
Remaining liabilities
Total liabilities
Committed credit lines
Cash flow of assets and liabilities
at 31 December 2011 (TCHF)
less than
less than
less than
3 months
12 months
5 years
0
Cash in hand, balances with central banks
2 619 966
0
0
Loans and advances to banks
3 980 277
1 251 148
1 312 404
0
0
6 543 829
Loans and advances to customers
2 763 921
730 816
999 470
1 685 400
270 779
6 450 386
Securities held for trading purposes
Derivative financial instruments
Financial assets designated at fair value
Available-for-sale securities
Investments in associates
Remaining assets
Total assets
Amounts due to banks
0
2 619 966
0
4 666
0
280
0
4 946
37 360 615
19 399 939
17 830 624
178 552
4 438
74 774 168
61 780
1 159 174
411 761
2 050 821
12 411
3 695 947
298 388
758 219
606 475
558 142
54 433
2 275 657
0
2 446 237
0
0
0
2 446 237
0
645 625
0
0
0
645 625
47 084 947
26 395 824
21 160 734
4 473 195
342 061
99 456 761
1 585 366
49 498
218 876
4 073
0
1 857 813
Amounts due to customers
15 745 453
582 605
662 457
291 136
0
17 281 651
Derivative financial instruments
37 280 827
19 401 136
17 928 352
197 870
6 700
74 814 885
0
659 520
0
0
0
659 520
7 775
7 896
282 012
1 079 446
273 060
1 650 189
0
131 439
0
0
0
131 439
54 619 421
20 832 094
19 091 697
1 572 525
279 760
96 395 497
115 552
58 551
21 063
140 704
0
335 870
Financial liabilities designated at fair value
Certificated debt
Remaining liabilities
Total liabilities
Committed credit lines
Notes to the consolidated financial statements
67
Derivative cash flows
at 31 December 2012 (TCHF)
Within
More than
More than
More than
More than
1 month
1 and
3 and
1 and
5 years
less than
less than
less than
3 months
12 months
5 years
Total
Derivatives held for trading/hedging
Foreign exchange derivatives
Outflow
42 802 014
20 846 292
12 626 963
196 617
0
76 471 886
Inflow
42 822 631
20 888 203
12 577 369
197 016
0
76 485 219
Outflow
595
2 178
11 798
31 437
7 600
53 608
Inflow
148
1 897
6 487
10 637
6 487
25 656
Interest rate derivatives
Other derivatives
Outflow
0
0
0
0
0
0
Inflow
0
0
0
0
0
0
Total outflow
42 802 609
20 848 470
12 638 761
228 054
7 600
76 525 494
Total inflow
42 822 779
20 890 100
12 583 856
207 653
6 487
76 510 875
Within
More than
More than
More than
More than
Total
1 month
1 and
3 and
1 and
5 years
Derivative cash flows
at 31 December 2011 (TCHF)
less than
less than
less than
3 months
12 months
5 years
Derivatives held for trading/hedging
Foreign exchange derivatives
Outflow
37 280 397
19 398 123
17 914 011
158 784
0
74 751 315
Inflow
37 360 506
19 397 077
17 820 984
157 034
0
74 735 601
Interest rate derivatives
Outflow
430
3 012
14 341
39 086
6 701
63 570
Inflow
108
2 861
9 640
21 518
4 439
38 566
0
0
0
0
0
0
Other derivatives
Outflow
Inflow
68
0
0
0
0
0
0
Total outflow
37 280 827
19 401 135
17 928 352
197 870
6 701
74 814 885
Total inflow
37 360 614
19 399 938
17 830 624
178 552
4 439
74 774 167
Notes to the consolidated financial statements
Credit risk
Credit risk is the risk that a counterparty of a financial instrument fails to meet its contractual obligation and causes LGT Group to incur
a financial loss. Credit risk exposures arise principally in lending activities that lead to loans and advances, and investment activities that
bring debt securities and other bills into the Group’s asset portfolio. Further there is also credit risk in derivative financial instruments
and off-balance sheet financial instruments, such as loan commitments and financial guarantee contracts.
Within LGT Group credit risk is primarily incurred by LGT Bank Ltd., Vaduz. Therefore the credit risk management and control are
centralized in this unit. The conservative lending policy is established by internal directives, guidelines and written policy papers. These
guidelines include: (i) regulations on maximum single credit lines, (ii) limits on unsecured lending exposures to any one customer or
customer group, and (iii) strict credit handling procedures and internal controls.
Credit risk strategy
Lending is an integrated part of the business philosophy of LGT Group and thus complementary to the wealth management s­ ervices
offered. Any transaction must be viewed in the context of the whole client relationship. It is not the policy of LGT Group to extend
credit facilities on a stand-alone basis, but only in conjunction with assets deposited or to be deposited with LGT Group. The risk
appetite of LGT is low to moderate. The center for lending business within LGT Group is the credit function at LGT Bank Vaduz.
As part of its comprehensive system for monitoring lending exposures, regular reports are provided at a Group level to the Foundation
Board on (i) credit risk ratings, (ii) allowances, (iii) country exposures and (iv) bank limits. Stress Testing on securities and property
collateral is executed regularly and on an ad hoc basis if requested by management. In addition, ad hoc reports of special events, as
well as daily reports of global exposures to specific customers, are also provided on request.
Credit risk measurement
Loans and advances
In measuring credit risk of loans and advances to customers and to banks at a counterparty level, the Group assesses the probability of
default of individual counterparties using internal rating tools. They have been developed internally and combine statistical analysis with
credit officer judgment and are validated, where appropriate, by comparison with externally available rating data. The Group regularly
validates the performance of the rating tools and their predictive power with regard to default events.
Debt securities and other bills
For debt securities and other bills, external ratings such as Standard & Poor’s or Moody’s are used for managing the credit risk exposures.
The credit function at LGT Bank Vaduz is responsible for extending counterparty limits, while Treasury is managing the individual positions
within these limits. The investments in those securities and bills are viewed as a way to gain a better credit quality mapping and maintain
a readily available source to meet the funding requirement at the same time.
Assets by countries
In addition to the limitation of credit exposures of customers or customer groups, LGT Group has restricted the group of countries
in which credit risks may be incurred. Limits are established for these countries which are reviewed by the Foundation Board at least
annually. The table below shows the allocation of assets by countries:
Assets by countries/country group (TCHF) 1
2012
in %
2011
in %
12 703 846
46.7
8 790 719
33.5
Europe
6 276 361
23.1
9 185 065
35.0
Americas 2
4 489 677
16.5
4 706 616
17.9
Asia
1 666 280
6.1
1 611 204
6.1
Other countries
2 056 070
7.6
1 958 516
7.5
27 192 234
100.0
26 252 120
100.0
Liechtenstein and Switzerland
Total
1
Based on risk domicile of the assets
2
Mainly Class Funds
Notes to the consolidated financial statements
69
Derivative financial instruments
The Group maintains strict control limits on net open derivative positions. At any time, the amount subject to credit risk is limited to the
current fair value of instruments that are favorable to the Group, which in relation to derivatives is only a small fraction of the contract,
or notional values used to express the volume of instruments outstanding. This credit risk exposure is managed as part of the overall
lending limits with customers, together with potential exposures from market movements (an add-on factor is calculated depending on
underlying risks and time to maturity of the contract).
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a corresponding
receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to cover the aggregate of all settlement
risk arising from the Group’s market transactions on any single day. As member of the CLS (Continuous Linked Settlement) network
LGT is able to mitigate major parts of its daily settlement risk via forex netting.
Off-balance sheet financial instruments
The primary purpose of off-balance sheet financial instruments is to ensure that funds are available to a customer as required. LGT Group
has credit commitments in the form of guarantees and standby letters. These credit commitments carry the same credit risk as loans,
and therefore the same lending criteria and identical limitation processes are applied.
Risk limit control and mitigation policies
LGT Group systematically manages, limits and controls concentrations of credit risk. As part of the credit risk management policy,
exposures are structured by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers, and to
geographical segments. The risks and their changes are closely monitored on a revolving basis and subject to an annual or more
frequent review, when considered necessary. Centralized loan approval procedures ensure a consistent lending process.
In line with the conservative credit policy a major part of the Group’s credit exposure is mitigated. The principal collaterals used within
LGT Group are mortgages over residential properties and charges over financial instruments such as debt securities, equities and
funds. Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly used for
the c­ orresponding assets. In subsequent periods, the fair value is updated by reference to market prices or indexes of similar assets.
Because of the fact that mortgages are granted primarily within Liechtenstein and Switzerland, LGT Group is exposed to the market
trends of the real estate sector in these countries.
Collateral accepted as security for assets (TCHF)
2012
2011
1 143 504
1 645 764
Fair value of financial assets accepted as collateral that the Group is permitted to sell or repledge
in the absence of default
When trading derivatives with banking counterparties in the Interbank market, the Group uses netting and credit support agreements
to mitigate credit risk.
70
Notes to the consolidated financial statements
Impairment and provisioning policies
The Group’s policy requires the review of individual financial assets that are above materiality thresholds at least annually or more regularly when individual circumstances require it. Impairment allowances on individually assessed accounts are determined by an evaluation
of the incurred loss at balance-sheet date on a case-by-case basis, and are applied to all individually significant accounts. The assessment
normally encompasses collateral held (including reconfirmation of its enforceability) and the anticipated receipts for that individual account.
Assets are summarized separately if contractual interest or principal payments are past due but the Group believes that impairment
is not appropriate yet.
Distribution of loans and advances by credit quality
(TCHF)
Neither past due nor impaired
Past due but not impaired
Impaired
Total loans and advances (gross)
Less allowance for impairment
Total loans and advances (net)
2012
Loans and
Loans and
Loans and
advances
advances
advances
advances
to customers
to banks
to customers
to banks
7 012 334
4 010 212
6 041 974
6 530 566
213 145
0
232 002
0
40 126
0
35 244
0
7 265 605
4 010 212
6 309 220
6 530 566
21 767
0
20 427
0
7 243 838
4 010 212
6 288 793
6 530 566
Loans and
Loans and
Loans and
Loans and
Distribution of loans and advances which were past due
but not impaired (TCHF)
2011
Loans and
2012
2011
advances
advances
advances
advances
to customers
to banks
to customers
to banks
158 058
0
171 593
0
Past due 31–60 days
12 387
0
11 248
0
Past due more than 60 days
42 700
0
49 161
0
213 145
0
232 002
0
Past due up to 30 days
Total
Collectively assessed impairment allowances are provided for: (i) portfolios of homogenous assets that are individually below materiality
thresholds; and (ii) losses that have been incurred but have not yet been identified, by using the available historical experience, experi­
enced judgment and statistical techniques.
Impaired loans and advances (TCHF)
2012
Loans and
Loans and
2011
Loans and
Loans and
advances
advances
advances
advances
to customers
to banks
to customers
to banks
Specific allowance for impairment
16 045
0
15 167
0
Portfolio allowance for impairment
5 722
0
5 260
0
21 767
0
20 427
0
Total
LGT Group obtained assets by taking possession of collateral held as security. Repossessed properties are sold as soon as practicable,
with the proceeds used to reduce the outstanding indebtedness.
Carrying amount of collateral and other credit enhancements obtained (TCHF)
Residential, commercial and industrial property
2012
2011
481
481
Loans and advances to banks are highly diversified with a large number of mainly European banks of prime quality. Over 33 percent
of counterparties had a rating of at least “AA”, and 86 percent a rating of at least “A”. LGT is closely monitoring these positions and
applies strict criteria in order to assess whether or not a bank qualifies for lending.
Credit lending is typically granted to LGT Bank’s private banking clientele in the context of the bank’s comprehensive wealth management business. Lending activities are granted in accordance with conservative lending and valuation criteria with a robust tracking
record; the majority of mortgage loans remains concentrated in Liechtenstein and Switzerland. Loans and advances to customers are
qualitatively assigned within an internal rating system.
Notes to the consolidated financial statements
71
Operational risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external
events. They can be caused deliberately or accidentally or be of natural origin and encompass all elements of the organization.
Operational risks are inherent in all types of products, activities, processes and systems.
LGT Group has established a group-wide Operational Risk Committee which provides the Group CEO with support in the early identification of these risks and in implementing appropriate measures. These tasks are based on the principles stipulated in the ‘Sound
Practices for the Management and Supervision of Operational Risk’ issued by the Basel Committee on Banking Supervision. The set
guidelines ensure that risk management takes care of all defined risk categories:
Internal and external fraud
Employment practices and workplace safety
n Customers, products and business practices
n Damage to physical assets
n Business disruption and system failures
n Execution, delivery and process management.
n
n
Operational risk measurement
The operational risk measurement approach is based on appropriate measures adapted for business units, such as an internal monitoring
system, and on the three dimensions risk self-assessment, key risk indicators and error event data base, in which the above risk categories
are assessed. In case of essential operational risk events, the business units and group functions immediately inform Group Risk Controlling
that analyses, monitors and reports relevant data and initiates appropriate actions.
Regulatory risk
Regulatory risk is the overall risk that a change in laws and regulations or a non-compliance with them will materially impact a security,
business, sector or market. A change in laws or regulations made by the government or a regulatory body can increase the costs of
operating a business, reduce the attractiveness of investment and/or change the competitive landscape.
Therefore the regulatory risk management of LGT Group focuses on the early identification of new regulatory requirements, the effective
adoption of new regulatory requirements within LGT Group and the implementation of processes and procedures to ensure that all
business lines within LGT Group permanently meet the respective legal and regulatory requirements.
Reputational risk
Ultimately, if risks are not identified, adequately managed and monitored, this may lead – apart from financial losses – to reputation
being damaged. Reputational risk is defined as the risk of potential damage through deterioration of LGT Group’s reputation or due to
negative perception of its image among customers, counterparties, equity holders and/or regulatory authorities.
LGT Group pursues a holistic reputation risk management consisting of both preventive measures and a dedicated crisis management.
Preventive measures are defined within the code of conduct introduced by LGT Group. Within the crisis management LGT Group has
established processes and organizational structures to address crises and specifically trained all corresponding employees in order to
guarantee quick and adequate responses to potential crises.
72
Notes to the consolidated financial statements
Fair value of financial instruments not carried at fair value
Fair value information is used for business purposes in determining an enterprise’s overall financial position. Fair value information
permits comparisons of financial instruments having substantially the same economic characteristics.
Financial assets (TCHF)
2012
2011
Carrying amount
Fair value
Carrying amount
Fair value
Loans and advances to banks
4 010 212
4 015 996
6 530 566
6 538 994
Loans and advances to customers
7 243 838
7 366 166
6 288 793
6 409 725
Financial liabilities (TCHF)
Amounts due to banks
Amounts due to customers
Certificated debt
1 231 402
1 232 474
1 855 132
1 856 680
19 094 587
19 100 575
17 253 591
17 256 411
1 572 986
1 688 337
1 516 851
1 626 117
Loans and advances to banks
The estimated fair value of loans and advances to banks is based on discounted cash flows using prevailing market interest rates
for debts with similar credit risk and remaining maturity.
Loans and advances to customers
Loans and advances are stated net of impairments. The estimated fair value of loans and advances to customers represents the
discounted amount of estimated future cash flows expected to be received.
Amounts due to banks or to customers
The calculation of the fair values of the amounts due to banks or customers is based on the discounted cash flow method using
interest rates for new debts with similar remaining maturity.
Certificated debt
The aggregated fair values are calculated under the discounted cash flow method. The model is based on a current yield curve
appropriate for the remaining term to maturity.
Notes to the consolidated financial statements
73
Pillar III disclosures according to Basel II
Geographical credit risk
Switzerland
Oceania
North America
Liechtenstein
Latin America
at 31 December 2012 (TCHF)
Loans and advances
Liquid assets
Loans and advances to banks
Loans and advances to customers
5 877 561
68
4 786
1 036
656
882 973
1 241
97 066
196 466
1 039
381 772
98 712
107 733
632 855
65 537
1 459 761
5 062
0
1 337 969
0
Securities
23 598
499 218
538 821
471 697
102 088
Other assets
71 056
1 579
1 089
164 652
211
Mortgages
Replacement value after netting
23 248
290
17 442
626 117
963
8 719 969
606 170
766 937
3 430 792
170 494
Contingent liabilities
18 781
2 655
12 018
107 889
6 489
Commitments
14 248
82
1 208
2 765
0
Total
Off-balance sheet
Deposit and reserve liabilities
Add-ons
Securities
General allowance
0
0
35 584
4 912
0
278 014
287
20 390
107 177
304
555
0
0
0
0
-1 077
0
0
-3 663
0
Total reporting period
9 030 490
609 194
836 137
3 649 872
177 287
Total 2011
6 166 952
583 459
1 234 914
2 445 085
87 449
17 447
13
161
20 145
891
7 537
0
906
2 545
0
Europe
Caribbean
Asia
Africa
Total
56 883
0
156
4
5 941 150
Impaired loans
Impaired loans
Specific allowance
Loans and advances
Liquid assets
Loans and advances to banks
2 552 698
292
389 369
755
4 121 899
Loans and advances to customers
1 310 143
975 700
503 151
37 768
4 113 371
Mortgages
Securities
Other assets
Replacement value after netting
Total
226 085
0
123 356
0
3 152 233
2 673 964
2 214 702
550 555
0
7 074 643
4 200
43 799
6 883
11
293 480
52 480
34 659
1 556
163
756 918
6 876 453
3 269 152
1 575 026
38 701
25 453 694
59 260
45 852
7 724
4 786
265 454
Off-balance sheet
Contingent liabilities
Commitments
34 820
68
33
0
53 224
Deposit and reserve liabilities
15 753
126
0
0
56 375
347 598
98 625
3 334
237
855 966
-1 505
5 138
1 166
28
5 382
Add-ons
Securities
General allowance
-8 661
-99
-32
0
-13 532
Total reporting period
7 323 718
3 418 862
1 587 251
43 752
26 676 563
Total 2011
9 735 675
3 821 797
1 498 257
73 406
25 646 994
10 557
172
834
8
50 228
8 162
99
32
0
19 281
Impaired loans
Impaired loans
Specific allowance
74
Notes to the consolidated financial statements
Segmentation of credit risk
0%
10%
20%
35%
Liquid assets
5 941 150
Loans and advances to banks
1 078 778
Loans and advances to customers
50%
0
0
0
0
0
2 704 062
0
337 989
2 722 918
0
118 021
3 364
49 651
37 843
0
0
2 142 032
582 103
953 083
0
927 101
0
2 216 247
2 778
0
16 125
98
1 736
at 31 December 2012 (TCHF)
Loans and advances
Mortgages
Securities
Other assets
Replacement value after netting
Total
607 603
0
67 741
0
15 947
11 344 153
0
3 833 050
2 145 494
3 203 673
173 574
0
10 990
180
352
1 702
0
1 296
1 746
630
Off-balance sheet
Contingent liabilities
Commitments
Deposit and reserve liabilities
Add-ons
Securities
0
0
0
0
0
11 380
0
470 209
1
161 926
0
0
0
0
0
-13 532
0
0
0
0
11 517 277
0
4 315 545
2 147 421
3 366 581
6 909 636
0
7 479 862
1 930 954
3 699 062
Impaired loans
2 338
0
0
1 173
0
Specific allowance
5 750
0
14
967
0
75%
100%
150%
≥ 200%
Total
0
0
0
0
5 941 150
General allowance
Total reporting period
Total 2011
Impaired loans
Loans and advances
Liquid assets
Loans and advances to banks
0
110
960
0
4 121 899
118 779
1 096 979
3 659
0
4 113 371
Mortgages
0
384 239
6 016
0
3 152 233
Securities
0
823 593
2 154 619
0
7 074 643
Loans and advances to customers
Other assets
Replacement value after netting
Total
0
272 743
0
0
293 480
10
65 617
0
0
756 918
118 789
2 643 281
2 165 254
0
25 453 694
0
80 358
0
0
265 454
Off-balance sheet
Contingent liabilities
Commitments
0
47 850
0
0
53 224
Deposit and reserve liabilities
0
56 375
0
0
56 375
229
212 221
0
0
855 966
0
0
5 382
0
5 382
Add-ons
Securities
General allowance
0
0
0
0
-13 532
Total reporting period
119 018
3 040 085
2 170 636
0
26 676 563
Total 2011
119 124
3 149 393
2 358 963
0
25 646 994
Impaired loans
3 347
37 345
6 025
0
50 228
Specific allowance
1 364
11 186
0
0
19 281
Impaired loans
Notes to the consolidated financial statements
75
Credit risk/credit risk reduction
at 31 December 2012 (TCHF)
Covered by
Covered by
Mortgage-
Other
financial
guarantees
backed
collateral
collateral
Total
and credit
derivatives
Loans and advances
Liquid assets
0
0
0
0
0
Loans and advances to banks
1 135 885
0
0
0
1 135 885
Loans and advances to customers
2 568 981
13 908
43 438
153 936
2 780 263
34 750
0
3 049 191
3 018
3 086 959
0
0
0
0
0
Mortgages
Securities
Other assets
Replacement value after netting
Total
2 567
0
419
32
3 018
596 446
0
0
10 369
606 815
4 338 629
13 908
3 093 048
167 355
7 612 940
169 786
8 215
207
3 788
181 996
1 694
0
10 655
8
12 357
Off-balance sheet
Contingent liabilities
Commitments
Deposit and reserve liabilities
0
0
0
0
0
9 090
0
1
2 200
11 291
Securities
0
0
0
0
0
General allowance
0
0
0
0
0
Total reporting period
4 519 199
22 123
3 103 911
173 351
7 818 584
Total 2011
4 535 983
15 066
2 868 199
145 448
7 564 696
Impaired loans
2 291
0
31 913
47
34 251
Specific allowance
5 750
0
4 134
0
9 884
Add-ons
Impaired loans
76
Notes to the consolidated financial statements
Credit risk/distribution according
counterparty or sector
States and
Public
Administrative
Multilateral
central banks
authorities
facilities
development
at 31 December 2012 (TCHF)
banks
Loans and advances
Liquid assets
Loans and advances to banks
Loans and advances to customers
Mortgages
Securities
5 941 150
0
0
0
402 355
29 782
284 902
44 043
69 231
106 411
13 738
29 761
0
0
20
0
880 827
5 283
277 168
272 240
Other assets
540
0
224
391
Replacement value after netting
902
123
776
836
7 295 005
141 599
576 828
347 271
Total
Off-balance sheet
Contingent liabilities
2 950
4
740
542
Commitments
0
0
1 296
0
Deposit and reserve liabilities
0
0
0
0
115
176
2 537
0
0
0
0
0
Add-ons
Securities
General allowance
-3 414
0
0
0
Total reporting period
7 294 656
141 779
581 401
347 813
Total 2011
3 752 173
16 346
317 970
84 950
Impaired loans
Impaired loans
Specific allowance
0
0
14
0
572
110
14
134
International
Banks
Corporates
Retail
0
0
organizations
Loans and advances
Liquid assets
0
0
Loans and advances to banks
0
2 138 984
7 113
0
Loans and advances to customers
0
449 210
1 659 914
1 729 662
Mortgages
0
18 480
18 917
63 515
Securities
0
1 957 708
1 266 337
0
Other assets
0
16 001
4 024
271 872
Replacement value after netting
2 445
436 615
46 534
37 064
Total
2 445
5 016 998
3 002 839
2 102 113
0
45 240
127 892
87 514
Commitments
0
286
4 165
36 823
Deposit and reserve liabilities
0
0
56 375
0
Off-balance sheet
Contingent liabilities
Add-ons
1 888
342 207
135 237
86 352
Securities
0
0
0
0
General allowance
0
-62
-844
-9 046
4 333
5 404 669
3 325 664
2 303 756
0
8 656 720
3 327 100
1 433 656
Impaired loans
0
0
465
4 367
Specific allowance
0
284
5 092
4 757
Total reporting period
Total 2011
Impaired loans
Notes to the consolidated financial statements
77
Credit risk/distribution according
counterparty or sector
Mortgage-
Overdue
backed
Investment
Covered notes
in associates
at 31 December 2012 (TCHF)
Loans and advances
Liquid assets
0
0
0
0
Loans and advances to banks
0
-14
0
0
41 061
14 378
0
0
3 015 192
36 109
0
0
0
0
266 954
0
419
0
0
0
0
0
0
0
3 056 672
50 473
266 954
0
Loans and advances to customers
Mortgages
Securities
Other assets
Replacement value after netting
Total
Off-balance sheet
Contingent liabilities
207
0
0
0
10 654
0
0
0
Deposit and reserve liabilities
0
0
0
0
Add-ons
1
0
0
0
Securities
0
0
5 382
0
Commitments
General allowance
0
-166
0
0
Total reporting period
3 067 534
50 307
272 336
0
Total 2011
2 825 943
57 745
3 789
0
Impaired loans
1 173
44 209
0
0
Specific allowance
1 030
7 288
0
0
Investment
Other
Total
Impaired loans
Short-term
fund shares
Loans and advances
Liquid assets
Loans and advances to banks
0
0
0
5 941 150
1 214 734
0
0
4 121 899
Loans and advances to customers
5
0
0
4 113 371
Mortgages
0
0
0
3 152 233
Securities
0
2 148 126
0
7 074 643
Other assets
9
0
0
293 480
Replacement value after netting
Total
231 623
0
0
756 918
1 446 371
2 148 126
0
25 453 694
365
0
0
265 454
Off-balance sheet
Contingent liabilities
Commitments
0
0
0
53 224
Deposit and reserve liabilities
0
0
0
56 375
287 453
0
0
855 966
0
0
0
5 382
Add-ons
Securities
General allowance
0
0
0
-13 532
Total reporting period
1 734 189
2 148 126
0
26 676 563
Total 2011
2 825 777
2 344 825
0
25 646 994
Impaired loans
0
0
0
50 228
Specific allowance
0
0
0
19 281
Impaired loans
In certain cases, our Pillar III disclosures can differ from the way we manage our risks and how these risks are disclosed in other sections
of this annual report.
78
Notes to the consolidated financial statements
LGT Group Foundation
79
Report of the statutory auditors
80
LGT Group Foundation – report of the statutory auditors
Income statement
Income statement (TCHF)
Note
2012
2011
0
5
Interest paid and similar charges
-1 544
-5 177
Net interest
-1 544
-5 172
100 341
75 717
98 797
70 545
-72
-134
Interest and dividend income
Interest earned
Current income from participations
Total interest and dividend income
Income from commission and service fee activities
Commission expenses
Income from financial transactions (all from trading activities)
Other operating income
1
Total operating income
412
482
51 210
47 094
150 347
117 987
Administrative expenses
Personnel expenses
2
-18 571
-7 689
Business and office expenses
3
-27 320
-12 369
Total administrative expenses
-45 891
-20 058
Other operating expenses
-12 675
-1 422
0
-1 816
affiliated companies and securities treated as current assets
-1 367
-6 621
Profit for the period
90 414
88 070
296 325
283 255
90 414
88 070
386 739
371 325
Allowances for impaired loans and increase of provisions for
contingent liabilities and credit risk
Depreciation, allowances and provision on subsidiary undertakings,
Appropriation of available Foundation earnings
Balance at the beginning of the period
Profit for the period
The Foundation Board proposes to the Foundation Meeting of 25 April 2013:
Payment to the Prince of Liechtenstein Foundation
Balance to be carried forward
-150 000
-75 000
236 739
296 325
The accounting principles and the notes on pages 83 to 91 form part of these accounts.
The accounts on pages 83 to 91 were approved by the Foundation Board on 25 April 2013 and are signed
on its behalf by H.S.H. Prince Philipp von und zu Liechtenstein, Chairman, and Olivier de Perregaux, CFO.
LGT Group Foundation – income statement
81
Balance sheet
Balance sheet (TCHF)
Note
2012
2011
4
777
815
Assets
Loans and advances to banks (subsidiary undertakings)
777
815
Other loans and advances to customers (subsidiary undertakings)
of which on demand
5
0
587 508
Participations (shares in associated companies)
6
1 181 084
1 387 850
Other assets
7
Total assets
74 567
59 639
1 256 428
2 035 812
451 333
1 280 500
0
0
451 333
1 280 500
17 169
7 589
Liabilities
Amounts due to banks
8
of which due daily
of which other loans
Other liabilities
9
Accrued expenses and deferred income
16 968
3 432
45 175
33 922
339 044
339 044
296 325
283 255
90 414
88 070
1 256 428
2 035 812
4 936
4 970
Guarantees and similar instruments
1 981 492
1 673 789
of which for affiliated companies
1 954 679
1 649 536
9 888
11 943
Provisions
10
Foundation capital
Profit/loss to be carried forward
Profit for the period
Total liabilities
11
Off-balance sheet items (TCHF)
Collateralization guarantees and similar instruments
Put options 1
Contract volume
The guarantees and similar instruments are valued with the carrying amount except 2 (2011: except 2) guarantees without specified amount, which are valued with
their pro memoria value.
1
Put option in favor of a Group company.
The accounting principles and the notes on pages 83 to 91 form part of these accounts.
82
LGT Group Foundation – balance sheet
Notes to the financial statements
Accounting principles
Introduction
Loans and advances
The accounting principles are in accordance with the
These items are calculated at nominal values. Value
Liechtenstein Law on Persons and Companies (PGR)
adjustments for identifiable individual risks are set off
and the Liechtenstein Banking Law and its directives.
against the corresponding asset positions.
A summary of the most important accounting prin­
ciples, which have been applied consistently, is set
Financial liabilities and provisions
out below.
These items are shown at nominal values. Provisions
have been created for operational and other risks.
Basis of accounting
The accounts are prepared using the historical cost
Derivative financial instruments
convention. All transactions are recorded on a trade
Derivative financial instruments that are held for trad-
date basis.
ing purposes are valued at their fair market value with
changes in fair market value recognized in income from
Foreign currencies
trading activities. The related positive and negative
Revenue items denominated in foreign currencies are
replacement values are stated at gross values. Income
translated at the exchange rates ruling on the dates of
and expense arising on derivatives used in the context
the transactions. Assets and liabilities denominated in
of asset and liability management, primarily interest
foreign currencies are translated at the exchange rates
rate swaps and forward rate agreements, are recog-
ruling on the balance sheet date, except financial fixed
nized on an accrual basis, as this reflects the Group’s
assets, which are translated at historical rates. Exchange
risk management.
differences are entered in the income statement.
Risk management
Participations
Risks are defined by the adverse impact on profitability
Participations represent investments in subsidiary
of several distinct sources of uncertainty. LGT Group
undertakings and are stated at cost, less any provision
Foundation is exposed to market risks, credit risks,
for permanent diminution in value.
liquidity risks, operational and business event risks.
The Foundation Board is responsible for the risk policy
Debt instruments and shares
and its regular review. The risk policy comprises two
Realized gains or losses arising from the disposal of
key elements:
securities are entered in the income statement.
n
Securities held as current assets (short-term assets) are
shown at market value. Other securities are stated at
the lower of cost or market value.
risk strategy, which details the overall approach to
risk-taking desired by the Board; and
n
risk principles, which translate the risk strategy into
operating standards for both the risk organization
and required risk processes.
Dividends
Proposed dividends from subsidiary undertakings are
Risk management on a daily basis is conducted by the
accrued as receivables in the accounts.
line management. The overall responsibility lies within
the executive management teams of each business
unit. The risk controlling unit oversees the risk-taking
activities of LGT Group Foundation and reports directly
to the Board.
LGT Group Foundation – notes to the financial statements
83
Details on the income statement and balance sheet
Overview
LGT Group Foundation was established on 20 July 2001 and is the top holding company of LGT Group. Its purpose is the holding of
the majority of the subsidiaries of LGT Group. For a complete list of subsidiary undertakings see note 6 below.
The profit for the business year 2012 amounts to 90 414. The balance sheet total decreased by 779 384 or 38.3% to 1 256 428.
1
Other operating income (TCHF)
2012
2011
50 396
37 207
Income from subsidiary undertakings (license fees, income from
service level agreements and service charge for comfort letters)
Other
814
9 887
51 210
47 094
2012
2011
salaries
3 545
3 440
bonuses
6 157
4 221
pension costs
267
302
social security costs
559
450
Total other operating income
2
Personnel expenses (TCHF)
Personnel expenses, including Foundation Board members, consisting of
other personnel expenses
Personnel expenses before long-term incentive scheme
3
608
249
11 136
8 662
Long-term incentive scheme
7 435
-973
Total personnel expenses
18 571
7 689
2012
2011
Business and office expenses (TCHF)
Business and office expenses, consisting of
information and communication expenses
travel and entertainment expenses
legal and professional expenses
advertising expenses
other expenses
Total business and office expenses
84
LGT Group Foundation – notes to the financial statements
46
60
736
698
6 557
6 874
19 919
4 326
62
411
27 320
12 369
4
Loans and advances to banks (subsidiary undertakings) on demand
The loans and advances to banks are bank accounts with LGT Bank Ltd., Vaduz.
5
Other loans and advances to customers
The loans and advances are due from subsidiaries and are not secured by collateral.
6
Participations (TCHF)
Acquisition cost
Accumulated depreciation
Opening balance
Investments
Depreciation
Disposals/Capital decrease
Liquidation
Closing balance
2012
2011
1 495 830
1 175 515
-107 980
-107 653
1 387 850
1 067 862
114 318
320 315
-1 084
-327
-320 000
0
0
0
1 181 084
1 387 850
All participations of LGT Group Foundation are unlisted.
LGT Group Foundation – notes to the financial statements
85
Name
Principal activity
The subsidiary undertakings
LGT Bank Ltd.
Banking and investment management
of LGT Group Foundation
LGT Swiss Life Non Traditional Advisers Ltd.
Investment advisers
at 31 December 2012 were:
LGT Private Equity Advisers Ltd.
Investment advisers
LGT Capital Management Ltd.
Investment management
LGT Funds SICAV
Investment advisers
1
LGT Funds II SICAV 1
Investment advisers
LGT Investments Ltd.
Investment advisers
1
LGT Premium Strategy Ltd. 1
Investment advisers
LGT Fondsleitung Ltd.
Investment advisers
LGT Capital Partners Advisers Ltd.
Investment advisers
LGT Financial Services Ltd.
Services company
LGT Audit Revisions AG
LGT Strategy Units (Lie) AGmvK
Audit services
1,7
Investment advisers
LGT Bank (Singapore) Ltd.
Banking and investment management
LGT Investment Management (Asia) Ltd.
LGT Capital Partners (Asia-Pacific) Ltd., Hong Kong
Investment management
LGT Holding (Malaysia) Ltd.
Holding company
LGT Bank (Cayman) Ltd.
Banking and investment management
LGT Finance Ltd.
Financing
LGT Global Invest Ltd.
Investment management
LGT Participations Ltd. 5
Investment management
LGT Certificates Ltd.
86
Consulting and advisers
8
6
Investment management
LGT (Uruguay) S.A.
Bank representation
LGT (Middle East) Ltd. 9
Investment advisers
1
Companies with variable share capital structure, only part of fund manager held by LGT Group Foundation.
2
Partly held via LGT Global Invest Ltd., Grand Cayman.
3
Voting rights held via LGT Bank Ltd., Vaduz.
4
Partly held via LGT Bank Ltd., Vaduz.
5
Share capital decrease by CHF 1.
6
Company with variable share capital structure, only founder’s shares held by LGT Group Foundation.
7
Acquired as per 1 June 2012.
8
Acquired as per 10 February 2012.
9
Founded in December 2012.
LGT Group Foundation – notes to the financial statements
Registered office
% of voting
% of capital
rights held
held
Share capital (paid in)
Net profit of the
Vaduz – Liechtenstein
100.0
100.0
CHF
291 200 800
CHF
167 644
Vaduz – Liechtenstein
62.8
62.8
CHF
1 000 000
CHF
2 896
subsidiary in business
year 2012 (‘000)
Vaduz – Liechtenstein
60.0
60.0
CHF
1 000 000
CHF
14 943
Vaduz – Liechtenstein
100.0
100.0
CHF
1 000 000
CHF
-4 075
Vaduz – Liechtenstein
100.0
100.0
CHF
50 000
CHF
0
Vaduz – Liechtenstein
100.0
100.0
CHF
50 000
CHF
0
Vaduz – Liechtenstein
100.0
100.0
CHF
50 000
CHF
-6
Vaduz – Liechtenstein
100.0
100.0
CHF
50 000
CHF
0
Vaduz – Liechtenstein
100.0
100.0
CHF
1 000 000
CHF
57
Vaduz – Liechtenstein
100.0
100.0
CHF
250 000
CHF
3 183
Vaduz – Liechtenstein
100.0
100.0
CHF
1 000 000
CHF
-8 651
Vaduz – Liechtenstein
100.0
100.0
CHF
100 000
CHF
-11
Vaduz – Liechtenstein
100.0
100.0
CHF
50 000
CHF
0
Singapore
100.0
100.0
SGD
370 000 000
CHF
4 263
Hong Kong – China
100.0 2
100.0 2
HKD
24 000 000
HKD
1 840
Hong Kong – China
100.0
100.0
HKD
66 000 000
HKD
-1 061
Labuan – Malaysia
100.0
100.0
CHF
90 100 000
CHF
-89 955
Grand Cayman – Cayman Islands
100.0 3
100.0 4
USD
600 000
CHF
8 572
Grand Cayman – Cayman Islands
100.0
100.0
USD
50 001
CHF
1 387
Grand Cayman – Cayman Islands
100.0
100.0
CHF
4
CHF
46 753
Grand Cayman – Cayman Islands
100.0
100.0
CHF
7
CHF
-214
Grand Cayman – Cayman Islands
100.0
100.0
CHF
1
CHF
0
Montevideo – Uruguay
100.0
100.0
UYU
9 647 616
USD
-26
Dubai – United Arab Emirates
100.0
100.0
USD
17 000 000
USD
-618
The book value of the participations in banks and finance companies is CHF 823 351 526.
LGT Group Foundation – notes to the financial statements
87
7
Other assets (TCHF)
Dividend proposed from LGT Bank Ltd., Vaduz
Receivables from subsidiary undertakings
Receivables from others
Total
8
9
Amounts due to banks (TCHF)
782
6 180
10 809
74 567
59 639
2011
1 280 500
Total
451 333
1 280 500
Other liabilities (TCHF)
2012
2011
Bonuses
6 050
4 268
986
986
9 108
1 725
444
148
Others
581
462
17 169
7 589
2012
2011
Opening balance
33 922
41 671
Current year expenses
12 675
1 422
-631
-9 171
Total
Provisions (TCHF)
Provisions released
Provisions utilized
-791
0
Closing balance
45 175
33 922
2012
2011
Equity at the beginning of the business year
710 369
697 299
Payment to the Prince of Liechtenstein Foundation
-75 000
-75 000
Statement of changes in equity (TCHF)
Profit for the period
Total equity at the end of the business year
Headcount
Headcount at 31 December
88
48 048
4 323
2012
Long-term incentive scheme
12
64 064
451 333
Social security costs
11
2011
Amounts due to LGT Bank Ltd., Vaduz
Salaries
10
2012
LGT Group Foundation – notes to the financial statements
90 414
88 070
725 783
710 369
2012
2011
9
8
13
Analysis of balance sheet by origin
Foreign
%
Domestic
%
Total
%
0
0.00
777
100.00
777
100.00
at 31 December 2012 (TCHF)
Assets
Loans and advances to banks
Other loans and advances
Participations
0
0.00
0
0.00
0
0.00
659 190
55.81
521 894
44.19
1 181 084
100.00
Other assets
55
0.07
74 512
99.93
74 567
100.00
Total assets
659 245
52.47
597 183
47.53
1 256 428
100.00
0
0.00
451 333
100.00
451 333
100.00
Liabilities
Amounts due to banks
0
0.00
17 169
100.00
17 169
100.00
Accrued expenses and deferred income
Other liabilities
16 654
98.15
314
1.85
16 968
100.00
Provisions
12 675
28.06
32 500
71.94
45 175
100.00
0
0.00
725 783
100.00
725 783
100.00
29 329
2.33
1 227 099
97.67
1 256 428
100.00
Foreign
%
Domestic
%
Total
%
0
0.00
815
100.00
815
100.00
Other loans and advances
587 508
100.00
0
0.00
587 508
100.00
Participations
865 925
62.39
521 925
37.61
1 387 850
100.00
Foundation capital
Total liabilities
Analysis of balance sheet by origin
at 31 December 2011 (TCHF)
Assets
Loans and advances to banks
Other assets
719
1.21
58 920
98.79
59 639
100.00
Total assets
1 454 152
71.43
581 660
28.57
2 035 812
100.00
0
0.00
1 280 500
100.00
1 280 500
100.00
Liabilities
Amounts due to banks
0
0.00
7 589
100.00
7 589
100.00
Accrued expenses and deferred income
Other liabilities
1 627
47.41
1 805
52.59
3 432
100.00
Provisions
1 422
4.19
32 500
95.81
33 922
100.00
0
0.00
710 369
100.00
710 369
100.00
3 049
0.15
2 032 763
99.85
2 035 812
100.00
Foundation capital
Total liabilities
LGT Group Foundation – notes to the financial statements
89
14
Breakdown of assets according to
2012
%
2011
%
597 183
47.53
581 659
28.57
2 345
0.19
719
0.03
country/country group (TCHF)
Liechtenstein
Europe excl. Liechtenstein
Americas
255 224
20.31
575 224
28.26
Asia
401 676
31.97
878 210
43.14
1 256 428
100.00
2 035 812
100.00
US Dollars
Euros
Other
Total
Total assets
15
Foreign exchange exposure
Swiss Francs
at 31 December 2012 (TCHF)
Assets
Loans and advances to banks
Other loans and advances
Participations
777
0
0
0
777
0
0
0
0
0
872 967
15 224
0
292 893
1 181 084
Other assets
74 567
0
0
0
74 567
Total assets
948 311
15 224
0
292 893
1 256 428
Liabilities
Amounts due to banks
449 000
0
0
2 333
451 333
17 169
0
0
0
17 169
Accrued expenses and deferred income
16 756
40
98
74
16 968
Provisions
33 900
0
11 275
0
45 175
Other liabilities
Foundation capital
Total liabilities
Foreign exchange exposure
725 783
0
0
0
725 783
1 242 608
40
11 373
2 407
1 256 428
Swiss Francs
US Dollars
Euros
Other
Total
815
0
0
0
815
at 31 December 2011 (TCHF)
Assets
Loans and advances to banks
Other loans and advances
Participations
587 508
0
0
0
587 508
1 097 024
224
0
290 602
1 387 850
Other assets
58 984
0
0
655
59 639
Total assets
1 744 331
224
0
291 257
2 035 812
Liabilities
Amounts due to banks
Other liabilities
Accrued expenses and deferred income
Provisions
Foundation capital
Total liabilities
90
LGT Group Foundation – notes to the financial statements
1 280 500
0
0
0
1 280 500
7 589
0
0
0
7 589
3 432
0
0
0
3 432
32 500
0
1 422
0
33 922
710 369
0
0
0
710 369
2 034 390
0
1 422
0
2 035 812
16
Analysis of current assets and liabilities
On demand
by maturity at 31 December 2012 (TCHF)
Within
More than
More than
3 months
3 and less
12 months
Total
than 12
months
Current assets
777
0
0
0
777
Other loans and advances
Loans and advances to banks
0
0
0
0
0
Other assets
0
7 503
64 064
3 000
74 567
777
7 503
64 064
3 000
75 344
0
451 333
0
0
451 333
Total current assets
Current liabilities
Amounts due to banks
Other liabilities
0
1 025
16 144
0
17 169
Accrued expenses and deferred income
0
843
4 125
12 000
16 968
Total current liabilities
0
453 201
20 269
12 000
485 470
Within
More than
More than
Total
3 months
3 and less
12 months
Analysis of current assets and liabilities
On demand
by maturity at 31 December 2011 (TCHF)
than 12
months
Current assets
Loans and advances to banks
Other loans and advances
Other assets
Total current assets
815
0
0
0
815
587 508
0
0
0
587 508
0
5 591
48 048
6 000
59 639
588 323
5 591
48 048
6 000
647 962
0
1 060 500
220 000
0
1 280 500
Current liabilities
Amounts due to banks
17
Other liabilities
0
609
6 980
0
7 589
Accrued expenses and deferred income
0
3 316
116
0
3 432
Total current liabilities
0
1 064 425
227 096
0
1 291 521
Emoluments to members of the management
The emoluments to the members of the Foundation Board and to the Group and business unit executives employed by the
Foundation are disclosed under note 37 in the consolidated financial statements of LGT Group Foundation.
LGT Group Foundation – notes to the financial statements
91
International presence and imprint
AustriaSalzburg
Media relations
Christof Buri
Vienna
Phone +423 235 23 03
BahrainManama
christof.buri@lgt.com
ChinaBeijing
Germany
Frankfurt am Main
Dispatch
Iris Dreier
Hong Kong
Hong Kong
Phone +423 235 20 51
IrelandDublin
JapanTokyo
LiechtensteinVaduz
NetherlandsRotterdam
SingaporeSingapore
SwitzerlandBasel
Berne
Chur
Davos
Geneva
Lausanne
Lugano
Pfäffikon
Zurich
United Arab Emirates
Dubai
United KingdomLondon
United States of America
New York
UruguayMontevideo
92
International presence and imprint
iris.dreier@lgt.com
Portrait of Prince Joseph Wenzel I of Liechtenstein
During his stay in Paris (1738–1741) Prince Joseph Wenzel I of
Liechtenstein had himself painted, twice, by the French portraitist
Hyacinthe Rigaud who was probably the greatest of the period.
In each case ensuring that he was recorded in his full regalia and
with an almost imperial demeanour. To mark his appointment as
Austrian Ambassador, the prince ordered a luxury vehicle from
the best manufacturers in Paris, his celebrated Golden Carriage,
which was both technologically and stylistically one of the most
advanced of its day. It was in this carriage that Joseph Wenzel I
of Liechtenstein would arrive at Versailles and at the Louvre; and
it was also in this carriage that Isabella of Parma, the bride of the
later Emperor Josef II, made the journey from Parma to Vienna.
© LIECHTENSTEIN. The Princely Collections, Vaduz–Vienna
The illustrations in this brochure are details from
Hyacinthe Rigaud, “Portrait of Prince Joseph Wenzel I
of Liechtenstein”, 1740
www.lgt.com
LGT Group is represented in more than 20 locations in Europe, Asia and the Middle East.
A complete address list can be seen at www.lgt.com
50027en 0513 1.2T GUT
LGT Group Foundation
Herrengasse 12
FL-9490 Vaduz
Phone +423 235 11 22
Fax +423 235 16 77
lgt@lgt.com