Sparkasse KölnBonn

Transcription

Sparkasse KölnBonn

Sparkasse KölnBonn
Financial Statements 2005
State of North Rhine-Westphalia – District of Cologne
Founded 1826
Financial institution incorporated under public law
The responsible body (“Träger”) for the Sparkasse KölnBonn is the special-purpose
organisation “Zweckverband Sparkasse KölnBonn”
Although the greatest care has been taken to ensure that the
English translation conveys the true meaning of the original
text throughout, only the German text can be considered as legally binding.
s
2
Financial Statements 2005
Contents
Management Report
3
Annual Financial Statements as at
31 December 2005
14
Notes to the Financial Statements
17
Report of the Supervisory Board
39
Sparkasse KölnBonn
State of North Rhine-Westphalia – District of Cologne
founded 1826
Financial institution incorporated under public law
The responsible body (“Träger”)for the Sparkasse KölnBonn is
the special-purpose organisation “Zweckverband Sparkasse
KölnBonn”
Management Report
3
A. Business Development
After a sluggish start to the year in 2005 the German economy started to show a marked
recovery in the second half of the year as a result of increasing export demand. The Federal
Statistics Office recorded GDP growth for 2005 accounting for price and calendar factors at
1.1%, thus providing evidence of the past year’s growth dynamics.
The Economic
Environment in
2005
The economy was reliant mainly on buoyant foreign trade, with exports increasing
considerably more than imports. Once again domestic demand was only able to make a
modest contribution to the German economy. Private consumption persisted at the
previous year’s level and government spending was also reduced. In spite of investment in
equipment picking up, gross capital investment remained under the previous year’s level
due to a further decline in investment by the construction industry.
Weak consumer demand on the part of private consumers can for the most part be
explained by a reduction in purchasing power resulting from sharply increased energy
prices. In addition, high unemployment as well as fear of job losses dampened
consumption. In 2005 an average of 4,863,000 people in Germany were registered as
unemployed and the unemployment rate stood at 11.7%.
The annual inflation rate for 2005 increased to 2.0% after 1.6% in 2004. Without the
energy component the inflation rate would only have been 1.1%. In the eurozone the
inflation rate was above the European Central Bank’s target of 2.0%.
Stable prospects for the economy and strong growth in the money supply caused the
European Central Bank for the first time in 30 months to raise its minimum repo rate by 25
basis points to 2.25%.
First signs of economic recovery in the Cologne/Bonn economic area began to appear
around mid-year 2005. In the city of Cologne the number of company insolvencies filed in
2005 showed a decrease of 8.1% compared with the previous year, while in Bonn the
number was down 13.8% in the same period. The business situation and expectations of
companies located in the Sparkasse KölnBonn’s business area showed a marked
improvement in the course of the year. Both in Cologne and in Bonn it was good export
prospects which formed the basis of this positive change of sentiment.
However these economic developments in the region varied according to business sector:
In particular mechanical engineering benefited from strong export demand and reached a
high degree of capacity utilisation in the past year. On the other hand the automotive
sector was only able to compensate for weak domestic demand by high demand from
abroad. By contrast the chemical industry reported decreased turnover in the past year,
which can be explained by continuing structural changes and the burden of the increase in
oil prices.
Although the construction industry was once again faced with a further reduction in
turnover, towards the end of 2005 there were first signs of a possible stabilisation which
was in the main due to sales brought forward before the abolition of mortgage allowance in
2006.
As a consequence of stagnating incomes the situation in the retail trade remained strained.
By contrast wholesalers can look back on a more satisfying development due to buoyant
foreign trade. The services sector showed an overall stable development in 2005.
The situation in the labour market remained strained in the past year. However there were
considerable differences in the labour markets of Cologne and Bonn. While Cologne’s
average annual unemployment rate of 13.5% was well above the 12.0% average for North
Rhine-Westphalia, Bonn’s labour market showed a considerably more benign rate of 8.2%.
The economy in
the Cologne/Bonn
region in 2005
4
Management Report
Trends in German
Banking in 2005
The level of economic growth, at best only moderate in 2005, was felt by the banking
industry. Demand for borrowing on the part of small and medium-sized companies, which
are the backbone of the German economy, remained weak for much of the year. Since the
2nd quarter of 2005 lending has gradually been recovering.
The economic situation of the German banking industry nevertheless improved further in
2005. Measures designed to reduce costs and to increase profitability began to bear fruit.
The risk situation of the banking industry eased further and is apparent in a falling number
of write-offs. However it cannot be denied that operating earnings are under great pressure
caused by tough price competition.
The following remarks refer to the development of the Sparkasse KölnBonn which resulted
from the merger of the Stadtsparkasse Köln and the Sparkasse Bonn on 1 January 2005
(see also page 6 “Important events during the year”) The positions for 2004 contain the
cumulated financial data of the former Stadtsparkasse Köln and the former Sparkasse Bonn.
The ratios mentioned are calculated on the basis of rounded values:
Sparkasse
KölnBonn –
Business
Development
Business Development
2004
EUR million
31.12.2005
EUR million
Changes
EUR million
Changes
in %
Business volume
28,713
29,203
490
1.7
Total assets
28,019
28,653
634
2.3
Lending volume
19,871
19,547
-324
-1.6
Customer deposits
20,184
19,399
-785
-3.9
7,567
7,886
319
4.2
Safe custody accounts
As expected Sparkasse KölnBonn maintained its position in 2005 as largest German savings
bank in the legal form of a public law institution. Business volume (Total assets and
Contingent liabilities) increased by 1.7% to EUR 29,203 million. Total assets grew by 2.3%
to EUR 28,653 million as at the reporting date. Average total assets increased by 1.7% in
the course of the year to EUR 29,115 million after EUR 28,633 million in the previous year.
Balance sheet growth resulted principally from the accumulation of own investments (see
page 5 “Own investments”). The volume held on safe custody accounts (including custody
accounts held at the DGZ DekaBank) rose by 4.2% to EUR 7,886 million.
Lending
Lending volume
Claims on customers
Trustee loans/bills
Contingent liabilities
Total
2004
EUR million
2005
EUR million
19,101
18,940
75
57
695
550
19,871
19,547
Total lending volume decreased by 1.6% to EUR 19,547 million (see Business Development
chart). In 2005 customer lending was characterised by a structural change in demand.
Demand for mortgages showed a satisfying increase of 3.7% to EUR 8,342 million. On the
other hand demand for commercial lending was restrained and remained behind the
Sparkasse’s expectations.
In total EUR 11,321 million was lent to companies and the self-employed, EUR 6,693 million
to private customers and EUR 1,533 million to other customer groups (e.g. insurance
companies, churches, associations).
Following on from EUR 4,243 million in the previous year, Sparkasse KölnBonn granted new
loans amounting to EUR 3,274 million.
5
2004
EUR million
2005
EUR million
11,431
11,321
Private customers
6,604
6,693
Other
1,836
1,533
Lending volume by customer group
Companies / self-employed
The position “Bonds and other fixed-interest securities” increased by 4.8% to EUR 3,641
million. Sparkasse KölnBonn extended its holdings of shares and other non-fixed-interest
securities by 53.5% to EUR 1,820 million. The latter group is an accumulation of special fund
deposits in which a part of the liquidity reserve is held.
Own Investments
Sparkasse KölnBonn’s holdings of shares mentioned under the positions “Participations”
and “Shares in affiliated companies” decreased by 10.9% to EUR 589 million. The decrease
results mainly from the valuation allowance for two affiliated companies, which have been
written off according to the German Commercial Code’s prudent lower of cost or market
principle.
Participations
Customer deposits
Liabilities to customers
Certificated liabilities
Subordinated liabilities
Total
2004
EUR million
2005
EUR million
15,256
15,470
4,250
3,172
678
757
20,184
19,399
Liabilities towards customers rose by 1.4% to EUR 15,470 million. As an advantage from the
merger Sparkasse KölnBonn was by and large able to refrain from raising capital through
institutional investors and substituted these sources in part by customer business. Bearer
bonds due in 2005 were not replaced. As a consequence Certificated Liabilities fell by 25.4%
to EUR 3,172 million.
Sparkasse KölnBonn's good credit rating (Moodys A1) is helpful for enabling placements of
bearer bonds within a wide circle of investors, such as customers, institutional investors or
financial institutions both as an investment or for further placement.
Customer deposits by product
2004
EUR million
2005
EUR million
Sight deposits
3,886
3,981
Investment accounts
1,014
1,465
Term deposits
1,689
1,467
Savings deposits
5,811
5,683
Savings certificates
3,276
3,364
Bonds
Total
4,508
3,439
20,184
19,399
Deposits
6
Management Report
Customer interest concentrated on deposits of money available at short notice. Sight
deposits increased by 2.4% to EUR 3,981 million and deposits held on investment accounts
with a special rate of interest showed a pleasing increase of 44.5% to EUR 1,465 million.
Term deposits decreased by 13.1% to EUR 1,467 million. This is in comparison with the
previous year due to reduced activities of institutional investors in their cash management
at the end of the accounting year.
For savings deposits there was a slight reduction in holdings of 2.2% reducing the total to
EUR 5,683 million, whereby the higher interest- bearing savings certificates registered
growth of 2.7% to EUR 3,364 million. Issues of bonds becoming due were not replaced and
on account of the merger were reduced by 23.7% to EUR 3,439 million.
Safe Custody
Volumes
Safe custody volumes developed favourably in 2005 and increased sharply by 4.2% as
against the previous year to EUR 7,886 million.
Holdings of fixed-interest rate securities rose slightly by 1.1% to EUR 2,976 million ,
whereas shares fell back by 6.3% to EUR 2,184 million.
In 2005 investors showed a preference for the purchase of investment funds which,
compared with individual investments, provide a better spread of risk. Holdings of these
funds showed a sharp rise of 18.9% to EUR 2,726 million.
Turnover in customer-related
securities trading
Personnel and
Welfare
2004
EUR million
2005
EUR million
Fixed-interest securities
2,943
2,976
Shares
2,332
2,184
Investment funds
2,292
2,726
Total
7,567
7,886
At year-end Sparkasse KölnBonn employed a total of 5,517 members of staff, of which 3,253
were full-time, 1,433 part-time and 374 trainees. There was a low level of staff fluctuation.
The staff overhang in administrative areas resulting from the merger will be absorbed by
natural fluctuation within a manageable time-frame.
In view of continuing new developments in banking as well as technical innovations,
personnel work in the past year again focused on training and the career development of
our employees. In order to achieve a more flexible and thus more economic regulation of
working hours, our employees are able to make use of flexitime and a variety of part-time
arrangements. As at 31 December 2005 part-timers accounted for 29.9% of staff.
Important events
during the
business year
The merger of Stadtsparkasse Köln and Sparkasse Bonn took place on 1 January 2005. The
responsible body (“Träger”) for Sparkasse KölnBonn is a special-purpose association with
participations of 70% and 30% held respectively by the cities of Cologne and Bonn. With
some 2.1 million customer accounts Sparkasse KölnBonn is market leader in its business
areas of Cologne and Bonn.
Product and process harmonisation has already been partially completed. The
harmonisation of all technical processes into a single EDP platform is planned for the
Whitsun weekend in June 2006.
In the context of the removal of the guarantee obligation on 18 July 2005, the Savings
Banks Financial Group has extended its deposit insurance scheme. Support for individual
institutions remains a core element of the system. This ensures that Sparkasse KölnBonn is
able to fulfil its contractual obligations towards its customers at all times. Customer
deposits are protected without limitation, irrespective of their type and size.
In the period between the end of the business year on 31 December 2005 and the
compilation of the management report there were no events of particular significance.
7
B. Net Assets, Financial and Earnings Situation
In its first business year after the merger Sparkasse KölnBonn achieved a satisfactory
result. All in all the merger process ran smoothly. When the annual financial statements are
officially approved, they will show reserves totalling EUR 1,127.7 million – this is equivalent
to an increase of 3.1% as against the previous year. Together with the security reserve,
Sparkasse KölnBonn also has additional equity elements (supplementary and Tier III
capital) as a regulatory basis for future extension of risk-weighted business.
Net Assets
In the year under review there were no shifts of any note within the balance sheet structure.
On the assets side, loans and claims on customers accounted for 66% and securities
(bonds and shares) for 19%, while on the liabilities side liabilities towards customers,
interbank liabilities and certificated liabilities were the major positions with respective
shares of 54%, 26% and 11%.
In making value adjustments and provisions, all Sparkasse KölnBonn's currently identifiable
lending risks spread over all customer groups and lines of business, participation risks as
well as other liabilities have been appropriately covered in accordance with the German
Commercial Code.
Remaining assets have also been valued prudently.
Details of the capital ratios can be found in Part C. Risk Report, Total Risk Situation (see
page 12).
The solvency of Sparkasse KölnBonn during the year under review was guaranteed at all
times, owing to well-planned and balanced liquidity provision.
Financial
Situation
Credit lines at the Bundesbank and Westdeutsche Landesbank were utilised in line with
cash management requirements. The Bundesbank's offer of repo facilities in the form of
open market transactions was used to a varying degree as required.
In order to satisfy minimum reserve requirements, appropriate deposits were maintained at
the Cologne branch of the Bundesbank.
Sparkasse KölnBonn’s Statement of income for 2005 shows an amount of EUR 78.5 million Earnings Situation
as the result of its normal business operations (Statement of income position 19). There
was a distinct easing of the situation regarding the measures of risk provision.
Net income increased slightly by 1.5% to EUR 33.5 million.
Earnings development
Net interest income
+ Net commission income
+ Net result from financial transactions
2004
31.12.2005
Changes
Changes
EUR million
EUR
million
EUR million
in %
601.7
507.4
-94.3
-15.7
144.0
145.7
1.7
1.2
22.7
30.5
7.8
34.4
- Personnel costs
250.4
251.6
1.2
0.5
- Material costs
226.4
247.1
20.7
9.1
-17.6
1.8
19.4
> 100.0
221.1
108.2
-112.9
-51.1
= Operating result from normal
business operations
52.9
78.5
25.6
48.4
- Taxes on income and earnings
19.6
42.6
23.0
> 100.0
0.3
2.4
2.1
> 100.0
33.0
33.5
0.5
1.5
+ / - Net result from other operating
Earnings (+) / Costs (-)
- Valuation/Risk provisions
- Other taxes
= Net income
8
Management Report
Earnings
The principal causes were falling interest rates in the past business year, the reduction of
Development 2005 risks resulting from interest rate change as well as restrained borrowing demand. On the
basis of average total assets this was equivalent to an interest margin of 1.7% after 2.1%
in Detail
in the previous year. The ratio of net interest income to total earnings of EUR 741.4 million
(see Statement of income items 1-9) stood at 68.4% after 73.5% in the previous year.
Interest-related business continues to be the main source of earnings for Sparkasse
KölnBonn.
The surplus from net commission income rose by 1.2% to EUR 145.7 million, with earnings
from customer-related securities trading and brokerage business more than compensating
for the decline in commission from agency, lending and international business. At 0.5%,
the ratio of net commission income to average total assets equalled the previous year’s
value. The ratio of net commission income to total net income (see Statement of income
positions 1 – 9) amounted to 19.7% after 17.6% in the previous year.
The net result from financial transactions, which arises principally from trades in securities,
derivatives, foreign bank notes and (customer-related) foreign exchange trades, increased
sharply by 34.4% to EUR 30.5 million (previous year: EUR 22.7 million). There was greater
customer demand for interest rate hedging.
General administrative expenses (Statement of income position 10) increased by 5.5% in
the first year after the merger to a total of EUR 481.8 million. At 1.7% the ratio of
administrative expenses to average total assets remained more or less at the value for the
previous year.
The personnel costs included in this item, also comprising social security and pension fund
contributions, remained at EUR 251.6 million, almost at the previous year’s level.
Material costs (other administrative expenses/Statement of income item 10b plus
depreciation and value adjustments on intangible and fixed assets/Statement of income
item 11) increased by 9.1% to EUR 247.1 million. Increases in material costs were due in
the main to the implementation of the new One System Plus IT platform in the 2005
business year and to the one-off expenditure associated with preparation for the merger of
the former Stadtsparkasse Köln and the former Sparkasse Bonn to form the Sparkasse
KölnBonn.
Total expenses (Statement of income items 10-12) rose slightly by 1.9% to EUR 554.6
million. Earnings (Statement of income items 1-9) were down 9.4 % to EUR 741.4 million.
The ratio of total operating expenditure to operating earnings (without Statement of
income positions 8 and 12, cost-income ratio) stood at 72.9%. Achieving a marked increase
in earnings coupled with rigorous cost management remains one of the primary objectives
of our business policy.
Write-downs and value adjustments on claims, certain securities and participations are
recorded at EUR 108.2 million (previous year: EUR 221.1 million), when offset against
earnings. Adequate cover was provided for lending and participation risks spread out over
various customer segments and lines of business.
Taxes on income and earnings amounted to EUR 42.6 million. The rise of 117.3% as against
the previous year is a result of aperiodic expenditure, in particular in connection with
taxation of special funds for the years 2001 and 2002.
In total this results in an increase of 1.5% in net income to EUR 33.5 million.
The result permits an increase in capital resources. When the Financial Statements are
officially approved , the net profit of EUR 33.5 million will be allocated to the security
reserve.
At the time of preparation of the Management Report, developments in net assets, the
financial and earnings situation are running according to our expectations.
9
C. Risk Report
Risk Management at Sparkasse KölnBonn is supervised by the central divisions Risk and
Yield Management and Controlling which are separated organisationally from the market
operations. They are responsible for collating risks and for assessing and supervising risk
cover potential, which comprises liable capital and available valuation reserves. It is the aim
of risk management to allocate risk positions within the framework of the available risk
capital. The process is subject to the legal and compliance requirements placed on
management and controlling.
Risk Management
and Risk Control
at Bank Level
Taking the expected operating earnings before valuation as well as the share of reserves
released for deliberate risk-taking, the Board of Management determines an array of risk
limits for individual business fields (For the planning period of the 2006 business year of
the merged Sparkasse KölnBonn, this accounts for around 10% of total risk cover
potential). The above-mentioned central divisions are responsible for monitoring and
regular reporting on how these limits are being respected. Furthermore they are
responsible for the further conceptional development of the bank's risk management. In so
doing Sparkasse KölnBonn uses the synergy effects available within the German savings
banks organisation, where it also takes part in projects organised by the national
association (DSGV).
Sparkasse KölnBonn differentiates between the following types of risk: counterparty risks,
participation risks, liquidity risks, market risks and operational risks (including legal risks).
Various methods are used depending on the field of business and type of risk involved.
Individual risk factors are assessed in respect to their possible effects on the results. As a
matter of principle, assessments are made according to the “value-at-risk” method.
This entails establishing the loss potential which at a pre-determined occurrence
probability (confidence level) will not be exceeded within a particular time frame. These
reference figures then undergo sensitivity analyses and stress tests. In addition use is also
made of the backtesting procedure.
The risk management and risk controlling systems are inspected on a regular basis by
internal auditors.
Sparkasse KölnBonn also controls the observation of risk limits and market risk positions in
particular through the use of derivative financial instruments. These are bundled into
valuation units at the time of the legal settlement of the underlying trades. German
accounting practice prescribes as a matter of principle strict individual valuation as well as
an imparity treatment which does not offset unrealised gains against unrealised losses.
As far as banks are concerned, this procedure leads to a discrepancy between actual
business performance and the published results according to the commercial code. For this
reason the accounting principles (GoB) have been further developed to the extent that the
formation of valuation units is permitted. Through the formation of valuation units
individual valuation results from the trades grouped in the valuation unit are offset against
each other to give a net result, as long as losses are covered by gains from the reciprocal
trades.
A valuation unit only contains those trades whose main risk originates from the same risk
factor. Examples of same risk factors are interest rates in a given currency, types of shares
or specific currencies. The formation of valuation units is initiated in the Central Division
“Money and Capital Markets/Treasury”. Controlling and documentation of valuation units
takes place in the Central Division “Controlling”.
Alongside the above-mentioned micro-hedges, macro-hedges are arranged at bank level in
order to secure interest rate risks in the investment book. By means of internal trades,
Sparkasse KölnBonn transfers market risks from the investment book to the trading book.
In the trading book the risks are managed and hedged. Commercial valuation units are
formed at portfolio level according to the principle risk factors. Portfolio formation aims to
present the actual earnings situation from the business in the legally binding financial
statements. In so doing internal trades at Sparkasse KölnBonn are concluded at market
rates and measured on an equal basis with external trades.
Hedging
Transactions
10
Management Report
Internal trades and the presentation of the financial instruments from the trading book in
portfolios are treated in more detail as Item 3 “Other Details” in the Notes to the Financial
Statements.
Counterparty
Risks
The credit risk strategy forms the basis for managing counterparty risks from lending. It
comprises the ramifications for lending, taking into consideration the risk-bearing capacity
of the bank as a whole and the starting point for planned lending activities. Alongside
growth targets, these will also include risk-limiting measures and the further development
of a range of instruments for controlling lending risk. As a basis for measurement of
counterparty risks Sparkasse KölnBonn uses the uniform rating system of the Savings
Banks Financial Group developed jointly with the German Savings Banks Association
(DSGV).
Standard ratings will be applied to corporates, traders, business customers, the selfemployed and business start-ups, whereas property developers and investors, together
with management and operational properties, will be rated according to a real estate rating
classification. For consumer loans, loan application and behaviour score cards are
integrated into the loan approval process.
Ratings also form the basis for the calculation of risk-adjusted loan conditions.
Sparkasse KölnBonn regularly assesses a risk status with the aid of a credit risk database. In
so doing the complete portfolio is analysed both according to customer groups, rating
categories, lines of business and existing security held, as well as according to
concentrations of particular lines and sizes of business. To complete the picture a credit
risk model is used to assess the portfolio risk or credit-value-at-risk. A confidence level of
99% and a duration of one year are assumed.
An automated system is employed which identifies conspicuous borrowers by means of
defined early warning indicators and provides technical support to accompany the higher
degree of customer care (intensive monitoring or rescheduling).
Counterparty risk from derivatives transactions is subject to particular scrutiny. The volume
of the nominal values of all Sparkasse KölnBonn's external derivatives exceeds the volume
of total assets two-fold (see Notes / Other Details / Overview of pending forward trades). The
credit weighting for counterparty risks from derivatives is calculated and monitored on a
daily basis. With some individual counterparties standby agreements on the provision of
security (collateral agreements) have been made to keep the weighting within predetermined limits.
Participation
Risks
The risks associated with Sparkasse KölnBonn’s participations are managed by the Central
Participations Division and the Board of Management’s Participation Committee.
Representatives from the Participations division and from “Risk and Yield Management”
take part in the regular meetings of the Participation Committee.
The Central Participations Division monitors the business of participations by a form of
participation controlling and management which is above all related to the degree of the
bank’s involvement. In addition independent risk controlling is conducted by the Central
“Risk and Yield Management” at portfolio level. For normal cases the risk is quantified at a
confidence level of 99% and a holding limit of one year’s duration.
Risks in participation business are mainly dependent on the development of the Cologne
property market. To this end controlling for real estate projects and/or real estate holdings
is implemented by Sparkasse KölnBonn’s appropriate subsidiaries.
Sparkasse KölnBonn’s Participation Principles form the basis for the management of the
participations business and lay down both qualitative requirements and target yields for
participations as well as determining the three-year participation strategy, which has to be
approved by the board. In addition a limit system has been devised for the management of
the participations business; the observation of limits (book values, value-at-risk, losses) is
continually monitored.
11
Liquidity risks are differentiated between the liquidity risk in its strictest sense, the
refinancing risk, the call risk and market liquidity risk.
Liquidity Risks
Sparkasse KölnBonn’s liquidity management is performed by the “Money and Capital
Markets Division / Treasury” on the basis of forecast cash-flows. Precautionary measures are
taken to cover unscheduled liquidity outflows.
The supervisory liquidity coefficient according to liquidity principle II KWG
(Kreditwesengesetz - Banking Law) was registered as 2.8 at year-end which was near on
three times the minimum value of 1.0. Also the figures to be calculated for further
monitoring periods for which there are no prescribed minimum values indicate no signs of
any expected liquidity shortfalls.
The market liquidity risk is reproduced in the risk management system by entering
appropriately longer holding limits for illiquid risk positions
Liquidity coefficient (= Principle II)
Liquidity coefficient
31.12.2004
31.03.2005
30.06.2005
30.09.2005
31.12.2005
2.7
2.7
2.5
3.0
2.8
As well as interest rate risk, market risk positions also cover currency and share price risks.
To manage interest rate risk all interest-related transactions outside the trading book are
logged in a uniform cash-flow chart. For transactions not bound by fixed interest rates,
specific product-related scenarios are applied. Interest rate risk is the responsibility of the
“Finance and Cash Management Committee” made up of members of the Board of
Management as well as representatives from the specialist departments.
Market Risks
For those trading transactions subject to compliance classification (MaRisk - Minimum
requirements for risk management) market risk, limit utilisation and operational earnings
are calculated on a daily basis in accordance with general conditions for trading activities
approved by the Board of Management.
Risk assessment is made in particular with the help of an internal model on the basis of a
variance-covariance matrix. The risk is calculated at a confidence level of 99% and a 10-day
holding limit under normal conditions. The model has been inspected by the regulator
(BaFin, Federal Financial Supervisory Authority) and its usage approved for compliance
purposes. In addition stress scenarios are run to simulate extreme market developments.
Operational risks comprise all risks which can damage Sparkasse KölnBonn as a result of the
inappropriate nature or failure of internal processes, members of staff or as a consequence
of external influences such as legal risks. Sparkasse KölnBonn takes account of these
operational risks by shaping and monitoring processes by means of control mechanisms and
emergency planning.
A focal point in managing operational risk is IT security. Sparkasse KölnBonn has taken
extensive technical and organisational precautions against hardware, software and network
malfunctions and has arranged back-up procedures. IT systems can also remain operative in
definable emergency situations. Various authorisation systems as well as checking and
monitoring processes guarantee the protection of confidential information from
unauthorised access and modifications in internal business processes. High-quality firewall
systems with the very latest technology offer protection against unauthorised access by
third parties.
Reports are presented to a committee of board members responsible for operational risk.
Measuring and controlling operations risk is continually and systematically improved.
Operational
Risks
12
Management Report
Total risk
situation
The assessment and monitoring of individual risks and portfolio risks is supplemented by a
holistic view of the risk situation within the scope of a risk resistance analysis. According to
this, Sparkasse KölnBonn’s total risk position is adequately secured by the available risk
cover potential.
Sparkasse KölnBonn’s total risk situation is characterised by loan loss and participation
risks resulting from its commitment to the SME sector. A number of additional steps have
been taken in order to improve counterparty risks in lending, alongside those measures
outlined in the section on “Counterparty risk”. These include modifications to our
organisational structure, for example with the establishment of an autonomous Special
Loan Management section, process-related and organisational measures such as guidelines
and procedures for granting loans to particular business sectors. Appropriate risk
management and risk limitation measures were also introduced in the field of participation
risks.
The ratio of apportionable capital resources to the sum of risk-weighted assets and market
risk positions (Principle I KWG) stood at 10.7% as at 31 December 2005 and thus well
exceeded the minimum ratio of 8.0% prescribed by the banking supervisory authorities in
Principle I. The basis for future business expansion can thus be taken as given.
Sparkasse KölnBonn manages its risks in a manner appropriate to the scope and complexity
of its business activities
Solvability coefficient (= Principle I)
Result
31.12.2004 31.03.2005
10.8 %
10.8 %
30.06.2005 30.09.2005
11.0 %
11.0 %
31.12.2005
10.7 %
Throughout the whole business year both total risk amounts and the utilisation of risk
limits at bank level lay within the pre-determined boundaries and did not endanger
Sparkasse KölnBonn’s risk tolerance. Total risk amounts did not change to any great degree
in 2005.
D.
Outlook
What follows should only be construed as a forecast. Therefore actual future results can
diverge considerably from our expectations of anticipated developments at the time the
Management Report was compiled.
The climate in which the German economy operates ought to become more favourable in
2006. The robust development of the world economy should secure dynamic overseas
demand, supported initially by a moderate exchange rate of the euro. In anticipation of an
only mildly restrictive monetary policy on the part of the European Central Bank, conditions
for financing will continue to remain favourable. In addition the German economy will in all
probability be stimulated by private consumption with purchases of consumer durables
brought forward ahead of the planned increase in value-added tax in 2007. Investment by
companies should also be favourably influenced by the planned changes in depreciation
methods, which will have a positive effect on borrowing.
However private consumption will continue to be exposed to restraining factors, as the
labour market situation will not be substantially improving in the foreseeable future and
disposable incomes will not increase to any great degree. In addition any further price rises
in the energy markets will withdraw purchasing power from consumers.
In this environment the German economy should begin to experience a moderate revival in
2006. Any risks will lie in the development in commodity and in particular, energy markets.
Demand pressure from the newly industrialised Asian countries and political risks in the
main oil-producing countries could lead to a sharp rise in prices. The possible revaluation
of the euro could also have unfavourable effects on the economic recovery, as it would
reduce price competitiveness.
13
The development of the economy in Sparkasse KölnBonn’s business area ought to be more
dynamic than the national trend, owing to a slightly above-average orientation towards
exports. Businesses are hoping for the positive mood to spread to investment and
consumption. In addition, with several World Cup football games taking place in Cologne,
this should have a knock-on effect for the hotel and catering trade. The slight economic
recovery will at first only have a small positive effect on the labour market.
In this context Sparkasse KölnBonn has started the new business year cautiously optimistic
as far as business development and the earnings situation are concerned. For the following
business year the Sparkasse is expecting all in all a slight improvement in earnings. In
interest-related business, still the most important contribution to earnings for Sparkasse
KölnBonn, we are assuming slightly rising net interest income. We are attaching
considerable importance to the contribution made by fee income. Here we see
opportunities, in particular in securities trading and mediated business with our (savings
bank) group partners. According to plan, we are expecting a result from ordinary business
operations slightly above last year’s result. Owing to the necessary technical harmonisation
of IT systems due to the merger, we are expecting total expenditure to be at the same level
as the previous year. With an improvement in the general economic situation and a
continuing relatively low level of interest rates there ought to be less of a need for write-offs,
so that Sparkasse KölnBonn is in all assuming a favourable development in its annual
results, leading to a further allocation to its capital reserves.
Within the next two years Sparkasse KölnBonn is expecting a marked reduction of the costincome ratio as well as a significant improvement in the result from normal business
operations. The Sparkasse will be monitoring the realisation of these goals and the influence
of changing operating conditions as part of its regular scenario calculations.
Cologne, 22 March 2006
Sparkasse KölnBonn
The Board of Management
Schröder
Binkowska
Kranz
Eberding
Dr. Gröschel
Dr. Riedel
Rindermann
Schäfer
Dr. Schmalzl
14
Balance Sheet as at 31 December 2005
Assets
EUR
1. Cash
a) Cash on hand
b) Balances with Deutsche Bundesbank
EUR
150,965,955.36
339,388,154.76
2. Debt instruments issued by public entities and bills of
exchange eligible for refinancing with Deutsche
Bundesbank
a) Treasury bills and discounted treasury notes
together with similar debt instruments issued by public
institutions
b) Bills of exchange
31.12.2004
Bonn
EUR 000’s
490,354,110.12
138,360
371,884
510,244
19,756
36,429
56,185
-
-
4,610,001.49
6,003
6,003
-
2,654,756,594.96
424,534
1,888,724
2,313,258
9,432
265,732
275,164
18,939,737,479.62
15,368,340
3,732,468
(5,876,883)
(1,923,210)
(446,680)
(591,397)
-
-
85,173.33
4,524,828.16
3. Claims on banks
a) payable on demand
b) other claims
126,515,989.73
2,528,240,605.23
4. Claims on customers
of which:
secured by mortgages
EUR 6,387,870,564.18
loans to public authorities and entities
EUR 2,245,032,595.18
5. Bonds and other fixed-interest securities
a) Money market instruments
aa) issued by public bodies
of which: eligible as collateral with
Deutsche Bundesbank
EUR
ab) from other issuers
Deutsche Bundesbank
EUR
EUR
31.12.2004
Köln
EUR 000’s
-.--.--.--
-,--.--
b) Bonds and notes
ba) issued by public bodies
356,535,397.32
Deutsche Bundesbank
EUR 334,880,850.32
bb) from other issuers
3,237,091,233.67
3,593,626,630.99
Deutsche Bundesbank
EUR 2,696,071,499.84
c) Bonds issued by the bank
principal amount
47,004,278.85
EUR
46,579,967.93
6. Shares and other non-fixed-interest securities
7. Participations
of which:
in banks
in financial services
institutions
8. Shares in affiliated companies
of which:
in banks
in financial services
institutions
9. Trust assets
of which: trust loans
EUR
255,645.94
EUR
-.--
-)
995
(
-)
-
(
-)
995
(
-)
-
247,071
145,300
( 241,905)
1,919,911
2,166,982
(1,714,306)
( 140,372)
1,139,016
1,284,316
( 947,040)
3,640,630,909.84
17,866
2,185,843
( 17,228)
2,606
1,286,922
(2,490)
1,820,378,307.55
908,719
276,824
455,477,611.93
376,629
72,773
(
(
133,659,374.26
EUR
-.--
EUR
-.--
EUR 53,095,957.83
10. Equalisation claims against public authorities
including bonds and notes issued in substitution thereof
11. Intangible assets
(
-.--
(
-)
(
209,316
(
53,095,957.83
256)
-)
-)
2,795
-)
(
(
-)
(
-)
(
30,312
30,312)
(
38,458
38,458)
-
-)
-
4,968,248.80
5,741
87
12. Fixed assets
84,301,532.70
49,811
41,597
13. Other assets
237,515,981.27
124,103
9,673
14. Deferred items
133,147,476.96
132,822
4,363
28,652,633,587.33
22,221,141
5,797,309
Total assets
15
Liabilities
EUR
1. Liabilities to banks
a) payable on demand
b) with agreed maturity or period of notice
187,145,917.19
7,383,990,541.57
2. Liabilities to customers
a) Savings deposits
aa) with agreed three months’ notice
ab) with agreed period of notice
in excess of three months
1,023,604,949.77
5,445,641,673.87
4,341,537,916.44
3. Certificated liabilities
a) Bonds and notes issued
b) Other certificated liabilities
7,571,136,458.76
10,348
4,930,801
4,941,149
10,549
1,257,317
1,267,866
3,056,652
1,562,778
684,389
3,741,041
507,017
2,069,795
15,469,988,707.38
3,693,135
4,143,854
7,836,989
11,578,030
1,207,290
401,347
1,608,637
3,678,432
3,172,131,015.13
3,830,186
3,830,186
419,389
419,389
5,682,809,117.07
9,787,179,590.31
3,172,131,015.13
-.--
of which:
money market instruments
EUR
Own acceptances and
promissory notes in circulation EUR
EUR
31.12.2004
Bonn
EUR 000’s
4,659,204,167.30
b) Other liabilities
ba) payable on demand
bb) with agreed maturity or period of notice
4. Trust liabilities
of which: trust loans
EUR
31.12.2004
Köln
EUR 000’s
-.--
(
-)
(
-)
-.--
(
-)
(
-)
(
30,312
30,312)
(
38,458
38,458)
53,095,957.83
EUR 53,095,957.83
5. Other liabilities
114,265,872.70
101,631
19,946
6. Deferred items
160,050,520.72
123,960
8,323
206,316,477.24
28,666
10,943
99,707
139,316
18,166
1,346
28,122
47,634
7. Provisions
a) Provisions for pensions and similar
obligations
b) Tax provisions
c) Other provisions
47,017,499.00
1,190,229.59
158,108,748.65
8. Special item with reserve characteristics
9. Subordinated liabilities
10. Profit participation rights
of which: falling due in
less than two years
EUR
-
27
603,974
74,105
9,585,426.68
1,137
8,448
-.--
(
11. Fund for general banking risks
12. Equity Capital
a) Subscribed capital
b) Capital reserves
c) Retained earnings
ca) security reserve
cb) other reserves
-.-756,409,391.40
12,000,000.00
d) Net profit
1,094,126,379.63
33,527,379.86
Total Liabilities
1. Contingent Liabilities
a) Liabilities relating to negotiated bills of exchange
b) Liabilities from guarantees and indemnity agreements
c) Liabilities relating to collateral given for third-party liabilities
-.-549,855,821.54
-.--
2. Other commitments
a) Commitments arising from ungenuine repurchase agreements
b) Placing and underwriting commitments
c) Irrevocable credit commitments
-.--.-698,617,571.55
(
-)
-
12,000
-
-
1,127,653,759.49
848,554
848,554
22,892
871,446
217,587
217,587
5,094
222,681
28,652,633,587.33
22,221,141
5,797,309
549,855,821.54
625,242
625,242
69,632
9,433
79,065
698,617,571.55
29,400
311,149
340,549
191,023
191,023
-.--.-1,094,126,379.63
-.--
-)
Statement of income for the period 1 January 2005 - 31 December 2005
16
EUR
1.
Interest income from
a)
Lending and money market transactions
b)
Fixed-interest securities
and book-entry securities
2.
Interest paid
3.
Current income from
a)
b)
c)
4.
5.
6.
7.
8.
9.
1,139,548,638.24
140,780,759.61
1,280,329,397.85
834,033,247.47
55,205,695.62
5,806,795.30
135,589.99
Shares and other non-fixed-interest securities
Participations
Shares in affiliated companies
Income from profit pooling, profit transfer or
partial profit transfer agreements
Commission income
Commission paid
158,339,702.70
12,611,927.69
Net result from financial transactions
Other operating income
Income from the release of special item with
reserve characteristics
10. General administrative expenses
a)
Personnel
aa) Wages and salaries
ab) Social security contributions and expenses for
retirement pensions and other staff benefits
of which: for retirement pensions
EUR 18,805,868.24
b)
Other administrative expenses
11. Depreciation and value adjustments on intangible
and tangible fixed assets
12. Other operating expenses
13. Write-downs and value adjustments on claims and
certain securities as well as allocations to loan-loss
provisions
13a. Allocation to fund for general banking risks
14. Income from write-ups of claims and certain
securities and from the release of loan-loss
provisions
15. Write-downs and value-adjustments on
participations, shares in affiliated companies and
securities traded as fixed assets
16. Income from write-ups of participations , shares in
affiliated companies and securities treated as fixed
assets
17.
18.
19.
20.
21.
22.
23.
24.
EUR
Expenses from the assumption of losses
Allocation to special item with reserve characteristics
Profit from ordinary activities
Extraordinary income
Extraordinary expenses
Extraordinary result
Taxes on income and earnings
Other taxes paid, unless shown under item 12
57,183,475.29
221,793
446,296,150.38
87,957
1,099,897
681,868
418,029
51,358
273,151
147,672
125,479
61,148,080.91
( 33,798)
( 4,202)
( 9,075)
47,075
( 9,508)
( 1,137)
(
440)
11,085
145,727,775.01
30,467,436.54
57,683,850.86
( 121,305)
( 13,164)
108,141
21,067
37,520
( 37,581)
( 1,692)
35,889
1,648
12,668
26,692.81
741,349,986.51
631,832
186,769
( 140,051)
( 50,630)
-.--
481,838,802.85
( 46,041)
( 186,092)
( 14,768)
( 159,434)
345,526
16,872,977.19
55,935,802.66
13,830
44,845
6,225
22,870
( 192,973)
(
-)
( 19,020)
( 7,000)
251,594,775.84
230,244,027.01
34,552,301.19
-.--.--
34,552,301.19
73,616,710.83
-.--
-.--.-42,586,587.86
2,364,483.13
27. Withdrawals of retained earnings
a)
from the security reserve
b)
from other reserves
-.--.--
28. Allocations to retained earnings
a)
to the security reserve
b)
to other reserves
-.--.--
Net profit
1,011,940
194,411,300.55
25. Net income
26. Profit carried forward
29.
1.1. - 31.12.2004 1.1. - 31.12.2004
Köln
Bonn
EUR
EUR 000's
EUR 000's
73,616,710.83
54,940.94
-.-78,478,450.85
-.-44,951,070.99
33,527,379.86
-.-33,527,379.86
-.-33,527,379.86
-.-33,527,379.86
(
13,642)
( 64,272)
( 3,970)
( 46,917)
111,189
(
-)
192,973
(
3,253)
( -)
(
-)
3,253
43
31,362
-)
-)
8,441)
29)
8,470
22,892
22,892
( 1,161)
1,161
26
21,600
(
-)
(
-)
( 11,206)
(
300)
11,506
10,094
10,094
(
(
-)
-)
22,892
(
(
-)
-)
10,094
(
(
-)
-)
22,892
(
(
5,000)
-)
5,000
5,094
(
(
(
(
(
-)
26,020
Notes to the 2005 Financial Statements
17
I
General Comments
Sparkasse KölnBonn was established at the beginning of the business year from a merger
of the two former entities Stadtsparkasse Köln and Sparkasse Bonn. Following the IDW
recommendations (Standard HFA 5 / 1988), Balance sheet and Statement of income figures
for the previous year appear in a “three column presentation.”
The financial statements of Sparkasse KölnBonn have been prepared in accordance with the
provisions of the German Commercial Code (HGB) and the Ordinance for Accounting
Procedures for Banks (RechKredV).
Under the option selected according to §11 Section 3 RechKredV, amounts subdivided by
residual maturity attributed to balance sheet items or sub-items contain no pro rata
interest.
II
Accounting and Valuation Principle
Claims on banks and customers including promissory notes and registered bonds have
been entered at nominal value, reduced by value adjustments and loan loss provisions.
Promissory notes from the trading book have been entered at their historical cost.
Any discounts retained or supplements paid with the disbursement of loans have been
spread over the life of the loan or the fixed interest rate period accordingly in line with the
amortisation method.
Fixed–term loans and holdings of bills of exchange are entered at current value. They were
discounted at their effective initial rates.
Promissory notes and registered bonds acquired from third parties have been entered at
their historical cost.
Appropriate specific value adjustments and provisions have been made to cover discernible
lending risks. Together with a general value adjustment for holdings of doubtful loans
based on the past five years experience, additional flat-rate provisions have been valued
strictly at the lower of cost or market principle to take account of the special risks of
financial institutions.
Lending
All securities held in the liquidity reserves have been valued strictly at the lower of cost or
market principle; in so doing the average valuation option has been used.
As a consequence of the revaluation rule according to § 280, Section 1 HGB (German
Commercial Code) marketable securities entered under assets items 5 and 6 have been
entered at the higher of their market value as at 31 December 2005 or their historical cost.
Adequate risk provisions were made to cover the special securities trading risks for banks.
Special consideration has been given to securities in valuation units with derivative
instruments and securities in portfolios (cf. III Other Details).
Securities
Participations and shares in affiliated companies have been entered at their historical cost
or as the case may be at the net value less depreciation to cover lasting loss of value.
Shares in
Affiliated
Companies and
Participations
Intangible assets are shown at cost, reduced by their planned linear depreciation. Software
newly acquired in the current business year and standard software which up to now was
entered under “Fixed Assets” (Balance sheet item 12) has now been allocated to “Intangible
Assets” (Balance sheet item 11) in its entirety in accordance with a statement of the main
Expert Committee (HFA 11) of the Institut der Wirtschaftsprüfer in Deutschland e.V.
(Institute of Public Auditors).
Intangible
Assets
Linear depreciation has been applied to material assets over their useful life for our
business sector. In isolated cases degressive depreciation has been used, as has, where
permissible, the planned transition from the degressive to the linear method. Depreciation
of newly acquired fixtures and fittings was entered on a pro rata basis over their useful life.
To simplify matters low value items (up to EUR 410.00 purchase price) have been
depreciated fully in the business year.
Fixed Assets
18
Deferred Taxation
The creation of a deferred item for future tax relief was waived.
Liabilities
Liabilities have been recorded as redemption amounts and discounts recorded on the
assets side under deferred items. Earnings from premiums have been presented under
deferred items on the liabilities side. Differences between disbursement and redemption of
liabilities have been spread over their respective maturities.
Provisions
Adequate provisions have been made to account for all discernible risks for uncertain
liabilities and eventual losses from pending transactions in line with the principles of
business prudence.
In addition provisions totalling EUR 7,570,242.94 have been allocated for financial
instruments from the investment book and net provisions amounting to EUR 4,100,218.67
for financial instruments from the trading book.
Provisions for pensions have been calculated in accordance with the 2005 G Heubeck
Tables. An interest rate of 4% has been applied for the calculations with a present value for
the underlying pension liabilities set at 31 December 2005.
Furthermore in accordance with §249 Section 2 German Commercial Code (HGB), expense
provisions have been made to cover deposits with annually increasing interest rates.
Currency
Translation
Currency translation is made in accordance with §340h HGB (German Commercial Code).
Assets denominated in foreign currencies which are considered as capital investments and
debts in foreign currencies as well as pending spot trades have been translated into EUR at
the spot rate on the reporting date. Foreign legal tender has been converted at the buying
rate for foreign bank notes on the reporting date. The forward rate has been used for
forward contracts which were pending as at the reporting date.
Expenditure arising from currency translation has been taken into consideration in the
Statement of income. Earnings resulting from covered transactions have only been
accounted for to the extent that they compensate for actual temporary expenditure from
currency translation. In other cases unrealised gains from currency translation have not
been taken into account and have not been used to compensate unrealised losses.
Credit Derivatives
As far as credit-linked deposit certificates are concerned separate balance sheet entries and
valuation of credit default swaps were waived according to the principle of fundamentality.
Interest Results
from Derivatives
Sparkasse KölnBonn has compensated interest results from derivatives in the Statement of
income with all business of the same type. In so doing gross interest payments and pro rata
upfront payments have been offset through separate interest expenses and interest
earnings accounts, split according to derivatives from the investment book, the bond
portfolio in the trading book and the derivatives portfolio in the trading book. The net
interest result for investment derivatives and for trading book derivatives from the bond
portfolio is included in the net interest result (Statement of income positions 1 or 2), the
net result for trading book derivatives from the derivatives portfolio in Net result from
financial transactions (Statement of income position 7).
Internal Trades
Sparkasse KölnBonn operates internal trades for individual product groups.
Internal trades are taken to mean trades made at market conditions between legally
dependent organisation units of Sparkasse KölnBonn. For regulation purposes internal
trades are as a matter of principle valued as external trades; interest and premiums have
not been taken into consideration for the drawing up of these accounts.
III
Other Details
19
Derivatives contracts designed to hedge interest and currency risks as well as pricing risks
on the liabilities and assets sides have been collated with the underlying securities to form
valuation units. Interest rate swaps designed to hedge risks arising from interest rate
movements have been assimilated in a general view of interest rate risks and thus not
valued on an individual basis.
Options have been valued at their market price as at 31 December 2005. Valuation units
have also been formed for Caps and Share Options. In so doing, valuation earnings have
been entered to compensate for valuation losses. Any unrealised residual gains are not
taken into consideration.
Structured own issue products were entered after being split into their individual
component parts, so far as required by commercial law.
Financial
Derivatives in the
Investment Book
Sparkasse KölnBonn values the overwhelming portion of its trading contracts with the
assistance of portfolio valuation. The formation of portfolios aims to comply with
requirements in the Commercial Code at providing a true and fair view of the earnings
position in the annual financial statements. Individual gains from currency derivatives
were entered together in an interest rate portfolio within the requirements of the
Commercial Code. The imparity principle is retained at portfolio level. The offset of realised
loss overhangs with unrealised profit overhangs led to the formation of an assets side
compensatory item of EUR 7,726,695.74 (Assets item 13). As a result of portfolio valuation
Sparkasse KölnBonn created provisions of EUR 9,311,072.97.
Results from derivatives in the trading book which do not belong to the portfolio
valuation are included under Net result from financial transactions.
Financial
Instruments in the
Trading Book
Since 1 January 2005 Sparkasse KölnBonn has been a member of the
Zusatzversorgungskasse der Stadt Köln (ZVK) and the Rheinische Zusatzversorgungskasse
(RZVK). Appropriate agreements have been made with both company pension funds. Staff
of the former Stadtsparkasse Köln and the former Sparkasse Bonn remain covered by the
fund which has been responsible for them to date. New members of staff are split between
the two funds.
The pension funds have the task of providing supplementary retirement, bereavement and
disablement pensions to their members’ employees in accordance with the provisions of
the statutes and the tariff agreement of 1 March 2002 (ATV-K). According to §1, Section 1,
Page 3 of the Improvement of Company Pensions Law (BetrAVG), the Sparkasse vouches
for the fulfilment of the agreed benefits (Subsidiary liability as part of its indirect
maintenance obligation).
Sparkasse KölnBonn belongs to the pay-as-you-go accounting union of both the
Rheinische Zusatzversorgungskasse (RZVK) and the Zusatzversorgungskasse der Stadt
Köln (ZVK).
Company Pension
Scheme
In the 2005 business year, the RZVK contribution rate stood at 4.25% of pension-eligible
emoluments (assessment basis). It will remain unchanged in 2006. As at 31 December
2000 the previous comprehensive provision system was closed and replaced by a company
pension scheme based on points system. As a result, in accordance with §63 of its statutes,
the RZVK levies a so-called stabilisation contribution of 2.5% of the assessment basis for
the partial financing of claims and entitlements which have their origin before 1 January
2002. The level of stabilisation contribution is regularly adjusted on the basis of sliding
cover periods (§60 RZVK statutes). Additional contributions (§64 RZVK statutes) for the
gradual conversion to a funded system are not levied at the present time.
Membership in the
RZVK
In the 2005 business year, the ZVK contribution rate stood at 5.8% of eligible emoluments
(5.5% employer’s contribution and 0.3% employee’s contribution are permanently fixed).
Since 1 January 2003 an additional contribution has been levied for the creation of a
funded system . This additional contribution is 2.9% in 2006 and will be raised by a further
0.3% in the coming year, and in 2007 reach 3.2% of the eligible pension contributions
amount at that time. From 2007 onwards it is projected that there will be a lasting total
contribution of 9.0%, while the long-term perspective (from 2030 onwards) assumes a
noticeable reduction in the size of contributions as a consequence of capital funding.
Membership in the
ZVK
20
Information
concerning
Pfandbriefs
With the Pfandbriefgesetz (PfandBG - Mortgage Bond Law) coming into force on 19 July
2005, Sparkasse KölnBonn, as a bank issuing Pfandbriefs, was obliged to respect the law’s
transparency regulations. Details are presented separately for mortgage Pfandbriefs and
public-sector Pfandbriefs.
Mortgage
Pfandbriefs
Owing to the merger Sparkasse KölnBonn declined issuing additional mortgage
Pfandbriefs in the 2005 business year.
Details of total
amounts and term
structure
Details of total amount
EUR million
Nominal
value
Risk-adjusted
value 2)
Risk-adjusted
value 2)
(shift upwards)
(shift downwards)
Total value of Pfandbriefs in
circulation
100.00
100.05
91.54
109.73
Total value in cover pool
158.59
171.66
154.24
192.59
58.59
71.57
68.49
75.51
1)
Excess cover in %
Security excess cover according to
§ 4 PfandBG in %
9.50
1)
There were no derivatives in the cover pool
2)
Static method in accordance with Pfandbrief Net Present Value Directive (PfandBarwertV)
Details of term structure
Term structure of Pfandbriefs in
circulation
Term structure in cover pool
Composition of
cover stock
Present
value
x < 1 year
1 year < x < 5
years
5 years < x < 10
years
x > 10 years
-.--
100.00
-.--
-.--
12.37
72.64
73.55
0.03
Total amount of claims used as cover 3)
EUR million
by size
x < EUR 300 K
EUR 300 K < x < EUR 5 million
x > EUR 5 million
by usage (I) in Germany
Total amount
Percentage share
0.87
0.62
126.43
90.55
12.32
8.82
Total amount
Percentage share
Residential
33.60
24.07
Commercial
106.01
75.93
by usage (II) in Germany 4)
Total amount
Percentage share
0.77
0.55
28.30
20.27
4.53
3.24
office buildings
14.36
10.29
commercial property
18.26
13.08
-.--
-.--
73.35
52.54
unfinished new properties not yet yielding
earnings and building sites
0.04
0.03
of which building sites
0.04
0.03
Apartments
single-family properties
apartment blocks
industrial property
other commercially used property
3)
Only normal cover reported.
4)
No property located outside Germany.
21
Substitute cover
Percentage share
18.97
according to § 19 PfandBG
of which in cover values according to
§ 4 Abs. 2 PfandBG
9.47
Overview of
outstanding
claims
Total amount
EUR million
Total amount of claims outstanding
for over 90 days
-.--
EUR million
Residential
Commercial
Number of forced sales and forced sale judgements
pending as at the reporting date
-.--
-.--
Number of forced sales effected in the business year
-.--
-.--
Number of plots of land taken over in the business year
to avoid loss
-.--
-.--
Total interest outstanding
-.--
-.--
0.06
1.59
-.--
-.--
Total repayments through amortisation
5)
Total amount of other repayments
5)
Other Details
Total amount from 19 July 2005 onwards
In 2005 Sparkasse KölnBonn placed public-sector Pfandbriefs with a nominal value of EUR 5.0
million
Public-sector
Pfandbriefs
Details of total amount
EUR million
Details
concerning the
total amount and
the term structure
Nominal
value
Total value of Pfandbriefs in circulation
Total value in cover pool
1)
Excess cover in %
Present
value
Risk-adjusted
value 2)
(shift upwards)
(shift downwards)
634.52
664.36
605.68
739.11
1.524.22
1.640.02
1.478.30
1.843.52
140.22
146.86
144.07
149.42
5 years < x <
10 years
x > 10 years
Security excess cover according to
§ 4 PfandBG in %
3.00
1)
There were no derivatives in the cover pool
2)
Static method in accordance with Pfandbrief Net Present Value Directive (PfandBarwertV)
Details of term structure
Risk-adjusted
value 2)
x < 1 year
1 year < x < 5
years
Term structure of Pfandbriefs in
circulation
10.00
503.52
15.00
106.00
Term structure in cover pool
63.07
584.52
744.70
131.75
22
Composition of cover
stock
Total amount
EUR million
Total amount of claims used for
cover pool
Cover stock by country and
sector of borrower 3)
EUR million
State
Regional
government
bodies
Local
government
bodies
Other
borrowers
Federal Republic of Germany
2.56
99.00
40.60
1,081.46
Austria
-.--
-.--
-.--
97.00
Netherlands
-.--
-.--
-.--
60.89
Spain
-.--
25.00
-.--
-.--
20.00
4.29
-.--
-.--
Greece
9.54
-.--
-.--
10.60
Canada
5.11
15.00
-.--
-.--
Ireland
-.--
-.--
-.--
11.00
Great Britain / Northern Ireland
-.--
-.--
-.--
10.00
Italy
Poland
10.00
-.--
-.--
-.--
Others
12.00
10.00
-.--
-.--
3)
Only normal cover reported.
Substitute cover
Overview of
outstanding claims
1,524.05
Percentage share
according to § 20 Sec. 2
PfandBG
2.84
of which highest claim
1.58
EUR million
Total amount of claims
outstanding for over 90 days
Total amount
-,--
Claims on banks
EUR
Assets item 3
This item includes:
Claims on our own Central Giro Institution
95,608,491.95
(Previous year Köln:
252,716,800.08)
(Previous year Bonn:
33,544,497.99)
25,500,000.00)
Subordinated claims
20,515,126.57
Sub-item b) – Other claims – is classified according to residual maturity as
follows:
up to three months
more than three months and up to one year
-.--)
1,183,115,082.49
93,985,934.99
more than one year and up to five years
477,445,612.10
over five years
307,352,955.10
Claims on customers
EUR
This item includes:
Claims on companies in which a participation exists
519,676,958.72
Claims on affiliated companies
397,493,938.47)
99,050,656.19)
463,429,838.35
417,056,020.79)
2,080,041.29)
12,094,564.19)
9,781,972.62)
Subordinated claims
10,501,097.03
of which:
on companies in which a participation exists
claims on affiliated companies
663,500.00
-.--)
-.--)
987,597.03
184,306,19)
-.--)
Subordinated claims are subject to liability exemptions
through Deutsche Ausgleichsbank amounting to
-.-(Previous year Köln:
-.--)
4,781,972.62)
This item is classified according to residual maturity as follows:
up to three months
over five years
Claims with undetermined maturities
783,622,271.30
1,182,904,937.16
3,766,642,180.91
11,498,479,131.44
1,672,268,530.00
Assets item 4
23
24
Assets item 5
Bonds and other fixed-interest securities
EUR
This item includes:
Amounts falling due on or before 31.12.2006
-.--
a) Money market paper
456,418,043.65
b) Bonds and promissory notes
888,442.61
c) Own issues
Of the marketable securities contained therein the following are:
3,491,008,041.12
listed on the stock exchange
Not listed on the stock exchange
149,622,868.72
The following sub-items contain subordinated loans:
138,590,910.09
b) Bonds and subordinated loans
c) Own issues
-.--)
511,569.35
Assets item 6
23,139,158.61)
1,220,772.80)
-.--)
EUR
Shares and other non-fixed-interest securities
This item includes:
Units in special funds (“Spezialfonds”) with a book value of
1,718,458,125.25
848,564,802.25)
243,866,202.58)
Sparkasse KölnBonn is the sole holder of units for the amount of
EUR 1,701,513,410.03.
Unit certificates are transferable; the Sparkasse can demand the
redemption of assets in kind.
Of the marketable securities contained therein the following are:
43,670,241.35
not listed on the stock exchange
31,613,367.11
Payouts from Sparkasse KölnBonn’s special funds always
took place after the end of the fund’s business year.
25
Participations / Shares in affiliated companies
EUR
Of the participations securitised in marketable form the following are:
not listed on the stock exchange
24,533,266.78
-.--
Selected participations of Sparkasse KölnBonn
Company name
Holding in
% Participation Participation
direct
I. Affiliated companies
"Laurenz" Vermögensanlage- und -verwaltungsgesellschaft mbH
Grundbesitz und Beteiligungen "Laurenz" Vermögensanlageund -verwaltungsgesellschaft mbH & Co. KG
SKB Kapitalbeteiligungsgesellschaft KölnBonn mbH
TechnoMedia Kapitalbeteiligungsgesellschaft Köln mbH
SK Unternehmensbeteiligungsgesellschaft Köln mbH
ProBonnum GmbH
SK Equity Investments GmbH & Co. KG
SKI Standort Köln-Immobilien GmbH & Co. KG
SAVOR Verwaltung GmbH & Co. Objekt Kalk KG
EUROFORUM Grundstücksentwicklungsgesellschaft mbH & Co. KG
professional eservices GmbH
GKS – Gesellschaft für KontoService mbH
Rheinlandmobil GmbH
Campus Grundstücksentwicklungsgesellschaft mbH
KOPOR Grundbesitzverwaltung GmbH
FDK Köln Finanzdienste Vertriebsgesellschaft mbH
PROSERVICE Dienstleistungsgesellschaft mbH
Prosystems IT GmbH
Kredit-Serviceagentur Rheinland in Siegburg GmbH & Co. KG
GSE Grundstücksentwicklungsgesellschaft mbH & Co. KG
II. Participations
mbw Mittelstandsberatung GmbH
RTZ Besitzgesellschaft Rechtsrheinisches Technologiezentrum
Köln mbH
CORPUS Immobiliengruppe GmbH & Co. KG
modernes köln Gesellschaft für Stadtentwicklung mbH
TS Lease- und Technologie AG *
BonnCasa GmbH
VEMAG Verlags- und Medien AG
Sparkassen Dienstleistung Rheinland GmbH & Co. KG
Grund und Boden GmbH *
GAG Immobilien AG *
neue leben Pensionsverwaltung AG *
* Reporting according to § 340 a Sec. 4 Clause 2 HGB
100.0
x
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
94.9
92.5
83.3
62.6
62.6
55.0
51.0
x
x
x
x
x
indirect
x
x
x
x
x
x
x
x
x
x
x
x
x
x
50.0
x
25.5
25.0
25.0
25.0
25.0
24.9
19.9
10.0
10.0
6.6
x
x
x
x
x
x
x
x
x
x
The required reporting of Sparkasse KölnBonn’s participations according to § 285, Section 11 German
Commercial Code (HGB) has been made according to § 287 HGB in a separate listing at the Cologne
Commercial Register (HR Extract A 7961).
Assets items 7/ 8
26
Assets item 9
EUR
Trust assets
Trust assets shown represent claims on:
-.--
banks
53,095,957.83
customers
Assets item 12
Fixed assets
EUR
This item includes:
18,485,373.58
land and buildings used within the scope of our own business activities
Assets item 14
Deferred items
EUR
These items include:
The difference between the nominal value and
the higher amount actually disbursed
1,375,891.72
1,831,539.58)
-.--)
The difference between the nominal value and
the lower amount actually issued
51.931.845.40
67,899,608.79)
2,440,313.83)
EUR
Fixed asset movement schedule
Financial assets
Balance sheet value as at
01.01.2005
Köln
Balance sheet value as at
01.01.2005
Bonn
Changes in the reporting year
Balance sheet value 31.12.2005
Other material assets
Purchase price Köln
Purchase price Bonn
Additions
Retirements
Adjusting entries
Attributions
Accumulated depreciation
Balance sheet value 31.12.2005
(Previous year Köln)
(Previous year Bonn)
Depreciation in the reporting year
(Previous year Köln)
(Previous year Bonn)
Shares and other
non-fixed-interest
securities
Shares in
affiliated
companies
Participations
Other
financial
assets
1,068,272.29
209,315,590.13 376,628,820.22
10,009,457.29
-.--
2,795,000.00 72,772,725.11
1,143,823.83
552,470.94
1,620,743.23
Intangible
fixed assets
6,076,066.60
-78,114.25
133,659,374.26 455,477,611.93
-78,451,215.87
11,075,166.87
Land
and buildings
Fixtures and
fittings
16,357,301.19
1,761,118.18 149,645,234.81
111,905.54
80,188,474.73 57,538,246.05
1,138,427.56
964,066.60
8,876,905.26
786,492.29
4,993,367.81
5,952,625.30
10,452,538.55
-.--
-.-- -10,452,538.55
-.--
-.--
Other
assets
853,035.11
-.--
-.--.--.--.--
22,305,431.75
49,034,764.21 144,239,217.06
415,690.97
4,968,248.80
28,885,527.49 55,416,005.21
437,344.14
(5,740,612.00)
(529,820.47) (49,281,116.60)
(512,175.53)
(87,307.96)
(30,868,503.04) (10,728,289.90)
(-.--)
2,332,729.09
1,524,851.32 13,015,396.78
74,831.39
(1,596,397.88)
(231,699.06) (12,001,485.78)
(74,831.39)
(24,597.58)
(2,312,352.41) (3,887,636.85)
(-.--)
27
Liabilities to banks
EUR
Liabilities item 1
This item includes:
Liabilities to our own Central Giro Institution
120,632,801.10
589,817,091.24)
95,446,240.99)
Liabilities to companies in which a participation exists
142,800.53
822,575.97)
-.--)
Sub-item b) – with agreed maturity or period of notice
is classified according to residual maturity as follows:
up to three months
72,107,803.09
649,939,109.51
1,781,142,859.45
over five years
4,247,295,590.37
Assets amounting to EUR 373,238,282.55 have been transferred as
security for the refinancing amounts from centralised lending
initiatives shown under this item
Liabilities to customers
EUR
Liabilities item 2
This item includes:
Liabilities to companies in which a participation exists
100,366,789.52
Liabilities to affiliated companies
32,523,763.86)
2,992,777.81)
15,246,472.80
15,725,513.88)
2,476,487.99)
Sub-item a) ab) – Savings deposits with agreed periods of notice in
excess of three months – is classified according to residual maturity as
follows:
up to three months
191.530.726,79
690.600.491,03
127.922.940,22
over five years
9.257.421,23
Sub-item b) bb) – other liabilities with agreed maturity or period of
notice – is classified according to residual maturity as follows:
up to three months
1,297,728,072.27
287,999,888.30
807,649,785.06
over five years
1,879,996,481.99
Certificated liabilities
EUR
This item includes:
67,320.50
Sub-item a) – own issue debt instruments – contains all amount falling
due on or before 31.12.2006
-.--)
178,844.76)
642,223,038.69
Liabilities item 3
28
Liabilities item 4
Trust liabilities
EUR
Trust liabilities consist of liabilities to:
50,462,483.19
banks
2,633,474.64
customers
Liabilities item 6
Deferred items
EUR
These items take account of the difference between the
nominal amount and the lower actually disbursed amount of
claims
142,474,440.81
Liabilities item 8
Special item with reserve characteristics
104,129,652.87)
7,918,027.58)
EUR
The special item created at Sparkasse Bonn in accordance with §6b
EStG (Income Tax Law) was dissolved in the year under review and
transferred to another asset
Liabilities item 9
Subordinated liabilities
EUR
This item includes:
-.--
-.--)
1,042,447.45)
Original maturities of 4-35 years were agreed.
Expenditure for liabilities recorded under this item amounts to EUR 34,566,043.59 for the year under review.
The average interest rate applied to subordinated liabilities is recorded at 4.67%.
Within the course of the next business year EUR 131,333,914.72 will be due for repayment.
The conditions for the liabilities assumed by the Sparkasse are in accordance with the requirements of §10
Section 5a, Clause 1 KWG (Banking Law). The transformation of these funds in capital or another form of debt
has neither been agreed nor is planned.
29
Essentially business in derivative products takes place on the one hand as part of our trading Derivative
operations and on the other as a means of hedging interest rate, exchange rate and market price financial
risks from customer-related business. Own holdings have also been hedged through internal instruments
contracts in our own trading portfolio.
The following overview shows all pending forward transactions as at 31 December 2005 with
external partners.
Derivative financial instruments (Part 1)
EUR million
Capital amounts or write/buy claims according to time to
maturity
up to 1 year
1 - 5 years
over 5 years
Total
Contracts for our own account
Interest-related products
OTC products
Interest rate swaps (same currency)
Interest rate options - long
Interest rate options - short
25,073
12,587
13,473
51,133
57
517
992
1,566
105
252
1,049
1,406
457
21
0
478
235
Products traded on the exchanges
Interest rate futures
Currency-related products
OTC products
231
4
0
Cross currency swaps
27
51
129
207
Currency swaps
66
213
522
801
Currency options – long
29
0
0
29
Currency options - short
32
0
0
32
110
23
8
141
86
1
0
87
100
360
0
460
3
0
0
3
Forward currency contracts
Share or index-linked products
OTC products
Share/index-linked options- long
Share/index-linked options - short
Equity swaps - long
Credit-related products
OTC products
Total
Credit default swaps – long
0
20
0
20
Credit default swaps - short
5
45
0
50
26,381
14,094
16,173
56,648
30
Derivative financial instruments (Part 2)
EUR million
Current value
Book value
Option premiums / Variation
margins / Up-front payments
positiv
e
negativ
e
positiv
e
Provisions
negative
Balance
sheet
position
Balance
sheet
position P7
Contracts for our own account
Interest-related products
OTC products
Interest rate swaps (same
currency)
Interest rate options - long
Interest rate options - short
818
1,079
6
12
A14 / P6
17
25
0
0
41
A13
0
0
46
49
0
P5
0
0
0
1
1
A13 / P5
0
4
Interest rate futures
Currency-related products
OTC products
Forward currency contracts
2
1
0
0
---
Cross currency swaps
10
1
0
0
---
0
Currency swaps
15
9
0
1
A14 / P6
0
Currency options - long
0
0
0
0
---
0
Currency options - short
0
0
0
0
---
0
28
0
0
9
A13
0
Share or index-linked products
OTC products
Share/index-linked options- long
Equity swaps - long
0
1
17
0
P5
0
38
3
6
0
P5
0
0
0
0
0
---
0
Credit-related products
OTC products
Total
Credit default swaps - long
0
0
0
0
---
0
Credit default swaps - short
1
0
0
0
---
0
937
1,140
79
64
---
21
With products traded on exchanges the current values are the market prices. For OTC products such
as interest rate swaps, the current values are determined as a present value of future payment
flows based on current market rates. In the process use was made of swap yield curves as at
31.12.05 corresponding with the currencies from the actual contracts. Current values of options
were determined on the basis of the generally recognised Black-Scholes model; the model was
modified accordingly for index options and European-style interest rate options.
Credit-related products encompass on the one hand credit default swaps with a volume of EUR 20
million where Sparkasse KölnBonn is protection buyer and on the other hand credit default swaps
with a volume of EUR 50 million where Sparkasse KölnBonn is protection seller. In the last case
contingent liabilities have been entered below the line on the liabilities side of the accounts as Item
1.b).
The counterparties of Sparkasse KölnBonn’s derivative financial instruments are essentially
German financial institutions and partly financial institutions from OECD countries. In addition
currency options and interest rate swaps were written for customers.
31
On the assets side items totalling EUR 430,682,467.97 are denominated in foreign currency. Of total Other Details
and contingent liabilities EUR 464,095,548.14 is denominated in foreign currency.
A special item has been created to cover general banking risks in accordance with §340 g HGB
(German Commercial Code).
Total emoluments amounting to EUR 4,156,806.95 were paid to active members of the Board of
Management.
Total remunerations for former members of the Board of Management and their dependants have
been made, amounting to EUR 1,854,630.66. Pension provisions amounting to EUR 19,595,537.00
have been made for this group of people.
Loans totalling EUR 1,875,065.63 have been granted to members of the Board of Management and
EUR 3,734,093.47 to members of the Supervisory Board.
In the year under review the following fees were paid to the auditors:
a) for audit of the financial statements
b) other audit and valuation services
c) other services
EUR 831,423.74
EUR 6,198.38
EUR 6,191.00
In 2005 annual average staff numbers were as follows:
Personnel
Full-time employees
3,317
Part-time and relief employees
1,490
4,807
Trainees
Total
316
5,123
32
Supervisory Board
Supervisory Board of Sparkasse KölnBonn from 1 January 2005 to 28 February 2005
Chairman
Members
Deputy Members
Fritz Schramma
Lord Mayor of the City of Cologne
Götz Bacher
Technical employee
Siemens AG
Karl-Heinz Schmalzgrüber
Pensioner
Professor Dr. Rolf Bietmann
Member of Parliament
Private-practice lawyer
University Lecturer
Ursula Gärtner
Head of Department
Landschaftsverband Rheinland
Bachelor of Economics
Jürgen Biskup
Employee of Sparkasse KölnBonn
Staff representative
Michael Baedorf
Martin Börschel
Member of the North Rhine-Westphalia
Regional Parliament
Josef Jansen
Pensioner
Heinz Christian Esser
Helga Köhler
Housewife
Walter Grau
Pensioner
Graduate Engineer
Wolfgang Simons
Consultant for In-Service Teacher
Training
1st Deputy Chairman
Martin Börschel
Regional Parliament
2nd Deputy Chairman
Heinz Christian Esser
Hans-Otto Höggemann
Doris Kemen
Karl Jürgen Klipper
Independent Tax Consultant
Bachelor of Commerce
Alexander Kolter
Inge Mohr
Karin Reinhardt
Bachelor of Education
Dr. Martin Stankowski
Freelance Journalist
Michael Zimmermann
Manager of the SPD Group
in Cologne City Council
(Referent für Lehrerfortbildung)
Konrad Dröschel
Julie Galonska
Dr. Eberhard Klein
Managing Director
M.DuMont Schauberg Group of
Companies
Markus Pohl
Hans-Jürgen Vogt
Ralph Sterck
Businessman
Jörg Frank
Organisation Specialist
Dorothee Gerstenberg
Managing Director
33
Supervisory Board of Sparkasse KölnBonn from 1 March 2005 to 31 December 2005
Chairman
Members
Deputy Members
Fritz Schramma
Lord Mayor of the City of Cologne
Götz Bacher
Technical employee
Siemens AG
Johannes Waschek
Of independent means
Michael Baedorf
Daniel Falterbaum
Martin Börschel
Regional Parliament
Ulrike Heuer
Senior Teacher
State of North Rhine-Westphalia
Guido Déus
Civil Servant
Bundesanstalt für Immobilienaufgaben
Bachelor of Finance
Herbert Kaupert
Konrad Dröschel
Josef Breitbach
Jörg Frank
Employee of Gerling Allgemeine
Versicherungs AG
SAP Organiser
Andreas Wolter
Head of Accounts
Deutsche Mechatronics GmbH
Graduate in Business Studies
Albert Fröbus
(until 31.05.2005)
Rudolf Kipp
(until 01.12.2005)
Herbert Gey
Pensioner
Margret Dresler-Graf
Housewife
Graduate in Administration
1st Deputy Chairman
Wilfried Klein
Managing Director of the Willi-EichlerBildungswerk
(Educational Organisation)
2nd Deputy Chairman
Martin Börschel
Regional Parliament
Petra Grah (deceased)
Managing Director of
Grah & Grah GmbH
Graduate Engineer
Walter Grau
Pensioner
Graduate Engineer
Ursula Gärtner
Head of Department
Wolfgang Maiwaldt
Benedikt Hauser
Manager of Personnel and Legal Department Technical Employee
Ministry of Defence
Regionalverkehr Köln GmbH
Werner Hümmrich
Jutta Giering
Axel Kaske
Pensioner
Walter Kluth
Senior Teacher
Rudolf Kipp
(from 02.12.2005)
Andreas Brünjes
(from 02.12.2005)
Wilfried Klein
Managing Director of the
Willi-Eichler-Bildungswerk
(Educational organisation)
Dr. Hans-Uwe Nass
Academic employee
University of Bonn
34
Supervisory Board
Members
Deputy Members
Irmgard Kroll
Rainer Schulten
Emanuel Kux
Jürgen Biskup
Rudolf Mertens
Hans-Jürgen Vogt
Inge Mohr
Doris Kemen
Barbara Moritz
Teacher
Elisabeth Thelen
Commercial employee
RheinEnergie AG
Josef Müller
Pensioner
Mayor of the City of Cologne
Andreas Köhler
Managing Director of Köhler
GmbH & Co. KG
Bachelor of Financial Engineering
Markus Pohl
Jürgen Didschun
Bärbel Richter
Archivist
Keeper of the Friedrich-Ebert-Stiftung
Archives of Social Democracy
Erika Coché
Equal Opportunities Officer,
Niederkassel Town Council
Tom Schmidt
Manager of the Bündnis 90/Die Grünen Group in
the Council of the Federal City of Bonn
Brigitta Poppe
Senior Agricultural Commissioner
Dienstleistungszentrum Ländlicher
Raum Westerwald-Osteifel
Graduate Dietician
Dieter Steffens
Pensioner
Karl-Wilhelm Starcke
Academic employee
Fraunhofer Institut für sichere
Informationstechnologie
Ralph Sterck
Chief Manager of the North Rhine-Westphalia
FDP
Reinhard Houben
Arnold Houben GmbH
Michael Zimmermann
Manager of the SPD Group in Cologne City
Council
Monika Möller
Teacher
35
Supervisory Board of Sparkasse KölnBonn from 1 January 2006
Chairman
Members
Deputy Members
Wilfried Klein
Managing Director of the
Willi-Eichler-Bildungswerk
(Educational Organisation)
Götz Bacher
Technical employee
Siemens AG
Johannes Waschek
Of independent means
Michael Baedorf
Daniel Falterbaum
Martin Börschel
Member of the
North Rhine-Westphalia Regional
Parliament
Ulrike Heuer
Senior Teacher
1st Deputy Chairman
Martin Börschel
Member of the
North Rhine-Westphalia Regional
Parliament
2nd Deputy Chairman
Winrich Granitzka
Granitzka Security Consult GmbH
Guido Déus
Civil Servant
Bundesanstalt für Immobilienaufgaben
Bachelor of Finance
Konrad Dröschel
Jörg Frank
Employee of
Gerling Allgemeine Versicherungs-AG
SAP Organiser
Herbert Gey
Pensioner
Petra Grah (deceased)
Managing Director Grah & Grah GmbH
Graduate Engineer
Herbert Kaupert
Josef Breitbach
Andreas Wolter
Head of Accounts
Deutsche Mechatronics GmbH
Graduate in Business Studies
Margret Dresler-Graf
Housewife
Graduate in Administration
Ursula Gärtner
Head of Department
Winrich Granitzka
Granitzka Security Consult GmbH
Dr. Michael Paul
Official at the Ministry of the
Environment, Conservation
and Reactor Safety
Walter Grau
Pensioner
Benedikt Hauser
Manager of Personnel and Legal
Department
Regionalverkehr Köln GmbH
Werner Hümmrich
Axel Kaske
Pensioner
Rudolf Kipp
Irmgard Kroll
Emanuel Kux
Wolfgang Maiwaldt
Technical employee
Ministry of Defence
Jutta Giering
Walter Kluth
Senior Teacher
Andreas Brünjes
Rainer Schulten
Jürgen Biskup
36
Supervisory Board
Members
Deputy Members
Rudolf Mertens
Hans-Jürgen Vogt
Inge Mohr
Doris Kemen
Barbara Moritz
Teacher
Josef Müller
Pensioner
Mayor of the City of Cologne
Markus Pohl
Bärbel Richter
Archivist
Keeper of the
Friedrich-Ebert-Stiftung
Archives of Social Democracy
Tom Schmidt
Manager of the Bündnis 90/Die Grünen
Group in the Council of the Federal City of
Bonn
Dieter Steffens
Pensioner
Ralph Sterck
Chief Manager of the North Rhine
Westphalia FDP
Michael Zimmermann
Manager of the SPD Group in Cologne City
Council
Elisabeth Thelen
Commercial employee
RheinEnergie AG
Andreas Köhler
Köhler GmbH & Co. KG
Bachelor of Financial Engineering
Jürgen Didschun
Erika Coché
Equal Opportunities Officer,
Niederkassel Town Council
Brigitta Poppe
Senior Agricultural Commissioner
Dienstleistungszentrum Ländlicher
Raum Westerwald-Osteifel
Graduate Dietician
Karl-Wilhelm Starcke
Academic Employee
Fraunhofer Institut für sichere
Informationstechnologie
Reinhard Houben
Arnold Houben GmbH
Monika Möller
Teacher
Board of Management
37
Board of Management of Sparkasse KölnBonn
Chairman
Gustav Adolf Schröder
Board Members
Dietmar P. Binkowska (Deputy Chairman)
The following board members of Sparkasse KölnBonn are
members of the Supervisory Boards of the following public
and private limited companies in accordance with §340a
Section 4, Clause 1 HGB (German Commercial Code):
Gustav Adolf Schröder
—
Michael Kranz (Deputy Chairman)
Bernd Eberding
Dr. Ulrich Gröschel
Dr. Wolfgang Riedel
Wolfgang Rindermann
Franz-Josef Schäfer
Dr. Joachim Schmalzl
—
—
Member of the Supervisory Board of Axa
Lebensversicherung AG
Member of the Supervisory Board of the
Deutscher Sparkassen Verlag GmbH
Member of the Supervisory Board of
Westdeutsche Landesbank AG
Michael Kranz
—
Member of the Supervisory Board of
Gesellschaft für Zahlungssysteme mbH
Bernd Eberding
—
Member of the Supervisory Board of TS Leaseund Technologie AG
Dr. Wolfgang Riedel
—
Member of the Supervisory Board of Dekabank
Deutsche Girozentrale Luxemburg S.A.
Wolfgang Rindermann
—
Member of the Supervisory Board of Vereinigte
Bonner Wohnungsbau AG
Franz-Josef Schäfer
—
Member of the Supervisory Board of S Broker AG
& Co. KG
Cologne, 22 March 2006
Schröder
Binkowska
Kranz
Eberding
Dr. Gröschel
Dr. Riedel
Rindermann
Schäfer
Dr. Schmalzl
38
Auditors’ Report
Auditors’ Report
We have audited the annual financial statements, comprising the balance sheet, the income statement and the
notes to the financial statements, together with the bookkeeping system, and the management report of the
Sparkasse KölnBonn for the business year from 1 January 2005 to 31 December 2005. The maintenance of the
books and records and the preparation of the annual financial statements and management report in accordance
with German commercial law (and supplementary provisions of the shareholder agreement/articles of
incorporation) are the responsibility of the Company's management. Our responsibility is to express an opinion
on the annual financial statements, together with the bookkeeping system, and the management report based on
our audit.
We conducted our audit of the annual financial statements in accordance with § 317 HGB (Handelsgesetzbuch:
German Commercial Code) and German generally accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany / IDW). Those
standards require that we plan and perform the audit such that misstatements materially affecting the
presentation of the net assets, financial position and results of operations in the annual financial statements in
accordance with principles of proper accounting and in the management report are detected with reasonable
assurance. Knowledge of the business activities and the economic and legal environment of the Sparkasse and
expectations as to possible misstatements are taken into account in the determination of audit procedures. The
effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in
the books and records, the annual financial statements and the management report are examined primarily on a
test basis within the framework of the audit. The audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the annual financial
statements and management report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the annual financial statements comply with the legal
requirements and give a true and fair view of the net assets, financial position and results of operations of the
Sparkasse in accordance with principles of proper accounting. The management report is consistent with the
annual financial statements and as a whole provides a suitable view of the Sparkasse’s position and suitably
presents the opportunities and risks of future development.
Düsseldorf, 23 May 2006
Auditing Body of the Rhineland
Savings Banks and Giro Association
(Prüfungsstelle des Rheinischen Sparkassen- und Giroverbandes)
Engel
Beschoten
German Public Auditor
German Public Auditor
(Wirtschaftsprüfer)
(Wirtschaftsprüfer)
39
In 2005 the Supervisory Board fulfilled its duties as required both by law and the statutes. The Board of
Management kept the Supervisory Board continually informed on business developments as well as on the
financial position of the Sparkasse KölnBonn. At its regular board meetings the Supervisory Board took the
necessary decisions as required by law. The Zweckverband Sparkasse KölnBonn as the responsible body
(“Träger”) for the Sparkasse KölnBonn and in which the cities of Cologne and Bonn have respective participations
of 70% and 30% formally gave its confirmation to the actions of the organs of the predecessor institutions, the
Stadtsparkasse Köln and the Sparkasse Bonn (Supervisory Board, Credit Committee and Board of Management)
for the 2004 business year.
The Auditing Body of the Rhineland Savings Banks and Giro Association (RSGV), Düsseldorf, inspected the annual
financial statements, lending and deposit-taking business, as required by law. They confirmed that the data they
inspected had been compiled competently and diligently and that the accounting practices conformed with
generally accepted accounting principles. The 2005 annual financial statements and management report
presented for inspection by the Board of Management were given unreserved confirmation.
Acting within their instructions laid down by the Supervisory Board, internal auditors carried out systematic,
random inspections in all operational areas of the bank. Particular emphasis was placed both on control systems,
conformity, functionality and economy of operational procedures and processes as well as on credit supervision.
The Supervisory Board has adopted the 2005 annual financial statements and approved the management report.
The profits recorded in the balance sheet totalling EUR 33.5 million will be allocated in full to the security reserve.
The Supervisory Board expresses its thanks and recognition to both the Board of Management and all members
of staff for their successful work in the first business year after the merger of the predecessor institutions to form
Sparkasse KölnBonn.
Cologne, 23 May 2006
The Chairman of the Supervisory Board of Sparkasse KölnBonn
Wilfried Klein

Sparkasse KölnBonn

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