annual report - Banque de Luxembourg

Transcription

2015
EN
annual report
ANNUAL REPORT
2015
B A N Q U E D E LU X E M B O U R G
CONTENTS
FOREWORD
01
—
GOVERNANCE
02
—
ACTIVITY REPORT
03
—
RISK MANAGEMENT
05
—
FINANCIAL STATEMENTS
06
—
COMMENTS ON THE FINANCIAL STATEMENTS
09
—
NOTES TO THE ACCOUNTS
11
—
REPORT OF THE RÉVISEUR D’ENTREPRISES AGRÉÉ
43
—
OUR SHAREHOLDER
45
—
ANNUAL REPORT
2015
1
Foreword
Established in Luxembourg in 1920, Banque de Luxembourg
is one of the leading private banks in the Grand Duchy. We
serve local, European and international private investors
whom we advise and support at every stage of their lives. Our
independent investment strategy focuses on consistent longterm performance and access to the best products on the
market.
Our expertise in advisory and management solutions, along
with the products, services and tools we have developed for our
core business of private banking, are available to financial
professionals. We also offer a wide range of well-established
investment fund services. In all our professional activity, we draw
on the strengths of our shareholder, Crédit Mutuel-CIC group.
Banque de Luxembourg has equity capital of EUR 888.1 million
and employs around 800 people. In 2015, it returned profits
after tax of EUR 68.8 million on total assets of EUR 12.9 billion.
ANNUAL REPORT
2015
2
GOVERNANCE
{ MANAGEMENT}
Administrateur délégué — Pierre Ahlborn
Businesses, Marketing and Communication — Philippe Depoorter
Finance — Philippe Duchêne
Dealing Room — Benoît Elvinger
Secrétariat Général — Georges Heinrich
Loans and Credit — Étienne Planchard
Compagnie Financière de Gestion (CFG) — Sam Reckinger
Professional Banking — Fernand Reiners
Private Banking and Estate Planning — Luc Rodesch
BLI - Banque de Luxembourg Investments — Guy Wagner
Organisation & IT, Finance — Romain Weiler
{ BOARD OF DIRECTORS}
Président
Philippe Vidal, Directeur Général Adjoint du CIC, Paris
Vice-Président
Michel Lucas, Président de la Confédération Nationale
du Crédit Mutuel, Paris
Administrateur délégué
Pierre Ahlborn, Luxembourg
Administrateurs
Nicolas Buck, CEO Seqvoia, Luxembourg
Jacques Delvaux, Lawyer, Luxembourg
Jean Hoss, Lawyer, Luxembourg
Georges M. Lentz Jr., Administrateur délégué
de la Brasserie Nationale, Luxembourg
Philippe Neyrand, Directeur, CM-CIC Grands Comptes, Paris
Pit Reckinger, Lawyer, Luxembourg
Charles Ruggieri, Président de Batipart Invest, Luxembourg
Présidents Honoraires
Robert Reckinger, Luxembourg
Jean Weber, Le Plan-de-la Tour
Administrateurs Honoraires
Dr Ekkehard Storck, Vice-Président Honoraire, Berlin
Camille Diederich, Luxembourg
Paul Leesch, Luxembourg
Dr Jost Prüm, Sarrebruck
Marc Weinand, Luxembourg
Secrétaire du Conseil d’Administration
Benoît Elvinger, Luxembourg
3
Activity report
GENERAL INFORMATION
Weakness in the global economic situation, historically low
interest rates and the slump in oil prices continued to weigh on
the economy throughout 2015. In this environment, clients are
looking for greater certainty, resilience, stability and security.
Banque de Luxembourg exemplifies these qualities which are
integral to its long-term perspective. Its sound balance sheet
combined with the stability of its shareholder, Crédit Mutuel
CIC, one of the most robust European banking groups, are
undeniable strengths.
The EU’s banking union was reinforced in 2015 with the establishment of a single supervisory mechanism under which
responsibility for the prudential supervision of the leading
European banking groups – including Groupe Crédit Mutuel
CIC – was transferred to the European Central Bank.
The Bank has a tier one solvency ratio of 19.42%. It reported
net profit in 2015 of EUR 68.8 million, an increase of 8.8% over
2014. Net banking income was up 27.9% at EUR 333.2 million.
At 31 December 2015, securities and cash deposits, including
fiduciary deposits, were 8.5% higher at EUR 68.5 billion, while
the Bank’s total assets came to EUR 12.9 billion.
No event with the potential to significantly impact the annual
financial statements at 31 December 2015 took place between
the closing date and the publication date of this report.
The Bank’s review of its positioning, reflected in the unveiling
of the new logo, emphasises our determination to be a prudent
and responsible establishment for small-business and family
clients. The Bank’s aim is to work rigorously and purposefully
with them and to be by their side at important moments in their
life in order to safeguard their assets over the long term and
contribute to the realisation of their projects, so they can carry
them out with absolute confidence.
The Bank’s employees were faced with a number of challenges in 2015. Throughout, they showed exemplary commitment and enhanced the Bank’s model to strengthen the
foundations for its future development.
PRIVATE BANKING
During the past year, the Private Banking environment
continued to adapt to regulatory changes. By anticipating
these developments, the Bank was able to confirm its recognised position at the forefront of private banking on the
domestic market. The Bank operates in a competitive environment so it needs to stand out by constantly enhancing its
expertise and capacity to serve the most sophisticated and
exacting clients. At the year end, assets under management
excluding those deposited by external fund managers totalled
EUR 22.2 billion (up 6.1% since the end of 2014).
ANNUAL REPORT
2015
4
The development plan for the Belgium branch was solidified in
2015 with the expansion of the head office in Brussels and
opening of a branch in Ghent.
PROFESSIONAL BANKING
Professional Banking continues to be dominated by investment funds and services for independent asset managers
and life insurance companies. The Bank has focused on its
niche positioning serving professional managers who need a
partner to support them, from designing their product through
to providing the necessary services for fund management,
administration and distribution.
2015 was a successful year for the development of the
Investment Fund Services (IFS) business. Net assets increased
from EUR 36.3 billion to EUR 40.5 billion, a rise of 11.5%.
The IIS (Independent Investor Services) business also did well
with an increase in assets deposited by the clients of external
managers and life insurance companies of around EUR 300
million, to total assets of EUR 6.7 billion deposited at 31
December 2015.
Assets in third-party funds were stable compared to the
previous year, accounting for over EUR 13.5 billion at the end
of 2015. During the past year, thirty new distribution agreements were signed with fund promoters. The Bank’s thirdparty funds purchasing department now enables clients to
benefit from distribution agreements covering some 730 fund
families.
The Bank’s Services for Businesses division is an extension of
the Bank’s own activity in this field in Luxembourg, where it is
becoming a leading player in investment and financing solutions. In this context, the Bank’s teams support Luxembourg
companies, usually family companies and entrepreneurs, in
the development and then the handover of their business and
personal assets.
OUTLOOK
In the face of major changes in the economic, regulatory and
tax environment, the Bank’s aim is to offer its clients a haven of
trust and stability. Now, more than ever, our role is to work with
our clients to pave the way for their decision-making and offer
them responsible and sustainable solutions.
The Bank intends to make its investment solutions even more
relevant by highlighting its discretionary mandate options and
introducing innovative advisory formats. Greater emphasis
will be placed on the client experience in a context of the digital
transformation of many banking services. The Bank is keen to
meet the expectations of its clients who are increasingly
mobile and connected and will consequently upgrade its
digital services in order to offer new functionalities in the
utmost security.
5
Risk Management
In its role as asset manager, Banque de Luxembourg has
adopted a set of prudential rules to meet the security requirements.
ASSET MANAGEMENT
For many years, Banque de Luxembourg’s investment policy
has kept a long-term perspective focusing on capital preservation and performance consistency. The range of investment
profiles on offer are designed to meet the main expectations in
terms of risk and return, investment horizon and the currency
in which the client wishes to invest. The profiles are based on
an optimised strategic allocation, which is regularly reviewed
to take account of market developments (tactical allocation).
Investment funds enhance the level of portfolio diversification
and are the preferred tool for the implementation of the Bank’s
investment management strategy.
Significant use is also made of external investment funds,
which are selected using a rigorous methodology implemented by the Bank’s research and analysis teams. New
products and services are coordinated by a committee made
up of staff from various departments. The committee’s remit
is to ensure that solutions are in line with clients’ needs, that
they meet certain quality standards and comply with regulations in force.
MARKET ACTIVITIES AND BALANCE SHEET
MANAGEMENT
The Dealing Room’s mission is to find the best way of reinvesting deposits made by private and institutional clients and
to manage the flow of orders in financial instruments generated by these clients. The policy and objectives for risk
management and market activities are laid down by the
Management Committee and approved by the Board of
Directors. Formal policies, restrictions, authorised operations,
management methods and tools, as well as a series of controls
for each business line are clearly defined in two handbooks: an
organisational ALM (Assets and Liability Management) and a
dealing handbook. The Bank is not a market maker and does
not engage in proprietary trading.
While the Assets and Liability Management Committee
oversees strategic decisions with regard to asset and liability
management and market trading, decisions are also made in
close collaboration with the Crédit Mutuel-CIC group, with
whom the Bank has placed a significant share of its excess
cash. The Risk Management Committee is in charge of monitoring the risk factors. Both committees are made up of
members of the Management Committee and heads of the
departments involved.
An independent Risk Management department, under the
ultimate responsibility of one of the members of the
Management Committee, conducts controls of daily trading
risks and exposures, and monitors the profit and loss account.
The methodology used to manage the various risks is
described in Note 3 of the appendix of the current report.
ANNUAL REPORT
2015
6
Financial statements
{ BALANCE SHEET }
ASSETS (EUR 000)
cash, balances with central banks and post office banks
loans and advances to credit institutions
2014
2015
4
94,795
1,448,804
4, 5, 14
6,819,427
5,935,312
999,519
1,094,124
notes(1)
a) repayable on demand
b) other loans and advances
loans and advances to customers
debt securities and other fixed-income
securities
4, 6, 14
4, 7, 8, 9,
12, 14, 15, 21
a) issued by public bodies
5,819,908
4,841,188
2,493,642
2,737,780
3,963,880
2,519,371
1,517,815
1,701,609
2,446,065
817,763
4, 7
20,774
37,870
participating interests
7, 10, 12, 14, 22
10,318
9,250
shares in affiliated undertakings
7, 10, 12, 14, 22
23,064
23,000
12
41,048
23,505
12, 13
112,312
106,422
11
10,339
9,558
107,741
72,687
16
13,697,340
12,923,559
b) issued by other borrowers
shares and other variable-yield securities
intangible assets
tangible assets
other assets
prepayments and accrued income
total assets
(1) See notes to the accounts.
7
LIABILITIES (EUR 000)
amounts owed to credit institutions
notes(1)
4, 22
2014
2015
1,508,920
358,945
180,488
177,744
1,328,432
181,201
11,087,048
11,350,589
a) savings deposits
2,153,017
2,004,609
b) o
ther debts
8,934,031
9,345,980
ba) repayable on demand
6,235,966
6,734,441
bb) with agreed maturity dates or periods of notice
2,698,066
2,611,539
4,974
0
4,974
0
a) repayable on demand
b) with agreed maturity dates or periods of notice
amounts owed to customers
debts evidenced by certificates
4, 22
4
a) debt securities in issue
other liabilities
17, 31
accruals and deferred income
provisions
a) provisions for taxation
b) other provisions
special items with a reserve quota portion
33, 34
18
fund for general banking risks
subscribed capital
19
share premium
42,760
33,247
91,741
94,627
119,876
129,304
13,181
22,593
106,695
106,710
8,952
8,764
114,800
212,800
104,784
104,784
18,689
18,689
reserves
20
531,528
542,978
profit brought forward
20
40
47
63,228
68,784
23
13,697,340
12,923,559
2014
2015
329,266
265,677
218,147
156,379
profit for the financial year
total liabilities
OFF-BALANCE SHEET ITEMS (EUR 000)
contingent liabilities
notes(1)
4, 24
of which: guarantees and assets pledged as collateral security
commitments
fiduciary operations
4, 25
685,456
746,329
28
1,782,267
1,750,605
ANNUAL REPORT
2015
8
Profit and
loss account
2014
2015
226,582
205,431
97,786
70,988
(159,933)
(137,579)
56,750
134,630
a) income from shares and other variable-yield securities
46
41,703
b) income from participating interests
27
40
EUR 000
notes(1)
interest income and similar income
of which: arising from fixed-income securities
interest expense and similar charges
income from securities
56,678
92,888
commission received
155,568
174,035
commission paid
(22,203)
(18,819)
3,803
(24,546)
11,217
6,273
(122,800)
(125,989)
(79,863)
(84,013)
c) income from shares in affiliated undertakings
net profit on financial operations
other operating income
29
general administrative expenses
a) staff costs of which:
31
wages and salaries
(65,838)
(67,363)
social security costs
(10,621)
(12,823)
social security costs relating to pensions
31
b) other administrative expenses
value adjustments in respect of tangible and intangible assets
other operating charges
30, 33
value adjustments in respect of loans and advances and provisions for
contingent liabilities and commitments
value re-adjustments in respect of loans and advances and provisions for
contingent liabilities and for commitments
value adjustments in respect of transferable securities held as financial fixed
assets, participating interests and shares in affiliated undertakings
value re-adjustments in respect of transferable securities held as financial fixed
assets, participating interests and shares in affiliated undertakings
income from the write back of “special items with a reserve quota portion”
transfers to the fund for general banking risks
release of amounts from the fund for general banking risks
tax on profit on ordinary activities
profit on ordinary activities after tax
other taxes not shown under the preceding items
profit for the financial year
18
(6,718)
(8,187)
(42,936)
(41,976)
(23,513)
(39,208)
(10,991)
(7,073)
(13,529)
(6,686)
2,762
13,472
0
(543)
10,136
21,736
188
188
(37,000)
(98,000)
0
0
(13,721)
(28,410)
63,317
68,914
(89)
(130)
63,228
68,784
9
Comments on the
financial statements
TOTAL ASSETS
The Bank’s total assets came to EUR 12.9 billion, down 5.7%
compared to the end of 2014. This decline was mainly due to
loans maturing and redemptions in the bond portfolio.
INCOME FROM SECURITIES
Income from securities came to EUR 134.6 million. The
increase in this item was mainly due to a dividend paid out by
one of the Bank’s holding companies.
LOANS AND ADVANCES TO CREDIT INSTITUTIONS
Loans and advances to credit institutions fell by 13.0% to EUR
5.9 billion. Of this amount, 88.8% is on deposit with the Bank’s
parent company.
NET COMMISSION
At EUR 155.2 million, net commission was up 16.4% from the
previous year, mainly due to the increase in commissions on
securities, management commissions and net custodian
bank commissions.
LOANS AND ADVANCES TO CUSTOMERS
At EUR 2.7 billion, loans and advances to customers rose by
9.8% since the end of 2014.
DEBT SECURITIES AND OTHER FIXED-INCOME SECURITIES
This item, which consists mainly of government bonds and
bonds issued by financial institutions and other high-quality
issuers, fell by 36.5% to EUR 2.5 billion, notably due to securities reaching maturity and redemptions.
AMOUNTS OWED TO CREDIT INSTITUTIONS
Liabilities to financial institutions fell by 76.2% to EUR 0.3 billion
mainly due to a decrease in deposits from the CM-CIC group
at the Bank.
AMOUNTS OWNED TO CUSTOMERS
Liabilities to customers rose by 2.4% to EUR 11.4 billion.
NET INCOME FROM BANKING OPERATIONS
In 2015, net income from banking operations was 27.9% higher
at EUR 333.2 million, mainly due to an increase in net commissions and income from transferable securities.
NET INTEREST
The low interest rate environment continues to impede the
generation of interest which remained at a level close to that of
last year. The Bank’s net interest income increased by 1.8% in
2015 to EUR 67.9 million.
NET RESULT OF FINANCIAL OPERATIONS
At the end of 2015, the Bank reported a net result of financial
operations of EUR -24.5 million.
OTHER OPERATING INCOME
Other operating income came to EUR 6.3 million compared to
EUR 11.2 million in 2014. This decrease was largely due to the
non-recovery of VAT.
GENERAL ADMINISTRATIVE EXPENSES
General administrative expenses amounted to EUR 126.0
million, up 2.6% compared to 2014.
OTHER OPERATING CHARGES
Other operating charges decreased from EUR 11.0 million in
2014 to EUR 7.1 million, mainly due to the removal of
Luxembourg deposit guarantee scheme (AGDL) provisions
from this item in 2015.
NET PROFIT
The Bank ended 2015 with a net profit of EUR 68.8 million, up
8.8% compared to 2014.
ANNUAL REPORT
2015
10
DISTRIBUTION OF PROFITS
At the General Meeting of Shareholders on 22 March 2016, the Board of Directors made the following proposal for the distribution
of profits (profits for 2015 and amounts carried forward):
EUR
distribution of dividend
allocated to the Board of Directors
appropriation to 'free reserves’
total
61,905,272
775,500
6,150,000
68,830,772
After distribution of profits, total equity amounted to EUR 894.2 million.
SOLVENCY RATIO
Since 2014, the Bank has been calculating its solvency ratio using Basel III norms. The overall capital requirement at 31 December
2015 for credit, market and operational risks was EUR 445.7 million. The Bank’s Common Equity Tier 1 (CET1) ratio was 19.42%,
which is well above the prescribed minimum.
11
Notes to the accounts
NOTE 1
NOTE 2
GENERAL
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
—
—
1.1. Corporate matters
The Bank was founded in Luxembourg on March 31, 1937. On
May 24, 1977, the Bank, a société anonyme under Luxembourg
law, changed its name to Banque de Luxembourg.
The Bank prepares its annual accounts under the historical
cost principle, in accordance with the laws and regulations in
force in the Grand-Duchy of Luxembourg and on the basis of
accounting principles generally accepted in the banking
sector in the Grand-Duchy of Luxembourg.
As at December 31, 2015, the capital of the Bank is held at
100% by Crédit Industriel et Commercial (CIC).
The Bank’s business policy and valuation principles are determined and monitored by the Board of Directors in accordance
with Luxembourg rules and regulations.
1.2. Nature of the Bank’s business
The Bank’s mission is to undertake all banking and financial
operations in the Grand-Duchy of Luxembourg and abroad.
More generally, it may carry on all commercial, industrial or
other operations, involving both real estate and other assets
that may contribute directly to the fulfilment of this mission.
In 1991, the Bank took over the private banking activities of the
branch of Credit Industriel d’Alsace et de Lorraine, which had
been active in Luxembourg since 1920.
The Bank holds a branch in Belgium with 3 agencies, one in
Brussels, one in Gand and one in Arlon.
1.3. Annual accounts
The Bank’s accounting year coincides with the calendar year.
The Bank prepares its annual accounts in Euros (EUR), the
currency in which the capital is expressed.
Pursuant to Article 80 of the amended Law of June 17, 1992 in
regards to the annual and consolidated accounts of credit
institutions, the Bank is released from the obligation to draw up
consolidated accounts.
In observing these, the following significant accounting
policies are applied:
2.1. The date of recording of transactions in the balance sheet
Assets and Liabilities are booked in the balance sheet based
on the transaction date rather than on the basis of the availability of funds, i.e. the date of the effective transfer.
2.2. Foreign currencies
The Bank maintains a multi-currency accounting system,
which records all transactions in the currency or currencies of
the transaction on a trade-date basis.
Revenues and expenses in foreign currencies are translated
into EUR daily at the prevailing exchange rates.
All the assets and liabilities are converted into EUR at the spot
rates applicable at the balance sheet date.
Results on uncompleted forward foreign exchange transactions linked to spot transactions and results on swap transactions are recorded on the profit and loss account of the
financial year.
Uncovered and covered forward transactions are valued individually on the basis of forward exchange rates applicable at
the balance sheet date.
Currency futures and options are revalued at their market
value at the balance sheet date. The revalued amount is translated into EUR at the spot rate.
ANNUAL REPORT
2015
12
2.3. Definition of the trading book
The Bank has classified the following items in its trading book,
for the purposes of the prudential rules defining own funds, in
accordance with Article 1 paragraph 26 bis of the Law of
April 5, 1993 on the financial sector (as amended):
– the securities trading book as defined in the banking law;
– the securities underwriting;
– the open positions in financial derivatives.
The accounting and market values of the trading book are
detailed in note 9.
The financial derivatives that are included in the trading book
are analysed in note 26 b).
2.4. Financial derivatives
The Bank’s commitments deriving from financial derivatives
such as interest rate swaps, forward rate agreements, financial
futures and options are recorded on the transaction date as
off-balance sheet items.
At the year-end, where necessary, a provision is raised in
respect of individual unrealised losses resulting from the revaluation of the Bank’s commitments at market value. This provision is included on the liabilities side of the balance sheet
under “Provisions: other provisions”. The unrealised revaluation gains are not recognised, except for forward exchange
transactions.
No provision is raised in those cases where a financial instrument clearly hedges an asset or a liability and economic unity
is established or where a financial instrument is hedged by a
reverse transaction so that no open position exists.
2.5. Specific value adjustments in respect of doubtful and
irrecoverable debts
It is the Bank’s policy to establish specific value adjustments in
respect of doubtful and irrecoverable debts. Value adjustments are determined by the Management of the Bank and
are approved by the Board of Directors.
Value adjustments, if any, are deducted from the asset items to
which they relate.
2.6. Lump-sum provision for risk exposures
In accordance with Luxembourg tax legislation, the Bank
establishes a lump-sum provision for risk exposures, as
defined in the legislation governing prudential supervision of
banks. The purpose of this provision is to take account of
potential risks that have not yet been identified at the date of
preparation of the annual accounts.
Pursuant to the instructions issued by the “Directeur des
Contributions” on December 16, 1997, this provision is made
before taxation and calculated as a maximum of 1.25% of the
Bank’s risk exposures.
The lump-sum provision for risk exposures is broken down in
proportion to the weighting of the items, which form the basis
for its calculation, between:
– a portion which is deemed to represent a value adjustment, and which is deducted from the asset items which
constitute risk exposures; and
– a portion which is deemed to represent a provision for
liabilities and charges attributable to credit risk associated with off-balance sheet items, foreign exchange risk
and market risks, and which is shown among the liability
items under “Provisions: other provisions”.
2.7. Fund for general banking risks
It is the Bank’s policy to establish a fund to take account of
general banking risks, pursuant to Article 63 of the law on the
accounts of banks, which is shown separately on the liabilities
side of the balance sheet.
Transfers to the fund for general banking risks are not tax
deductible.
2.8. Transferable securities
Transferable securities are recorded at the purchase price at
which they were first recorded in the Bank’s portfolio.
The average cost method is used for the calculation of
proceeds realised on the sales.
2.9. Debt securities and other fixed-income securities
The Bank has divided its portfolio of fixed-income securities
into three categories, whose principal characteristics are the
following:
– a n investment portfolio of financial fixed assets, which
are intended to be used on a continuing basis in the
Bank’s activities;
– a trading portfolio of securities purchased with the intention of resale in the short term; and
– a structural portfolio of securities which do not fall into
either of the two other categories.
13
Fixed-income securities are valued as follows:
Value adjustments are made in case of permanent depreciation.
– Investment portfolio
Fixed-income securities included in the Bank’s investment portfolio are stated at purchase price, provided that they fulfil the
required conditions and at “lower of cost or market” for those
who do not meet the criteria. Long term depreciations are subject
to impairment, except when the securities are guaranteed.
2.12. « Beibehaltungsprinzip »
It is the Bank’s policy to retain value adjustments in respect of
certain categories of assets made previously but which no
longer correspond to a reduction in the value of the assets in
question, in accordance with Articles 56 (2) (f) and 58 (2) (e) of
the law on banks accounts.
When the purchase price of fixed-income securities included
in the Bank’s investment portfolio, which are not covered by an
interest rate swap, is greater than the amount repayable at
maturity, the difference is released to the profit and loss
account in instalments over the remaining period. Regarding
previous years acquisitions, this difference was charged to
the profit and loss account immediately, within the limit specified by the Luxembourg Banking Regulations.
2.13. Repurchase Agreement
In accordance with Luxembourg legislation, the securities
subject to a sale or a repurchase agreement are maintained in
the balance sheet.
Where the purchase price of fixed-income securities included
in the Bank’s investment portfolio, which are covered by an
interest rate swap, is greater or less than the amount repayable at maturity, the positive or negative difference is released
to the profit and loss account in instalments over the remaining
period until repayment.
– Trading portfolio
Fixed-income securities included in the Bank’s trading portfolio are stated at the lower of cost or market value at the
balance sheet date.
– Structural portfolio
Fixed-income securities included in the Bank’s structural
portfolio are valued at the lower of cost or market value at the
balance sheet date.
– Securities issued on a discounted basis
The difference between the issue (or purchase) value and the
par (or disposal) value of securities issued on a discounted
basis represents their sole source of income. This discount is
taken to income over the period during which the security
remains in the Bank’s portfolio. The discount is spread on a
linear basis and is added to the book value of the security.
2.10. Shares and other variable-yield securities
Shares and other variable-yield securities are valued at the
lower of cost or market value at the balance sheet date.
2.11. Participating interests and shares in affiliated undertakings
At the balance sheet date, participating interests and shares in
affiliated undertakings held as financial fixed assets are stated
at purchase price.
2.14. Other intangible assets
The value of other intangible assets with limited useful
economic lives is reduced by value adjustments calculated to
write off the value of such assets systematically over their estimated useful economic lives.
2.15. Tangible fixed assets
Tangible fixed assets are valued at purchase price.
The value of tangible fixed assets with limited useful economic
lives is reduced by value adjustments calculated to write off
the value of such assets systematically over their estimated
useful economic lives.
2.16. Accruals
Income and expenses received before the balance sheet date
but attributable to a subsequent financial year must be shown
under the assets item “prepayments and accrued income” or
the liabilities item “accruals and deferred income”.
2.17. Special items with a reserve quota portion
Special items with a reserve quota portion consist of those
amounts which may be eligible for fiscal exemption. The
exemption covers realised gains in accordance with Articles
53, 54 and 54bis of the Luxembourg income tax law.
2.18. Taxes
Taxes are accounted for on an accruals basis.
The Bank has opted for fiscal integration regime.
As at December 31, 2015, 4 subsidiaries of the Bank are part of
the fiscal integration regime. Based on the fiscal integration
convention signed with the Bank, the integrated entities are
recognizing in their individual financial statements a tax
liability.
ANNUAL REPORT
2015
14
The Bank is calculating the current income tax and the
communal business tax payables based on the taxable profit
of all the entities that are part of the fiscal integration, including
its own profit.
Tax advances are calculated on the same basis and paid by
the Bank in its capacity of the Parent Company.
With regards to the wealth tax, no fiscal integration exists.
Nevertheless, in compliance with the applicable tax regulatory requirement, the Bank, on behalf of the entities, and part
of the fiscal integration, forms a specific reserve in order to
offset the wealth tax of each of the entities.
The reserve recognized for each of the integrated companies
is equal to five times the amount of wealth tax payable and is
made unavailable for a period of 5 years.
NOTE 3
RISK MANAGEMENT METHODOLOGY
—
3.1. Market risks related to Dealing Room activities
The main market risk is the exposure to interest rate risks in
treasury, in Asset Liabilities Management (ALM) and in the
bond trading books portfolio.
Market risk is defined as the impact of a change in interest
rates on the value of financial assets and liabilities, both onand off-balance sheet. Sensitivity analysis is used to measure
interest rate risk. This analysis involves calculating the impact
of a 1% upward or downward shift in interest rates on the
current market value of positions. Correlations between the
various currencies are not taken into account. Using this methodology, the interest rate exposure was EUR 33.6 million for
the year ended December 31, 2015. Exposure limits are also
expressed in terms of sensitivity to a 1% change in interest
rates and are controlled on a daily basis. Limits have been set
for each currency, and the maximum limit for all currencies is
EUR 68 million. The sensitivity calculation is carried out in real
time by the systems used by the Front Office and the Risk
Management teams.
Foreign exchange risks and the risks associated with financial
instruments, such as change in equity prices, are not significant. Limits are defined in terms of the maximum volume of
positions. These are also subject to daily monitoring and
stress tests are regularly applied to measure the impact of a
10% change in all currency prices and a 20% change in stock
prices.
3.2. Credit risk
The Bank applies strict criteria in the selection of its counterparties for market operations and investment activities, and restricts
itself to investment-grade issuers mainly from OECD countries.
The Board of Directors approves all credit lines which are
granted according to the quality of the issuer, based on ratings
and equity capital. Credit lines are managed by the Front Office
and Risk Management tools, and all Dealing Room operators
have real-time access to any credits outstanding. Breaches are
automatically reported to the Risk Management department
which is in charge of monitoring the compliance of credit lines.
With regard to investments in the interbank market, the Bank
tries to privilege, the Group or the central Bank of Luxembourg
compared to other counterparties.
The Bank may also engage in secure longer-term operations:
– for Repo and Buy & Sell Back operations, the Bank has signed
agreements with its counterparties, including General Master
Repurchase Agreement (GMRA), drawn up by the ISMA or
the Bond Market Association (BMA).
– s ecurities Lending operations are covered by the Global
Master Securities Lending Agreement (GMSLA) developed
by the International Securities Lending Association (ISLA).
– t he Bank exchanges, with all counterparties with which it
deals derivative transactions, the Master Agreement developed by the International Swaps Derivatives Association
(hereinafter “ISDA”). The Bank also enters into a Credit
Support Annex (CSA Schedule to the ISDA Master
Agreement) with its counterparties in order to establish a
daily evaluation of net exposure offset and reduce the credit
risk associated with derivative transactions.
– the Bank exchanges a CLS agreement with the majority of
the counterparties with which it deals foreign exchange operations on the market. However, for foreign exchange operations to cover investments in securities of customers on the
market where the domestic currency is not freely convertible,
Forex Desk operators deal directly with the Depositary Bank
securities in these countries.
The Bank is highly cautious and selective with regard to
customer loans and great emphasis is placed on long-term
client relations and the client’s overall situation.
The Bank rarely participates in international loans.
3.3. Liquidity risk
According to the nature of its balance sheet, the Bank does not
refinance its activities in the non-secured interbank lending
market (except transactions with its parent company) and
15
does not issue debt securities. Liabilities are mainly constituted by clients’ deposits. Except for interbank investments
with its parent company, assets are essentially made up of a
portfolio of quality debt securities, allowing a mobilization for
repo transactions with banking counterparties. Loans and
advances to customers represent 21% of the total balance
sheet at year-end.
The Bank monitors its liquidity by identifying significant maturities of deposits and investments on a balance-sheet level and
relies on a liquidity risk monitoring framework based on the
follow-up of:
– the liquidity buffer;
– the securities available for refinancing operations;
– the LCR (Liquidity Coverage Ratio);
– the NSFR (Net Stable Funding Ratio);
– the granularity of customer deposits;
– liquidity stress test scenarios over a period of three months;
– the survival period in case of a financing problem;
– the static liquidity gap on middle and long term basis;
– the dynamic liquidity gap based on projected cash flows from
1 to 5 years.
In case of a liquidity requirement, the portfolio’s quality enables
the Bank to finance via several sources:
– bilateral et tripartite repo transactions with market counterparties,
– repo transactions with central Bank of Luxembourg,
– financing with the head office, CIC.
At the end of 2015, the LCR of the Bank was 117.3% (compared
to a prescribed minimum of 60%).
3.4. Operational risk
The Operational Risk Management service (ORM) is responsible for managing the operational risk of the Bank. As defined
by the Basel Committee, the operational risk is the risk of
“direct or indirect losses resulting from inadequate or ineffective internal procedures, personnel or systems, or from
external events”.
The operational risk management is consistent with the AMA(1)
methodology and is organized around two axes:
– risk prevention,
– risk analysis.
Risk prevention is achieved through the development of 47
risk maps covering all activities of the Bank. They are reviewed
annually with business experts in the relevant field. They allow
to define and implement measures to reduce the risk in the
most vulnerable processes.
The analysis of identified risks is first to identify all operational
incidents within the Bank, regardless of the financial impact.
The collection of operational losses exists since 1996 and
extends to all departments and subsidiaries of the Bank.
Communication channels and specific accounting procedures have been put in place to enable the ORM to centralize
these events. Each operational incident is then analyzed to
identify its causes, and develop action plans to strengthen the
internal control system and to prevent further problems.
These data are included in the model calculation of equity
capital according to the AMA methodology.
The department “Risk Management” is involved in enhancing
the quality of internal controls and its aim is to constantly
improve the banking systems used as well as the processing
procedures. The department defines and controls the information systems security policy.
The second level controls, carried out within the departments
of the Bank, are identified through an internal control project.
In line with the CSSF regulation 13-02, the Bank must provide
mandatory reporting of all customer complaints to the ORM,
with the necessary diligence, transparency and objectivity.
Each claim is analyzed to identify possible improvements to
the functioning of the Bank. This analysis is delegated to the
Legal Department if their expertise is sought for the investigation of the case.
Defined action plans are documented and monitored
semi-annually.
Quarterly reports are prepared and presented to the members
of the Executive Committee, as well as the heads of the Legal
& Compliance and Internal Audit departments.
Each department in the Bank has its own set of detailed
procedures that are either stored in a dedicated database or in
a procedures manual. The Bank has a list of sensitive procedures which is managed by the ORM service.
The Bank has insured a major part of property and business
risks.
The continuity plan of the Bank, which is tested on a regular
basis, covers the risks having an impact on the continuity of
the Bank’s activities and its information systems.
(1) Banque de Luxembourg is approved to implement the advanced method of calculating equity capital for operational risk (AMA: Advanced Measurement Approach) since 30/09/13.
ANNUAL REPORT
2015
16
NOTE 4
ANALYSIS OF PRIMARY FINANCIAL INSTRUMENTS
—
The primary financial assets and liabilities are presented according to their remaining maturity:
2014 EUR 000
(accounting value)
cash, balances with central banks and post
office banks
less than
3 months
3-12 months
1-5 months
more than
5 years or
indefinite
TOTAL
2014
94,795
0
0
0
94,795
2,923,823
1,141,031
2,749,584
4,990
6,819,427
875,448
337,774
370,168
910,252
2,493,642
securities
711,708
1,382,676
1,504,973
364,523
3,963,880
shares and other variable yield securities
total
total
0
0
0
20,774
20,774
4,605,773
2,861,480
4,624,725
1,300,538
13,392,517
488,871
965,335
47,514
7,200
1,508,920
10,263,191
768,536
54,322
1,000
11,087,048
4,974
0
0
0
4,974
10,757,036
1,733,871
101,835
8,200
12,600,942
guarantees
108,084
29,439
96,911
94,831
329,266
credits confirmed not used
257,479
124,124
145,277
158,577
685,456
total
365,563
153,563
242,188
253,408
1,014,722
TOTAL
2015
less than
3 months
3-12 months
1-5 months
more than
5 years or
indefinite
cash, balances with central banks and post
office banks
1,448,804
0
0
0
1,448,804
2015 EUR 000
(accounting value)
2,027,195
1,623,049
2,247,962
37,106
5,935,312
923,892
308,200
431,595
1,074,094
2,737,780
securities
140,836
487,374
1,293,197
597,965
2,519,371
0
0
0
37,870
37,870
4,540,727
2,418,623
3,972,754
1,747,034
12,679,138
229,744
21,117
98,334
9,750
358,945
10,696,062
427,810
182,217
44,500
11,350,589
0
0
0
0
0
10,925,806
448,928
280,551
54,250
11,709,534
shares and other variable yield securities
total
total
1,522
28,955
50,918
184,281
265,677
credits confirmed not used
128,901
188,360
217,579
211,489
746,329
total
130,423
217,315
268,497
395,771
1,012,006
guarantees
17
NOTE 5
LOANS AND ADVANCES TO CREDIT INSTITUTIONS
—
The geographical breakdown of loans and advances to credit institutions, including those repayable on demand, is shown in the
table below:
EUR 000
European Union
United States of America
2014
2015
5,696,461
5,029,575
9,407
221,460
other OECD countries
434,125
225,980
other countries
679,433
458,297
6,819,427
5,935,312
total
The maximum credit risk on loans and advances to credit institutions is represented by the notional amount of the loans and
advances.
At December 31, 2015 the “repurchase agreement transactions with credit institutions” amount to EUR 498,734 thousand
(31.12.2014: EUR 1,407,089 thousand).
At the request of the Bank, the CSSF has exempted the large exposure risk calculation on the group CM-Crédit Mutuel CIC,
pursuant to Article 387 of the EU 575/2013 Regulation (CRR). At December 31, 2015, loans and advances to credit institutions on
related parties amount to EUR 5,271,181 thousand (31.12.2014: EUR 6,235,259 thousand) as described in note 14.
ANNUAL REPORT
2015
18
NOTE 6
LOANS AND ADVANCES TO CUSTOMERS
—
The geographical breakdown of loans and advances to customers is shown in the table below:
EUR 000
European Union
2014
2015
2,050,429
2,358,030
90,272
83,687
103,991
101,701
other countries
248,949
194,363
2,493,642
2,737,780
total
The table below shows the breakdown of loans and advances to customers according to the type of security obtained by the Bank:
EUR 000
secured lending
unsecured lending
total
Value adjustments deducted from loans and advances to
customers amount to EUR 40,805 thousand at December 31,
2015 (31.12.2014: EUR 52,452 thousand).
The portion of the lump-sum provision for risk exposures that
relates to loans and advances to customers amounts to EUR
21,141 thousand at December 31, 2015 (31.12.2014: EUR 14,572
thousand) and is deducted from unsecured lending.
2014
2015
2,282,315
2,560,812
211,326
176,968
2,493,642
2,737,780
Advances and credits granted to the Bank’s management
At December 31, 2015, advances and credits (including guarantees and other commitments) granted to members of the
Board of Directors amounted to EUR 16,264 thousand
(31.12.2014: EUR 16,295 thousand) and to senior managers
amounted to EUR 17,055 thousand (31.12.2014: EUR 14,965
thousand).
19
NOTE 7
TRANSFERABLE SECURITIES
—
Transferable securities shown under the various items “Debt securities and other fixed-income securities”, “Shares and other
variable-yield securities”, “Participating interests” and “Shares in affiliated undertakings” may be broken down as follows into listed
and unlisted securities:
2014
EUR 000
listed
unlisted
TOTAL
3,963,880
0
3,963,880
0
20,774
20,774
0
10,318
10,318
debt securities and other fixed-income securities
total
2015
EUR 000
0
23,064
23,064
3,963,880
54,156
4,018,036
listed
unlisted
TOTAL
2,519,371
0
2,519,371
0
37,870
37,870
0
9,250
9,250
0
23,000
23,000
2,519,371
70,120
2,589,491
total
At December 31, 2015, debt securities and other fixed-income securities linked to interest rate swaps amount to EUR 1,732,045
thousand (31.12.2014: EUR 1,883,109 thousand).
At December 31, 2015, value adjustments maintained in respect of financial fixed assets and current assets in conformity with the
Beibehaltungsprinzip amount to EUR 22,602 thousand (31.12.2014: EUR 25,152 thousand).
ANNUAL REPORT
2015
20
NOTE 8
DEBT SECURITIES AND OTHER FIXED-INCOME SECURITIES
—
Transferable securities shown under “Debt securities and other fixed-income securities” are as follows:
EUR 000
financial fixed assets
others
total
2014
2015
3,961,565
2,516,193
2,315
3,179
3,963,880
2,519,371
Transferable securities are included under financial fixed assets if they are to be used on a continuing basis in the Bank’s activities.
Transferable securities shown under “Debt securities and other fixed-income securities” are broken down as follows according to
the type of the issuer:
2014
2015
public issuers
1,517,815
1,701,608
credit institutions
1,176,740
763,856
EUR 000
other issuers
1,269,325
53,907
total
3,963,880
2,519,371
The geographical breakdown of transferable securities shown under “Debt securities and other fixed-income securities” is as
follows:
2014
2015
3,275,517
2,118,291
504,356
299,631
184,007
101,449
0
0
3,963,880
2,519,371
EUR 000
European Union
other countries
total
21
The ratings of debt securities and other fixed-income securities are shown in the following table:
EUR 000
classe
central administrations
AAA-AA
2014
2015
1,180,727
1,498,961
360,811
1,009,002
84,991
84,993
734,925
404,966
B
0
0
CCC-CC
0
0
NR
0
0
regional and local administrations
355,088
218,246
AAA-AA
265,097
193,248
A
BBB-BB
A
BBB-BB
0
0
89,991
24,998
0
0
supra-national
74,805
0
AAA-AA
74,805
0
nr
A
covered bonds
AAA-AA
A
BBB-BB
B
nr
banks
AAA-AA
A
0
0
276,556
261,839
85,000
155,559
139,556
57,280
52,000
49,000
0
0
0
0
616,905
315,103
58,792
5,430
477,806
172,627
60,292
133,869
B
7,851
0
CCC-CC
9,850
0
BBB-BB
nr
2,314
3,177
corporate
8,883
9,900
0
0
8,883
9,898
BBB-BB
0
0
B
0
0
AAA-AA
A
0
2
securitisations
263,013
215,322
AAA-AA
108,722
112,969
nr
61,133
44,159
BBB-BB
58,236
50,963
B
34,922
0
0
7,231
A
CCC-CC
specialised fund
1,187,903
0
nr
1,187,903
0
3,963,880
2,519,371
total
ANNUAL REPORT
2015
22
The tables hereafter show the part of debt securities and the other fixed-income securities valued at historical cost and included
in the investment portfolio. This part is composed of two homogenous subsets in accordance with note 2.9. of the notes to the
present annual accounts.
a) Fixed-income securities included in the Bank’s investment portfolio, linked to own funds and valued at purchase price: 2014
EUR 000
accounting value
693,117
2015
EUR 000
accounting value
During the financial year 2008, the Bank has, with the approval
of the CSSF, reclassified as “financial fixed assets, valued at
acquisition cost” its FRN portfolio corresponding to a reinvestment of its customer deposits. The accounting value of the
securities acquired before January 1, 2008 including value
adjustments performed at year-end in 2007, remains
unchanged as at December 31, 2015.
At December 31, 2015, the accounting value of this portfolio
amounts to a total of EUR 461,917 thousand (31.12.2014:
516,343
fair value(1)
707,350
fair value(1)
524,512
EUR 634,760 thousand) and its market value amounts to
EUR 467,721 thousand (31.12.2014: EUR 642,264 thousand).
The bonds reclassified in the “fixed financial assets, valued at
cost” portfolio, are not subject to impairment, due to the fact
that the Bank intends to hold these positions up to maturity and
the unrealized loss is not deemed as durable.
(1) Fair Value: If available, the quoted market price on an active market is used to determine the fair value of the financial assets or liabilities.
If not available, the fair value is obtained:
– by reference to recent arm’s length market transactions;
– by using a valuation technique (discounted cash flow analysis). The valuation technique incorporates all market inputs that the stakeholders would take into consideration when determining
a price and be in accordance with the valuation methods agreed upon for the pricing of the financial instruments.
23
b) Fixed-income securities included in the Bank’s investment portfolio, covered by an interest rate swap:
2014
EUR 000
accounting value
1,883,151
2015
EUR 000
accounting value
1,732,045
fair value(1)
2,010,483
fair value(1)
1,864,360
At December 31, the cumulative amortisation since the date of acquisition of premiums and discounts on debt securities and other
fixed-income securities held as financial fixed assets was as follows:
2014
2015
premiums
930
1,702
discounts
5
0
EUR 000
The Bank has entered into transactions based on unconditional
agreements to sell and repurchase assets. For the periods
ending December 31, 2014 and December 31, 2015, no assets
have been sold.
The CIC has issued a guarantee in favour of the Bank to cover
the risk of default for a major part of its portfolio. The securities
concerned are those issued by credit institutions, securitisation
companies and some sovereigns. The value of these securities
as at December 31, 2015 is EUR 1,278,838 thousand (31.12.2014:
EUR 2,001,195 thousand). The guarantee received from the CIC
also covers the securities held by the four funds with short term
management (sub funds “Short Term”) for an amount of
EUR 40,480 thousand (31.12.2014: EUR 78,905 thousand). The
Bank reissued the same guarantee towards these four funds.
(1) Fair Value: If available, the quoted market price on an active market is used to determine the fair value of the financial assets or liabilities.
If not available, the fair value is obtained:
– by reference to recent arm’s length market transactions;
– by using a valuation technique (discounted cash flow analysis). The valuation technique incorporates all market inputs that the stakeholders would take into consideration when determining
a price and be in accordance with the valuation methods agreed upon for the pricing of the financial instruments.
ANNUAL REPORT
2015
24
NOTE 9
TRANSFERABLE SECURITIES: TRADING PORTFOLIO
—
At December 31, 2015 and 2014, the trading portfolio (see also note 2.3.) was as follows:
2014
EUR 000
accounting value
market value
2,315
2,401
accounting value
market value
3,179
3,215
2015
EUR 000
NOTE 10
PARTICIPATING INTERESTS AND SHARES IN AFFILIATED UNDERTAKINGS
—
At December 31, 2015 and 2014, the Bank has no participating interests in other credit institutions.
At December 31, 2015, the Bank holds an interest of at least 20% in the capital of the following undertakings:
company name
headquarter
Aigle Aviation S.à r.l. & Cie SECS
Luxembourg
25.00%
BL General Partner S.à r.l.
Luxembourg
100.00%
Banque de Luxembourg Investments
Luxembourg
100.00%
Cigogne Management S.A.
Luxembourg
20.00%
Compagnie Financière de Gestion Luxembourg S.A.
Luxembourg
100.00%
Conventum Asset Management (société anonyme)
Luxembourg
100.00%
European Fund Administration
Luxembourg
24.23%
Düsseldorf
100.00%
Fund-Market S.A.
Luxembourg
100.00%
Tradhold S.A.
Luxembourg
50.00%
Fund-Market Deutschland GmbH
percentage of share capital held
ANNUAL REPORT
2015
26
NOTE 11
OTHER ASSETS
—
2014
EUR 000
short-term receivables
pension fund investments
2015
1
2
7,503
7,496
282
476
precious metals
1,446
1,392
others
1,106
192
10,339
9,558
premiums on options purchased
total
Since 2003, the provisions for future pensions have been transferred to a pension fund created by the Bank under the form of a
Pensions Savings Association (A.S.S.E.P.) (note 31).
NOTE 12
MOVEMENTS IN FIXED ASSETS
—
The following movements have occurred in the Bank’s fixed assets in the course of the financial year:
value adjustments at
the balance sheet date
EUR 000
items
gross value
at the
beginning
of the
financial year additions
gross value
at the end
foreign
of the
exchange
financial
disposals transfer difference
year
lump-sum
net value
cumulative provision at the end of
value
for risk the financial
adjustments exposures
year
1. participating interests
10,654
1,829
(2,984)
0
85
9,584
0
(334)
9,250
2. shares in affiliated undertakings
29,021
0
(50)
0
0
28,971
(5,519)
(451)
23,000
4,023,915 683,457 (2,170,888)
0
13,126
2,549,611
(26,492)
(6,927)
2,516,193
3. debt securities and other
fixed-income securities(1)
105,229
3,204
(35,618)
0
0
85,920
(62,412)
(4)
23,505
of which:
a) costs of research
and development
59,706
5,187
(31,534)
0
0
33,359
(21,358)
(2)
11,999
b) concessions, patents, licenses,
trademarks and similar rights
and assets created by the
undertaking itself
23,498
582
(4,084)
75
0
20,071
(16,356)
(1)
3,714
22,025
10,540
0
(75)
0
32,490
(24,698)
(1)
7,791
245,304
4,720
(8,348)
0
0
241,676
(133,763)
(1,490)
106,422
4. intangible assets
c) goodwill
5. tangible assets
of which:
a) land and buildings
209,131
2,526
(2,802)
0
0
208,855
(107,830)
(1,400)
99,625
b) m
achinery and equipment
24,020
1,898
(4,378)
0
0
21,540
(17,025)
(62)
4,453
c) o
ther fixtures and fittings, tools
and equipment
12,154
296
(1,169)
0
0
11,282
(8,908)
(29)
2,344
0
0
0
0
0
0
0
0
0
d) in progress
(1) Acquisition of business combination.
27
NOTE 13
TANGIBLE ASSETS
—
At December 31, 2015, tangible assets included a net amount of EUR 99,625 thousand (31.12.2014: EUR 104,162 thousand) which
represents the land and buildings used by the Bank for its own activities.
NOTE 14
RECEIVABLES FROM AFFILIATED UNDERTAKINGS AND COMPANIES WITH WHICH THE BANK HAS A PARTICIPATING
INTEREST
—
At December 31, the receivables from affiliated undertakings and companies with which the Bank has a participating interest are
as follows:
2014
EUR 000
affiliated undertakings
6,235,259
0
1
346
32,159
1,187,903
6,267,419
1,188,249
total
2015
EUR 000
total
5,271,181
0
0
345
35,335
0
5,306,516
345
Value adjustments are deducted from loans and advances.
NOTE 15
SUBORDINATED ASSETS
—
Assets held by the Bank, which are of a subordinated nature, are mainly included in “Debt securities and other fixed-income securities” and amount to EUR 23,200 thousand at December 31, 2015 (31.12.2014: EUR 43,540 thousand).
ANNUAL REPORT
2015
28
NOTE 16
FOREIGN CURRENCY ASSETS
—
At December 31, 2015 the aggregate amount of the Bank’s assets denominated in foreign currencies, translated into EUR, corresponds to EUR 2,773,190 thousand (31.12.2014: EUR 2,030,502 thousand).
NOTE 17
OTHER LIABILITIES
—
2014
2015
short-term payables
8,121
3,162
preferential creditors
13,166
8,491
5,413
5,524
others
16,060
16,069
total
42,760
33,247
EUR 000
staff pension fund
The amount of EUR 5,524 thousand at December 31, 2015 relates only to current pension payments.
As part of the remuneration policy of the Bank, some of the “variable” compensation is paid over a period of four years:
At December 31, 2015, this amount is included under “Other” for EUR 14,112 thousand (December 31, 2014: EUR 13,600 thousand).
Since 2003, the provisions for future pensions have been transferred to a pension fund created by the Bank under the regime of
an A.S.S.E.P. (note 31).
29
NOTE 18
SPECIAL ITEMS WITH A RESERVE QUOTA PORTION
—
The amount recorded for tax purposes under “Special items with a reserve quota portion” represents the profit gained on the sale
of a building as well as the profit gained on the sale of participation interests.
NOTE 19
SUBSCRIBED CAPITAL
—
The authorised, subscribed and paid up share capital of the Bank amounted to EUR 104,784 thousand, represented by
26,546 shares with no indication of nominal value.
NOTE 20
MOVEMENTS IN RESERVES AND PROFIT BROUGHT FORWARD
—
legal
reserve
other
reserves
10,478
521,050
40
0
0
63,228
- transfer to reserves
0
11,450
(11,450)
- dividend
0
0
(51,021)
- directors’ fees
0
0
(750)
10,478
532,500
47
EUR 000
balance at January 1, 2015
profit for the year ended December 31, 2014
profit brought
forward
appropriation of profit:
balance at December 31, 2015
Under Luxembourg law, the Bank must levy an amount equivalent to at least 5% of the annual net profit to a legal reserve until such
reserve is equal to 10% of the share capital. This allocation is made the following year. The distribution of the legal reserve is not
allowed.
The other reserves as at December 31, 2015 are mainly constituted by an amount of EUR 79,929 thousand (December 31, 2014:
EUR 70,394 thousand) relating to a reserve of wealth tax for the years 2010 to 2014.
ANNUAL REPORT
2015
30
NOTE 21
ASSETS PLEDGED BY THE BANK AS SECURITY FOR ITS OWN LIABILITIES
—
At December 31, 2015, the Bank had pledged assets as security for its own liabilities in an amount of EUR 615,709 thousand
(31.12.2014: EUR 1,815,999 thousand). The majority of these assets are included in “Debt securities and other fixed-income securities”. These assets are pledged as collateral through refinancing activity and collateral management.
NOTE 22
DEBTS OWED TO AFFILIATED UNDERTAKINGS AND COMPANIES WITH WHICH THE BANK HAS A PARTICIPATING
INTEREST
—
At December 31, debts owed to affiliated undertakings and companies with which the Bank has a participating interest are as
follows:
2014
EUR 000
total
2015
EUR 000
total
1,277,510
0
19,435
46,133
1,296,945
46,133
138,215
0
9,334
56,306
147,549
56,306
31
NOTE 23
FOREIGN CURRENCY LIABILITIES
—
At December 31, 2015, the aggregate amount of liabilities denominated in foreign currencies, translated into EUR, was
EUR 3,990,757 thousand (31.12.2014: EUR 4,004,395 thousand).
NOTE 24
CONTINGENT LIABILITIES
—
The Bank’s contingent liabilities are as follows:
EUR 000
guarantees and other direct substitutes for credit
documentary credits
counter-guarantees
total
2014
2015
216,958
265,247
1,190
430
111,119
0
329,266
265,677
At December 31, 2015, the Bank has no contingent liabilities towards affiliated undertakings (31.12.2014: nil) but has contingent
liabilities towards participating interests for an amount of EUR 20 thousand (31.12.2014: EUR 20 thousand).
NOTE 25
COMMITMENTS
—
The Bank’s commitments may be analysed as follows:
2014
2015
confirmed credits, not used
685,456
746,329
total
685,456
746,329
EUR 000
At December 31, 2015, the Bank has commitments towards
affiliated undertakings for an amount of EUR 1,000 thousand
(December 31, 2014: EUR 1,000 thousand).
At December 31, 2015, the Bank has no commitments towards
entities in which it has a participating interest (31.12.2014: nil).
The Bank has entered into certain other commitments which
are not disclosed either in the balance sheet or in the off-balance sheet items but which are significant for the purposes of
assessing the Bank’s financial situation. These commitments
correspond to 8 rental contracts for which the remaining
period varies from 1 to 9 years.
ANNUAL REPORT
2015
32
NOTE 26
BREAKDOWN OF FINANCIAL DERIVATIVES
—
The presentation of item a) “Banking Book” has been modified from the presentation disclosed the previous year.
a) Banking book - breakdown by type of instrument and remaining maturity
The following table shows the non-trading financial derivatives (as defined in note 2.4.) linked to exchange rates, interest rates and credit
risks broken down by type of instrument and remaining maturity.
market value
2014
EUR 000 (notional amount)
less than
3 months
3-12
months
more than
1-5 years
5 years
4,324,602
1,416,114
80,427
0
13,508
0
75,744
0
4,131
21,333
0
0
13,973
25,855
0
0
4,356,214 1,463,302
156,171
total
positive
negative
5,821,144
102,284
(72,351)
89,252
0
(4,309)
25,463
4,666
0
39,828
25
(4,691)
0 5,975,687
106,975
(81,351)
operations linked to currency exchange rates
over-the-counter (OTC) contracts
forward exchange transactions(1)
cross-currency interest rate swaps
(1)
options - bought
options - sold
total
operations linked to interest rates
on regulated market transactions
interest rate futures purchase
0
0
0
0
0
0
0
interest rate futures sold
0
0
0
0
0
0
0
366,297
371,861
1,197,251
300,113 2,235,522
136
(226,725)
forward rate agreement purchase
0
0
0
0
0
0
0
forward rate agreement sold
0
0
0
0
0
0
0
capfloor purchase
0
698,232
596,321
0 1,294,553
2,961
(4,463)
0
0
0
0
0
0
0
0
0
0
0
0
300,113 3,530,075
3,097
(231,188)
interest rate swaps
option purchase
option sold
total
0
366,297 1,070,094 1,793,572
operations linked to equity
equity futures purchase
equity futures sold
125
0
0
0
125
0
0
0
8
0
0
8
3
0
0
2,866
0
0
2,866
21
(21)
41,861
260,175
0
9,887
311,923
57,579
(52,591)
accumulator swap
options
92
0
6
29,238
29,335
0
(32,470)
42,078
263,049
6
39,125
344,256
57,603
(85,082)
purchase of credit default swap
0
0
0
0
0
0
0
sale of credit default swap
0
0
0
0
0
0
0
0
0
0
0
0
0
0
warrant
total
operations linked to credit risk
total
(1) The amount of currency payable is included (the amount of currency receivable is included in note 27).
33
2015
EUR 000 (notional amount)
market value
less than
3 months
3-12
months
more than
1-5 years
5 years
total
positive
negative
operations linked to currency exchange rates
6,186,552
1,571,765
68,944
0
7,827,261
82,558
(77,573)
0
84,167
0
0
84,167
0
(2,435)
options - bought
1,946
28,575
0
0
30,521
5,146
0
options - sold
1,946
28,575
0
0
30,521
0
(5,146)
6,190,443 1,713,083
68,944
0
7,972,470
87,705
(85,155)
forward exchange transactions(1)
cross-currency interest rate swaps(1)
total
interest rate futures purchase
0
0
0
0
0
0
0
interest rate futures sold
0
0
0
0
0
0
0
172,468 1,304,864
interest rate swaps
40,000
0
0
capfloor purchase
0
option purchase
0
option sold
0
total
40,000
626,909
2,144,240
1,032
(202,051)
0
0
0
0
0
0
0
0
0
0
0
342,612
868,099
0
1,210,711
2,537
(3,161)
0
0
0
0
0
0
0
0
0
0
0
0
626,909 3,354,952
3,570
(205,212)
0
515,080 2,172,963
equity futures purchase
equity futures sold
131
0
0
0
131
0
0
0
0
0
0
0
0
0
0
2,486
0
0
2,486
23
(23)
79,731
287,738
0
0
367,468
30,047
(30,471)
accumulator swap
options
15
21
6
44,875
44,917
9
(25,620)
79,877
290,245
6
44,875
415,003
30,079
(56,115)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
warrant
total
total
(1) The amount of currency payable is included (the amount of currency receivable is included in note 27).
All outstanding foreign exchange and interest rate transactions as per year-end in 2015 and 2014, which are not included
in the trading portfolio, have been concluded for hedging
purposes. From the operations linked to credit risk, purchases
of Credit Default Swap represented hedging operations and
sales of Credit Default Swap represented positions taking in
the course the investment portfolio management.
Operations linked to other market rates relate to derivative instruments and are dealt on regulated markets on behalf of clients.
b) Trading Book
The derivative financial instruments belonging to the Trading
Book (as defined in note 2.3.) are traded over-the-counter
(OTC) and broken down by instrument category and
according to their maturity.
There are no financial derivatives belonging to the trading
book at December 31, 2015 and 2014.
ANNUAL REPORT
2015
34
NOTE 27
CREDIT RISK INFORMATION RELATING TO FINANCIAL DERIVATIVES
—
The presentation of item a) “Information on replacement cost”, point b) “Breakdown by counterparty rating” and c ) “Geographical and
economic sector breakdown” has been modified from the presentation disclosed previous year.
a) Information sur le coût de remplacement
The following table provides the replacement cost of financial derivatives traded over-the-counter (OTC).
The current replacement cost, potential future risks, the global replacement cost and the net credit risk exposure are calculated in
accordance with the requirements of regulation n° 575/2013 of the European Union on the definition of capital adequacy ratios
pursuant to Article 56 of the Law of April 5, 1993 on the financial sector (as amended).
2014
EUR 000
positive
notional amount replacement cost(1)
potential
future risk(2)
global
replacement cost
net credit risk(3)
102,265
61,852
164,117
13,583
operations linked to currency
exchange rates
5,861,576
foreign exchange transactions(4)
80,104
0
3,538
3,538
0
options bought
35,670
4,691
299
4,965
0
(4)
options sold
total
29,646
0
0
0
0
6,006,996
106,956
65,689
172,620
13,583
2,238,388
152
10,038
10,640
9,838
0
0
0
0
0
511,110
2,477
2,506
4,982
0
interest rate swaps
0
0
0
0
0
783,443
485
0
0
0
3,532,941
3,113
12,543
15,622
9,838
0
0
0
0
0
equity futures sold
125
0
8
8
0
accumulator swap
0
0
0
0
0
0
options bought
options sold
total
equity futures bought
options bought
options sold
warrants bought
0
0
0
0
311,777
57,579
0
0
0
0
0
0
0
0
29,343
3
2,930
2,933
0
341,246
57,582
2,938
2,941
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
warrants sold
total
total
(1) Contracts which have a positive value when marked to market.
(2) Potential future risk that may be incurred during the remaining life of the financial derivatives. It is calculated on the basis of the nominal amount as a function of the time to maturity.
(3) Corresponds to the weighted global replacement cost depending on the type of the counterparty.
Credit risk net exposure for purchases of credit default swaps is calculated on the basis of weighted nominal, the weighting depending on the nature of the counterparty.
The credit risk exposure for credit default swap sales is calculated on the basis of weighted nominal, the weighting depending on the nature of the underlying contract.
(4) The amount of currency receivable is disclosed.
35
2015
EUR 000
positive
notional amount replacement cost(1)
potential
future risk(2)
global
replacement cost
net credit risk(3)
82,395
80,960
163,355
39,859
exchange rates
7,839,315
foreign exchange transactions(4)
68,424
0
684
684
174
options bought
30,521
5,146
305
5,452
0
(4)
options sold
total
30,521
0
0
0
0
7,968,781
87,541
81,950
169,491
40,033
2,146,727
1,039
15,771
16,810
3,803
0
0
0
0
0
509,686
1,924
685
2,609
0
interest rate swaps
0
0
0
0
0
701,025
311
0
0
0
3,357,438
3,274
16,456
19,419
3,803
0
0
0
0
0
equity futures sold
131
0
8
8
0
accumulator swap
0
0
0
0
0
options bought
0
0
0
0
0
367,468
30,047
0
0
0
0
0
0
0
0
options bought
options sold
total
options sold
warrants bought
44,917
10
4,490
4,500
0
412,517
30,056
4,498
4,508
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
warrants sold
total
total
(1) Contracts which have a positive value when marked to market.
(2) Potential future risk that may be incurred during the remaining life of the financial derivatives. It is calculated on the basis of the nominal amount as a function of the time to maturity.
(3) Corresponds to the weighted global replacement cost depending on the type of the counterparty.
Credit risk net exposure for purchases of credit default swaps is calculated on the basis of weighted nominal, the weighting depending on the nature of the counterparty.
The credit risk exposure for credit default swap sales is calculated on the basis of weighted nominal, the weighting depending on the nature of the underlying contract.
(4) The amount of currency receivable is disclosed.
ANNUAL REPORT
2015
36
b) Breakdown by counterparty rating
The following table presents a breakdown of the global replacement costs of financial derivatives traded over-the-counter (OTC),
broken down by their solvency counterparty rating.
2014
EUR 000
Moody’s rating
notional
amount
Aa–
A+
A–
B+
B–
C+
5,861,576
3,922
232
9,706
35,673
15,789
0
80,104
0
0
0
1,367
0
options bought
35,670
0
0
0
40
0
not
rated TOTAL
credit risk
exchange rates
forward exchange transactions
98,796
164,117
2,171
0
3,538
0
4,925
4,965
0
0
29,646
0
0
0
0
0
0
6,006,996
3,922
232
9,706
37,080
15,789
2,171
2,238,388
50
0
4,127
5,345
1,118
0
0
10,640
forward rate agreements purchase
0
0
0
0
0
0
0
0
0
forward rate agreements sold
0
0
0
0
0
0
0
0
0
511,110
0
0
4,982
0
0
0
0
4,982
0
0
0
0
0
0
0
0
0
options sold
total
103,721 172,620
interest rate swaps
cap floor bought
options bought
783,443
0
0
0
0
0
0
0
0
3,532,941
50
0
9,109
5,345
1,118
0
0
15,622
0
0
0
0
0
0
0
0
0
equity futures sold
125
0
0
0
0
0
0
8
8
accumulator swap
0
0
0
0
0
0
0
0
0
options sold
total
options bought
options sold
0
0
0
0
0
0
0
0
0
311,777
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
29,343
0
0
0
0
0
0
2,933
2,933
341,246
0
0
0
0
0
0
2,941
2,941
purchases of credit default swap
0
0
0
0
0
0
0
0
0
sales of credit default swap
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
warrants bought
warrants sold
total
total
37
2015
EUR 000
Moody’s rating
notional
amount
Aa–
A+
A–
B+
B–
C+
not
rated TOTAL
7,839,315
0
9,266
16,071
43,768
18,043
0
76,206 163,355
68,424
0
0
0
250
0
434
0
684
options bought
30,521
0
0
0
0
0
0
5,452
5,452
0
0
credit risk
exchange rates
forward exchange transactions
30,521
0
0
0
0
0
0
7,968,781
0
9,266
16,071
44,018
18,043
434
2,146,727
0
0
7,929
5,960
2,898
0
23
16,810
forward rate agreements purchase
0
0
0
0
0
0
0
0
0
forward rate agreements sold
0
0
0
0
0
0
0
0
0
509,686
0
0
2,609
0
0
0
0
2,609
0
0
0
0
0
0
0
0
0
options sold
total
81,658 169,491
interest rate swaps
cap floor bought
options bought
701,025
0
0
0
0
0
0
0
0
3,357,438
0
0
10,538
5,960
2,898
0
23
19,419
0
0
0
0
0
0
0
0
0
equity futures sold
131
0
0
0
0
0
0
8
8
accumulator swap
0
0
0
0
0
0
0
0
0
options sold
total
options bought
options sold
0
0
0
0
0
0
0
0
0
367,468
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
44,917
0
0
0
0
0
0
4,500
4,500
412,517
0
0
0
0
0
0
4,508
4,508
purchases of credit default swap
0
0
0
0
0
0
0
0
0
sales of credit default swap
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
warrants bought
warrants sold
total
total
ANNUAL REPORT
2015
38
c) Geographical and economic sector breakdown
The table below provides a breakdown of replacement costs for financial derivatives traded over-the-counter (OTC) by
geographic and economic sector.
2014
EUR 000
banking
counterparties
other
TOTAL
European Union
73,258
93,284
166,542
12,337
364
12,701
2,171
4,905
7,076
credit risk
0
4,864
4,864
87,776
103,417
191,183
banking
counterparties
other
TOTAL
European Union
76,982
63,105
140,087
20,303
780
21,083
434
18
453
16,908
14,887
31,795
114,626
78,791
193,417
other countries
total
2015
EUR 000
credit risk
other countries
total
d) Collateral exchange convention
The Bank has signed “Credit Support Annex” (CSA) contracts with 46 counterparties that govern financial derivatives transactions.
39
NOTE 28
INVESTMENT MANAGEMENT SERVICES AND UNDERWRITING FUNCTIONS
—
The Bank provides its customers with the following services:
– portfolio management and investment advice;
– custody and administration of securities;
– safe deposit box hire;
– fiduciary representation
NOTE 29
OTHER OPERATING INCOME
—
Other operating income can be broken down as follows:
EUR 000
2014
2015
0
0
2,439
148
state contribution to training expenses
342
455
rental income
898
892
tax bonus on investment
refund of VAT and taxes from previous years
value re-adjustments of provisions for litigations
119
67
reimbursement by AGDL
220
436
31
75
gain on disposal of fixed assets
IT fees
5,494
0
others
1,673
4,201
total
11,217
6,273
In 2015, the account “Others” is mainly composed of services re-billed to related companies for EUR 350 thousand (in 2014
EUR 361 thousand) and indemnity reimbursements for EUR 879 thousand (in 2014 EUR 53 thousand). There were no reversals of
provisions for charges relating to previous years (in 2014 EUR 576 thousands).
ANNUAL REPORT
2015
40
NOTE 30
OTHER OPERATING CHARGES
—
EUR 000
2014
2015
AGDL provision (note 33)
7,200
0
non-recoverable debts
2,065
586
600
0
provision for litigation
0
5,209
1,126
1,278
10,991
7,073
disposal of intangible assets
others
total
NOTE 31
NOTE 32
STAFF
PARENT UNDERTAKING
—
—
At December 31, 2015 (2014), the Bank, including the subsidiary in Belgium, employed 803 (796) staff, including 52 (52)
senior managers, 751 (744) middle managers and employees.
The financial statements of the Bank of Luxembourg are
consolidated by:
Salaries paid to staff and amounts paid in respect of retirement pension schemes and other related costs amounted to
EUR 84,013 thousand (31.12.2014: EUR 79,863 thousand).
Of this amount, EUR 11,730 thousand was paid to the 52 senior
managers (31.12.2014: 52 senior managers, EUR 11,572
thousand). The amounts paid to the members of the Board of
Directors are disclosed in note 20.
In 2015, the Bank paid a sum of EUR 12,665 thousand
(31.12.2014: EUR 12,635 thousand) in respect of taxes deducted
from salaries to the Luxembourg income tax authorities.
There were no significant changes to report with regard to the
company pension scheme in 2015. In addition to pension
coverage (employer and personal contributions), the payment of
a capital and income in case of death and invalidity was included.
Contributions to the pension scheme (Luxembourg Pension
Fund), including the provisions for the future pensioners of the
Bank and its subsidiary companies, were calculated based on
an actuarial calculation and a 2% predicted yield of the fund’s
assets.
At December 31, 2015, the contribution transferred to the
provision for pensions is EUR 2,660 thousand (31.12.2014:
EUR 2,739 thousand).
– CIC group whose parent company is the Crédit Industriel et
Commercial (CIC),
– BFCM group whose parent company is the Banque fédérative
du Crédit Mutuel (BFCM) and includes CIC group,
– CM11 group whose parent company is the Caisse fédérale of
Crédit Mutuel (CFCM), and includes BFCM group,
– C rédit Mutuel whose central entity is the Confédération
nationale du Crédit Mutuel (CNCM), and includes CM11 group.
The financial statements of CIC group can be obtained at the
following address:
6, avenue de Provence
F-75009 Paris
The financial statements of BFCM group and CM11 group can
be obtained at the following address:
34, rue du Wacken
F-67000 Strasbourg
The financial statements of Crédit Mutuel group can be obtained
at the following address:
88-90, rue Cardinet
F-75017 Paris
41
NOTE 33
DEPOSIT GUARANTEE SCHEME
—
The law related to the resolution, reorganisation and winding-up measures of credit institutions and certain investment
firms and on deposit guarantee and investor compensation
schemes (“the Law”), transposing into Luxembourgish law the
directive 2014/59/EU establishing a framework for the
recovery and resolution of credit institutions and investment
firms and the directive 2014/49/EU related to deposit guarantee and investor compensation schemes, was passed on
December 18, 2015.
The deposit guarantee and investor compensation scheme
currently in place through the “Association pour la Garantie
des Dépôts Luxembourg” (AGDL) will be replaced by a new
contribution based system of deposit guarantee and investor
compensation. This new system will cover eligible deposits of
each depositor up to an amount of EUR 100,000 and investments up to an amount of EUR 20,000. The Law also provides
that deposits resulting from specific transactions or fulfilling a
specific social or other purpose are covered for an amount
above EUR 100,000 for a period of 12 months.
The provisions which have been created in the past by credit
institutions for the purpose of AGDL in their annual accounts
will be used/released according to the contributions of the
banks to the new Luxembourg banking resolution fund
“Fonds de resolution Luxembourg” (FRL), respectively to the
new Luxembourg deposit guarantee fund “ Fonds de
garantie des dépôts Luxembourg” (FDGL), which is still to be
established.
The funded amount of the FRL shall reach by the end of 2024
at least 1% of covered deposits, as defined in article 1 number
36 of the Law, of all authorized credit institutions in all participating Member States. This amount will be collected from the
credit institutions through annual contributions during the
years 2015 to 2024.
The target level of funding of the FGDL is set at 0.8% of
covered deposits, as defined in article 163 number 8 of the
Law, of the relevant credit institutions and is to be reached by
the end of 2018 through annual contributions. The contributions are to be made in the form of annual payments during the
years 2016 to 2018. For 2015, the credit institutions have
reflected a provision of 0.2% of covered deposits in order to
anticipate these contributions, using/releasing the existing
AGDL provision in their annual accounts.
When the level of 0.8% is reached, the Luxembourgish credit
institutions are to continue to contribute for 8 additional years
in order to constitute an additional safety buffer of 0.8% of
covered deposits as defined in article 163 number 8 of the Law.
NOTE 34
OTHER PROVISIONS
—
The amount under “Other provisions” is mainly composed of the deposit guarantee scheme provision (see note 33) and of provisions for compensations and bonuses as well as a lump-sum provision amounting to EUR 7,163 thousand.
NOTE 35
RELATED PARTIES
—
The Bank did not enter into any material transactions with related parties (as defined by the International Accounting Standard 24
“Related Parties”) that were not made at normal market conditions for the period ending December 31, 2015.
ANNUAL REPORT
2015
42
43
Report of the reviseur
d’entreprises agréé
ANNUAL REPORT
2015
44
REPORT ON THE ANNUAL ACCOUNTS
Following our appointment by the Board of Directors, we have
audited the accompanying annual accounts of Banque de
Luxembourg, Société Anonyme, which comprise the balance
sheet as at December 31, 2015 and the profit and loss account
for the year then ended, and a summary of significant
accounting policies and other explanatory information.
RESPONSIBILITY OF THE BOARD OF DIRECTORS
FOR THE ANNUAL ACCOUNTS
The Board of Directors is responsible for the preparation and
fair presentation of these annual accounts in accordance with
Luxembourg legal and regulatory requirements relating to the
preparation of the annual accounts, and for such internal
control as the Board of Directors determines is necessary to
enable the preparation of the annual accounts that are free
from material misstatement, whether due to fraud or error.
RESPONSIBILITY OF THE RÉVISEUR D’ENTREPRISES
AGRÉÉ
Our responsibility is to express an opinion on these annual
accounts based on our audit. We conducted our audit in
accordance with International Standards on Auditing as
adopted for Luxembourg by the Commission de Surveillance
du Secteur Financier. Those standards require that we comply
with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the annual accounts
are free from material misstatement.
whether due to fraud or error. In making those risk assessments, the réviseur d’entreprises agréé considers internal
control relevant to the entity’s preparation and fair presentation of the annual accounts in order to design audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of
Directors, as well as evaluating the overall presentation of the
annual accounts.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION(1)
In our opinion, the annual accounts give a true and fair view of
the financial position of Banque de Luxembourg, Société
Anonyme, as of December 31, 2015, and of the results of its
operations for the year then ended in accordance with
Luxembourg legal and regulatory requirements relating to the
preparation of the annual accounts.
REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS
The management report, which is the responsibility of the
Board of Directors, is in accordance with the annual accounts.
For Deloitte Audit, Cabinet de révision agréé
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the annual
accounts. The procedures selected depend on the réviseur
d’entreprises agréé’s judgement, including the assessment of
the risks of material misstatement of the annual accounts,
Martin Flaunet, Réviseur d’entreprises agréé
Partner
March 7, 2016
(1) The accompanying annual accounts, and the opinion expressed above, have been translated into English from its original French version. In the instance of any discrepancy, the original
French version of the annual accounts and of the audit opinion thereon shall prevail.
45
OUR SHAREHOLDER
Banque de Luxembourg is a wholly-owned subsidiary of Crédit Mutuel – CIC (CM-CIC) via Crédit
Industriel et Commercial (CIC) which owns 100% of the Bank’s capital. The CM-CIC group is not
listed and combines the strengths of the regional federations of Crédit Mutuel with those of CIC.
Owned by around 4.6 million “sociétaires” (shareholding members) and with 65,000 employees
serving 24.1 million customers, the group is a major player in the French retail banking sector. Its equity
capital of EUR 37.5 billion and its tier one solvency ratio of 15.1% reflect its excellent financial strength.
Moody’s, Standard & Poor’s and Fitch assign a rating of Aa3, A and A+ respectively to the group,
making it one of the highest-rated banks in the eurozone.
In 2014, the stress test and asset quality review (AQR) conducted by the European Central Bank
(ECB) and the European Banking Authority (EBA) confirmed the strength of the Crédit Mutuel group.
Since November 2014, it has been one of the 123 major European banks supervised directly by the
ECB under the Single Supervisory Mechanism (SSM).
Banque de Luxembourg is a major player in the group’s international private banking division, CIC
Private Banking. Together with Banque CIC (Suisse), CIC Banque Transatlantique and CIC’s subsidiary in Singapore, the Bank offers the private clients of CIC Private Banking wealth management
solutions with an international focus.
{ WWW.CREDITMUTUEL.COM {
{ WWW.CIC.FR {
ANNUAL REPORT
2015
46
OUR BRANCHES
LUXEMBOURG
14, Boulevard Royal, L-2449 Luxembourg
55, rue des Scillas, L-2529 Luxembourg-Howald
Tel.: (+352) 49 92 41 – Fax: (+352) 49 924 55 99
47
BELGIUM
Brussels, Chaussée de la Hulpe, 120, B-1000 Brussels
Tel.: +32 (0)2 663 45 43 – Fax: +32 (0)2 663 45 41
Arlon, Avenue Jean-Baptiste Nothomb, 30, B-6700 Arlon
Tel.: +32 (0)63 24 23 78 – Fax: +32 (0)63 24 23 70
Ghent, 3 Square Village
Rijvisschestraat 124, B-9052 Ghent
Tel.: +32 (0)9 244 00 44 – Fax: +32 (0)9 244 00 49
www.banquedeluxembourg.com
Banque de Luxembourg, société anonyme, 14 boulevard Royal, L-2449 Luxembourg – RCS Luxembourg B5310 – Photos: ©GettyImages, ©Shelby Watterworth

annual report - Banque de Luxembourg

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