From visions to facts Annual Report

VTB Bank (Deutschland) AG
From visions to facts
2011
Annual Report
Contents
Executive Bodies Division and Department Heads VTB Bank (Deutschland) AG
at a glance 2011 Business Environment
2011 Business environment 2
3
5
6
7
10
Management Report
Management report Business development Risk report Net Assets and
Earnings Position Representative Office Supplementary report Outlook 14
14
16
21
23
23
23
Annual Financial Statement
Balance Sheet as at
31 December 2011 Profit and Loss Account Notes
Notes Notes to the Annual
Financial Statement 2011 Auditor’s Report Supervisory Board Report 28
30
34
36
45
46
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Executive Bodies
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Supervisory Board
Management Board
Olga V. Dergunova, Moscow
Chairwoman
Valeriy V. Lyakin, Bad Homburg v. d. H.
Chairman
Igor Strehl, Vienna
Acting Chairman
Axel Breitbach, Niedernhausen
Alexander V. Yashnik, Moscow
Alexander V. Titov, Moscow
Florian Dorsch, Darmstadt
Stephan Schwind, Erlensee
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Division and Department Heads
Divisional Heads
Staff Department Heads
Alexander Frey
Fully Authorised Representative
Legal Department
Alexander Frey
(temporarily until 2 January 2012)
Internal Audit
Evgueni Bozoukov
Fully Authorised Representative
Loan Department
Sebastian Glaab
Anti-Money Laundering/Compliance
Holger Biernat
Controlling
Dmitry Bychkov
Russian Financial Institutions
Peter Petrik
Corporate Banking
Viacheslav Stroganov
Treasury
Kai Fabri
Accounting
Georg Moeller
Global Financial Institutions
Antonio Navarro-Delgado
Documentary and Settlement
Frank Schuler
Human Resources/Administration Department
Head of Representative Office Moscow
Irene Simon
International Payments
Olga Kapustina
Heiko Unverzagt
Information Technology
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VTB Bank (Deutschland) AG at a glance
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Selected key figures
Total assets
Liquid assets
Borrowed funds and deposits
Loan portfolio
Equity
Staff and other administrative expenses
2011
EUR 4,163 m
EUR 489 m
EUR 3,788 m
EUR 3,986 m
EUR 262 m
EUR 20 m
2010
EUR 3,505 m
EUR 1,304 m
EUR 3,205 m
EUR 3,399 m
EUR 217 m
EUR 18 m
Balance sheet structure
Assets
EUR (m)
Liquid funds
51 Liabilities to
banks
Receivables from banks
1,853 Liabilities to
customers
Receivables from customers
1,871 Equity
Bonds and other Net profit
fixed-interest securities
261
Other assets
127 Other liabilities
Balance sheet total
4,163 Balance sheet total
Contingent liabilities
Irrevocable undrawn credit lines
Business volume
Shareholders as at 31 December 2011
VTB Bank (Austria) AG, Vienna
100 %
Memberships
The bank is a member of the Bundesverband deutscher Banken e. V. (Federal Association of
German Banks) and the Einlagensicherungsfonds of the Bundesverband deutscher Banken e.V.
(Deposit Guarantee Fund).
It is also a member in the Verband der Auslandsbanken in Deutschland e. V.
(Association of Foreign Banks in Germany).
Liabilities
EUR (m)
3,049
740
262
51
61
4,163
13
88
4,264
2011 Business Environment
Annual Report
2011 Business environment
Again in 2011, VTB Bank (Deutschland) AG was increasingly successful in backing the continued positive
development of German-Russian foreign trade relationships, as compared to the 2010 business year. By
maintaining our risk-averse attitude, we were able
to provide our customers with more loans during the
2011 business year (as compared to the previous
year) and a higher number of settled payment transactions.
GDP of the Federal Republic of Germany
(adjusted for price, linked)
Change compared to previous year, in percent:
2004 2005 2006 2007 2008 2009 2010 2011
+ 1.2 + 0.8 + 3.4 + 2.7 + 1.0 – 4.7 + 3.6 + 3.0
Source: Federal Statistics Office
Economic environment in the Russian Federation
Economic environment in Germany
At 3.0 %, the growth rate of the GDP remained behind
the initially more optimistic forecasts and behind
the previous year’s growth rates of 3.6 %, whereby
it must be noted that quarterly growth for IV/2011
(netted for price and season) was again negative at
-0.25 % as compared to +0.5 % in IV/2010. At this
figure, Germany is experiencing growth that is double
that of the entire Euro zone.
This – albeit dampened – continued positive trend
reflects the sometimes good economic environment in
Germany which, according to the calculations of the
Federal Statistics office, increased the government
deficit to only 1.0 % of the GDP, as compared to 3.5 %
in 2010, and hence complied with the deficit ratio for
the Euro zone set in the Maastricht treaty (maximum
of 3.0 %) during 2011. The average deficit ratio of all
countries in the Euro zone was 4.1 % in 2011.
In addition to the impulses provided by foreign
trade (export +8.2 %), which is a virtually traditional
factor for Germany as an export nation, the boom
which started in the second half of 2010 received
considerable support in 2011 by a stable construction environment (+5.4 %) and growing private
consumption (1.5 %), which was favoured by higher
incomes of private households (+3.3 %). At 41.1 m,
German employment reached a new high in 2011,
following a previous high of 40.5 m in 2010. Government revenues increased by 6.1 %.
The GDP of the Russian Federation was able to
continue the positive growth from the previous year,
however, at a (preliminary) growth of 4.0 %, it is
still lagging far behind average growth rates prior to
the height of the financial crisis, as compared to
the previous year.
GDP of Russian Federation
(adjusted for price, linked)
Change compared to previous year, in percent:
2004 2005 2006 2007 2008 2009 2010 2011
+ 7.2 + 6.4 + 6.9 + 7.5 + 5.6 – 8.5 + 4.2 + 4.0
(prel.)
Source: Federal State Statistics Service
Following the collapse of the Russian economy in 2009
as a result of falling commodity prices, which also
highlighted the dependence of the Russian economy
on the export of commodities, and in this case the
export of energy carriers, 2010 was a year of growth
caused by an increase in global market prices for
these commodities, which continued into 2011. While
2010’s top prices for crude oil were still approx.
USD 94 per barrel in December, this level was held
over the entire period of 2011, and achieved a new
high of USD 123 per barrel in April, followed by a
decline to approx. USD 100 by the end of June – a level
where the price more or less remained for the rest of
the year at approx. USD 105.
Annual Report
Towards the end of 2011, Russian currency reserves
amounted to approx. USD 525 billion and were thus
slightly under the previous year’s level (2010: approx.
USD 531 billion), but were still among the top 3 ranking in the world, after China and Japan.
The development of crude oil prices in the past years
has shown that the world’s hunger for oil continues
unabated. In this context, we are forecasting a price
level of at least USD 100 per barrel on average for the
years 2012 and 2013, against the background of
increasing consumption figures, particularly in the
population- and consumer-rich countries of China, India,
US and also Japan. However, this forecast does not
take into account the currently acute risk of political
escalation including a military dispute between
Western countries and Iran – the fourth-largest oil
producing country in the world – or the spread of the
Arab rebellion to other OPEC countries. In the meantime, scenarios proposing a decline of the average
oil price to less than USD 90 per barrel are less likely
as a result of the demand for raw materials on the
part of emerging economies. While China’s economic
growth slowed somewhat in 2011 at +9.2 %, and is
forecast to decline again in 2012 to around +8 %,
these growth figures are nevertheless sufficient to
maintain demand for energy resources at a consistently high level, which will ensure revenues from the
export of these raw materials for the Russian economy for the foreseeable future. We assume that these
inflows will be sufficient to accommodate the foreign
trade balance of the Russian Federation.
But it remains to be seen which measures the Russian
Federation government elected in 2012 will take to
further reduce Russia’s dependence on raw material
exports. We continue to expect more investments in
infrastructure projects, and that Germany in particular
will be a participant as a supplier of the required
capital equipment, which in turn will benefit our own
business model.
We expect that the 2012 business year will be satisfactory overall. Our expectations match those of the ifo
business climate index, which at 107.2 for December
(as compared to 106.6 in the previous month) displayed
an increasing trend despite the continued debt crisis
and cooling of the global economy, prompting us to take
a positive assessment of Germany’s economic growth
in 2012.
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Management report
Business development
General environment
USA
China
The focus of attention for the entire 2011 business
year was on the debt crisis of the Euro periphery
countries and their effects on the core zone of Euro
states. Driven by the painful realisation of 2008,
namely that even so-called safe participants with solid
credit ratings may default as borrowers, numerous
banks invested in the government bonds of European
issuers that were considered safe and insolvencyresistant before the end of the year. Recurring revelations regarding the actual amount of the Greek
government deficit and general doubts regarding the
ability to reform the Greek state made for a situation
in which a Greek default, which was categorically excluded at the beginning of 2011, or at least Greece’s
vehemently denied exit from the European currency
union, were no longer considered impossible outcomes
towards the end of 2011, and became part of the
more general discussion. To gain some control over
the consequences, an increase to the core capital
ratio to be maintained by system-relevant banks from
8 % to 9 % was approved at an EU summit in October
2011, to go into effect in mid 2012.
Driven by these developments and the results of
the stress tests conducted by the EBA, three leading
rating agencies lowered their ratings for some large
European banks and several countries in the Euro
zone, sometimes by several levels, which increased
the pressure on the Euro.
During 2011, the EUR/USD exchange rate ranged
from a high of 1 EUR = 1.4940 USD and a low of
1 EUR = 1,3049 USD. Starting in 2011 with an exchange
rate of 1 EUR = 1.3182 USD, the exchange rate in-
creased to a short-lived high of 1 EUR = 1.4940 USD
by the beginning of May 2011, and then levelled off
to 1.41 and 1.45 into September, before falling to
1.3341 in October. Following a short recovery phase
at the beginning of November, the Euro lost considerable ground by the end of the year, ending with a
low of 1 EUR = 1.3049 USD.
The development of the German share price index
for 2011 was very similar. Starting the year at almost
7,000 points, the index reached its annual high in
May 2011 (7,527.64) after a brief period of weakness,
followed by a decline during August and September
and an annual low of 5,072.33, which in turn was
followed by a recovery until the end of the year,
prompting the DAX to close off the year with almost
5,900 points. The highest levels of the pre-crisis
years (8,105 points) were again unattainable.
While the overall positive development of the German
economy since the beginning of 2010 continued into
2011, it must be noted that other European markets
such as France, Italy or Austria experienced very
heterogeneous growth overall.
While we were again able to retain the previous
year’s earnings in the 2011 business year and thus
benefitted from expanded lending opportunities, we
have expanded our traditional portfolio centring on
the Russian Federation and the Republic of Germany
and also established a strong-margin European
portfolio for reasons of risk diversification and the
consistent utilisation of opportunities, in which we
combine non-government addresses with a low risk
and high quality from other EU member states. In
2011, we were able to further reduce the level of
poorly performing commitments as compared to the
entire loan volume.
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Contrary to initial fears, the trend towards lower
margins in the loan business with corporate customers,
which started towards the end of 2010 was not a
permanent feature, and was stopped towards the
middle of 2011 with a trend back towards a more
adequate pricing of loan approvals. The reason
behind this development can be partly found in the
fact that there were fewer refinancing options for
banks on the European market in the summer of 2011.
In a prescient move, for the purpose of diversifying
refinancing sources and minimise risks, the bank
decided early on, as part of the reinvestment of
available liquidity, to join the GC Pooling trading
system of EUREX Repo/Clearstream Banking, and
was able to undertake the first money trading transactions secured by securities baskets in July 2011.
In 2011, we were again able to expand our network
of correspondence banks cooperating with us,
and increase both the number as well as volume of
payment orders settled by our company to a new
record level. In addition to generating fees and crossselling effects for payments to and from Russia/CIS
as a result of the market penetration as a clearing
hub for payments, stable residual balances from loro
accounts represent a basic building block for our
short-term liquidity, which has some significance for
our business development. However, developments
on the European market have also at times prompted
us to review some business relationships with other
banks in Russia, CIS states and other European
countries, and reduce or suspend the same following
the result of our reviews.
Following the creation of the European VTB Sub-Group,
which consists of VTB Bank (Austria) AG as the parent
company, as well as the two subsidiaries VTB Bank
(Deutschland) AG and VTB Bank (France) SA, which
was carried out with the intention of increasing
synergies within the Group while at the same time
strengthening the respective core competences, the
continued further technological and infrastructural
development of the three institutions was driven
forward during the 2011 business year.
Against the background of the described developments, we are of the view that our strategy, which is
consistently aligned to the trading relations between
the Russian Federation and Europe’s core countries,
and without excluding the possibilities for risk
diversification with minimal and controllable risks, is
flexible enough to address the challenges.
Capital and shareholder structure
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Japan
VTB Bank (Austria) AG, domiciled in Vienna, continues
to be the sole shareholder of our bank. Similarly,
OAO Bank VTB, Saint Petersburg, continues to hold
all shares of VTB Bank (Austria) AG. Therefore VTB
Bank (Deutschland) AG remains a company dependent
on both VTB Bank (Austria) AG and OAO Bank VTB,
Saint Petersburg (sec. 17 para. 2 AktG).
Pursuant to sec. 312 AktG, the Management Board
is required to prepare a dependency report for these
corporate relationships. It contains the following
statement by the Management Board:
“We hereby declare that VTB Bank (Deutschland) AG,
according to the circumstances that were known to
the Management Board at the time at which the
aforementioned legal transactions were undertaken,
received adequate remuneration for each transaction. No measures were undertaken or omitted.” Personnel
The market environment already described and also
the increasing integration within the Group and the
large number of legislative changes, created considerable challenges for our employees in 2011. These
challenges could only be managed thanks to the high
qualification and high commitment of our employees.
The recruitment process for new staff and replacements included an increasing focus on the technical
suitability of applicants. This, in connection with
the long-standing professional experience of our staff,
a healthy turnover rate and the targeted promotion
of employees through continuing education and pro-
Euro-Raum
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fessional development activities, form the basis
for also meeting market requirements in the future.
We would like to thank our employees and the
Employee Council for the trustworthy and constructive working relationship during the past year.
Risk report
2011 was a year of consolidation. Initial regulatory
measures were implemented with the goal of generally
reducing the risks of the banks. Government risks
became the dominating issue. Assumed to be nonexistent at the regulatory level, it became obvious that
these allegedly safe harbours, the alternative to risky
activities, can nevertheless be just as risky. In this
case, politicians tried to assist with a lot of words and
money. The effect on the market is gone, mistrust
among banks has increased again, as was the case
during the 2008 crisis. The dominating issue with
regard to risk is safety and in particular liquidity, rather
than profitability. Previously, the crisis originated from
risky real estate transactions with doubtful creditworthiness; now it is happening as a result of bank
commitments in the area of government financing
and in particular also from the states of the Euro zone.
This may not only result in another credit crunch
but also a global decline leading to a global recession
and finally increasing default risks.
enter into risks. Therefore the bank expects a decline
in margin pressure. However, we will be limited in
expanding our loans portfolio due to unchanged
capitalization. For the most part, this will result in the
replacement of the expiring existing business with
more beneficial business. The bank also increasingly
took advantage of the opportunity to sell risks on
the market.
The entire Management Board is responsible for the
bank’s risk management. The risk control of overall
bank risks is performed by the Asset Liability Committee (ALC), while the risk control for credit risks
related to individual commitments is performed by
the Credit Committee (KA). The work of the Internal
Audit department is bound by instructions both for
reporting as well as the assessment of audit results.
It monitors operating and business processes, the
risk management system and risk controlling, as well
as the internal control system as an independent
body. It reports directly to the Management Board
and is required to provide information to the Supervisory Board. The time of cheap credit for large market players seems
to be over. There is greater hesitancy with regard to
granting loans, even if the market seems to be drowning in liquidity in other areas. At this point, we would
like to note the ECB’s liquidity push of EUR 500 billion
in 3-year monies in December 2011.
The bank obtains its operational instructions and
provisions from the existing strategies and the risk
bearing capacity. The risk strategy and business
strategy represent and limit the bank’s business
activities, and the risk bearing capacity is used as the
basis for measuring the coverage of risks through
the relevant own funds (pre-tax planned profits for the
accounting year plus reserves according to sec. 340f
HGB). To this end, upper loss limits and assumptions
regarding the holding period are established as
part of the risk bearing capacity for all key risks of the
bank. The degree to which the limits are utilised is
calculated monthly and discussed in the ALC, which
undertakes amended control measures in the case
individual upper loss limits or total loss limits are
exceeded. During the 2011 reporting year, the average
utilisation of the upper loss limit was 36.9 %, whereby
no upper limits were exceeded in any of the cases.
Even if the economy is doing well, the margin situation
for borrowers in Germany and the Russian market
will get worse if banks in general are not willing to
In addition to representing risks by basing them on
scenarios, they are also quantified pursuant to stress
scenarios. The bank describes the stress test as an
Germany continues to do well economically, which
has led to demands for financial support elsewhere in
the EU. This in turn takes away Germany’s ability to
relieve or reduce its own debts.
Annual Report
individual risk potential in the case of extraordinary
but plausible events.
A risk controlling system is used for the timely
monitoring of all specified limits of all risk areas for
compliance. Insights are implemented in reports
that are sent to the respective decision-makers at
specified intervals. Ad-hoc reports are provided for in
the case of extraordinary circumstances, e.g. considerable market movements.
For the purpose of appropriately addressing its risks,
the bank has established a system that allows it to
identify, measure and control its key risks. Controlling provides ALC members with a meaningful reporting system that displays the risk situation and
contains recommendations for action. The system
was again further optimised this year.
In addition to statutory provisions and self-restrictions, limits at the Group level must also be observed.
These concern in particular restrictions for the
selection of risk concentrations at borrower units, risk
countries and industries. Despite these restrictions,
the bank was able to grow very well in the past within
the confines of available opportunities.
A series of premises were used as key factors for the
bank’s risk and earnings position in the preparation
of budgets. The bank’s most important success driver
is interest rates, for which it is assumed that they
will increase moderately during the year both in the
US dollar as well as the Euro zone, given a continued
normal interest structure. In the case of assumed
crisis-related developments, the bank is assuming
increasing refinancing costs with stagnating margins
in the overall portfolio.
Counterparty risk
Counterparty risk comprises credit risk as well as
default and country risk. It results from failure to partly
or fully honour repayment obligations.
The Bank’s risk strategy has stipulations for controlling credit risk. The Bank makes lending decisions
on the basis of its own analyses within the scope of
comprehensive creditworthiness analysis. In this
respect, all relevant quantitative and qualitative company data is taken into account in the assessment.
The analysis follows a regular schedule and takes
into consideration country-specific accounting regulations as well as the industrial sector of the borrower.
The Russian banks are subject to particularly close
monitoring; their data can be analysed on a monthly
basis. Decisions on loans are made according to a
two-vote process, which is shown in a workflow
management system together with a final rating. The
creditworthiness audit includes the aforementioned
quantitative and qualitative customer data as well as
assessment and monitoring of collateral. The bank
handles problem loans and intensive-support loans,
such as restructurings, in its own lending processes.
For the purpose of limiting risk, money market
transactions are only concluded with those banks
for which a low-risk investment can be assumed.
Where this was not sufficiently possible in the past
with respect to investments of daily liquidity, the
bank placed deposits at the Bundesbank. By doing
business through the GC Pooling system of the
EUREX Frankfurt AG, it additionally became possible
to effect secured money market transactions in the
short- to medium-term segment. To this end, counterparties provided securities as collateral in line with
repo transactions. Due to attractive interest rates and
the possibility to conclude transactions at any time,
the bank now prefers this type of investment, since
the counterparty risk can be excluded on a regulatory
level and minimised on an economic level. Collateral
refers to top-quality collateral, which addresses the
bank’s security requirements with regard to the
investment of short-term funds. Netting agreements
as well as collateral are taken to mitigate risk.
Lending to foreign borrowers resident in jurisdictions
with heightened or high risk potential takes place
solely within the framework of established country
limits which are reviewed on a regular basis by the ALC
in accordance with the bank’s risk strategy and the
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risk bearing capacity. To this end, the bank primarily
relies on its own risk assessments as well as on
risk assessments by the parent, but also on those
of leading rating agencies. The appropriate country
risk provisions are made for countries with a high or
acute default risk. In the year 2011, this related to
already existing commitments in the Ukraine. General
allowances are created above and beyond the range
accepted for tax purposes for latent existing risks
from granting loans.
In recent years, the bank has gradually modified its
portfolio and added German business to its Russian
business. As it was not possible to achieve attractive
risks at adequate prices in the German market in
2011, the bank diverted to other countries in the Euro
zone. In this vein, it avoided risk concentrations and
default risks against central governments. The commitment with Greece was impaired down to market
prices. Risks that negatively impact individual credit
commitments beyond pure counter party risk cannot
be identified with the other commitments in countries
with a higher state risk.
Provisions were made with respect to the bank’s
risks. Specific loan loss allowances amount to 0.89 %
of the gross loans portfolio. The solvency indicator
was 10.65 % at the end of the year, and hence exceeds
the 8 % (or 9 % for system-relevant institutions)
required by regulatory authorities.
Market price risks
Market price risks lead to lost earnings due to a
change in market prices. For the bank, such losses
are mainly the result of risks related to changes in
interest rates and currency risks. The bank defines
itself as a non-trading-book institution. Hence it only
has very limited opportunities to hold trading positions. Therefore it does not draw a distinction with
the trading and banking book for risk measurement
purposes.
The non-trading portfolio is controlled by the ALC. The
bank aims for a fully currency-congruent and suitably
term-congruent refinancing of the loans business.
The bank adds transparency to, measures and controls
the interest-bearing business by way of interest
scenarios and interest shock scenarios. Because of the
large proportion of short-term refinancing, and for
the purpose of securing the appropriateness of term
congruency, the bank takes control measures by
applying limits in relation to the maximum term of
loans and the average remaining term of the portfolio.
The risks resulting from the bank’s securities portfolio are limited by medium-term and fixed-interest
acceptances of funds where possible.
The bank covers its USD requirements through FX
swaps. These are only used for that purpose and
not for speculation purposes, since the bank faces
restrictions in this context due to the restricted range
available to non-trading-book institutions. In most
cases, these do not concern anticipatory hedges, since
purchases of US dollars are always accompanied by
parts of the loans portfolio that cannot be covered
through other liquidity sources in US dollars.
Currency risks are limited by way of position and stop
loss limits that are monitored daily.
Concentration Risk
The bank views concentration risk as a major factor.
It makes a distinction between clump risks resulting
from credit approvals by regions, and the risks resulting from approvals to customers in the same industries.
Based on its proven expertise in the Russian business,
the bank has been focusing on this country, but in
past years also began to add other countries to the
portfolio in line with diversification efforts.
The Russian risk was monitored on the basis of daily
reports, as was done in previous years. To this end,
a default risk has been estimated and volume limits
have been established to this point. In 2011, the bank
improved its concept for this purpose. Instead of
calculating default risks with model-type assumptions,
it now examines the default risk pursuant to the re-
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gulatory report on solvency. In this context, the daily
report was converted, so that risks and associated
usage of equity can be shown per country or country
group, and per product or product group. Instead of
volume limits, the bank now examines the share of
Russia in total equity requirements and defines a
quota limit in this regard. To keep low-risk business
in the portfolio, a minimum volume has been established in this context for the volume in trade
financing, as it relates to the total portfolio.
The bank is addressing risk from the concentration
on industries through a separate measurement and
valuation in the risk bearing capacity. This is designed
to better highlight a possible concentration risk. At
the same time, the banking industry is not included
in the examination. It is traditionally the industry with
the highest allocation due to the investment of surplus liquidity. An examination of the other industries
is more useful to this type of control.
Liquidity risks
The bank incurs liquidity risks through the removal
of funds in the area of loro accounts, but also as a
result of the delayed or only partial repayment of loans.
Both situations can lead to difficulties and put the
bank’s ability to pay at risk.
The bank uses different ways of measurement and
monitoring. It measures the risk using regulatory key
figures, but also its own regularly performed scenario
analyses and cash flow evaluations. The monitoring
process is rounded off by automatically sent messages
regarding the liquidity position at hourly intervals.
This allows the bank to promptly detect changes, in
particular unplanned outflows from accounts, and take
adequate measures. This course of action supplements the traditional scheduling of payment flows,
since it provides on-going data to other bodies in the
company. Moreover, the bank has applied restrictions
for the transformation of terms on itself. This restriction limits the proportion of loro account deposits
that can be used for loans.
Daily scenarios supplement the regulatory key figures,
which are calculated daily, with the projection
dimension. Assumptions regarding likely extensions
to transactions that will expire in the near future
are made. Other scenario and stress calculations
investigate the effect of sudden fund outflows at the
loro accounts or withdrawal of irrevocably granted
facilities. In this vein, a discount of 40 % and 50 % is
assumed, which must be covered by existing shortterm liquidity. Liquid funds consist of nostro balances,
call deposits or monies due until further notice and
securities that can be liquidated in the short term.
A similar scenario is in place for an examination of
longer-term liquidity. The results do not give any
cause for worry.
Reporting includes hourly reports and also daily
reports regarding the liquidity situation, as well as
scenarios and projections. This makes it possible to
detect possible difficulties early on, and in a futureoriented manner, and address them immediately. The
reporting system features a flexible design intended
to enable the bank to quickly react to new circumstances and conditions and make adjustments if
necessary. An emergency plan describes the course
of action in the case of liquidity bottlenecks. In addition to a description of the process, it also contains
authorisation provisions designed to react to concrete
risks in an appropriate manner. A representation
plan ensures that acting representatives are also able
to react promptly and in line with the risk.
The bank has studied its options for selling its entire
portfolio or using it for repo purposes. In this vein,
it has measured all individual positions and valued
them at identified offers in the market. The remaining
amount, for which there was no market, had a volume
that could be covered by borrowing from banks or
non-banks.
The ALC has delegated the task of liquidity control
to Treasury, which remains bound by the specifications
for medium-term and long-term control in particular.
Due to the self-restriction for term transformations,
the bank’s liquidity position was never under stress.
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Similarly, the portfolio of liquid funds was further
expanded in 2011. This is particularly due to the
continued good working relationship with correspondence banks with regard to payments settlement.
In this context, the impacts and strength of the impact
between risks is investigated as part of an annual
assessment. Similar to previous years, this assessment indicated special risks for the bank in two places:
The option to borrow funds from the market was in
place at all times. At the same time, the bank is also
noting the renewed loss in trust among banks, which
relates not specifically to the bank itself, but is now
affecting all banks again.
Interplay between the address non-payment risk
and liquidity risk can occur if firmly assumed repayments are not provided in a timely manner. The bank
therefore uses scenarios to measure the default of
counterparties or borrowers and the impact on the
bank’s liquid funds.
The bank had the ability to enter into FX swap transactions at any time, allowing it to provide refinancing
required for the approval of credit at all times. While
there is a noticeable increase in tension in the general
market environment and a contraction in volumes,
we were nevertheless able to further expand the business relationships with our correspondence banks.
The bank’s own securities portfolio continues to be
divided into the asset portfolio and liquidity portfolio.
The bank intends to hold items in the asset portfolio until the due date. It is also of the view that its
assets in the liquidity portfolio can be sold at any
time. These generally concern titles for which a liquid
market is in place. Many parts of the securities portfolio can be used for refinancing via repo transactions
with the corresponding haircuts, insofar as they are
not permitted for transactions with the Bundesbank
or GC Pooling.
Compliance with the liquidity principle and hence
access to short-term liquidity was in place at all times
during the 2011 business year. The liquidity indicator
ranged from 1.17 to 1.82 (1.53 on average, and 1.41
as at 30 December 2011). At the end of the year, the
bank again registered traditionally high inflows to the
loro accounts. erneutes
Rekordergebnis
The investment of funds in bonds indicates another
possible risk, since the distribution over different
issuers is not satisfactory given the supply on the
market. In this case, the bank measures the resulting
market price changes of bonds.
Operational risks
In this category, the bank combines internal and
external events that can be caused by people or systems and lead to operational risks. These risks also
include legal risks, but not strategic risks, business
risks and reputation risks.
Monitoring of operational risks is carried out in a timely
and centralised manner by the OpRisk Manager, who
systematically adds all damage events to a damage
events database. Risks are controlled on a decentralised basis in the bank’s individual departments,
which are responsible for handling the operational
risks that fall under their area of responsibility.
Damage events are regularly reported to the ALC and
the Supervisory Board. Ad-hoc reports are provided
for in the case of serious events.
Interplay of risks
Each department conducts a “Self Assessment”
once a year. It is analysed in the form of a risk matrix
and shows the bank’s specific risk profile.
Risks originating from one risk type can spread to
other risks. It is this interplay that can create a risk if
they lead to a deteriorating situation.
Operational risk pursuant to SolvV (solvency regulation) is calculated by applying the basis indicator
approach.
Annual Report
Employees are invited to established assessment
and employee interviews once per year. The interviews
are used to reduce operational risks, in order to
create a trustful environment. They also include a
discussion of professional development measures,
which are used by the bank to ensure that the necessary knowledge of the business operations and the
identification and handling of risks is in place. It is also
designed to create the basis for the consistent further
development of the bank, so as to successfully address
new conditions in the market. Employee satisfaction
as a variable in employee turnover plays an important
part in the examination of operational risks.
Business processes are subjected to an inspection
at least once per year. This is designed to ensure an
appropriate response to risks and the bank’s continuous further development in this area.
Technical risks are limited through the customary
instruments such as functional separation, instructions
for emergency cases, and a back-up processing centre.
Since the bank provides a not insignificant number of
payment transactions services, these risks form another
key focus in the examination of operational risks.
Legal risks are limited through the use of framework
agreements. With respect to additional testing, the
bank draws on its own employees but also external
experts. In this context, the Legal Department is
responsible for reviewing, supervising, provide advisory services for and coordinating all legal issues. Net Assets and Earnings Position
On the closing date, the bank’s business volume was
EUR 4,264.3 m (previous year: 3,598.4)
ables from banks and customers continue to make up
the bank’s main assets.
The balance sheet total increased, as compared to
the previous year, by EUR 657.4 m to EUR 4,162.7 m,
and is mainly the result of increased liabilities to
customers by EUR 362.9 m to EUR 739.5 m and liabilities
to banks by EUR 220.8 m to EUR 3,048.8 m. The reason
for this development can be found in the acceptance
of longer-term deposits, particularly from customers,
as well as the continued increase in liabilities that are
due daily as a result of our considerable activities
as a clearing institute, which we place mainly on the
interbank market with first-class banks on a termcongruent basis.
We were able to again significantly increase corporate
lending in 2011. In relation to the closing date, we
have registered a strong increase in this segment, by
EUR 563.3 m to EUR 1,871.5 m. To this end, we were
available to our customer base particularly in the area
of trade financing as well as the guarantee business.
In the case of longer-term maturities, we mainly
participated in syndicated loans and are restricting
our activities to reputable addresses. In addition,
we were also able to again obtain large reputable
customers in Germany in the past year.
Insofar as the credit worthiness requirements for
borrowers do not correspond with our benchmarks, we
take in additional collateral, mainly in the form of
cash covers or valuable guarantees.
The bank establishes suitable provisions for existing
country risks. Acute risks from lending are addressed
with the corresponding specific loan loss allowances.
In addition to direct provisions, extensive additional
amounts for covering special risks from the bank
business as well as general allowances for covering
latent risks are in place, too.
Lending business
Securities
In addition to payment transactions, lending remains
the bank’s central core business segment. With 89.5 %
(previous year: 89.6 %) of balance sheet total, receiv-
The securities portfolio has continued to increase by
EUR 3.5 m to EUR 261.0 m as compared to the pre-
20
21
Annual Report
vious year. In addition to securities acceptable as collateral of EUR 17.7 m, the securities portfolio mainly
consists of bonds from Russian companies and
banks. As a result of the interest and yield structures
during the business year, we continued to invest in
short-to medium-term securities.
Deferred taxes
Deferred taxes declined from EUR 36.1 m to EUR 21.5 m.
This is mainly the result of the use of tax losses
carried forward.
Other assets
Holdings in affiliated companies include our 100 %
interest in Ost-West Vermögensanlagen GmbH. The
sole purpose of this company is the purchase and
management of real estate purchased for the bank’s
purposes. Tangible assets include the bank’s operating and
business equipment. Intangible assets consist solely
of software subject to capitalisation.
Other assets mainly consist of receivables from European banks from so-called margin accounts.
Deposit transactions
Compared to the previous year, deposits from
banks and customers increased by EUR 583.7 m to
EUR 3,786.4 m during the last business year (examined in relation to the closing date), whereby the
increase in liabilities to customers at EUR 362.9 m
was higher than that for banks at EUR 220.8 m. In
terms of the annual average, interest-bearing deposits
from banks and customers increased significantly
and amounted to EUR 3,153.7 m on average (previous
year: EUR 2,514.3 m).
Provisions
The largest part of the provisions in the amount of
EUR 28.1 m was again made up by pension provisions.
They have been calculated based on actuarial appraisals. The effects from the initial application of the
BilMoG provisions in the previous year are distributed
over a time period of up to 15 years. The pension provision increased due to the consideration of pension
entitlements that were added during the business
year. Taking into account paid pension receipts, pension provisions increase by EUR 1.0 m to EUR 22.5 m.
As a result of higher tax prepayments made during
the year, tax provisions were reduced by EUR 3.1 m to
EUR 0.7 m.
Other provisions of EUR 5.0 m mainly consist of
expenses for annual financial statements, labour, the
archiving of business documents and account maintenance fees.
Equity
Equity without retained earnings increased by
EUR 45.0 m to EUR 262.0 m as compared to the previous year. This is the result of allocating the previous
year’s profit in the amount of EUR 45.0 m to the other
profit reserves. It is recommended to the Shareholders’
Meeting that the full amount of retained earnings of
EUR 51.0 is distributed to the shareholders.
Eligible equity on the closing date is EUR 293.8 m
(previous year: EUR 274.2 m), with the core capital at
EUR 261.5 m (previous year: 249.0). The solvency
indicator is at 11.01 % (previous year: 12,08 %).
Earnings position
The bank’s annual result developed in a very positive
manner during the past year. The results driver in
this case is the valuation result, which is significantly
better as compared to the previous year. Net earnings
in the interest-dependent business have improved
Annual Report
somewhat, while the commission earnings declined
significantly. Both labour costs and other material
costs increased during the past year.
The interest surplus was EUR 93.1 m, following
EUR 91.5 m in the previous year. This corresponds
with an increase of 1.7 %, whereby interest income from
lending and money market transactions increased by
EUR 24.7 m or 26.1 % to EUR 119.4 m, while interest
income from securities declined by EUR 4.7 m or
19.2 % to EUR 19.8 m. Similar to last year, a key factor
with regard to lending is the expanded loan portfolio
with a simultaneous concentration on strong-margin
new business, as well as available funds from our
bank’s clearing services for Russian banks, mainly in
the Euro and USD area.
The 66.7 % increase in interest expenses to EUR 46.1 m,
which was above average in comparison to interest
income, was the result of accepting longer-term
customer deposits with much higher interest rates
than for bank deposits which are due daily.
The very good commission result of the previous year
of EUR 16.7 m declined by 26.4 % to EUR 12.3 m
during the past year. This was due in particular to
EUR 2.7 m lower commission proceeds from the lending
business and EUR 2.2 m higher commission expenses
for sureties and guarantees. Despite the continued
margin pressure in the clearing business with Russian
banks, the payment transaction area nevertheless
increased its fee income by EUR 1.0 m to EUR 8.0 m
as compared to the previous year, due to higher
settled volumes.
The net result from financial transactions in the previous year was exceeded by EUR 0.6 m, to EUR 1.1 m.
General administrative expenses rose by 13.9 % or
EUR 2.5 m to EUR 20.2 m (previous year: EUR 17.7 m)
as compared to the previous year. This result was
mainly due to 13.5 % or EUR 1.4 m higher salary and
wage expenses as well as the first-time expenses of
bank levy in the amount of EUR 0.5 m.
The positive development of the valuation result from
receivables and securities of the liquidity reserve in
the amount of EUR -9.9 m (previous year: EUR -22.5 m)
is mainly due to the net reversal of specific provisions
in the lending business of EUR 4.2 m (previous year:
EUR -17.0 m), which is however accompanied by a
less favourable valuation result for securities in the
amount of EUR -12.2 m (previous year: EUR 3.8 m),
mainly due to the devaluation of government bonds.
Overall, the income statement closes with an annual
profit of EUR 51.0 m (previous year: 45.0 m). It is
recommended to the Shareholders Meeting that the
retained earnings of the same amount are distributed
to the shareholder.
The positive development of the bank’s business
activities during the 2011 business year is reflected
in the higher balance sheet sum as well as higher
profits.
Material events of a special significance did not occur
after the end of the business year.
Representative Office
The bank maintains a representative office in Moscow.
It forms the ideal connection between our company in
Frankfurt am Main and our customers in Russia.
Supplementary report
Material events of a special significance did not occur
after the end of the business year.
Outlook
Projecting the findings of the past business year, and
taking into account most recent developments, we are
expecting that the growth process started after the
22
23
Annual Report
crisis in 2008 and 2009 will consolidate during the next
two business years. While the risk of a recession in the
Federal Republic of Germany cannot be excluded –
considering that GDP growth rates were already negative
for the fourth quarter of 2011 at -0.25 %, the requirements in this sense are met if the growth rates in the
next quarter (first quarter of 2012) are negative – forecasts citing an environment with a general trend towards
robust economic growth are nevertheless gaining in
numbers.
There is less optimism with regard to economic developments in the European periphery nations, which have
already spread to parts of the European core zone:
both the most recently published doubts regarding the
ability to reform the Greek economy and the on-going
delays in the implementation of measures decided on
by the so-called troika (EU committees, IMF and ECB)
confirm the assumption that Greece will not be able to
put its country’s finances in order in the medium term,
i.e. to reduce its debt and annual government deficit to a
level that would allow it to regularly borrow on the
free market while staying with the Euro. Moreover, an
economic examination also raises the question whether
the approach of consistently reducing government
expenses will only serve to further undermine Greece’s
economic growth.
However, even just the uncertainty regarding Greece’s
further development and possibly resulting consequences
for the financial system will in our opinion suffice to
decrease the trust of institutional market participants
in each other in the longer term, and lead to a shortage
of available liquidity in the market. As a consequence,
we also believe that the European Central Bank will
continue in its efforts of not raising the base rate where
possible; given the current level of 1.0 % for the Euro
zone as compared to the US (0 % - 0.25 %), Japan
(0 % - 0.10 %) or the United Kingdom (0.5 %), any further
exacerbation of the situation would offer the central
bank additional leeway for further reductions in the
base rate, regardless of the resulting inflationary risks.
In our opinion, this uncertainty originating in the Euro
zone will also affect the further course of the EUR/USD
exchange rate. While the US government deficit conti-
nues to reach new highs, it appears that the political
disputes in Washington regarding the required approval
to raise the upper limit of the budget deficit are at
times nothing more than “for show” disputes, which
occur in view of the imminent US presidential elections
on 6 November 2012. While S&P lowered the rating for
the US to AA+, there is little doubt regarding the credit
worthiness of the world’s largest economy in international markets – an economy that also surprised with
good news towards the end of 2011, which is why on a
fundamental level more pressure will be exerted on
the crisis-ridden Euro. Of course, the response to the
question whether the EUR/USD exchange rate will
break through the bandwidth of 1 EUR = 1.50 USD and
1 EUR = 1.20 USD (which has been held since 2008) and
head lower will depend to what degree the US Federal
Reserve will also be providing cheap liquidity in the
future. For the purpose of strengthening the currently
positive trends exhibited by the US real economy, it can
be expected that American monetary watchdogs will
not take any measures that would create shortages in
the money supply and put such developments at risk.
Therefore we are expecting that the EUR/USD exchange
rate will not leave the aforementioned corridor in the
next two years.
An overall weaker Euro will enable Germany’s exportoriented economy to overcome the economic downturn
in the global economy mostly without any problems.
At the same time, the general situation as described also
leads us to forecast that overall economic growth will
weaken.
With the realisation of these expectations, we expect
that our growth rates will also consolidate in 2012 and
2013, and we assume that we will not significantly
change but rather maintain our current balance sheet
indicators. As far as our lending is concerned, we are
expecting lower margins in some segments, but also
correspondingly higher risks, so that – in consideration
of increasing capital requirements and additionally
required risk provision resources – the annual results
for 2012 and 2013 will not be above the level of the
year 2011 (with a mainly unchanged balance sheet
sum) but rather will be slightly lower. We do not intend
to change the business or risk strategy alignment of
Annual Report
our company; rather, we will display a limited appetite
for risk during the next few years and will give more
consideration to the quality requirements for our assets
rather than our margin expectations.
An important milestone for the continued development
of our bank will consist of the conclusion of a new lease
agreement and associated relocation within Frankfurt
in 2013. A modern building with up-to-date technical
equipment will secure business activities at the Frankfurt location for the long term.
With regard to the Russian market, as a result of our
forecast high price level for raw materials exported from
that area, we are expecting a continuation of economic
stabilisation and growth at a slightly lower level, as well
as the continued cautious opening of the market for
Western investors. Based on our forecast, over the next
two years the current policy pursued by the Russian
Federation will continue to strive towards a sustained
improvement of the investment climate in Russia and
increasing the Russian market’s attractiveness for
foreign investors, in order to further reduce the country’s
dependence on raw material exports and allow it to
develop from a commodity exporter to a processor and
finisher of its own raw materials. We are in any case
expecting that German-Russian trade relations and
bilateral capital flows will see consistent growth in
2012 and beyond, even if the global economic climate
deteriorates.
24
25
Annual Financial Statement
Annual Report
Balance sheet
as at 31 December 2011 of VTB Bank (Deutschland) AG
Assets
EUR
1. Liquid funds
a) Cash balances
b) Credit balance with central banks
including:
with Deutsche Bundesbank EUR 51,182,302.27
previous year: EUR 46,033 thousand
EUR
1,226.47
51,182,302.27
1
46,033
51,183,528.74
2. Receivables from banks
a) Due on demand
b) Other receivables
420,485,668.93
1,432,631,710.20
3. Receivables from customers
including: secured through mortgages EUR 0.00
4. Debt securities and other fixed-interest securities
a) Bonds and debt securities
aa) from public issuers
including: eligible for use as collateral
at Deutsche Bundesbank EUR 17,667,881.14
previous year: EUR 26,006 m
ab) from other issuers
including: eligible for use as collateral
at Deutsche Bundesbank EUR 0.00
previous year: EUR 27,675 m
5. Shareholdings in other companies
6. Shares in affiliated companies
7. Intangible assets
a) Concessions, commercial trademarks and similar
rights and values as well as licenses for such rights
and values, purchased against payment
8. Tangible assets
9. Other assets
10. Accruals and deferrals
11. Deferred tax assets
Total assets
31/12/10
EUR 000s
46,034
1,231,921
600,592
1,853,117,379.13 1,832,513
1,871,486,863.47 1,308,142
17,667,881.14
26,006
243,318,536.90
231,520
260,986,418.04
257,526
73,741.15
74
437,208.29
400
517,417.00
549
530,789.00
596
102,767,322.83
23,218
78,613.09
80
21,500,971.59
36,135
4,162,680,252.33 3,505,267
Annual Report
Liabilities
EUR
1. Liabilities to banks
a) due on demand
b) with agreed term or notice period
2. Liabilities to customers
a) other liabilities
aa) due on demand
ab) with agreed term or
notice period
EUR
2,880,906,140.75
167,918,010.58
EUR
31/ 12/10
EUR 000s
2,786,859
41,169
3,048,824,151.33 2,828,028
73,298,299.11
16,296
666,251,136.21
739,549,435.32
360,366
376,662
376,662
3. Other liabilities
21,906,910.67
1,323
4. Accruals and deferrals
10,976,780.38
6,882
28,088,387.09
21,454
3,800
4,943
30,197
261,000.00
142
739,549,435.32
5. Provisions
a) Provisions for pensions
and similar obligations
b) Tax provisions
c) Other provisions
22,457,935.00
663,000.00
4,967,452.09
6. Fund for general bank risks
thereof: special items pursuant to § 340e
para. 4 HGB (German Commercial Act) EUR 261,000.00
7. Equity
a) Subscribed capital
b) Revenue reserves
ba) Legal reserve
bb) Other revenue reserves
66,467,944.56
66,468
6,646,794.46
188,918,170.14
195,564,964.60
51,040,678.38
c) net income for the year
313,073,587.54
Total liabilities
6,647
143,961
150,608
44,957
262,033
4,162,680,252.33 3,505,267
1. Contingent liabilities
Liabilities from guarantees and indemnity agreements
13,422,795.66
35,470
2. Other commitments
Irrevocable undrawn credit lines
88,152,996.81
57,680
28
29
Annual Report
Profit and Loss Account
of VTB Bank (Deutschland) AG for the period from
1 January to 31 December 2011
Expenses
EUR
EUR
1. Interest expenses
2. Commission expenses
3. General administrative expenses
a) Personnel expenses
aa) Salaries and wages
ab) Social security contributions
and expenses for pensions
and support
including:
EUR
46,064,857.16
2010
EUR 000s
27,644
7,415,551.92
5,131
11,433,041.30
10,069
1,680,565.77
1,858
for pensions EUR 748,494.99
previous year: EUR 930 thousand
13,113,607.07
b) Other administrative expenses
11,927
20,161,361.17
5,769
17,696
577,618.92
616
5. Other operating expenses
2,005,635.60
1,857
6. Depreciation and value adjustments for receivables
and certain securities as well as allocations to
provisions relating to the lending business
9,900,434.01
22,519
51,000.00
390
163,040.00
903
24,199,042.43
22,797
3,185.00
3
51,040,678.38
44,957
161,582,404.59
144,513
4. Depreciation and value adjustments
for intangible and tangible assets
7. Expenses from loss takeover
8. Extraordinary expenses
9. Taxes on income and earnings
of which expenses or income from
deferred taxes EUR 14,634,014.80
10. Other taxes, if not shown under item 5
11. Earnings for the year
Total expenses
7,047,754.10
Annual Report
Income
EUR
1. Interest income from
a) Loans and money market transactions
b) Fixed-income securities and
debt register claims
2. Commission income
3. Net income from trading portfolio
of which allocation to fund for general
bank risks EUR -119,000.00
4. Income from write-up of shareholdings,
Interests in affiliated companies and securities
Deemed equivalent to long-term assets
5. Other operating income
EUR
119,394,090.55
2010
EUR 000s
94,706
19,750,061.87
139,144,152.42
24,457
119,163
19,677,232.88
21,787
1,061,787.41
456
463,935.94
5.232.686,40
1,235,295.94
2,347
760
161,582,404.59
144,513
51,040,678.38
44,957
2. Profit carried forward from previous year
0.00
0
3. Allocation to profit reserves
a) to statutory reserve
b) to other profit reserves
0.00
0.00
0
0
51,040,678.38
44,957
Total earnings
1. Annual profit
4. Retained earnings
30
31
Notes
Annual Report
Notes
Applicable Regulations
The annual financial statements of VTB Bank (Deutschland)
AG for 31 December 2011 have been prepared according
to the relevant regulations of the German Commercial
Code (HGB), the Regulations on the Accounting of Banks
and Financial Institutions (RechKredV) and the German
Stock Corporation Act (AktG). The account form was used as
the basis for the profit and loss account. The statutory offset
options for the profit and loss account have been utilised.
Insofar as information can be optionally included in the
balance sheet or the Notes, such information has been
included in the Notes.
applied on the straight-line method in accordance
with the expected useful life based on the depreciation rates recognised for tax purposes. Low-value
assets up to EUR 150 net are fully written-off in the
year they are acquired, while low-value assets up to
EUR 1000 net are evenly depreciated over five years
in accordance with tax provisions. The bank is not
utilising the option under sec. 248 para. 2 HGB.
Other assets are shown at the nominal value or the
attributable value on the balance sheet date.
Prepaid expenses consist of expenses paid before
the balance sheet date that relate to expenses for a
certain period after that date. This item is reversed
over the term of the underlying transactions.
Accounting and Valuation Methods
Liabilities are entered at their repayment amount.
The accounting and valuation methods were not
changed since the previous year.
Provisions for pensions and other liabilities were
established on the basis of actuarial appraisal. Tax
provisions and other provisions that refer either
to provisions for uncertain liabilities or imminent
losses from pending transactions were created in
accordance with sec. 253 para. 1 HGB based on a
reasonable business assessment. Provisions with a
residual term of more than one year are discounted
pursuant to sec. 253 para. 2 sentence 1 HGB.
Pursuant to sec. 340a in connection with sec. 249
para. 1 sentence 1 previously 2 HGB, the bank has
verified whether it is required to create a provision in
the non-trading portfolio for a possible commitment surplus from transactions with interest-related
financial instruments. All balance sheet and offbalance sheet interest-related financial instruments
outside of the trading portfolio were included, based
on the bank’s portfolio structure. The present value
approach was selected for this purpose. Payment
flows of the financial instruments in the non-trading
portfolio are discounted at term-congruent interest
rates. Risk and administrative costs are included as a
discount on the payment flows. The calculations did
The cash reserve is shown on the balance sheet at
the nominal value.
Receivables and securities of the liquidity reserve
are valued in strict compliance with the lower cost
or market principle. On the other hand, securities
treated as fixed assets are valued in accordance with
the moderate lower of cost or market principle.
Where credit risks and country risks were identified,
allowances and country risk provisions were provided.
In addition, general allowances and provisions cover
deferred credit risks.
Holdings and interests in affiliated companies are
entered at acquisition costs or the lower attributable
value on the balance sheet date. Write-ups are made
if the reason for former depreciations no longer
apply.
Fixed and intangible assets are shown at acquisition costs less regular depreciation. Depreciation is
Annual Report
34
35
not lead to a commitment surplus, so that there was
no requirement to create a provision for the same on
the balance sheet date.
The deferred income item refers to earnings before
the balance sheet date that relate to earnings for
a certain period after that date. This item is reversed
over the term of the underlying transactions.
The fund for general bank risks was endowed in
accordance with the provision of sec. 340e para. 4 HGB.
Accordingly, every business year an amount corresponding with at least 10 percent of net earnings
from the trading portfolio must be allocated to the fund
for general bank risks, and shown separately.
Equity is the result of the residual parameter from
the sum of assets shown on the balance sheet less
obligations shown on the balance sheet. The share
capital is shown on the balance sheet at the nominal
value.
Currencies are converted pursuant to the principles
set out in sec. 340h HGB. Fixed assets in foreign
currencies are converted into Euro at the acquisition
rate, as long as there is no special cover in this
regard. The mean exchange rate on the balance sheet
date is used for assets and debt in foreign currency.
On the balance sheet date, open foreign-exchange
transactions were valued at the corresponding spot
or forward rate as per balance sheet date. For the
conversion of pending forward transactions, which
hedge interest-bearing balance sheet items, the swap
amounts were delineated on a time-proportionate
basis and posted under the item “Other liabilities”,
together with the spot rate differences. There were no
open interest-related forward transactions and forward transactions with other price risks on the balance
sheet date.
Valuation units pursuant to sec. 254 HGB were not
created.
Annual Report
Notes to the Annual Financial Statement 2011
Receivables, securities and liabilities refer solely to nonsecuritised assets and obligations.
I. Breakdown of Residual Terms
31/12/2011
in EUR 000s
Other receivables from banks
of which with a residual term of up to three months
three months to one year
between one and five years
accrued interest
1,432,632
1,103,690
256,928
69,897
2,117
Receivables from customers
of which with an indefinite term with a residual term of up to three months
three months to one year
between one and five years
more than five years
accrued interest
1,871,487
2,634
132,290
236,112
1,359,159
130,584
10,708
Liabilities to banks with agreed term
or notice period
of which with a residual term of
up to three months
three months to one year
between one and five years
more than five years
accrued interest
167,918
140,352
18,734
8,000
832
Other liabilities to customers with agreed term
or notice period
of which with a residual term of
up to three months
three months to one year
between one and five years
more than five years
accrued interest
666,251
33,857
35,100
449,334
135,667
12,293
Annual Report
II. Foreign Currency Holdings
in EUR 000s
Assets
Debt
31/12/2011
1,765,679 |
1,761,567 |
31/12/2010
1,713,377 |
1,710,983 |
III. Relations with Affiliated companies and companies in which
participations are held
in EUR 000s
Receivables from banks
Receivables from customers
Miscellaneous assets
Liabilities to banks
Liabilities to customers
Miscellaneous liabilities
Contingent liabilities
Affiliated |
companies |
50,291 |
700 |
663 |
318,755 |
189 |
95 |
77 |
Previous | Shareholdings | Previous |
year |
|
year |
87,571 |
- |
-|
1,000 |
- |
-|
234 |
- |
-|
152,981 |
- |
-|
1,206 |
- |
-|
371 |
16 |
-|
1,047 |
- |
-|
IV. Allocation of Income broken down by Geographic Markets
in EUR 000s
Interest income
Commission income
Net income from trading operations
Other operating income
Domestic |
39,820 |
3,576 |
58 |
416 |
Foreign |
99,324 |
16,101 |
1,004 |
819 |
Total |
139,144 |
19,677 |
1,062 |
1,235 |
V. Development of Fixed Assets
Intangible assets/Tangible fixed assets
Assets
schedule
in EUR 000s
Intangible
assets
Fixed assets /
Operational
and business
equipment
Acquisition | Additions | Disposals | Accumulated | Residual | Depreciation |
Residual |
costs |
Depreciation | book value | current year | book value, |
prior year |
31 Dec |
4,233 |
247 |
0 |
3,963 |
517 |
279 |
549 |
2,756 |
234 |
0 |
2,459 |
531 |
299 |
596 |
Amortisation and depreciation was calculated in accordance with the rates recognised for tax purposes.
36
37
Annual Report
VI. Holdings of VTB Bank (Deutschland) AG pursuant to sec. 285 no.11 (HGB)
Name/Registered office
Ost-West Vermögensanlagen GmbH
Frankfurt am Main
Russ Euro EEIG
London
Share |
in percent |
Shareholders |
capital in EUR m | 2011 result |
EUR |
100.00 |
0.40 | ./. 46,830.03 |
33.33 |
0.00 |
The subsidiary Ost-West Vermögensanlagen GmbH,
Frankfurt am Main, is of subordinate importance for the
representation of VTB Bank (Deutschland) AG’s assets,
financial and earnings position, pursuant to sec. 296
para. 2 HGB. A profit and loss transfer agreement has
been concluded with Ost-West Vermögensanlagen GmbH.
0.00 |
VII. Financial Assets and Securities
a) Financial assets
Assets
Acquisitions | Additions | Disposals | Changes during |
Residual |
the year | book value |
schedule
costs |
31 Dec |
in EUR 000s
Shareholdings
74 |
- |
- |
- |
74 |
Shares in affiliated
38 |
- |
-1* |
437 |
companies
400 |
Fixed-income
76,121 |
8,292|
3,282** |
152,389 |
Securities
81,278 |
Total
81,752 |
76,159 |
8,292 |
3,281 |
152,900 |
Residual |
book value |
previous |
year |
74 |
400 |
81,278 |
81,752 |
* The change results from EUR/RUB exchange rate effects.
** The change results from EUR/USD exchange rate effects.
The valuation of fixed-income securities in long-term
assets at the moderated lowest value principle means
that depreciation of EUR 5,994 thousand was avoided.
Reallocations of fixed-interest securities from the
liquidity inventory to the asset inventory are contained
in additions at an amount of EUR 48,189 thousand.
These securities were not amortised, since repayments
are made at the nominal value at the end of the term,
as long as the issuer is not facing financial difficulties. There were no indications in this regard at the
time the annual financial statements were prepared. b) Securities/Shareholdings/Affiliated companies
in EUR 000s
Fixed-interest securities (without accrued interest)
Shareholdings
Shares in affiliated companies
Total |
255,100 |
74 |
437 |
Negatiable |
255,100 |
- |
- |
Listed |
255,100 |
-|
-|
Annual Report
Securities of EUR 74,272 thousand (nominal) become
due in 2012. The value of negotiable securities not
valued at the lowest value amounts to EUR 152,389
thousand. These securities are separately allocated to
the banking book.
VIII. Other Assets and Liabilities
Other assets of EUR 102,767 thousand consist mainly
of receivables from European banks from so-called
margin accounts, totalling EUR 102,062 thousand.
Other liabilities of EUR 21,907 thousand consist mainly of negative replacement values for swap transactions amounting to EUR 20,778 thousand.
IX. Provisions
Pension provisions of EUR 22,458 thousand were
calculated in accordance with HGB stipulations based
on actuarial methods.
Pension obligations were valued in accordance with
accepted actuarial principles, using the so-called
“projected unit credit method” (PUC method). The
provision amount pursuant to the PUC method is
defined as the actuarial present value of pension
obligations generated by the employees up to that
point pursuant to the pension formula and vesting
provision, based on their past working hours.
The “2005 Guidelines Tables” by Klaus Heubeck were
used as the biometric calculation in this regard. The
amount of provisions was calculated in consideration
of the following trend assumptions:
Actuarial interest rate p.a.:
Salary increase trend p.a.:
Pension progression trend p.a.:
5.14 %
3.00 %
1.75 %
The conversion of the valuation of pension provisions
according to BilMoG in 2009 resulted in an additional
one-time provision requirement totalling EUR 2,446
thousand. The transitional rules pursuant to
sec. 67 para. 1 sentence 2 EGHGB was applied and
an amount of EUR 163,000 was allocated to pension
provisions (one-fifteenth of the difference is EUR
163,000). The allocation is shown as extraordinary
expenses in the Profit and Loss Account. The amount
of EUR 1,217 thousand resulting from the initial
application, which is not shown in the balance sheet,
is allocated to the pension provisions during the
remaining transitional period.
Other provisions of EUR 4,967 thousand mainly
consist of expenses for annual financial statements,
labour, the archiving of business documents and
account maintenance fees.
Expenses from the compounding of longer-term
provisions to the amount of EUR 1,203 thousand is
included in other operating expenses.
38
39
Annual Report
X. Taxes
Taxes on income relate to the legal tax burden, taking
into account existing tax losses carried forward with
respect to income and business taxes, as well as the
changes to deferred taxes.
and deferred tax expenses of EUR 14,634 thousand.
Tax expenses for taxes on income are made up of
EUR 9,466 thousand from ordinary business activities
for the year 2011, as well as expenses for the previous year totalling EUR 99thousand.
Tax expenses of EUR 24,199 thousand result from taxes on income in the amount of EUR 9,565 thousand
XI. Deferred Taxes
The bank has booked deferred taxes for losses carried
forward and differences between the tax balance
sheet and the trade balance sheet. With respect to
corporate income tax, we have taken into account a
tax rate of 15 % and a 5.5 % solidarity surcharge on
corporate income tax. A business tax of 3.5 % and an
assessment rate of 460 % was used for the city
of Frankfurt am Main. The differences between the
tax balance sheet and balance sheet are based
on risk provisions, valuations and discount rates that
vary for tax purposes. There were no deferred tax
liabilities on the closing date.
XII. Subscribed Capital
in EUR 000s
Status at end of financial year – 1,300 no-par shares subject to transfer restrictions
66,468
VTB Bank (Austria) AG, Vienna, held all 1,300 shares
in the company’s subscribed capital during the entire
financial year.
XIII. Revenue Reserves
Revenue reserves of EUR 195,565 thousand consist
of statutory reserves of EUR 6,647 thousand and other
profit reserves of EUR 188,918 thousand.
Hence the other profit reserves increased during
the business year from EUR 143,961 thousand to
EUR 188,918 thousand.
The statutory reserve is 10 % of the subscribed capital
pursuant to sec. 150 para. 2 AktG.
As at 31 December 2011, the bank shows deferred
taxes of EUR 21,501 thousand. Hence an amount equal
to EUR 21,501 thousand in the reserves is blocked for
distribution. The retained earnings of the previous year (EUR 44,957
thousand) were allocated to other profit reserves pursuant to the resolution of the Shareholders’ Meeting.
Annual Report
XIV. Income Statement Items
Other operating expenses of EUR 2,006 thousand
consist mainly of interest expenses of EUR 1,309
thousand in connection with the compounding of
pension provisions.
Other operating income of EUR 1,235 thousand
mainly consists of earnings from cost transfers and the
services within VTB Group totalling EUR 702 thousand.
XV. Annual result and recommended appropriation of profits
The bank’s income statement shows an annual profit
of EUR 51,040,678.38.
It is recommended to the Shareholders’ Meeting that
retained earnings of EUR 51,040,678.38 are distributed
to the shareholders.
XVI. Forward Transactions/Derivative Financial Instruments
Derivative financial instruments refer solely to currency
swaps that are used to hedge foreign currency positions
posted under asset and liabilities side. The currency
swaps are valued using a theoretical pricing method
based on a swap currency curve. Forward currency
swaps of EUR 485.5 million existed on the balance
sheet date. Following the market valuation method,
this results in a positive market value of EUR 0.1 million and a negative market value of EUR 21.1 million.
In addition, currency cash swaps of EUR 1.5 million
also existed on the balance sheet date, for which the
market valuation method resulted in a positive market
value of EUR 1,000 and a negative market value of
EUR 1,000. The book value of the currency swaps is
shown in other liabilities at an amount of EUR 20.8 million.
All forward currency transactions are allocated to the
banking book. The risk of the instrument consists of
the counterparty’s failure to perform at maturity as
per the agreement.
XVII. Contingent Liabilities and other Commitments
in EUR 000s
a) Contingent liabilities
aa) Liabilities from guarantees and warranty agreements
of which:
Letters of Credit
Advance payment and payment guarantees
Other guarantees
b) Other commitments
ba) Irrevocable credit commitments
13,423
9,171
4,247
5
88,153
40
41
Annual Report
The contingent liabilities item includes collateral of
EUR 12.0 million.
For the purpose of estimating the latent risk of contingent liabilities and other obligations, an average
model based on the past – supplemented with a risk
surcharge – is used and the corresponding reserves
are created. Due to the financial situation of our customers, we are of the view that our risk assessment
and resulting provisions are appropriate. In addition,
individual risk provisions are established when acute
risks occur.
XVIII. Consolidated Financial Statements and Consolidated Companies
The company is a wholly-owned subsidiary of VTB Bank
(Austria) AG, Vienna, which in turn is a wholly-owned
subsidiary of JSC VTB Bank, St. Petersburg.
The company preparing the consolidated financial
statements for the largest group of companies is OAO
Bank VTB domiciled in 29, Bolshaya Morskaya Street,
St. Petersburg, 190000 Russia. The consolidated financial statements may be viewed at OAO Bank VTB’s
registered office in St. Petersburg. In addition, they
are also published on the internet at www.vtb.ru.
The company preparing the consolidated financial
statements for the smallest group of companies is
VTB Bank (Austria) AG, Vienna, in Austria. The subgroup financial statements may be viewed at the
registered office of VTB Bank (Austria) AG in Vienna;
they are also published on the internet at www.vtb.ru.
XIX. Total auditor fees
The expenses and fees for our auditors amounted to
EUR 437,000 for the financial year. They are broken
down as follows:
EUR 000s |
Auditing services
268 |
Other certification services
3 |
Tax advisory services
40 |
Other services
126 |
Total
437 |
Of which for prior years |
EUR 000s |
-|
-|
-|
-|
-|
XX. Average Number of Employees during the Business Year
Frankfurt Head Office
Moscow Representative Office
Total
1
additionally five employees with external contracts
total |
84 |
11 |
85 |
female |
34 |
1 |
35 |
male |
50 |
0|
50 |
Annual Report
XX. VTB Bank (Deutschland) AG Management Bodies
Supervisory Board
Olga Dergunova, Moscow
Chairperson
Member of the Management Board of OAO Bank VTB
Igor Strehl, Vienna
Acting Chairman
Member of the Management Board of VTB Bank (Austria) AG
Alexander Yashnik, Moscow
Alexander Titov, Moscow
Florian Dorsch, Darmstadt
Stephan Schwind, Erlensee
Managing Director of OAO Bank VTB
Vice President of OAO Bank VTB AG
Bank employee, VTB Bank (Deutschland) AG
Bank employee, VTB Bank (Deutschland) AG
Management Board
Valeriy V. Lyakin, Bad Homburg
Chairman
Axel Breitbach, Niedernhausen
Member of the Management Board
42
43
Annual Report
Remuneration paid to Members of the Executive Bodies
With regard to remunerations paid to members of the
Management Board, the Bank utilised the exemption
provisions of sec. 286 para. 4 HGB in connection with
sec. 285 no. 9 HGB.
Payments to former members of the Management
Board amounted to EUR 456 thousand, while the
pension provisions for this group totalled EUR 11,741
thousand. The remuneration for members of the
Supervisory Board amounted to EUR 137 thousand.
No loans were granted to the Supervisory Board and
the Executive Management.
Frankfurt am Main, 13 February 2012
THE MANAGEMENT BOARD
V. Lyakin
A. Breitbach
Annual Report
Auditor’s Report
We have audited the Annual Financial Statements
– consisting of Balance Sheet, Profit & Loss Account
and Notes to the Annual Financial Statements – including the accounting and the Management Report
of VTB Bank (Deutschland) AG, Frankfurt am Main, for
the financial year from 1 January 2011 to 31 December 2011. The accounting and the preparation of the
Annual Financial Statements and the Management
Report in accordance with German Commercial Law
are the responsibility of the Bank’s Management
Board. Our responsibility is to express an opinion on
the accounting system and the Management Report
based on our audit.
We conducted our audit of the Annual Financial Statements in accordance with Section 317 of the German
Commercial Code (HGB) and the generally accepted
standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer
(IDW). These standards require that we plan and
perform our audit such that material misstatements
affecting the presentation of net assets, the financial position and results of operations in the Annual
Financial Statements and the Management Report in
accordance with German accounting principles are
detected with reasonable assurance. Knowledge of
the business activities and the economic and legal
environment of the Bank and potential misstatements are taken into account in the determination of
audit procedures. The effectiveness of the internal
accounting-related control system and the evidence
supporting the disclosures in the books and records,
the Annual Financial Statements and the Manage-
44
45
ment Report are examined primarily on the basis of
random sampling within the framework of the audit.
Our audit also includes assessing the accounting
principles used and significant estimates made by
the Management Board, as well as an evaluation of
the overall presentation of the Annual Financial Statements and the Management Report. We believe that
our audit provides a reasonable basis for our opinion.
Our audit has not led to any objections.
In our opinion, at which we have arrived based on our
findings during the audit process, the Annual Financial Statements have been prepared in accordance
with legal requirements and give a true and fair view
of the net assets, financial and earnings position
of the Bank in compliance with principles of proper
accounting. The Management Report corresponds
with the Annual Financial Statements, presents an
accurate overall picture of the Bank’s position and
suitably describes both opportunities and risks for
future development.
Frankfurt am Main, 17 February 2012
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Christian F. Rabeling
Auditor
ppa. Andreas Hülsen
Auditor
Supervisory Board Report
During the reporting year, the Supervisory Board has
carried out the duties and authorities incumbent on it
by law and the articles of association.
The Supervisory Board hereby approves the management report and the annual financial statements,
which is hereby adopted.
It received regular information from the Management Board regarding the bank’s business developments. PWC AG Wirtschaftsprüfungsgesellschaft,
Frankfurt/Main, which was appointed as the auditor
by the Shareholders’ Meeting, has audited the
accounting, annual financial statements and the
management report, insofar as it discusses the
annual financial statements, and has not issued any
reservations.
The Supervisory Board would like to express its
gratitude and acknowledge the work performed by
the Management Board and employees during
the year 2011.
The Supervisory Board has noted the results of the
audit with agreement.
Pursuant to sec. 312 AktG, the Management Board
has prepared a report regarding relations to affiliated
companies for the 2011 business year; no complaints have been noted. PWC AG Wirtschaftsprüfungsgesellschaft has audited the report and issued the
following unqualified opinion:
“Following our audit, which we performed in accordance with professional standards, we confirm that:
1. the actual information contained in the report is
correct,
2.
the consideration given by the company in
relation to the legal transactions listed in the
report was not inappropriately high or that
disadvantages have been compensated.”
The Supervisory Board agrees with this audit result.
Following the final result of the audit by the Supervisory Board of the annual financial statements,
management report and the report of the Management Board regarding relations with affiliated
companies, the Board has not issued any reservations.
Frankfurt am Main, March 2012
THE SUPERVISORY BOARD
Nikolay A. Kuznetsov
Geschäftsbericht
Annual Report
46
47
Contact Information
VTB Bank (Deutschland) AG
Walter-Kolb-Straße 13
60594 Frankfurt am Main
Federal Republic of Germany
Phone: +49 69 /2168-0
Fax: +49 69 /2168-319
S.W.I.F.T.:
OWHB DE FF
E-Mail:
[email protected]
Internet:
www.vtb.de
Moscow Representative Office
B. Yakimanka Str. 1
119180 Moscow
Russian Federation
Phone: +7 495/777 08 23 or 777 08 24
Fax: +7 495/777 25 12
E-Mail:
[email protected]