51ST annual reporT 2012 araB BanK (SWITZerlanD) lTD.

Transcription

51ST annual report 2012
ARAB BANK (SWITZERLAND) LTD.
51ST annual report 2012
ARAB BANK (SWITZERLAND) LTD.
Summary
Board of Directors
CEO Message
6
8
Comments on profit and
loss statement
and balance sheet
Balance Sheet
Profit and Loss Statement Allocation of Earnings Statement of Cash Flows
14
16
17
19
notes to the Financial statements
1 - Business Activities and Personnel 2 - Accounting Policies and Valuation Principles 3 - Information on the Balance Sheet 4 - Information on Off-Balance Sheet Transactions 5 - Information on the Income Statement 6 - Eligible capital and required capital 20
22
24
34
36
37
Report of the Statutory Auditor 39
arab bank
51ST annual
report 2012
Arab Bank (Switzerland) Ltd. is an independent company, founded in 1962 according to Swiss law, specialized in asset
management and investment counselling
for a sophisticated clientele, in addition
Arab Bank (Switzerland) Ltd. is a sister
company of Arab Bank plc., Amman /
Jordan, a leading financial institution,
which has a wide network in the Arab
world and major financial centers.
to trade finance activities.
Head Office (as from 18 April 2012)
Geneva
10-12 Place de Longemalle
P.O. Box 3575
CH-1211 Geneva 3
Branch (as from 18 April 2012)
Zurich
Bahnhofstrasse 46
P.O. Box 2023
CH–8022 Zurich
www.arabbank.ch
www.arabbank.ch
Phone : +41 22 715 12 11
Fax : +41 22 715 13 11
Swift : ARBSCHZZ
Phone : +41 44 265 71 11
Fax : +41 44 265 73 30
Swift : ARBSCHZZ
Board of Directors
Abdel Hamid Shoman Chairman
Dr. Alfred Schwarzenbach Vice-Chairman*
Until 18 April 2012
Sabih T. Masri Member
Wahbé A. Tamari Member*
Antoine J. Raphael Member
Jean Zwahlen Member*
Dina Shoman Member
As from 18 April 2012
Alessandro Bizzozero Member*
As from 18 April 2012
Directly Reporting to
the Executive Management
Nadine Ruegg
Human Resources / Executive Director
As from 1st November 2012
Patrick Culliford
Credit & Trade Finance / Executive Director
Rani Jabban
Treasury Management / Executive Director
Lena Brirmi
Compliance / Associate Director
Mark de Snaijer
COO ad interim
As from 1st August 2012
Executive Management
Nasri Victor Malhamé CEO / General Manager
Jean Kamitsis Head of Wealth
Management / Deputy CEO
Richard Rochat CFO / Managing Director
As from 1st August 2012
Patrick Pillon Head of Legal & Compliance /
Managing Director
As from 1st September 2012
* Reference of independent board member
according to FINMA circular 2008 / 24 margin
number 10 (according to prior year)
Internal Audit
Dung Nguyen-Manh
Antoine Pangallo
Auditors
Deloitte SA
Board of
Directors
At the Ordinary General Meeting of
Shareholders held on 18 April 2012,
Ms. Dina M. Abdel Hamid Shoman and
Mr. Alessandro Bizzozero were elected
as new Members of the Board of Directors
for a term of office of four years, i.e.
until the Ordinary General Meeting of
Shareholders 2016.
Dr. Alfred Schwarzenbach, whose tenure
expired, decided to retire. The Board
of Directors thanks him for his commitment and dedication over the past 30
years and wishes him all the best in his
private future.
Deloitte SA was appointed as the Bank’s
auditors.
Mr. Antoine Raphaël has resigned from
the Board of Directors on 31 December
2012 as he was appointed Chief Executive Officer of the Bank effective as
of 1st January 2013.
We would like to take this opportunity
to thank our shareholders and clients
for their continued trust in Arab Bank
(Switzerland) Ltd. Also, we extend our
appreciation to Mr. Nasri V. Malhamé,
the management and staff for all their
contributions during the past year.
The Board of Directors
6 | 7 • arab bank (switzerland) Ltd. annual report 2012
CEO Message
2012 was another challenging year for
the banking industry during which Arab
Bank (Switzerland) Ltd. strengthened
its business model.
Global Economy
The year 2012 proved to be yet another challenging one. Investors regularly
awaited critical key events such as EU
summits, German constitutional rulings, or
Fed meetings. Various serious and critical
situations were fixed at the 11th hour (from
the US fiscal cliff to the Greek bailouts
and other events) against a backdrop of
low growth. In hindsight, the biggest risk
for investors was the threat of underestimating policy measures and political
leaders’ determination and their impact
on the markets.
The effectiveness of central bank interventions is expected to continue to diminish and investors will in turn need to
focus on the effect of a potential exitstrategy by these same central banks.
Identifying sources of risk will be crucial in order to navigate through the
challenging year ahead. Anticipating
shifts will be key in 2013 as the global
economy may continue to display a
lack of sustained recovery.
Arab Bank (Switzerland) Ltd. activity
The change program adapted by the
Bank over the past three years, continued during 2012. Like all players
in the financial services industry, we
faced additional regulatory challenges,
which the Bank managed to cope with
successfully.
In 2012 our Wealth Management
Department enhanced its Investment
Advisory services and further expanded its product platform. Investment
Management was able to grow its assets
under management despite a difficult
and complex investment environment.
At the same time, the Bank focused
on new business acquisitions from its
traditional market, the MENA region,
with the help of its sister institution,
Arab Bank plc. As a result of the Wealth
Management team efforts, the Bank ‘s
return on assets under management
increased from 58 bps to 63 bps. The
Bank also managed to increase efficiency by decreasing its cost / income
ratio from 80 % to 76 % through better
project management, reduction of staff
and relocation of premises in Zurich.
As I am leaving the Bank to pursue other
opportunities with Arab Bank plc Group,
I would like to thank the Chairman and
the Board for their continued support,
as well as the staff and the clients of
Arab Bank (Switzerland) Ltd. for their
support and trust.
The Trade Finance Department pursued
the growth trend of its activities by continuing to actively add new customers to
the Bank’s portfolio and develop its existing client base. In line with the Bank’s
profile, MENA destinations and origins
remained the department’s core business.
The Bank achieved its income objectives
despite the challenging economic and
regulatory environment. Whilst the Trade
Finance department was focused on
achieving adequate returns, all transactions were always executed using a
careful risk based approach.
Nasri Victor Malhamé
Financial Highlights
CHF million
2012
2011
Variance
CHF
Variance
%
2 746,0
2 454,9
291,1
12%
512,8
525,5
- 12,7
- 2%
Securities and financial investments
384,6
409,7
- 25,1
- 6%
Shareholders’ equity (before profit distribution)
493,6
492,9
0,7
0%
Net interest income
21,2
20,7
0,5
2%
Results from commission and service fee activities
21,1
18,6
2,5
14%
Balance Sheet
Balance sheet total
Due from customers
Profit and Loss Statement
Results from trading operations
Operating expenses
1,7
3,1
- 1,4
- 44%
- 33,9
- 33,6
- 0,3
1%
Gross Profit
10,7
8,8
1,9
22%
Depreciation, valuation adjustments/provisions
- 1,6
- 4,3
2,7
- 63%
Profit before Extraordinary Items and Taxes
9,1
4,4
4,7
105%
- 0,1
0,6
- 0,7
- 117%
Tax Expenses
- 3,0
- 3,0
0,0
- 1%
Net Income
6,0
2,0
4,0
197%
Extraordinary income, net
Comments on
Profit and Loss
Statement and
Balance Sheet
Profit and Loss Statement
The gross profit increased by CHF 1.9
million compared to the previous year
mainly due to higher commission and
service fees. The Bank’s net income increased from CHF 2.0 million in 2011 to
CHF 6.0 million in 2012 (+197%).
Interest income declined by about CHF
3.9 million which was mainly driven by
low interest rates and the erosion of
margins. However, net interest income
increased by CHF 0.5 million due to the
decrease in interest expenses by CHF
4.4 million.
Results from commission and service fee
activities increased by CHF 2.5 million
(+14%). This increase is attributable to
higher trade finance and private banking activities and to adjustments in the
pricing of the Bank’s services.
The result from trading operations decreased by CHF 1.4 million (-44%) mainly
due to general market conditions.
Operating expenses slightly increased
due to more stringent regulatory
conditions.
Balance Sheet and Off-Balance Sheet
The Balance Sheet increased by CHF
291 million mainly due to higher liquid
assets (+CHF 413.9 million) inclusive of
the Swiss National Bank balance at CHF
487.4 million. This was partially offset
by the lower Banks’ deposits (-CHF 65.2
million) and a smaller securities trading
portfolio (-CHF 52.9 million).
There was minor impact on profitability from foreign exchange as rates were
relatively stable (USD and EUR rates
were at 0.92 and 1.21 respectively as at
December 31, 2012 compared to 0.94
and 1.22 as at December 31, 2011).
Loans to customers were slightly lower
than in the previous year (-CHF 12.7
million), while mortgages remained
stable. Furthermore, the Bank’s own
investments decreased by about CHF
25.1 million to CHF 416.6 million of which
6% from trading activities, 87% from
financial investment activities and 8%
from participations.
Estimated tax expenses were the same
As a result of the slight reduction in lending activities, the contingent liabilities
and the confirmed credits decreased in
the reporting period. Mainly due to the
low money market interest rates, fidu-
as in the previous year.
ciary deposits showed a slight decline.
Assets under Management decreased by
CHF 88.1 million and amounted to CHF
2’900.5 million as at December 31, 2012.
balance sheet
AT december 31, 2012
2012
CHF
2011
CHF
VARIANCE
CHF
Assets
Liquid assets
2012
CHF
2011
CHF
Variance
CHF
Off-balance sheet transactions
500 548 264
86 659 473
413 888 791
Contingent liabilities
163 261 866
176 046 223
1 150 803 685
1 216 015 622
- 65 211 937
Irrevocable commitments
95 553 731
65 851 853
29 701 878
Due from customers
512 820 677
525 506 366
- 12 685 689
Confirmed credits
11 840 534
26 866 818
- 15 026 284
Mortgages
98 475 620
97 497 423
978 197
Securities and precious metal trading portfolios
24 030 795
76 976 753
- 52 945 958
360 536 616
332 706 898
27 829 718
- 136 654 236
Due from banks
Financial investments
Participations
Fixed assets
Accrued income and prepaid expenses
Other assets
Total Assets
Total subordinated claims
32 001 453
32 000 106
1 347
51 562 289
49 932 000
1 630 289
5 387 181
18 975 933
- 13 588 752
9 840 007
18 671 157
- 8 831 150
2 746 006 587
2 454 941 731
291 064 856
142 244 200
145 818 700
- 3 574 500
1 306 122 634
1 170 644 834
135 477 800
907 158 151
742 353 273
164 804 878
Derivative instruments :
- Contract volume
707 160 691
843 814 927
- Positive replacement value
7 161 046
18 042 147
- 10 881 101
- Negative replacement value
8 886 394
17 536 612
- 8 650 218
965 731 192
1 067 826 196
- 102 095 004
Fiduciary transactions
Liabilities and shareholders’ equity
Due to banks
Due to customers
Accrued expenses and deferred income
8 299 085
8 099 692
199 393
10 335 950
20 782 028
- 10 446 078
20 464 466
20 120 722
343 744
80 381 634
80 381 634
0
26 700 000
26 700 000
0
General legal reserve
22 735 500
22 735 500
0
Legal reserves from capital contribution
14 850 000
17 849 900
- 2 999 900
Other liabilities
Valuation adjustments and provisions
Reserves for general banking risks
Share capital
Other reserves
342 500 000
342 500 100
- 100
Retained earnings brought forward
434 049
751 412
- 317 363
Net income
6 025 118
2 022 637
4 002 481
2 746 006 587
2 454 941 731
291 064 856
Total liabilities and shareholders’ equity
- 12 784 357
profit and loss
statement
Allocation
of earnings
Revenues and expenses
from ordinary banking activities
2012
CHF
2011
CHF
VARIANCE
CHF
Results from interest activities :
Interest and discount income
Interest and dividend income on trading portfolio
Interest and dividend income on
financial investments
Interest expenses
Total net interest income
- 317 363
6 459 167
2 774 049
3 685 118
5 340 000
5 340 000
- 758 359
5 685 157
5 991 145
- 305 988
- 8 480 258
- 12 899 831
4 419 573
The Board of Directors proposes :
469 587
Distribution of a dividend of 20 %
on the share capital (2010 : 20 %)
Retained earnings at the end of period
Dissolution of legal reserves
from capital contribution
- 3 000 000
3 000 000
Dissolution of other reserves
5 779 472
5 036 485
742 987
15 158 874
13 281 903
1 876 971
517 817
1 292 041
- 774 224
- 375 271
- 1 040 166
664 895
21 080 892
18 570 263
2 510 629
1 683 787
3 050 495
- 1 366 708
- 42 351
- 458 063
415 712
Real estate income
710 675
680 398
30 277
11 791
- 152 732
164 523
680 115
69 603
610 512
- 22 588 022
- 23 514 388
926 366
- 11 322 279
- 10 103 950
- 1 218 329
- 33 910 301
- 33 618 338
- 291 963
10 688 206
8 756 149
1 932 057
- 1 436 511
- 2 312 874
876 363
- 118 756
- 2 000 000
1 881 244
9 132 939
4 443 275
4 689 664
1 624 713
596 410
1 028 303
- 1 757 534
- 17 049
- 1 740 485
- 2 975 000
- 3 000 000
25 000
6 025 118
2 022 637
4 002 481
Allocation to legal reserve
Allocation to other reserves
Commission income on other services
Commission expenses
Total result from commission
and service fee activities
Result from trading operations
Other ordinary results
Total other ordinary results
Operating expenses :
Personnel expenses
Other operating expenses
Total operating expenses
Gross profit
Depreciations and write-offs on non-current assets
Valuation adjustments, provisions and losses
Profit before extraordinary items and taxes
Net income
4 002 481
751 412
1 018 102
Commission income on securities
and investment transactions
Taxes
2 022 637
434 049
259 743
Commission income on lending activities
Extraordinary expenses
6 025 118
- 2 885 639
20 684 126
VARIANCE
CHF
26 574 710
21 153 713
2011
CHF
Net income
23 689 071
Results from commission
and service fee activities :
Extraordinary income
2012
CHF
Surplus to be carried forward to retained earnings
1 000 000
1 000 000
119 167
434 049
- 314 882
6 459 167
2 774 049
3 685 118
To the shareholders registered in the share book
at April 19, 2013, per share of CHF 0.75 par value
less 35% Swiss withholding tax
0,15000
- 0,05250
0,15000
- 0,02301
0,00000
- 0,02949
Net per share
0,09750
0,12699
- 0,02949
As stated above
Upon acceptance of this proposal,
the dividend will be paid as follows :
Statement
of Cash Flows
2012
Source APPLICATION
of funds
OF FUNDS
CHF 1000
CHF 1000
2011
Source APPLICATION
of funds
OF FUNDS
CHF 1000
CHF 1000
Cash-flow from operating results
Net income
Depreciation and write-offs on
non-current assets
6 025
2 023
1 437
2 313
344
4 824
Allocation to reserves for general banking risks
13 588
1 045
199
Dividend of preceding year
762
5 340
Balance
5 340
16 252
4 021
Cash-flow from investment activities
Participations
1
32 000
Real estate
1 735
774
Fixed assets
1 331
32
3 067
32 806
Balance
Cash flow from banking operations
Medium and longterm operations (>1 year)
Due to banks
Due to customers
Due to customers savings
and investment accounts
Other liabilities
Due from banks
10 446
80
9 117
372
Due from customers
Mortgages
978
Other assets
12 449
27 830
40 022
8 831
8 147
Shortterm operations
Due to banks
135 478
160 228
Due to customers
164 805
14 408
Due from banks
65 132
21 027
Due from customers
12 686
46 017
Securities and precious metal
trading portfolios
52 946
13 351
Money market instruments
386
Liquidity
Cash
413 889
Balance
Total source of funds
Total application of funds
13 185
16 252
73 623
36 827
36 827
16 252
36 827
Notes to the Financial Statements
1 - Business
Activities
and Personnel
Arab Bank (Switzerland) Ltd. is constituted according to Swiss law as an
independent company. It started operations in 1962 in Zurich and opened a
branch in Geneva in June 1964. The Bank
headquarters have been transferred to
Geneva on the 18th April 2012.
The Bank is a public company with 20’451
shareholders, the same as the shareholders of Arab Bank Plc in Amman, Jordan
at the end of 2012. As an independent
sister company it draws upon a wide
network of branches in the Arab world
and the world’s major financial centers.
The focus of the services of Arab Bank
(Switzerland) Ltd. is on providing asset
management and investment advisory, Trade Finance and credit-related as
well as financial planning services for
private, institutional, commercial and
corporate clients.
Arab Bank (Switzerland) Ltd. employed
92 people on a full-time equivalent basis
at the end of 2012 (previous year: 92).
BUSINESS ACTIVITIES
Wealth Management
Wealth Management caters and responds to the private banking needs of
its predominantly Middle-Eastern clientele working closely with Arab Bank
Plc Group.
Investment & Advisory
Management (IM)
Investment Management complements
the service offered by Relationship
Managers including product screening,
due diligence reviews, creation of various products in each asset class, portfolio analysis, investment proposals and
portfolio management.
Treasury and Foreign Exchange
The Bank provides its clients with a
wide range of products and services
in Money Market, Foreign Exchange,
Precious Metals and Securities Trading.
Our team’s experience and know-how is
at our clients’ disposal to advise them on
their hedging and investment strategies.
Credit Activities
Arab Bank (Switzerland) Ltd. provides
a comprehensive range of credit instruments (loans, mortgages, guarantees,
bonds letters of credit) to its private
banking clients enabling them to fund
their commercial business or leverage
their private portfolios. The Bank has become an established trade finance player,
offering tailor-made solutions to trading
companies and exporters with a special
focus on those dealing with the MENA
region, making use of all possible synergies available within Arab Bank Plc
group of companies.
Outsourcing activities
The Bank has recently out-tasked part
of its IT operations to IBM. This out-
tasking is not considered as outsourcing
of essential IT services to third parties
as defined in FINMA circular 2008/7.
RISK MANAGEMENT &
CONTROL
General
The Bank has established internal policies and procedures in order to manage
and monitor the key risks to which it is
exposed. Whenever risks are taken, they
are identified, measured, monitored and
limited accordingly. The relevant guidelines, and regulations issued by FINMA
and Swiss Bankers Association, are adhered to.
In conformity with article 663b ch. 12 of
the Swiss Code of Obligations, the Board
of Directors formally reviews annually the
bank’s key risks and, whenever deemed
necessary, takes appropriate measures.
Credit Risks
Credits and loans are granted according
to clear rules, regulations and competencies. Lending ratios for all categories
of collateral have been defined. Credit
risks are mitigated by strict monitoring
of limits (counterparty, group, country)
and quality collaterals are assessed and
reviewed on a regular basis.
Market risks
The Bank defines various limits regarding
the nature, quality, currency and duration
of investments for the Banking and the
Trading Book. Beside the daily management of the market risks by Treasury,
the Bank’s Asset & Liability Committee
monitors these risks and adherence to
the limits on a continuous basis.
As a rule, risks of interest rate changes are minimized by funding loans with
matching maturities. The Bank optimizes
asset and liability management in accordance with the anticipated interest
rate variation and the limits granted.
It transacts for this purpose in derivative
financial instruments such as interest rate
swaps and options to improve consistency between the interest generated
by the monetary assets and liabilities.
The Bank defines limits for refinancing
gaps and monitors adherence to this
limits on a regular basis.
Liquidity Risks
The Bank ensures and monitors its liquidity in the context of the regulatory
requirements to the liquidity ratios.
Operational Risks
The Bank has clear policies, regulations
and procedures in place and maintains
an overall control infrastructure that is
regularly amended to changes occurring in the Bank and is validated by the
Board of Directors on a yearly basis.
Legal & Compliance Risks
The Bank uses standardized contracts
and agreements to mitigate the Legal
and Compliance risks. Compliance department is responsible for the ongoing review of requirements and new
developments from regulatory authorities. It also ensures that internal rules
and regulations are amended to reflect
these developments and that these rules
are met and adhered to. Furthermore,
the Bank has mechanisms in place to
regularly check Client databases and
monitor transactions.
2 - accounting
policies and
valuation
principles
General Principles
Accounting and valuation principles
are governed by the Swiss Code of
Obligations, the Federal Law on banks
and savings banks, and its execution
by the Articles of Association and the
directives issued by the Swiss Financial
Markets Supervisory Authority (FINMA).
The annual accounts are presented in
conformity with the FINMA circular
2008/2 - Accounting-banks.
Booking of positions
Transactions are entered in the balance
sheet following the trade date accounting principles.
The most important valuation principles
can be summarized as follows:
Foreign currency translations
Assets and liabilities denominated in
foreign currencies are translated into
Swiss francs at the exchange rates on
the balance sheet closing date. Income
and expenses are converted at the exchange rate in force on the transaction
date. Exchange gains and losses resulting from conversion into Swiss Francs
of positions and operations denominated in foreign currencies are booked to
Income from trading.
The main exchange rates applied at closing date were as follows :
31.12.2012 31.12.2011
USD0.915
0.939
EUR1.207
1.217
Liquid assets, money market
instruments
These items are capitalized at nominal
value. The unearned discount income on
money market instruments is accrued
over the term of such instruments.
Claims and liabilities in respect of
banks and customers, mortgage loans
These amounts are valued at their nominal value. Valuation adjustments are made
for identifiable risks. General provisions
exist for contingent risks. Lending against
collateral is made within the generally
accepted lending principles. These are
stipulated in the internal rules and regulations. The valuation of real estate is
based on market value, which is determined according to generally accepted
valuation methods. Interest and commission income, which is overdue for
more than 90 days, will only be booked
after payment.
Trading positions in securities
and precious metals
Trading positions are valued at market
prices on the balance sheet date. Profits
and losses on prices are booked to result from trading operations.
ning to maturity and booked to the “interest and dividend income on financial
investments”.
Participations
Participations, held as permanent investments, are recorded at acquisition
cost, less appropriate depreciation where
necessary. There is no need to draw up
a consolidated financial statement, as
its participation may be classified as
insignificant.
Fixed Assets
Fixed assets are stated in the balance
sheet at their cost price and depreciated using the straight-line method over
a period corresponding to the useful
economic life of the different types of
assets. The depreciation rates used are
as follows :
• Bank Building : maximum 50 years
• Building improvement costs :
maximum 10 years
• Furniture and fixtures : maximum 5 years
• IT hardware : maximum 3 years
Valuation Adjustments and Provisions
According to the principle of prudence,
valuation adjustments and specific provisions are made for all identifiable risks.
Amounts due at risk, that means amounts
Financial investments, acquired with the
intent to be held until maturity, are carried in the balance sheet under “financial
investments”. The difference between
the nominal value and the acquisition
cost is spread over the period remai-
due where there is a probability that the
customer cannot cover its outstanding
liabilities, will be valued on an individual basis. The decrease in value will be
covered by an individual value adjustment. The position “Other provisions”
is based on professional experience and
may have contained hidden reserves.
Reserves for general banking risks are
reserves constituted out of prudence
with the objective of covering latent
banking risks. They are net of tax.
Taxes
Taxes are calculated in accordance with
relevant tax laws and are either paid or
provisioned for.
Derivative instruments
The gross replacement values of derivative financial instruments (for the Bank’s
and clients’ accounts) reflect the market value of all open positions at closing
date. The positive and negative replacement values are respectively recorded in
Other assets and Other liabilities.
The Bank uses derivatives instruments for
its own account for the purpose of assets
and liabilities management. Derivatives
financial instruments transactions are
traded mainly on behalf of clients.
Definition Client Assets & Net Increase /
(Decrease) of Client Assets
Client assets are asset values of clients,
for which Arab Bank (Switzerland) Ltd.
renders investment and consulting services. Custody portfolios and asset values,
which are held exclusively for transaction and custodian purposes, are not
included in the client assets. The same
applies for loans and purely commercial
clients. The net increase / (decrease)
of client assets consists of the sum of
all individual money deposits and payments as well as security incoming and
outgoing deliveries, whereby new loans
and loan repayments are accounted for.
Interest and dividends credited to clients
as well as debit interest, commissions
and charges debited for bank services,
are excluded from the calculation of the
net increase/(decrease) of client assets,
as they form part of the client performance – the same is valid for variations
in client assets due to market currency
and security prices.
(trust deed) as well as the currently valid
regulations of the pension plans.
Changes in Accounting Policies
and Valuation Principles
The fixed assets accounting rules have
been modified. Furnitures and fixtures
as well as IT hardware are now capitalized whereas they were depreciated
completely in the year of their purchase
in the previous years.
Pension Plans
Arab Bank (Switzerland) Ltd. maintains
legally separated welfare schemes for
its 95 active insured parties at the date
of the balance sheet (2011 : 96) and 30
retired (2011 : 36). The pension plans are
based on the Swiss defined contribution system (defined contribution plans
in accordance with “Swiss GAAP FER
26”). The Bank carries approximately
two thirds of the pension cost. The cost
carried by the bank is shown under item
5.2 (Social benefits).
The pension fund liabilities as well as the
plan assets are legally separated from
the Bank in fully funded independent
foundations. Organization, management
and financing of the pension plans are
subject to Swiss Federal regulations and
to the constitutions of the foundations
3 - Information on
THE Balance Sheet
3.1 - Schedule of collateral
for loans and
off-balance sheet
transactions
Mortgage
collateral
CHF 1 000
Other
collateral
CHF 1 000
Without
collateral
CHF 1 000
Total
CHF 1 000
14 436
279 847
218 538
512 821
Loans
Due from customers
Mortgages
- Residential commercial real estate
- Residential private real estate
80 690
17 786
Total current year
112 912
279 847
218 538
611 297
Total preceding year
97 497
350 554
174 952
623 003
80 690
17 786
Off-balance sheet transactions
Contingent liabilities
46 593
116 669
163 262
40 689
54 865
95 554
11 841
11 841
183 375
270 657
Confirmed credits
Total current year
87 282
Total debt
102 646
166 119
268 765
Estimated
liquidation value
Net debt
Individual
value adjustment
Impaired loans / Receivables
Current year
6 391
6 391
6 391
Preceding year
6 558
6 558
6 558
3.2 - Securities and precious
metal trading portfolios,
financial investments
and participations
2012
CHF 1 000
2011
CHF 1 000
Securities and precious
metal trading portfolios
Interest bearing securities and rights
- Exchange listed
- Unlisted
Shares and similar securities
and rights
50 119
Total
24 031
26 858
24 031
76 977
of which securities eligible for
repostransactions in accordance
with liquidity regulations
19 789
BOOK VALUE
Interest bearing securities
and rights valued according
to “Accrual Method”
FAIR VALUE
2012
CHF 1 000
2011
CHF 1 000
2012
CHF 1 000
2011
CHF 1 000
360 537
332 707
365 378
335 441
360 537
332 707
365 378
335 441
95 143
137 635
96 499
138 352
Interest bearing securities
and rights valued according
to “the lower of cost or market”
Shares and similar
securities and rights
Total
of which securities eligible for
repostransactions in accordance
with liquidity regulations
Participations interests
2012
CHF 1 000
2011
CHF 1 000
32 001
32 000
32 001
32 000
With listed value
Without listed value
Total participating interest
3.3 - Details of participations
ABS Corporate Services Inc.
Turkland Bank
Domicile
Share Capital
Interest held in %
Panama
USD 10 000
100.00
Turkey
TRI 300 000 000
21.66
3 078
49 853
- 14 143
1 624
Other fixed assets
Total
978
36 356
14 143
112
284
13 971
Disinvestments
Book value end
of 2012
52 931
Other real estate
Write-offs /
Depreciations
Investments
Real estate (bank building)
Reclassifications
CHF 1 000
Book value
end of 2011
accumulated
depreciation
prior years
3.4 - Schedule of fixed assets
Historical cost
2012
973
894
79
1 358
27
175
1 235
53 904
3 972
49 932
3 094
27
1 437
51 562
Fire insurance value of real estate
54 898
Fire insurance value of other
fixed assets
6 400
3.6 - Disclosure of assets
pledged or ceded to
secure own liabilities,
and assets subject to
ownership Reservation
2012
CHF 1 000
2011
CHF 1 000
0
0
3.7 - Disclosure of liabilities
to pension plans
2012
2011
Due to own pension plan
1 510
4 239
2 364
2 548
Securities pledged (credit line with
Swiss National Bank, not utilized)
Expenses for own welfare schemes
There is a half autonomous welfare schemes (defined contribution) plan in accordance with “Swiss GAAP FER 26”
for the staff members of Arab Bank (Switzerland) Ltd.
As in previous year, the application of GAAP FER 16 does still not lead to a capitalization of economic benefits.
For that reason, we refrain from further disclosures.
As at 31.12.2011 the coverage of the liabilities for the pension plans was 118.3% (preceding year: 122.2%)
3.5 - Other assets
and liabilities
2012
CHF 1 000
Other assets
Replacement value
7 161
Compensation account
1 783
Not paid dividends
8 886
Other assets
18 042
244
Other assets and liabilities
652
9 840
Other liabilities
17 537
1 451
830
Indirect tax
Total
Other liabilities
2011
CHF 1 000
620
1 281
269
513
360
10 336
18 671
3.8 - Schedule of outstanding bond issues and mortgage bonds
The bank did not have any transactions relating to such bonds in the current or previous year.
20 782
Balance
end 2012
Reversals
credited
to income
New creation
charged to
income
Recoveries
and currency
differences
Change in
definition
of purpose
Specific usage
CHF 1 000
Balance
end 2011
3.9 - Valuation adjustments
and provisions /
Reserves for general
banking risks
3.11 - Statement of changes
in shareholders’ equity
Shareholders’ equity at
beginning of current year
Share capital
26 700
22 736
Other reserves
Valuation adjustments
and provisions for :
- Loan loss (credit
and country risks)
- Other business risks
Other provisions
Distributable profit
18 906
1 215
Total valuation
adjustments and provisions
- 12 348
- 167
12 348
1 700
20 121
- 167
1 700
- 1 190
- 1 190
6 391
25
14 048
20 464
Total shareholders’ equity
at beginning of current year
(before profit distribution)
- Dividend 2011
+ Net income current year
Reserves for general
banking risks
80 382
80 382
Number of units
nom. CHF 0.75
Dividend
bearing capital
CHF 1 000
Total share capital
26 700
26 700 35 600 000
26 700
Total nominal
value
CHF 1 000
Dividend
bearing capital
CHF 1 000
26 700 35 600 000
Total nominal
value
CHF 1 000
3.10 - Capital structure
2011
Number of units
nom. CHF 0.75
2012
Significant shareholders
Nominal
in %
Nominal
in %
Social Security Corporation,
Amman (Jordan)
5 518 000
15,5%
5 514 191
15,5%
Saudi Oger Ltd., Riyadh
(Kingdom of Saudi Arabia)
3 445 756
9,7%
3 438 651
9,7%
Oger Middle East Holding SAL,
Beirut (Lebanon)
2 532 137
7,1%
2 535 703
7,1%
Family Shoman, Amman (Jordan)
1 213 903
3,4%
888 864
2,5%
CHF 1 000
Total shareholders’ equity
at end of current year
(before profit distribution)
Thereof
Share capital
Other reserves
Disposable profit
17 850
342 500
80 382
2 774
492 941
- 5 340
6 025
493 626
26 700
22 736
14 850
342 500
80 382
6 459
Total
Due after
5 years
Due within
1 to 5 years
Due within
3 to 12 months
Due within
3 months
Redeemable
by notice
CHF 1 000
At sight
3.12 - Maturity structure
of current assets
and borrowed funds
3.14 - Assets and liabilities
by domestic and
foreign origin
Current assets
Cash
Due from banks
500 548
500 548
163 331
Due from customers
130 589
Mortgages
1 150 804
Domestic
CHF 1 000
Foreign
CHF 1 000
Assets
Cash
500 548
86 659
Due from banks
282 190
868 613
202 143
1 013 873
Due from customers
110 865
401 955
47 494
478 013
Mortgages
98 476
97 497
77 321
39 606
8 878
512 821
19 344
4 688
24 294
52 683
76 148
9 164
12 316
848
98 476
44 745
315 792
29 923
302 784
19 993
43 092
148 226
149 226
360 537
687 910
130 589
1 280 727
188 891
200 148
158 952
2 647 217
462 029
117 774
1 076 917
329 512
193 814
155 316
2 335 362
Borrowed funds
Due to banks
292 339
1 013 784
1 306 123
Due to customers, other
872 015
35 143
907 158
Total current year
1 164 354
1 048 927
776 019
982 394
2 213 281
154 585
1 912 998
Participations
32 001
Fixed assets
49 932
Accrued income and
prepaid expenses
5 387
18 976
Other assets
9 841
18 671
Total assets
1 122 958
1 623 049
368
46 639
Due to banks
Accrued expenses
and deferred income
Other liabilities
2011
CHF 1 000
534 687
1 297 322
1 138 996
42 152
32 101
1 305 754
9 123
1 161 522
860 519
41 065
701 288
8 299
8 100
10 337
20 782
20 121
80 381
80 381
Share capital
26 700
26 700
22 736
22 736
Other reserves
Net income
339 651
1 879 353
20 464
Legal reserves from capital
contribution
2012
CHF 1 000
575 589
Liabilities and
shareholders’ equity
3.13 - Disclosure of amounts due from and due to
associated companies as well as loans and
exposures to the members of the bank´s
governing bodies
32 000
51 562
Valuation adjustments
and provisions
Due from members of the bank's governing bodies
Domestic
CHF 1 000
59 314
Total current year
Due to associated companies
Foreign
CHF 1 000
928 159
24 031
Due from associated companies
2011
256 427
24 031
2012
Total liabilities
and shareholders’ equity
14 850
17 850
342 500
342 500
434
751
6 025
2 023
579 733
2 166 274
Amounts “due from and due to associated companies” represent the interbank business concluded with the Arab Bank Group.
The Position “members of the bank’s governing bodies” includes mortgages and contigent liabilities granted at usual
banking conditions.
592 132
1 862 810
3.15 - Assets by countries /
country groups
2012
CHF 1 000
%
2011
CHF 1 000
%
United Kingdom
1 122 958
40,9
575 590
23,4
293 104
10,7
281 902
11,5
CHF
CHF 1 000
USD
CHF 1 000
EUR
CHF 1 000
498 058
1 989
390
111
Due from banks
24 922
946 365
67 973
111 544
Due from customers
38 773
411 712
38 453
23 883
Mortgages
91 327
7 149
Netherlands
99 120
3,6
49 897
2,0
Securities and precious metal trading portfolios
1 945
15 710
6 375
Germany
97 598
3,6
154 371
6,3
150 162
192 759
17 615
Paritcipations
32 000
75 618
2,8
40 611
1,7
France
Luxembourg
68 996
2,5
18 651
0,8
Turkey
51 523
1,9
51 747
2,1
Belgium
41 179
1,5
Fixed assets
Other assets
Sweden
19 246
0,7
23 025
0,9
Finland
15 000
0,5
15 000
0,6
Total balance sheet assets
Austria
4 958
0,2
5 086
0,2
4 611
0,2
4 680
0,2
7 640
0,3
22 565
0,9
Delivery claims from spot exchange deals,
forward exchange deals and currency options
transaction
Danmark
Other
Total assets
Middle East
77 107
2,8
137 545
5,6
United Arab Emirates
Jordan
150 193
5,5
158 937
6,5
Lebanon
98 585
3,6
115 085
4,7
Egypt
18 066
0,7
9 361
0,4
Bahrain
16 624
0,6
186 873
7,6
Kingdom of Saudi Arabia
15 919
0,6
33 917
1,4
31 560
1,1
34 471
1,4
Other
USA / Canada
115 783
4,2
149 740
6,1
Other American countries
111 745
4,1
104 472
4,3
188 164
6,9
198 640
8,1
Far East
Total assets
20 710
2 746 007
0,5
100,0
82 776
2 454 942
3,3
100,0
Due to banks
Other liabilities
2 543
2 433
9 174
128
284
667
900 466
1 570 968
138 751
135 822
18 355
325 613
84 413
216 854
918 821
1 896 581
223 164
352 676
229 995
941 620
19 918
114 589
56 865
624 770
120 765
104 759
6 546
1 086
241
426
10 336
14 073
80 382
Share capital
26 700
22 736
Net income current year
Total liabilities and
Delivery claims from spot exchange deals,
forward exchange deals and currency options
transaction
Total liabilities
Net positions in currencies
1
51 562
Liabilities and
Other reserves
Other countries
OTHERS
CHF 1 000
Assets
Cash
Europe
Switzerland
3.16 - Balance sheet
by currencies
6 392
14 850
342 500
434
6 025
811 442
1 573 869
140 923
219 773
114 572
311 133
85 746
133 785
926 013
1 885 001
226 669
353 559
- 7 192
11 580
- 3 505
- 883
4 - Information on
Off-Balance Sheet
Transactions
4.1 - Analysis of
contingent liabilities
2012
CHF 1 000
2011
CHF 1 000
VARIANCE
CHF 1 000
Credit guarantees
15 437
55 779
- 40 342
Back-up guarantees
60 271
12 105
48 166
87 554
108 162
- 20 608
163 262
176 046
- 12 784
Total contingent liabilities
2012
CHF 1 000
2011
CHF 1 000
Variance
CHF 1 000
Fiduciary placements
with third party banks
705 534
755 427
- 49 893
Fiduciary placements with banks
of the Arab Bank PLC Group and
affiliated banks
260 197
312 399
- 52 202
965 731
1 067 826
- 102 095
2012
CHF 1 000
2011
CHF 1 000
CHF 1 000
Total fiduciary transactions
4.2 - Analysis of credit
commitments
Liabilities under deferred payments
4.4 - Analysis of fiduciary
transactions
11 841
26 867
- 15 027
11 841
26 867
- 15 027
Acceptance liabilities
Total credit commitments
4.5 - Client assets
Assets in own administrated funds
25 385
27 497
- 2 112
251 470
233 715
17 755
Other client assets
2 649 063
2 752 765
- 103 702
Total client assets
(incl. double counts) 1)
2 925 917
3 013 977
- 88 060
25 385
24 676
709
- 72 058
- 90 041
17 983
Assets with administrations’ mandate
4.3 - Analysis of outstanding
derivative instruments
positive
negative
replacement value replacement value
CHF 1 000
CHF 1 000
Contract
volume
CHF 1 000
Trading instruments
Interest rate instruments
Swaps, Options (OTC)
Foreign exchange
Forward contracts
Options (OTC)
Thereof double counts
6 572
0
6 685
0
644 751
485
589
588
34 747
Total current year
7 161
7 273
679 983
18 042
16 131
815 976
1 613
27 179
Total current year
1 613
27 179
1 406
27 839
Shares/Indices
Options (traded)
Net change of client assets 2)
1) Client Assets are asset values of clients, for which Arab Bank (Switzerland) Ltd. renders investment and consulting
services, but without loans.
2) Sum of all individual money deposits and payments as well as security incoming and outgoing deliveries, whereby
new loans and loan repayments are accounted for.
Hedging instruments
Interest rate instruments
Swaps
Options (OTC)
Foreign exchange
Forward contracts
Options (OTC)
Shares/Indices
Options (traded)
5 - Information on
the Income Statement
5.1 - Analysis of results from
trading operations by
business segments
Foreign exchange, precious
metal and banknote trading
Securities trading
Total income from trading
2012
CHF 1 000
2011
CHF 1 000
6 - ELIGIBLE CAPITAL
AND REQUIRED CAPITAL
VARIANCE
CHF 1 000
2 355
2 381
- 26
- 671
670
- 1 341
1 684
3 051
- 1 367
17 971
18 606
- 635
1 555
1 627
- 72
2 364
2 548
- 184
698
733
- 35
22 588
23 514
- 926
31.12.2012
chf 1 000
31.12.2011
chf 1 000
Gross core capital
(after deducted own shares)
488 286
487 601
Other components to be
deducted from core capital
- 32 001
- 32 000
456 285
455 601
31.12.2012
chf 1 000
31.12.2011
chf 1 000
Credit risks
88 284
106 274
Non-counterparty-related risks
12 080
10 010
Market risks
7 120
7 458
Operational risks
6 917
7 116
Reductions in capital requirement
- 1 228
- 1 207
Required capital
113 173
129 651
403%
351%
6.1 - eligible capital
Eligible core capital
5.2 - Analysis of
personnel expenses
Salaries
Social benefits
Pension plan
Other
Total personnel expenses
5.3 - Analysis of other
operating expenses
Premises expenses
1 179
837
342
I.T., machinery, furnishings
and other equipment
3 852
4 146
- 294
Other operating expenses
6 292
5 121
1 171
11 322
10 104
1 218
Total other operating expenses
Ratio of eligible capital to required
capital under Swiss law
5.4 - ANALYSIS OF EXTRAORDINARY
INCOME AND EXPENSES
Extraordinary income
Release of provisions
for other business risks
Other extraordinary income
Total extraordinary income
1 190
1 190
435
596
- 161
1 625
596
1 029
Extraordinary expenses
Constitution of provisions
for general banking risks
Other extraordinary expenses
Total extraordinary expenses
6.2 - REQUIRED capital
1 700
1 700
58
17
41
1 758
17
1 741
REPORT OF
THE STATUtORY
AUDITOR
To the General
Meeting of ARAB BANK
(SWITZERLAND) LTD.,
GENEVA
audit to obtain reasonable assurance
whether the financial statements are free
from material misstatement.
Report on the financial statements
As statutory auditor, we have audited
the accompanying financial statements
of Arab Bank (Switzerland) Ltd., Geneva
which comprise the balance sheet, income statement, statement of cash flows
and notes (pages 14 to 36) for the year
ended December 31, 2012.
Board of Directors’ Responsibility
The Board of Directors is responsible for
the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s
articles of incorporation. This responsibility includes designing, implementing and
maintaining an internal control system
relevant to the preparation of financial
statements that are free from material
misstatement, whether due to fraud or
error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making
accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion
on these financial statements based on
our audit. We conducted our audit in
accordance with Swiss law and Swiss
Auditing Standards. Those standards
require that we plan and perform the
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks
of material misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers the internal
control system relevant to the entity’s
preparation of the financial statements
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 system. An audit
also includes evaluating the appropriateness of the accounting policies used
and the reasonableness of accounting
estimates made, as well as evaluating
the overall presentation of the financial
statements. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis for
our audit opinion.
Report on Other Legal Requirements
We confirm that we meet the legal requirements on licensing according to the
Auditor Oversight Act (AOA) and independence (article 728 CO and article 11
AOA) and that there are no circumstances
incompatible with our independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing
Standard 890, we confirm that an internal control system exists, which has
been designed for the preparation of
financial statements according to the
instructions of the Board of Directors.
We further confirm that the proposed
appropriation of available earnings complies with Swiss law and the company’s
articles of incorporation. We recommend
that the financial statements submitted
to you be approved.
Opinion
In our opinion, the financial statements
for the year ended December 31, 2012
comply with Swiss law and the company’s articles of incorporation.
Deloitte SA
Thierry Aubertin
Licensed Audit Expert
Auditor in charge
Fayçal Gacem
Licensed Audit Expert
Geneva, February 25, 2013

51ST annual reporT 2012 araB BanK (SWITZerlanD) lTD.

Transcription

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