Annual report 2013 - financial report of SaarLB

Transcription

2013 Corporate Report
The Franco-German regional bank
Die deutsch-französische Regionalbank
Foresight THROUGH PROXIMITY
CONTENTS
Foreword from the Board of Management ........................................... 6
Group Management Report – Overview ...............................................13
SaarLB consolidated financial statements 2013 ................................ 72
Consolidated statement of comprehensive income.......................... 73
Consolidated balance sheet .................................................................. 74
Schedule of changes in equity .............................................................. 76
Cash flow statement .............................................................................. 77
Group Notes to the consolidated financial statements 2013........... 78
Board of Administration .......................................................................159
Board of Management ......................................................................... 160
Independent Auditors’ Report .............................................................167
Report of the Board of Administration ............................................. 168
Organisational Chart ............................................................................ 170
Shareholders .......................................................................................... 171
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CORPORATE REPORT 2013 | CONTENTS
SaarLB – Your partner
for business
As the Franco-German regional bank, we do not just deal with numbers: We assess and calculate, compute and control. But behind each
figure is also a story, something that lives – which is why human proximity always comes with our economic foresight. We take the time to
listen and reflect on ideas – in order to consider the numbers also from
a different point of view.
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At a glance (IFRS)
1. BALANCE SHEET
31 DEC. 2013
EUR MILLION
31 DEC. 2012
EUR MILLION
CHANGE IN %
Total assets
16,959
18,740
-9.5
Business volumes
18,026
19,713
-8.6
Loans and advances to banks
2,022
3,246
-37.7
Loans and advances to customers
8,797
9,039
-2.7
328
518
-36.7
Investments*
5,033
5,271
-4.5
Liabilities to banks
5,749
6,000
-4.2
Liabilities to customers
4,759
5,898
-19.3
Securitised liabilities
4,940
5,115
-3.4
Liabilities held for trading
433
645
-32.9
Shareholders’ equity
585
559
4.7
Liable capital in acc. with Sec. 10 KWG/
Banking Act
876
932
-6.0
129.2
146.1
-11.6
Gains or losses on fair value measurement
19.7
37.0
-46.8
Administrative expenses
71.9
72.4
-0.7
Earnings before taxes
56.0
82.1
-31.8
Consolidated net income/loss for the year
35.6
59.4
-40.1
Assets held for trading
2. PROFIT AND LOSS ACCOUNT
Net interest and commission income**
* Including security repurchase transactions and interests in entities valued at equity
** Including shares of profits in associated companies accounted for using the equity method
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CORPORATE REPORT 2013 | AT A GLANCE (IFRS)
The cross-border profile of SaarLB again ensured a successful financial year in 2013. Earnings may not have been quite at the record
high of 2012, but they were substantially
above the budget.
5
Thomas Christian Buchbinder
Corporate Development, Market 2
Corporate Development, Savings Banks, Institutionals and High Net Worth Individuals,
Treasury and Portfolio Management, LBS Market and Risk Office, Internal Audit
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CORPORATE REPORT 2013 | FOREWORD FROM THE BOARD OF MANAGEMENT
Ladies and Gentlemen,
Dear Business Partners,
Numbers often have the connotation of not only something austere,
but also objective – as a figure for a company’s success, for example.
Yet it is at least just as exciting to find out what lies behind these
numbers. In this annual report, we would like to give you a few examples of the people and stories behind the numbers of SaarLB and its
customers.
To start with, we would like to recall a pure earnings figure for SaarLB
in 2013. We are very pleased with it: EUR 35.6 million after taxes is what
we earned in total – maybe not the record from 2012, but far above our
budget. Above all, however, the earnings in recent years have shown
a stable, improving development, particularly if you factor out the
volatile effects of fair value measurement. This is also proven by the
German Commercial Code earnings, which are significantly above the
budget, letting the bank make a substantial addition to the 340g reserves to achieve a further strengthening of its capital base.
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The IFRS interest income may have declined
from 2012, but this reflects the low interest
rates and the ongoing decrease in the reduction portfolio. Net interest income in the core
business segments of corporate customers,
real estate and projects is at or above the level reached in 2012. Overall, that means: we are
absolutely on track to keep improving income
in our core business segments. This is no accident. As the basis for our success is on the one
hand the role of SaarLB as a partner for the
economy in the region, and, on the other, as a
bank focused on Germany and France.
On the following pages, we would like to
show you some examples of who the people,
i.e. customers, behind the numbers are. “Always look ahead” is Michael Zehe’s motto.
This helped the founder of ROWE make his
company one of the largest lubricant manufacturers in Europe. Its new headquarters in
Worms was financed by SaarLB. Another exemplary project is the modernisation of the
Saarland University Clinic (UKS). UKS can look
back on over 100 years of history with its predecessor institutions. At the same time, they
have learned to move with the times, according to the motto: “The cornerstone of future
success is laid in the present.” The heart of
the current project FUTURE (ZUKUNFT) is the
new construction of the Internal Medicine
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department. The Saarland company Herweck
also needed a new location. It offers a total
product line of roughly 12,000 articles from
the areas of telecommunications, multimedia
and IT, which reach customers in the widest
range of ways. Herweck’s corporate strategy
is innovation and continuity – in management and with employees, customers or partners such as SaarLB. Innovation also plays a
major role for Bouygues Construction. That
means: the French company not only handles the planning or construction of projects
such as universities or motorways, but also
their operation and maintenance. Besides the
main location in Paris there are numerous locations, e.g in the east of France.
The ongoing improvement
in the income from our
core business segments is
absolutely on course.
Werner Severin
Operations/Management
Overall Bank Management, Risk Office, Services,
Compliance, Data Protection
9
We want to continue
SaarLB’s success story with
our customers.
Frank Eloy
Market 1
Corporate Customers, Real Estate and Projects,
Central Sales Management
10
Bouygues values SaarLB because it has the
competencies that are required on the French
financing market.
Fundamentally, the Franco-German profile of
the Bank has proven to be a particular guarantor of its success in recent years. Just one example of this is: The Bank made roughly 40 %
of its entire earnings in net interest and commission income from its core business. French
transactions accounted for almost 50 % of
the new business in the real estate segment.
In the area of renewable energies, French projects accounted for more than 50 % of the financing; another pleasing development was
seen in the progress made in the general energy policy discussion for this sector in Saarland
and Rhineland-Palatinate. The cross-border
profile is a requirement for the positive ongoing development of SaarLB. For this reason,
we also welcome the France strategy that the
state of Saarland proposed at the beginning
of 2014. We view SaarLB as an important part
of this France strategy.
We are also pleased that Saarland met the
requirements for the 2014 assumption of
BayernLB’s shares in the past financial year.
After fulfilling the contractually stipulated
conditions, SaarLB is now a purely regionally
owned bank.
For this reason, we would like to thank our
owner heartily for their dedication and likewise our employees. Last but not least, we
would like to thank our customers for their
trust and collaboration with us – together
with you we would like to continue the success story of SaarLB!
Werner Severin
Frank Eloy
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CORPORATE REPORT 2013 | GROUP MANAGEMENT REPORT
Group Management Report
OVERVIEW
Both the structure and the content of this
management report have been modified from
the format last year. The changes mainly take
into account the new applicable rules in the
German Accounting Standards (DRS 20) and
are intended to improve the transparency and
clarity of the report.
Strasbourg and Paris handle the French business.
Landesbausparkasse Saar (LBS), part of SaarLB, finances primarily residential real estate
through its home loan savings business.
The Bank’s business model depends strongly
on the awarding of long-term loans and is
to be harmonised with respect to the strict
requirements of Basel III particularly with
regard to the core capital ratio and liquidity
management by passing through a control
process that is governed by regulatory guidelines.
SAARLB
SaarLB (hereinafter referred to as “SaarLB”)
is a corporation established under public law
with its headquarters in Saarbrücken.
The conversion of silent partnership contributions of Saarland savings banks to hard core
capital in the fourth quarter of 2013 totalled
On account of its history and its ownership
EUR 36 million and shifted the ownership
structure, SaarLB is an integral part of the
structure of SaarLB from 2012, with the Saar
savings banks finance group (SparkassenAssociation of Savings Banks gaining a larger
Finanzgruppe) and places a high priority on
share of ownership. The owners of SaarLB as
networking work, particularly with the Saarof 31 December 2013 are:
land savings banks, while simultaneously con•Bayerische Landesbank, Munich:
centrating on core competencies. SaarLB is a
43.92 % (2012: 49.90 %)
central bank for the savings banks and is the
•
Saarland:
principal bank for Saarland.
30.98 % (2012: 35.20 %)
•Saar Association of Savings Banks,
SaarLB and its shareholders have each arSaarbrücken: 25.10 % (2012: 14.90 %)
ranged commitments that should ensure the
ongoing independence of the Bank and its deIn the past financial year, the requirements
velopment into the Franco-German regional
for Saarland’s acquisition of BayernLB’s
bank. There is also a framework agreement
shares in 2014 were met. After fulfilling the
with the Saar Association of Savings Banks
contractual conditions, the ownership strucon the principles for collaboration between
ture of SaarLB will change again. The ownerthe Saarland savings banks and SaarLB. The
ship structure in 2014 will be:
commitments and the framework agreement
•
Saarland:
set forth fundamental framework conditions.
74.90 %
The binding form is determined by the Bank’s
•Saar Association of Savings Banks,
risk strategy.
Saarbrücken: 25.10 %
The SaarLB Group’s target market is made up
SaarLB’s strategy is to be a regional bank with
of the core market Saarland and the regional
a focus on corporate customer lending, real
market, which consists of the surrounding
estate business, special financing in the area
regions in south-west Germany, France and
of renewable energies (“RE”) and advisory
Luxembourg. For business in the area of reservices for institutional investors, public
newable energies, the core market of SaarLB
sector/municipalities and high net worth indiin Germany and France extends across the
viduals (wealth management). SaarLB’s busiregions, depending on the geographic condiness is managed centrally from Saarbrücken,
tions that are required for the successful opwhile its branch in Metz and sales offices in
eration of RE plants. In the area of real estate
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financing in France, the Île-de-France region is
also one of the major core regions.
On the product side, SaarLB primarily concentrates on marketable and standardised
products. Project financing is, however, an exception on account of the business structure.
Over the long term, complex products and
services that require substantial advice are
primarily handled by cooperation partners.
As a member of the Saarland Sparkassen-Finanzgruppe, SaarLB and Landesbausparkasse
Saar are heavily involved in the syndication
business and as an arranger with the region’s
savings banks. SaarLB is also a centre of excellence, particularly for project financing,
corporate financing, foreign commercial business and interest and currency management.
SaarLB is the largest bank in Saarland and feels
a particular connection and obligation to the
region. SaarLB has deep roots in the region and
actively shapes economic life, making an important contribution to cultural diversity and
promotes the sciences in the greater region.
This is seen, among others, in the promotion
of science and culture through the awarding of
the SaarLB science prize and countless permanent loans to the Saarland museum.
The group of consolidated companies at
SaarLB includes seven (31 Dec. 2012: six) subsidiaries. These include SaarLB Bankenbeteiligungsgesellschaft mbH, Saarbrücken, LBS
Immobilien GmbH, Saarbrücken and special
funds that are consolidated in full in accordance with IAS 27 in conjunction with SIC 12.
The consolidated financial statements do not
include entities that are only proportionately
consolidated. Three associated companies (31
Dec. 2012: two) continue to be valued according to the at-equity method. LBS Immobilien
GmbH was included in the group of consolidated companies for the first time in 2013.
Please refer to the information in the notes to
the financial statements for a detailed list of
all equity investments in the finance section
of the annual financial statements.
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SaarLB breaks its business down into multiple segments that are mainly reflected in the
structural organisation. The segments are described in the following:
Corporate Customers
The Corporate Customers segment covers the
entire SME business of SaarLB in its target
markets. In Germany, this includes Saarland,
Rhineland-Palatinate and the adjacent regions. In France, SaarLB’s Corporate Customer
business is focused on the Grand-Est (Grand
East) and here in particular on the neighbouring Alsace-Lorraine where the Bank is represented by its branch in Metz and its sales office in Strasbourg.
The main product in this segment is traditional lending. Furthermore, a full service is
provided, primarily by offering investment
business and interest rate and currency management as well as the foreign trade and
payment transactions in accordance with
customers’ needs and giving business advice
on how to finance companies. Furthermore,
it also offers financing for municipalities and
municipally owned companies (with a focus
on Alsace and Lorraine).
Real Estate
The Real Estate segment at SaarLB is responsible for the financing of commercial real
estate. Its business activities are limited to
SaarLB’s target markets, with deals concluded on a bilateral basis or in the form of club
deals under the Bank’s leadership. Professional and institutional investors who primarily
invest in office and retail real estate are the
focus in this segment. In France, the market
is primarily handled by the Centre d’ Affaires
Paris, which is a part of SaarLB France. In the
German target market, SaarLB acts selectively as a financial service provider and also, on
the basis of strict guidelines, as a developer. It
also provides support for public private partnership (PPPs) measures for investments in
infrastructure, education or other public construction measures, with a focus on Saarland.
The Real Estate segment’s regional focus on
the German side is in the metropolitan area of
Rhine-Main, while in France it is on the urban
centre of the Île-de-France. As in the Corporate
Customers segment, credit financing is the
main product, although SaarLB’s structuring
and legal competency are also significant for
the success of the business segment. Interest
hedges with simple derivatives in the portfolio and new business are concluded with success, and increasingly payment transactions
and investment products, too.
Projects
The Projects segment at SaarLB is responsible for the financing of projects primarily in
the renewable energy sector (RE), but also in
the area of public private partnership on the
French market. In the RE sector, SaarLB acts
as a financial service provider for midsized project initiators and manufacturers that invest
in wind and/or solar parks at good locations
and with sophisticated technology. Many customers in the business segment are supported across borders. The segment is represented
in Saarland and Rhineland-Palatinate as well
as throughout France – due to its very good
market position. The Bank does not finance
offshore wind parks. As in the Corporate
Customers and Real Estate segments, credit
financing is of central significance for the
customer relationships and thus the development of business. In addition to SaarLB’s particular Franco-German legal expertise, it also
has extensive and longstanding know-how
with respect to project analysis, the resulting
case-specific and cash-flow driven structuring
of finance and SaarLB’s good access to longterm funding, which are viewed as significant
key factors for the segment’s success.
Savings Banks, Institutionals and High Net
Worth Individuals
The Savings Banks, Institutionals and High
Net Worth Individuals segment handles
wealth advisory services and management
for savings banks, institutionals and high
net worth individuals. The focus of the Savings Banks and Institutionals segment is on
increasing existing customer connections
and expanding contacts with insurance companies and pension funds in the region and
the business relationships to savings banks
in Rhineland-Palatinate. It also deals with
financing of the region’s savings banks and
municipalities. In the sub-segment of high
net worth private customers, the focus is on
complete support and advising for wealthy
private customers. Lastly, as a centre of expertise, it actively supports the other segments
in customer relationship management, especially in investment, interest rate and currency management.
Treasury & Portfolio Management
Treasury is responsible for the management
of the interest book, the trading activities of
the Bank, the collateral pool and collateral
management as well as liquidity control and
pricing. In addition, Portfolio Management is
in charge of managing the liquidity account
(Securities Account A and LCR portfolio), the
management of the Bank’s special funds and
the management of the portfolios that are no
longer a part of the SaarLB Group’s core business and are being systematically reduced (reduction portfolios).
LBS
Landesbausparkasse Saar is a legally dependent unit of SaarLB. Its core business is the
home loan savings business of Sparkassenfinanzgruppe Saar, cooperating closely with
the Saarland savings banks. It also finances
energy-saving measures for real estate as part
of the Renewable Energies Act [ErneuerbareEnergien-Gesetz // EEG].
Investments
Investments are mainly holdings in companies in the savings bank sector and in regional
development-type companies, which are managed by the Strategic Development unit. A difference is made between strategic, finance-/
credit-related and other equity investments.
This segment will lose significance over the
medium term due to the successive reduction
of equity investments.
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The focal point of the human resources work
at SaarLB in 2013 consisted in promoting future employees and women as well as expanding the job applicant marketing – in addition
to the operating daily business.
In the promotion of future employees, the
Bank started a new qualification programme
– “Talent management” – in 2013. The target
group consists of employees who already
have a few years of professional experience
and now have the opportunity to take the
next step on the career ladder. The modularly
developed promotion programme qualifies
future employees systematically to assume
additional responsibilities in the course of
their professional and management career.
Prospective employees have been able to
apply proactively for participation in the
programme since 2013. A two-day potential
analysis process precedes qualification. This
instrument makes it possible to identify the
strengths of each individual participant. In individual meetings, each participant receives
qualified feedback on his or her strengths and
development potential.
In order to increase the number of qualified
employees for positions in professional or
management careers over the medium term,
the promotion programme includes a “women’s quota.” At least half of the participants
in a class must be female.
Closely tied to the promotion of women is the
subject of work-life balance. In order to create more flexibility for families with regard to
working hour models, an inter-departmental
working group at the Bank addressed the subject of “alternating telework.” In 2013, the feasibility study was completed, and the concept
will be implemented in 2014, continuing to
create good framework conditions for a worklife balance.
In times of demographic change, another
central task in human resources work is to
expand significantly the applicant marketing.
The Bank’s presence at regional trade fairs
16
was significantly expanded and additional
agreements were concluded with universities. The first success has already been seen
in 2013 with the slight increase in applicants
for the work placement to become a qualified
bank employee and for vacant positions in
the Bank.
Control system in the SaarLB Group
The strategic controlling of SaarLB is based on
the business strategy for the entire bank and
for the segments. It monitors the following
financial performance indicators:
•Return on equity (ROE): Earnings before taxes in relation to the tied-up economic capital, whereby the economic capital is defined
as 8 % of the average risk positions in the
year under review as calculated in accordance with the regulatory requirements, and
•Cost-income ratio (CIR): Administrative expenses in relation to the total ordinary income. The fair value result is not explicitly
taken into account in order to avoid marketinduced dilution effects.
Non-financial performance indicators are not
used for Group controlling.
Economic environment
The German economy initially had to overcome some temporary weakness at the turn
of 2012/2013. Then it gained momentum in
the second quarter – with growth being significantly stronger than in the eurozone as a
whole. In total, it was sufficient for positive
growth of 0.4 % over the entire year.
This may have been less than in the year before (2012: +0.7 %), but the situation during
the year was significantly better in 2013 than
in 2012. Since the second quarter of 2013,
the development of the economy can be described as an upswing.
This revival was borne solely by the domestic
economy. Different from the exports of the
eurozone overall, German exports in 2013
rose only slightly in real terms (+0.6 %). The
contribution of exports to real gross domestic product may have continued to produce a
high surplus, but there was not a further increase in 2013.
Rather, it was consumption alone that produced additional demand. When adjusted for
prices, private consumption rose by 0.9 % and
government expenditures rose by 1.1 %.
Although capital expenditures in the course
of the year 2013 crossed their cyclical nadir,
the change in trend came too late to move the
annual rate into plus. As a result, gross capital
expenditures decreased by a total of 0.8 %.
Within construction, expansive residential
construction again performed the best in
2013.
On average in 2013, 41.8 million people were
employed. That was 233,000 more than in the
previous year. Never before have there been
so many employed people in Germany.
Thanks to the good employment situation,
government revenue also reached a record
level in 2013. With simultaneously low interest expenditures, the total federal budget
was almost balanced.
Consumer prices in Germany rose on average
by 1.5 %.
In Saarland, industrial companies in the
manufacturing industry generated sales of
EUR 23.8 billion in 2013. That was 8 % less than
in the previous year. While domestic business
decreased by 4.4 % to EUR 12.4 billion, foreign
business fell by 11.6 % to EUR 11.4 billion.
In summary, primarily the traditionally strong
industrial sectors (automobile production,
metal production and processing, machine
building) had to bear the main burden of this
weakness. In the rest of the Saarland economy, the development was much more positive. This primarily relates to the diverse areas in services: restaurant business, financing
and real estate sector; other private and public sector services were largely able to avoid a
downward trend, but their momentum was
not sufficient in order to brighten the overall
picture for the Saarland economy.
The number of employees in Saarland required to pay into social security was just
below the level in December 2013. The unemployment rate fell over the course of the year
from 7.6 % to 7.0 % in December.
In Rhineland-Palatinate, the economic slowdown that was already felt in 2012 continued
in the first half of 2013. Since autumn, however, there has been a revival in business expectations and planned investment expenditures – even if the majority of the investments
were in the area of replacement investments.
Overall, Rhineland-Palatinate industry generated sales of EUR 84.7 billion in 2013. This was
0.1 % more than in 2012. The export ratio was
at 54.1 %. The number of employees in Rhineland-Palatinate required to pay into social security was just below the level of the previous
year in December 2013.
In 2012, the economy in France stagnated with
zero growth. The 2013 GDP over the entire year
was only slightly better than the previous
year, with growth of 0.2 %. After three weak
quarters, economic output in France clearly
recovered for the first time in the fourth quarter due to the strengthening global economy
and the recovering southern European crisis
countries. However, investment activity continued to fall (by 1.8 %) in 2013 due to the high
social security and tax burden that weighed
on companies and the remaining uncertainties due to the lack of structural reforms
(2012: -1.9 %). As in 2012, private demand (as
a reaction to the high unemployment rate)
and public sector expenditures could not provide any tangible stimulus for the economy
in 2013. Despite fluctuations in the export
sector during the year, it was able to sustainably recover in the last quarter of 2013, which
also caused the trade deficit to fall slightly to
EUR 61.2 billion (2012: EUR 67.2 billion). The
current economic situation is also reflected
in industrial production, which remains slow.
17
The unemployment rate reached an historic
high of 11 % in December 2013. German companies were relatively hesitant to make acquisitions and investments in existing or new locations in France due to the disadvantageous
market conditions. The willingness of French
banks to extend credit remained on an unchanged high level both in the short-term and
long-term area, which maintained pressure on
margins. It was peculiar that the competitive
pressure for business was greater with small
and mid-sized enterprises (SMEs) than in the
segment of midcap companies (ETIs), which is
the opposite of the situation on the market
in Germany.
In Lorraine, the business climate for industry
and services performed in an analogous way
to the national development: It was slow, but
picked up somewhat toward the end of 2013.
Investment activity declined from 2012, and
the unemployment rate was at a historic high
of 11.1 %. GDP may have fallen in 2013 with a
contraction of 0.3 %, but it was better than in
2012 at -0.7 %.
18
In Alsace, industrial production improved
steadily over the course of the year to the
level of 2010/2011. In the agricultural and food
production sectors, incoming orders rose
significantly, but the automotive and other
manufacturing industries continued to make
a weak contribution to overall economic output. The utilisation of capital was on average
74 % and remains unsatisfactory. Although
investment activity continues to decline, the
business climate for industry improved from
2012. In the service sector, a stable development was observed. In Alsace, the unemployment rate rose to 9.5 % (particularly in the
Department Haut-Rhin at 10.2 %) and is following the national trend. Gross domestic
product showed zero growth in the past year
after a contraction of 0.4 % in 2012.
Financial sector
The sovereign debt crisis in Europe abated for
the first time in 2013 – though it would be premature to speak of an end to the crisis.
The easing of the debt crisis in the eurozone
was the most obvious on financial markets.
While the euro-dollar exchange rate at the
end of December 2012 was still at 1.29 EUR/
USD, the euro appreciated over the course of
the year to 1.35 EUR/USD. In addition to the
strong euro, the European and particularly
the German stock market are also signs that
the crisis has at least paused for the time being. This is especially clear if you consider the
performance of the DAX over the course of
the year, which reached a new high in the last
weeks of the year. For another novelty, the European Central Bank was responsible in 2013.
Due to the ongoing low inflation rates in the
eurozone, the ECB lowered its benchmark refinancing rate to a record low of 0.25 % in November. The performance of gold also showed
that the perception of crisis in 2013 was abating. As a result, the gold price fell below the
EUR 1,000/ounce mark toward the end of the
year.
The average 3 month Euribor was approx.
0.22 % and below the expected amount of
the Bank (0.5 %) in 2013. The performance of
long-term interest rates remained on an historically low level over the course of the year.
VDP curve for mortgage Pfandbriefe in 2013 in %
3-month Euribor in 2013 in %
0.31
3.00
0.29
2.50
0.27
0.25
2.00
0.23
1.50
0.21
1.00
0.19
0.50
0.17
5 years
10 years
0.00
0.15
Q1
Q2
Source: Deutsche Bundesbank statistics
Q3
Q1
Q4
Q2
Q3
Q4
Source: German Association of Pfandbrief Banks (VDP)
The finance market and sovereign debt crisis
over the past few years caused the introduction of numerous regulatory measures in
2013, which should affect the regulatory environment in the financial sector over the long
term.
This includes, among others, a law for protecting against risks and planning the restructuring and unwinding of banks (“TrennbankenG”),
which makes the violation of significant risk
management obligations punishable if the
bank or insurance company has financial
difficulties. Furthermore, in anticipation of
the planned EU directive, this stipulates that
measures must be taken early on and preventively to facilitate the unwinding of a systemic
bank in the case of a crisis (bank testaments).
Furthermore, the Restructuring Act (Restrukturierungsgesetz) contains instruments for
the orderly unwinding of banks, the bank fee
and the restructuring fund in Germany.
With the EU Regulation on OTC derivatives
(EMIR), significant parts of the G20 resolutions for the stronger regulation of OTC
19
derivative markets are implemented. The
EMIR Execution Act (EMIR-Ausführungsgesetz) adapted national law to the EU Regulation. The goal is to create more transparency
for over-the-counter derivative transactions
and a reduction in default risks by including a
central counterparty.
The significance of the European financial
regulatory system – consisting of the European Committee for Systemic Risks and the
European Securities and Markets Authority
(ESMA), EIOPA and EBA – has increased substantially from prior years and has currently
culminated in a uniform regulatory mechanism for banks with the inclusion of the ECB
(SSM Regulation). As a result, the powers of
the national regulatory bodies have been partially transferred to the European level.
In addition, the law for the strengthening of
the German financial authority on the national level reformed the national regulatory body
in Germany and ensured that risks to financial
stability can be identified early on.
The resolution adopted by the European Parliament, the EU member states and the Commission in December 2013 for the banking
union should stabilise the markets. The plan
for the banking union includes uniform bank
supervision by the ECB, a collective unwinding and restructuring mechanism and a European system of deposit insurance. Setting up
a European bank authority is a prerequisite
for direct recapitalisation of banks by the European Stability Mechanism. The French government is currently calling for a near-term
compromise on the disputed points with
regard to the unwinding of bankrupt banks
so that movement toward a banking union
can be anticipated in 2014. It remains to be
seen how exactly the SRM (Single Resolution
Mechanism) will be defined by the European
Parliament and the European finance ministers.
20
Likewise, the negotiations on the deposit
guarantee guidelines (DGSD) were completed
in December.
Since 1 January 2014, the most important
regulatory measures, those combined under
the name of Basel III / CRD IV, have entered
into force. The first reports must be made by
the banks in 2014, such as e.g. the reports on
the new liquidity performance indicators for
the LCR. Furthermore, new requirements by
the EBA were announced and must be fulfilled in the course of 2014 (according to the
current situation). This includes both the
funding plans (reporting of asset and liability
positions by maturities, funding sources and
types) and the asset encumbrance (reporting
of assets that are not available for sale).
EARNINGS
DEVELOPMENT OF EARNINGS IN THE
SAARLB GROUP
Financial year 2013 was another very successful year for SaarLB, even if the consolidated
net profit after taxes of EUR 35.6 million was
below the extraordinarily good earnings in
2012 (EUR 60.2 million). Slow investment activity, particularly in the first half of the year,
but also the historically low interest rates,
had a negative impact on SaarLB’s net interest income. Although SaarLB continued to
meet its ambitious goals, net interest income
fell short of our expectations.
31 Dec. 2013
EUR million
Due to the ongoing positive course of business in 2013, the return on equity (before
taxes) according to IFRS was 9.9 % in 2013
and remained at a high level. Nonetheless,
the extraordinarily good performance in 2012
(13.6 %) was not achieved. The cost-income ratio (CIR) according to IFRS is 54.9 % and thus
above the level of 49.0 % in the previous year.
31 Dec. 2012
∆ in EUR million
∆ in %
Net interest income, including profit/loss from
companies valued at equity
[1]
121.4
138.8
-17.5
-12.6 %
Risk provisions in the credit business
[2]
-20.0
-33.0
13.0
-39.5 %
Net commission income
[3]
7.8
7.3
0.5
6.7 %
Earnings from fair value measurement, including
gain/loss on hedge accounting
[4]
20.1
36.9
-16.8
-45.4 %
Gain/loss on investments
[5]
-3.3
3.2
-6.5
-202.4 %
Administrative expenses (incl. depreciation)
[6]
-71.9
-72.4
0.5
-0.7 %
Other income
[7]
1.9
1.6
0.3
15.7 %
Consolidated net profit/loss (before taxes)
[8]
56.0
82.4
-26.4
-32.0 %
Income taxes
[9]
-20.4
-22.2
1.7
-7.8 %
Consolidated net profit/loss for the year
[10]
35.6
60.2
-24.7
-40.9 %
Average risk positions
[11]
7,041.9
7,564.8
-522.9
-6.9 %
CIR ([6] / ([1]+[3]+[7]))
[12]
54.9 %
49.0 %
5.9 %
RoE ([8] / ([11]*8 %))
[13]
9.9 %
13.6 %
-3.7 %
21
The SaarLB Group’s net interest income (including the profits/losses from companies
valued at equity) fell by EUR 17.5 million, from
EUR 138.8 million in 2012 to EUR 121.4 million
in 2013, thereby failing to meet the forecast
from the previous year. This is a decline of
12.6 %. The decline in interest income from
EUR 765.4 million in 2012 to EUR 598.2 million in 2013 (-21.8 %) was not entirely compensated by a decline in interest expenses from
EUR 626.7 million in 2012 to EUR 477.2 million
in 2013 (-23.9 %). The drop in net interest income continues to be defined by the very low
interest rates and decreasing business volume, which is largely determined by the systematic reduction of the sub-portfolios that
are no longer a part of the core business.
Interest income from credit and money market transactions fell by EUR 71.6 million and
was significantly below the level of the previous year. This is a decline of roughly 19.1 %.
To the same extent, interest expenses for
liabilities to banks and customers fell by
EUR 65.0 million, or 26.4 %.
Interest expenses for subordinated and hybrid
capital were EUR 18.7 million in 2013, slightly
below the amount in 2012 (EUR 19.5 million).
The risk provision in the credit business was
EUR 20.0 million, by EUR 13.0 million substantially below the level of EUR 33.0 million in
2012.
Additions to individual risk provisions are
EUR 39 million, or EUR 5.2 million below the
level of EUR 44.1 million in 2012. In addition,
the Bank was able to release EUR 4.8 million
more specific risk provisions (including general provisions) than in the previous year.
Direct depreciation and amortisation was
EUR 2.7 million and thus EUR 0.9 million
above the level from the previous year (2012:
EUR 1.8 million).
22
An additional positive impact was made by
the net release of portfolio risk provisions in
the credit business for a total of EUR 1.9 million in 2013 (2012: addition of EUR 2.1 million).
Net commission income totalled EUR 7.8 million and was slightly above the level in 2012
(EUR 7.3 million). The development of net
commission income was the opposite of the
forecast made in 2012.
The increase in the net commission income
is primarily due to an improvement in the
commission income in the securities business, which improved by EUR 2.4 million, from
EUR -0.7 million in 2012 to EUR 1.8 million.
Commission income in the credit business totalled EUR 9.6 million and was EUR 1.7 million
below the income in the previous year. This is
mainly due to the reduction portfolio, partly
on account of declining guarantee commissions.
Other commission income also improved to
EUR 1.3 million. This is due to inclusion of LBS
Immobilien GmbH in the group of consolidated companies of the SaarLB Group.
The gains on fair value measurement and
hedge accounting came to EUR 20.1 million
and were significantly below the level of
EUR 36.9 million in 2012, as forecast. Besides
the significantly higher year-on-year gains
from interest rate related transactions of
EUR 18.7 million (2012: EUR 4.8 million), there
were negative valuation effects from securities measured at fair value in the amount of
EUR -1.4 million (2012: EUR 24.8 million). Fair
value gains from credit derivatives fell by
EUR 4.0 million from 2012, in part due to the
systematic reduction of this asset class.
The gains on hedge accounting were
EUR 0.4 million in the year under review, exceeding the level of the previous year (2012:
loss of EUR -0.2 million), but of minor significance.
Gains on fair value measurement and hedges
are reported almost entirely in the overhead
within the framework of segment reporting.
A distribution across the segments only takes
place if the earnings components cannot be
assigned clearly to segments, as e.g. with
credit derivatives and gains/losses on trading
in precious metals.
Losses on investments were EUR -3.3 million
in 2013 and EUR 6.5 million below the level of
the previous year (2012: gain of EUR 3.2 million). The performance here did not meet
the forecast made in 2012. The losses on investments in 2013 were affected by disposal
losses that primarily relate to securities in the
reduction portfolio.
Administrative expenses incl. the depreciation of property, plant and equipment and
the amortisation of other intangible assets
were EUR 71.9 million on 31 December 2013
and below the level in the previous year
(2012: EUR 72.4 million). Personnel expenses
rose slightly from 2012, by EUR 0.9 million, to
EUR 41.5 million, in accordance with the anticipated forecast. The increase is mainly due
to the rise in social security fees and expenses
for pensions. On the other hand, other administrative expenses fell by EUR 1.3 million to
EUR 27.9 million in 2013 (2012: EUR 29.2 billion). The depreciation of property, plant and
equipment and the amortisation of other intangible assets was EUR 2.5 million and slightly below the level from 2012 (EUR 2.6 million).
Other expenses totalled EUR 2.7 million in
2013, which was EUR 0.8 million lower than
the level in 2012 (EUR 3.5 million).
In total, there was a consolidated net profit
before taxes of EUR 56.0 million in financial
year 2013 (2012: EUR 82.1 million).
After taking into account the tax expenses
of EUR 20.4 million (2012: EUR 22.2 million),
there was a consolidated net profit after taxes of EUR 35.6 million (2012: EUR 60.2 million).
The tax expense consists of an actual tax expense in the amount of EUR 15.1 million (2012:
EUR 12.7 million) and an expense for deferred
taxes in the amount of EUR 5.3 million (2012:
EUR 9.5 million).
The SaarLB Group will service its hybrid capital in full in 2013, too, similar to previous
years. EUR 8.3 million (2012: EUR 9.7 million)
will be distributed on the equity component
of hybrid capital. A dividend on the shareholder capital of SaarLB will not be paid in 2013 in
order to strengthen equity capital. As a result,
the total consolidated profit of EUR 27.2 million will remain (2012: EUR 50.5 million).
Other comprehensive income amounted to
EUR 1.9 million in 2013 (2012: EUR 1.6 million).
Other income fell from EUR 5.1 million in 2012
to EUR 4.6 million in 2013. It mainly includes
rental income from investment property
(EUR 1.3 million; 2012: EUR 1.3 million), income
from the release of provisions (EUR 1.5 million; 2012: EUR 0.9 million) and other income
(EUR 1.2 million; 2012: EUR 1.8 million).
23
DEVELOPMENT OF BUSINESS AND
EARNINGS IN THE SEGMENTS
The contributions made by important segments to earnings are described in the following:
Corporate Customers
Corporate Customers services corporate
customers in Germany as well as corporate
customers, municipalities and municipally
EUR million
Net interest income
31 Dec. 2013
31 Dec. 2012
∆ in EUR million
∆ in %
23.0
22.3
0.7
3 %
-6.7
-1.4
-5.3
>100 %
3.9
3.3
0.7
20 %
Gains/losses on fair value measurement
0.1
0.3
-0.2
-73 %
Gains/losses on investments
0.1
0.0
0.1
*** %
-15.1
-14.8
-0.3
2 %
5.3
9.7
-4.4
-46 %
1,778.4
1,734.4
44.0
3 %
Segment assets
The Corporate Customers segment completed the past financial year with net interest
income of EUR 23.0 million, which is slightly
above the level in 2012 (+3 %). The main factors were the sideways trend in credit volumes
both in the lending area and in variable portfolios. A critical aspect of this is in particular
the lower new business in the Corporate Customers Germany segment, which could only
be included in the books after a short delay,
and repayments that reduced the loan portfolio as planned. The forecasts made in 2012
could not be met. The slow demand for credit
overall and investment loans in particular
was felt in the first half of the year and only
picked up in the second half of the year. This
momentum continued until the turn of the
year. The Bank clearly noticed greater competition with pressure on margins, particularly
in the midcap segment, where not only German business banks and Landesbanks, but
24
owned companies in France. The target markets in Germany are Saarland, RhinelandPalatinate and the surrounding regions. In
France, the SaarLB Group concentrates on the
Grand-Est (Grand East) and here in particular
on the neighbouring Alsace-Lorraine where
the Bank is represented by its SaarLB France
branch at the offices in Metz and Strasbourg.
also increasingly foreign bank groups are doing business and starting sales initiatives. In
the France segment, the planned targets for
new business volumes in the sub-segments
of Corporate Customers and Public Sector
were met overall, confirming the forecast in
2012. The lending business with municipallyowned companies saw substantially more
competition than in 2012, which was defined
by a number of new market participants, including foreign ones. The entire new business
volume in the area of roughly EUR 300 million
was distributed fifty-fifty over Germany and
France. In comparison to the previous year
and to the plan, new business could also be
improved with regard to the portfolio quality
as well as to the income components in the
financial year.
The risk provision in the credit business of
EUR -6.7 million breaks down to roughly
two-thirds for France and one-third for Corporate Customers Germany in 2013. In terms of
volume, the greater addition to the risk provision in Germany than in France was clearly
overcompensated by releases of provisions.
Net commission income in the amount of
EUR 3.9 million consists of one-third commissions as a result of guarantee business and
two-thirds commissions from portfolio-unrelated commissions that are largely driven by
the credit business. The Corporate Customers
Germany segment makes a major contribution here with roughly EUR 2.0 million.
The segment assets have shown a sideways
trend over the course of the year and remain,
31 Dec. 2013
EUR million
Net interest income
with a volume of EUR 1.8 billion, on the level
of 2012 at the end of the year.
Real Estate
The Real Estate segment is responsible for
the financing of commercial real estate in
the SaarLB Group. The regional focus is also
on the German target markets already defined for Corporate Customers and the French
Grand East, with a focus on the Île-de-France.
The management of the French real estate
financiers is also handled from the offices in
Paris. Additionally, this segment monitors
public private partnership measures (PPP) for
investments in infrastructure and education
as well as other public construction measures
in the German regional market.
31 Dec. 2012
∆ in EUR million
∆ in %
29.8
29.3
0.5
2 %
-7.1
-9.1
2.0
-22 %
1.5
1.2
0.3
24 %
0.0
2.8
-2.8
-100 %
-8.8
-8.7
-0.1
2 %
15.4
15.5
-0.1
-1 %
2,713.0
2,678.5
34.5
1 %
Segment assets
Net interest income in the Real Estate segment increased slightly to EUR 29.8 million in
the past financial year (+2 %). Similar to what
was explained in the Corporate Customers
business, there was a sideways movement over
the course of the year, but with rising margins
in both markets. Decreases in volumes in Germany can be compensated by rising volumes
in France. The Real Estate segment gained or
extended roughly EUR 497 million in its target
markets in 2013, whereby roughly EUR 286 million was invested in Germany and EUR 211 million in the French market. The achieved margins were above the plan and the previous year
across the entire segment. The income targets increased in comparison to the previous
year and were exceeded again. The very good
performance was primarily a result of business in Germany, despite greater competition
in terms of conditions, whereby the Bank also
took a leading role in making investments in
its core market. But the French business also
picked up and achieved its planned targets in
connection with ongoing pleasing margins and
comparatively high commission income.
The risk provision in the credit business in
the amount of EUR -7.1 million improved by
roughly EUR 2 million (+22 %) from the previous year. The creation of new provisions in
Germany was compensated in full by the release of provisions. As a result, the majority
of the risk provision was attributable to the
sub-segment French Real Estate.
25
More than 80 %, or EUR 1.3 million of the
net commission income in the amount of
EUR 1.5 million is based on processing commissions from the credit business, which were generated in particular in the Germany segment.
In total, the segment assets amounted to
roughly EUR 2.7 billion and continue to be
on the level of the previous year. This reflects
the 2012 forecast for the development of the
credit volume.
EUR million
Net interest income
31 Dec. 2013
31 Dec. 2012
∆ in EUR million
∆ in %
20.0
20.0
0.0
0 %
0.0
-0.7
0.7
-99 %
4.6
5.3
-0.8
-15 %
-7.4
-6.6
-0.8
13 %
17.1
18.0
-0.9
-5 %
1,790.4
1,502.7
287.7
19 %
Segment assets
Net interest income in the area of projects
remained on the level of the previous year
at EUR 20.0 million (2012: EUR 20.0 million).
The stable year-on-year earnings mainly result from higher income from the net interest income on assets compensating for low
segment-related income from the investment
of equity. Nonetheless, the area of new credit
business continued to expand. For renewable
energies, the Bank awarded credits in the
amount of EUR 430 million, which confirms
the trend stated in the 2012 forecast. Of this
amount, as in previous years, the vast majority was attributable to the French market,
which again underscores the outstanding
market position and the structuring and legal
expertise of the SaarLB Group as the FrancoGerman regional bank. In the German target
market, the Bank was able to achieve high
growth of roughly 50 % in the portfolio, making a disproportionately large contribution to
the development of earnings in the segment.
The planned volumes in the awarded new
business were slightly exceeded due to the
business in renewable energy in Germany. In
26
Projects
The Projects segment is responsible for the financing of projects in the SaarLB Group, especially in the renewable energy sector, but also
in the area of public private partnership (PPP)
on the French market. The regional focus of
business is also on the target markets already
defined in the Corporate Customers segment.
the sub-segment PPP France, the Group was
able to expand its market position as a niche
provider for midcap projects, as planned. The
total volume here was roughly EUR 139 million in 2013, as compared to EUR 83 million in
the previous year. There were also credit commitments of roughly EUR 61 million, which
are successively paid out with construction
progress.
The new business in this year is also linked to
the quality of the previous year, which speaks
for the entire portfolio with respect to the
hardly used risk provision.
Net commission income was EUR 4.6 million in
the financial year and somewhat weaker than
in the previous year (2012: EUR 5.3 million),
whereby this is mainly due to a decline in commissions without a relationship to portfolios.
The contribution from the portfolio business
doubled from the period in the previous year.
The sub-segment Projects France made the
largest contribution at more than 55 % in this
year.
Overall, the segment assets in the business area rose by some EUR 0.3 billion, from
EUR 1.5 billion as of 31 December 2012 to just
under EUR 1.8 billion as of 31 December 2013,
thereby confirming the forecast from the previous year.
The increase in administrative expenses from
EUR -6.6 million to EUR -7.4 million is mainly
due to the occupancy of open positions and
thus the resulting increase in operating costs.
Worth Individuals
Worth Individuals provides wealth advice and
management for savings banks, institutional
investors and high net worth individuals. The
focus of the Savings Banks and Institutionals
is on increasing existing customer connections and expanding contacts with insurance
companies and pension funds in the region
and the business relationships to savings
banks in Rhineland-Palatinate. It also deals
with financing of the region’s savings banks
and municipalities. The credit volumes, in
particular defined by municipal financing,
fell slightly over the course of the year, from
about EUR 2.0 billion to about EUR 1.8 billion, but with moderately rising margins. New
business in the area of municipalities did
EUR million
31 Dec. 2013
not reach the level of the previous year and
finished 2013 at EUR 52 million, significantly
below the level in 2012 (EUR 213 million). However, it was possible to increase new business
margins significantly. The private placement
volume also declined in financial year 2013 –
as planned – since SaarLB was able to profit
from high placement success in 2012. In total,
just EUR 778 million was placed (2012: EUR 2.3
billion). The ongoing low interest rates continued to hurt the liability business in the
past financial year, which despite large fluctuations during the year was able to stabilise
again toward the end of the year.
In the business with high net worth private
customers, the volume of liabilities enjoyed a
positive development, rising by roughly 10 %
to EUR 200 million at the end of the year. Due
to the low interest environment, this increase
in volume also came with a decrease in margins.
The sub-segment of Wealth Management is
still being developed, but improved high net
worth individuals’ awareness of the SaarLB
Group and will continue to strengthen our
market presence in this segment. The volume
of liabilities increased again in this segment
to roughly EUR 17 million.
31 Dec. 2012
∆ in EUR million
∆ in %
Net interest income
4.4
7.4
-2.9
-40 %
0.0
0.2
-0.1
-82 %
3.8
1.7
2.1
> 100 %
0.8
2.8
-2.0
-71 %
-7.4
-7.9
0.5
-7 %
1.6
4.0
-2.4
-60 %
1,818.0
1,966.6
-148.6
-8 %
Segment assets
27
Net interest income fell substantially, from
EUR 7.4 million to EUR 4.4 million. The reason for this was in particular the declining
volumes in the asset area, which could not
be compensated by higher margins. Furthermore, there was also a noticeable reduction
in the volume of liabilities in the entire area,
which is reflected, due to the ongoing low interest rate, in the drop in net interest income.
Another factor for the declining interest income in the segment is a change in procedure
that does not have an impact on the income
statement. In 2013, the Bank launched a remuneration system based on the exact business in the area of segment assets for private
placement transactions, which replaced the
lump-sum volume-related remuneration.
The risk provision fell again in the financial
year, which reflects the improved portfolio
quality in the area of Savings Banks, High Net
Worth Individuals and Institutions.
Net commission income rose by more than
100 % to a level of EUR 3.8 million and confirmed the forecast in 2012. The largest income item in this segment is the securities
commission income, which makes a contribution of EUR 3.4 million to the earnings. With
a share of roughly 60 %, the Savings Banks
and Institutionals segment makes the largest
contribution.
The gains on fair value measurement fell substantially, by EUR 2 million, to EUR 0.8 million
due to market-induced measurement effects
(2012: EUR 2.8 million).
Administrative expenses are, at EUR 7.4 million, slightly below the level in 2012
(EUR 7.9 million), which corresponds to the
situation in the bank as a whole.
Overall, the segment results fell by roughly
EUR 2.4 million to EUR 1.6 million, which is
partially due to the described change in the
process for net interest income.
28
Treasury and Portfolio Management
The Treasury and Portfolio Management segment is responsible for the traditional treasury functions and the controlling of the interest rate risk (asset-liability management) and
the liquidity as well as all the portfolios that
are not part of the SaarLB Group’s core business. For the most part, these portfolios consist of the reduction portfolio (investments
in international bank and corporate counterparties outside of the core of Europe, international commercial real estate financing, securitisation and diverse smaller sub-portfolios)
that the SaarLB Group would like to divest in
the medium term.
Liquidity management primarily includes
Securities Account A, which is held primarily
according strict liquidity criteria (securities
portfolio with a focus on European companies in the investment grade area) and the
LCR portfolio, which serves to build up qualified Basel III assets.
With assets of EUR 1.7 billion as of December
2013, the reduction portfolio decreased by
another EUR 1.1 billion from 2012 (EUR 2.8 billion). The volume in Securities Account A is, at
EUR 2.3 billion, on the level of 2012, although
the new business in 2013 increased significantly (EUR +55 million). The build-up of the
LCR portfolio in preparation for Basel III was
begun in past years and is at the same level
as in 2012 (EUR 0.3 billion). The statements on
the development of the portfolio reflect the
2012 forecasts for financial year 2013.
31 Dec. 2013
EUR million
Net interest income
31 Dec. 2012
∆ in EUR million
∆ in %
35.2
36.8
-1.6
-4 %
-8.3
-19.3
11.0
-57 %
-0.5
1.9
-2.3
<-100%
1.1
0.0
1.1
>100 %
Gains/losses on investments
-2.9
-2.6
-0.4
14 %
-10.6
-10.5
-0.1
1 %
14.0
6.3
7.7
>100 %
4,285.1
5,387.5
-1,102.3
-20 %
Segment assets
While net interest income at EUR 35.2 million
was below the level in 2012 (EUR 36.8 million),
net commission income fell by EUR 2.3 million
to EUR -0.5 million – with the reduction portfolio being critical here. The opposite effect
was produced by positive fair value measurement of the credit default swaps, which total
EUR 1.4 million. This was reported in overhead
in 2012 and will be assigned on the basis of
cause in 2014.
In addition to the management of the reduction portfolio, the segment is responsible
for liquidity and asset-liability management
in the Group. The Bank’s derivative business
mainly serves to hedge interest rate risks
and has a volume of EUR 15.8 billion (2012:
EUR 16.5 billion).
EUR million
Net interest income
31 Dec. 2013
Landesbausparkasse Saar
Privately used real estate was financed in
close collaboration with the Saarland savings
banks exclusively through the Landesbausparkasse Saar, which belongs to the SaarLB
Group.
Customer credit volumes of Landesbausparkasse were, at EUR 0.6 billion as of 31
December 2013, above the level in 2012
(EUR 0.5 billion). The increase in the credit
volume totalled roughly 20 %.
The new business volume increased substantially by roughly 15 % in the past financial
year and amounted to EUR 581 million (2012:
EUR 504 million).
31 Dec. 2012
∆ in EUR million
∆ in %
17.2
15.2
2.0
13 %
-0.1
-0.5
0.4
-80 %
-2.9
-1.8
-1.1
62 %
-11.0
-10.8
-0.2
2 %
Other income
0.6
0.6
0.0
1 %
3.9
2.8
1.1
40 %
758.5
690.9
67.6
10 %
Segment assets
29
The earnings of Landesbausparkasse in 2013
rose by 40 % from the previous year and
reached about EUR 3.9 million.
Interest income improved and benefited from
the strong rise in new business, which confirms the 2012 forecast trend. In comparison
to the 2012 amount of EUR 15.2 million, net
interest income rose to EUR 17.2 million.
The risk provision in the home loan savings
business continues to be on a very low level
and was, at EUR -0.1 million, significantly below the level in 2012 (EUR -0.47 million).
30
Commission income from the brokerage business at savings banks followed the trend in
2012 and the forecast, reducing the segment’s
income by roughly EUR -2.9 million (2012:
EUR -1.8 million). In contrast, sustainable
higher net interest income will be generated
over the next few years.
Administrative expenses rose slightly at
Landesbausparkasse, from EUR 10.8 million
to EUR 11.0 million.
FINANCIAL POSITION
The SaarLB Group’s financial position also remained good in 2013. The inflow of liquidity in
coming years is ensured on account of the current refinancing structures. The flow of liquidity from the asset business can be used again
to refinance new business. Furthermore, the
Bank benefited from a high liquidity surplus
from the very successful placements in 2012,
about 80 % of which were issued without
cover.
The mortgage cover in accordance with Section 28 PfandBG increased by roughly 24 %
on account of the good new business in the
real estate area. Due to the use of ongoing financing sources, the higher cover funds were
not reflected in an equivalent increase in the
Pfandbrief circulation, so the coverage with
approx. 105 %, as compared to approx. 60 %
in 2012, represents another considerable increase.
The public sector cover funds and the corresponding public sector Pfandbriefs in circulation were reduced due to maturities and ongoing new business. The surplus is, at roughly
54 %, still significantly above the previous
year (approx. 39 %).
EUR 788 million (2012: EUR 2.3 billion), the
placed volumes in 2013 continue to be on a
high level and took place almost entirely as
part of private placements with customers
and financial partners. Investor loyalty therefore remains of central importance. As a result, SaarLB in 2013 was largely independent
of capital markets, as in 2012. In the process,
the SaarLB Group – similar to 2012 – also succeeded in refinancing itself primarily via uncollateralized issuances with long maturities.
The development of new business conditions
for refinancing depends largely on the swap
curve and the Pfandbrief curve for covered issues.
The capital structure of the SaarLB Group follows the development of the credit volume.
Maturities, particularly for institutional investors, were not replaced. This resulted in a
drop of EUR 1.1 million in liabilities to customers to EUR 4.8 million (2012: EUR 5.9 million),
whereby the structure of the refinancing also
changed slightly.
The situation on the capital market continues to be stable as compared to financial
year 2012, from the perspective of the SaarLB
Group. The very good placement success in
the past financial year and the prevailing liquidity surplus systematically reduced new
issues in 2013, however. With just under
EUR billion
31 Dec. 2013
31 Dec. 2012
∆ in EUR billion
∆ in %
Banks
5.7
6.0
-0.3
-4.2 %
Customers
4.8
5.9
-1.1
-19.3 %
4.9
5.1
-0.2
-3.4 %
Subordinated capital
0.3
0.3
0.0
-4.5 %
15.8
17.3
-1.6
-9.1 %
Total liabilities
31
EUR billion
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Banks
Customers
31 Dec. 2013
Liabilities to banks fell by EUR 0.3 billion
(-4.2 %) to EUR 5.7 billion in comparison to
2012. Short- and medium-term maturities
were partially compensated by money market
liabilities.
Liabilities to customers totalled EUR 4.8 billion in 2013 and were EUR 1.1 billion below the
previous year (2012: EUR 5.9 billion).
Securitised liabilities fell from EUR 5.1 billion
to EUR 4.9 billion in 2013. In preparation for
the 2015 maturity of municipality guarantor
EUR billion
31 Dec. 2012
31 Dec.2011
liabilities, the Bank actively repurchased securities on the market.
Subordinated capital fell from EUR 335.1 million to EUR 319.9 in the expired financial year.
A planned run-off of subordinated liabilities
and profit participation rights for a total of
EUR 15.2 million was not replaced.
The maturity structure of refinancing mainly
reflects the maturity structure on the asset
side.
31 Dec. 2013
31 Dec. 2012
∆ in EUR billion
∆ in %
of which due on demand / without maturity
0.2
0.2
0.0
14.0 %
up to 3 months
4.6
4.7
-0.1
-2.1 %
more than 3 months and up to 1 year
1.5
2.4
-0.9
-36.2 %
more than 1 year and up to 5 years
5.2
6.1
-1.0
-15.5 %
more than 5 years
3.4
3.1
0.3
9.5 %
of which without maturity
0.8
0.7
0.0
3.1 %
15.8
17.3
-1.6
-9.1 %
Total refinancing
32
Reported equity rose by EUR 27.7 million,
from EUR 557.2 million to EUR 584.9 million.
The change is mainly due to the retention of
earnings from 2012 and the conversion of silent reserves.
The retained profit fell from EUR 50.5 million
in 2012 to EUR 27.2 million in 2013. Please refer to the section on the results of operations
for information about distributions.
The debt component of silent reserves decreased by EUR 19.0 million in 2013 due to
the shorter maturities as part of the split accounting and the proportionate effect of the
conversion of silent reserves.
Please refer to the “Risk report” section for an
explanation of the regulatory capital requirements and the resulting regulatory key performance indicators.
The negotiations on the conversion of silent
reserves of Saarland savings banks, as discussed in the 2012 management report, were
successfully completed in the fourth quarter
of 2013. The share of Saarland savings banks’
ownership in SaarLB increased from 14.9 % to
25.1 % as a result. Furthermore, SaarLB has
the right to request the conversion of the remaining silent reserves of Saarland savings
banks to hard core capital as of 1 January 2016,
if need be.
Off-balance sheet liabilities of SaarLB are primarily affected by irrevocable credit commitments and contingent liabilities. With a total
volume of EUR 640 million as of 31 December
2013, these liabilities are of only insignificant
importance for an assessment of the financial
position, as in the previous year (EUR 593 million).
In order to ensure solvency at all times,
SaarLB deposited securities amounting to
roughly EUR 1.0 billion at the ECB, as in 2012
(EUR 1.4 billion). Payment obligations could
therefore be met independently of other
sources of refinancing.
Please refer to the “Risk report” for an explanation of the liquidity management.
The proportion of hedging for net positions in
foreign currencies is insignificant due to the
business activity focused on Germany and
France. Both the new awarding of loans and
the corresponding refinancing take place primarily in EUR. The existing foreign currency
portfolios are primarily assigned to the reduction portfolio.
The use of derivative financial instruments
is overwhelmingly to hedge the Bank’s own
interest rate risk as part of asset/liability management. The nominal volume fell
by EUR 0.7 billion to EUR 15.8 billion (2012:
EUR 16.5 billion). Roughly 96 % of this relates
to interest swaps and is also on the level of
the previous year in terms of product usage.
The SaarLB Group’s ability to meet its payment obligations was thus ensured at all
times in the 2013 financial year.
The SaarLB Group’s access to money and capital markets is supported by the credit ratings
of two international rating agencies. Both the
rating agency Moody’s Investor Service and
Fitch Ratings fundamentally confirmed SaarLB’s credit rating as an issuer in the past financial year. Moody’s lowered the outlook for
the financial strength rating and thus for the
long-term rating on the outlook to negative.
SaarLB does not have any credit lines.
33
Rating
Moody’s
Fitch
Long-term rating (uncollateralised)
with government liability
without government liability
Outlook
Short-term rating (uncollateralised)
Financial strength/viability rating
In summary, the development of business
in 2013 went well overall, but the extraordinarily good earnings from 2012 could not be
achieved. Nonetheless, the total earnings significantly exceeded the ambitious earnings
budget (before the retention of profits). Both
the development of the core business segments and the refinancing options of SaarLB
meet the Bank’s expectations.
34
Aa1
AAA
A3
A
Negative
Stable
P-2
F1
D
bb+
ASSETS
The SaarLB Group’s total assets fell by 9.5 %
to EUR 17.0 billion as of 31 December 2013
(31 December 2012: EUR 18.7 billion). The decline is mainly due to the lower loans and
31 Dec. 2013
EUR billion
advances to banks and to securities. The credit volume of the SaarLB Group – similar to total assets – fell by 8.7 % from EUR 18.4 billion
to EUR 16.8 billion in financial year 2013.
31 Dec. 2012
∆ in EUR billion
∆ in %
2.0
3.2
-1.2
-37.7 %
Investments
5.0
5.3
-0.2
-4.5 %
Interests in associated companies
0.0
0.0
0.0
109.6 %
Investments
4.4
4.7
-0.3
-6.4 %
Securities repurchase transactions
0.6
0.6
0.1
10.4 %
8.8
9.0
-0.2
-2.7 %
Contingent liabilities
0.3
0.3
0.0
17.4 %
Irrevocable credit commitments
0.6
0.6
0.0
7.9 %
16.8
18.4
-1.6
-8.7 %
of which
Total credit volume
Loans and advances to banks made a significant contribution, declining year on year by
some EUR 1.2 billion to EUR 2.0 billion. The
decrease in invested excess liquidity in 2012 is
responsible for this.
Financial assets (incl. securities repurchase
transactions) fell by EUR 0.3 billion, from
EUR 5.3 billion to EUR 5.0 billion, in the past
financial year (-4.5 %). The reasons for this include the repayment of bank securities and
investments in international corporates that
do not belong to the core business.
by EUR 0.2 billion to EUR 8.8 billion (2012:
EUR 9.0 billion). The slight decline in loans and
advances to customers by approx. EUR 0.2 billion comes primarily from the reduction portfolio and the decline in the portfolio of municipal financing.
Contingent liabilities totalled EUR 0.3 billion in 2013 and were on the level of 2012
(EUR 0.3 billion), while irrevocable credit
commitments were almost unchanged at
EUR 0.6 billion (2012: EUR 0.6 billion).
A similar development was seen in loans and
advances to customers, which are mainly influenced by the core business segments of
the Bank. The nominal volume fell slightly,
35
SUPPLEMENTARY REPORT
There have been no events of special significance since the end of the year under review.
RISK REPORT
RISK MANAGEMENT AND MONITORING
PRINCIPLES
The SaarLB Group manages and monitors its
risks on the basis of uniform principles. All information provided below relates to the SaarLB Group unless expressly stated otherwise.
Management of subsidiaries and companies
valued at equity takes place as part of investment controlling.
The key risk management and monitoring
principles are laid down in SaarLB’s risk strategy. In accordance with the business strategy, the Board of Management lays down
the policy for dealing with counterparty risk
(counterparty default risks and credit spread
risks), market price risk, liquidity risk, operational risk, risks from unexpected behaviour
of home loan savers, real estate risk, strategic risks / business risks and reputation risks,
which are the key risk types for SaarLB. It is
responsible for and monitors the implementation of these guidelines.
Generating a reasonable and sustainable
return after allowing for risk is the ultimate
aim of all SaarLB’s business activities. Risks
may only be entered into to the extent permitted by SaarLB’s risk-bearing capacity. The
risk management system fundamentally does
not take into account either diversification
effects between risk types or (income) opportunities.
Suitable limits for the key risk types have
therefore been set and appropriate procedures for identifying, measuring and monitoring them defined as part of the risk strategy.
36
The tasks, competencies and responsibilities
of the staff involved are based on clearly defined organisational structures and processes. Organisational structures take account
of the supervisory requirements under the
Minimum Requirements for Risk Management (MaRisk) and the Solvency Ordinance
(SolvV) on the division of functions between
Sales and Trading (business segments) on the
one hand and Risk Office, Settlement and Risk
Controlling on the other.
While business areas are based around SaarLB’s business model, core competencies have
been combined in the organisation of the Risk
Office and Settlement.
Global Risk Management is in charge of risk
controlling of all risk types at the portfolio
level. Risk Office is responsible for managing
and monitoring counterparty risk at the individual exposure and sub-portfolio level. This
involves integrated risk reporting of all risk
types as part of a joint MaRisk risk report.
Internal Audit reports directly to the Board of
Management and is answerable to its Chairman. It is an independent internal division
that audits and assesses, on the basis of a
risk-oriented audit approach, all activities and
processes within SaarLB, including the internal control system and risk management and
controlling. This also applies for outsourced
activities and processes. Internal Audit acts
in accordance with legal and supervisory requirements such as KWG [German Banking
Act], MaRisk [Minimum Requirements for
Risk Management].
With the publication of the 4th MaRisk
amendment on 14 Dec. 2012, SaarLB immediately began the implementation of the new
requirements and met the necessary requirements at the end of 2013.
CAPITAL MANAGEMENT
The supervisory requirements set out in the
Solvency Ordinance are key for SaarLB when
assessing and managing capital adequacy as
well as maintaining economic risk-bearing capacity.
REGULATORY CAPITAL
SaarLB has applied the relevant rules on calculating capital requirements under the Solvency Ordinance since obtaining approval from
the German Federal Financial Supervisory
Authority (BaFin) to use the Internal Ratings
Based Approach (IRBA) from 1 January 2007.
Regulatory capital – i.e. equity – comprises
core capital (essentially nominal capital, silent partner contributions and reserves, including the reserves under Section 340 g of
the Commercial Code) plus supplementary
capital (essentially profit participation rights
and long-term subordinated liabilities) after
deductible items.
The overall ratio – the ratio of capital to risk
positions calculated under Solvency Ordinance rules – must not fall below 8.0 % from a
regulatory point of view. SaarLB has specified
a stricter target ratio of 10.0 % for its Group
Key Solvency Ordinance (SolvV) data
Risk exposure (EUR million)
figure and a core capital target ratio of 8.0 %
in its internal management. The latter is the
ratio of core capital (after deductible items)
to risk exposures.
Target values are constantly maintained by
means of medium-term planning over a fiveyear timeframe. The Corporate Development
segment is responsible for the strategic planning process. On the basis of the economic
conditions determined in this process, each
business area performs its own risk exposure
planning for this time period. Their figures are
then collated at Group level by Profit Controlling – the department in charge of the quantitative aspects of medium-term planning –
and compared with the equity available in the
planning period. Finally, the measures needed
to procure capital or scale back proposed business area budgeting are defined to ensure the
targets are met.
An overview of the key Solvency Ordinance
data as of the balance sheet date of 31 Dec.
2013 and the corresponding figures from the
previous year are given below. SaarLB has
no longer prepared regulatory group reports
since the middle of 2011. To this extent, the
figures only include the individual bank.
31 Dec. 2013
31 Dec. 2012
6,904
7,423
832
835
809
754
Equity ratio (Group level in %)
12.1 %
11.3 %
Core capital ratio (in %)
11.7 %
10.2 %
Equity (EUR million)
of which: core capital (EUR million)
37
SaarLB’s equity ratio has increased noticeably
due to the falling risk assets. The core capital
rose from the previous year due to the additions to reserves in accordance with Section
340 g of the German Commercial Code (HGB)
(EUR 30.3 million) and a reduction in the value adjustment shortfalls (EUR 21.6 million) so
that the core capital ratio rose significantly.
SaarLB complied with the minimum regulatory ratio during the entire reporting period
at all times as well as its stricter target ratios.
Good overall capital adequacy ratios were
also reflected in the results of the required
regulatory stress tests: based on the assumption of economic weakness, the equity ratio
at the Group level was 10.2 % and the core
capital ratio was 10.0 % as of 31 Dec. 2013.
ECONOMIC CAPITAL
(RISK BEARING CAPACITY)
The core aim of the SaarLB Group’s risk management, aside from complying with regulatory capital requirements, is to ensure that
economic risk-bearing capacity, which is the
difference between risk capital (risk cover
funds) and risk capital requirements, is adequate.
Risk cover funds were fundamentally determined on the basis of IFRS accounting and
indicate the maximum actual level of unexpected losses from risks entered into that can
be borne1:
Components of the available risk cover funds (EUR million)
Results after taxes (minimum YTD and proj.)
Change
74.1
-38.1
+ nominal capital
150.1
132.1
+18.0
+ capital reserves
69.1
50.8
+18.2
+ retained earnings
203.8
154.1
+49.7
+ undated silent partner contributions
124.5
137.0
-12.5
+ dated silent partner contributions
218.6
252.3
-33.7
8.5
38.5
-30.0
124.0
124.0
-
41.9
54.7
-12.8
976.5
1,017.7
-41.2
less intangibles
4.0
2.0
+2.0
less balance of hidden charges and silent reserves from securities (LaR and HtM)
2.6
0.4
+2.2
-12.3
-8.0
-4.3
+982.2
+1,023.3
-41.2
less losses from non-performing positions
17.8
21.3
-3.5
less anticipated losses from the risk assessment horizon
35.2
30.5
+4.7
+929.2
+971.6
-42.4
+ subordinated liabilities
+ revaluation reserve
Risk cover funds
less corrections in equity due to the surplus of deferred taxes
Liquidation cover funds
Available cover funds
38
31 Dec. 2012
36.0
+ profit participation rights
1
31 Dec. 2013
On account of the one-year period under consideration, the equity items as of the reporting deadline are not reported in the risk cover funds, but rather
the figures one year after the reporting deadline are recognised (if need be, reduced by maturities in the period under consideration).
The risk cover funds fell in comparison to the
previous deadline, primarily due to the declines in supplementary capital (dated silent
reserves and profit participation rights). The
available cover funds result from the risk cover funds due to the reductive consideration of
other effects:
•In the liquidity cover funds, elements from
the cover funds are corrected if it would
be necessary to net them differently in the
case of a liquidation.
•Buffers for possible reductions in the risk
cover funds are deducted over a one-year assessment horizon, which will not be explicitly considered in the future modelling of the
economic risk bearing capacity calculation.
As part of economic risk capital management,
SaarLB monitors its risk profile and ensures
Economic risk bearing capacity:
Capital requirement and cover funds
(EUR million)
Counterparty risk
its risk-bearing capacity is always adequate
by comparing each month the risk capital allocated to the available cover funds and risk
capital needed. Risk capital needed is determined by analysing all significant risk types
in a consistent manner. The risks from across
the Group are collated into an overall assessment of the risk existing. In ICAAP, the value
at risk (VaR) method based on a confidence
level of 99.95 % is used to determine risk capital needed. The limiting takes place on the level of the individual risk types and collectively
through the (total) allocated risk capital. The
assumptions and results of risk quantification are validated at least annually.
The ICAAP risk-bearing capacity as of 31 December 2013 is illustrated in the following
overview:
31 Dec. 2013
Capital
needed
Limit
31 Dec. 2012
Range
Capital
needed
Limit
Range
268.6
420.0
64 %
331.1
430.0
77 %
of which default risk
(139.9)
(180.0)
78 %
(141.2)
(180.0)
78 %
of which credit spread risks
(128.7)
(240.0)
54 %
(189.9)
(250.0)
76 %
48.0
90.0
53 %
32.2
90.0
36 %
Operational risk
6.8
10.0
68 %
2.6
5.0
51 %
Reputation risk
0.0
2.0
0 %
0.0
2.0
0 %
Unexp. behaviour by home loan
savers
0.7
3.0
23 %
0.6
3.0
20 %
Real estate risk
12.6
15.0
84 %
13.3
15.0
89 %
Strategic risk/business risk
76.6
90.0
85 %
72.7
85.0
86 %
Total
413.3
630.0
66 %
452.4
630.0
72 %
929.2
971.6
Free econ. cover funds
515.9
519.2
Market risk
39
The SaarLB Group’s risk bearing capacity
was ensured at all times without limitations
throughout the reporting period (both in total and on the level of individual types of risk).
Besides the ICAAP risk capital needed, the risk
capital needed in multiple scenarios, was calculated among others in the case of serious
Serious economic downturn: capital requirement
and cover funds (EUR million)
Counterparty risk
31 Dec. 2013
31 Dec. 2012
291.4
306.8
(174.3)
(155.8)
(117.1)
(151.0)
27.8
12.2
Operational risk
3.4
1.3
Reputation risk
0.0
0.0
Unexp. behaviour by home loan savers
0.2
0.5
Real estate risk
9.6
10.2
40.3
38.3
Total
372.8
369.3
515.9
519.2
Market risk
Capital requirements and free economic cover
funds changed only slightly over the course of
the year. The free economic cover funds as of
the reporting deadline continued to exceed
the capital requirements significantly.
COUNTERPARTY RISK (CREDIT RISK)
Under counterparty risk (credit risk), SaarLB
combines counterparty default risk and credit spread risks. SaarLB defines counterparty
default risk as the risk that the credit quality
of a business partner will deteriorate to such
an extent that it is unable to meet its payment or contractual obligations towards the
Bank either in full and/or on time. Counterparty default risk traditionally covers credit
risk but also includes issuer risk, borrower
risk, country risk and investment risk. Other
40
economic weakness modelled across all risk
types under consistent assumptions. With
regard to counterparty risks, a sector-specific
deterioration of the credit portfolio and a further increase in credit spreads are assumed,
and for all other types of risk, more stringent
assumptions also apply.
counterparty risks (credit spread risks) result
from credit-related changes in prices for the
securities portfolio (incl. credit derivatives
and securitisations).
The risk strategy sets out the framework for
taking on counterparty default risks. A limit
on them, calculated from the risk-bearing capacity, is then set in the annual strategy process. To manage and monitor concentration
risks and for operationalisation purposes, limits are also imposed according to the credit
quality of borrowers, transactions, geographical markets and sectors.
The entire credit business chain, including
management and monitoring systems, is described in detail in the SaarLB instructions.
The master processes defined here apply
Bank-wide and are implemented uniformly in
all Risk Office areas. The instructions are constantly updated to take account of changing
internal and external requirements.
Counterparty default risk is initially assessed
at individual borrower and (supervisory) borrower unit level using the rating procedures
of RSU Rating Service Unit GmbH & Co. KG,
Munich, for banks, corporates (including municipally-owned companies), international
public authorities, leasing entities (leasing
companies and real estate leasing SPVs), insurers, international commercial real estate,
project financing and country and transfer
risk as well as the DSGV liability association
of the RSU Rating Service Unit GmbH & Co.
KG, Munich. These procedures are backed up
by the savings banks standard rating and the
savings bank real estate rating modules from
Sparkassen Rating und Risikosysteme GmbH,
Berlin. All these rating procedures have been
approved by the German Federal Financial
Supervisory Authority (BaFin) for use within
the Internal Ratings Based Approach (IRBA)
to calculate capital requirements in accordance with the Solvency Ordinance. They are
validated annually by the Bank in cooperation with these partners on the basis of the
current credit portfolio.
Significant input parameters for the quantitative part of the credit rating analysis performed in the rating process come from a balance sheet analysis system, which supports
the major accounting standards (among others HGB, IFRS, US-GAAP) and facilitates peer
groups and industry comparisons. In addition
to borrowers’ credit ratings, the risk assessment also takes into account, where required,
property and project risks as well as country
and transfer risks. Finally, borrowers are allocated to a specific rating category on a 25-tier
rating scale based on the probability of default. Rating categories are therefore comparable regardless of the rating procedure used.
In accordance with SaarLB’s requirements, standard forms of bank collateral
– particularly mortgage liens, pledges, assignments, chattel mortgages, and debt undertakings – are accepted by the Bank to reduce
risks. Collateral is processed and valued in
accordance with the Collateral Manual. The
procedure used to calculate and determine
collateral value must be clearly documented.
In the case of derivatives trading, master
agreements are concluded for the purpose of
close-out netting. Collateral agreements have
been made with certain business partners restricting the risk of default in each case to an
agreed maximum.
Exposures that may be at risk are identified
using an appropriately constructed early
warning system – for example by means of
annually revised ratings – and transferred for
intensive support. As with problem loan handling, this falls within the remit of the Risk
Office.
Counterparty default risks from trading are
monitored daily by Settlement to take account of MaRisk. In particular, all derivatives
business is monitored (counterparty risk). All
trading business conducted with each customer is counted towards the borrower limits – including settlement limit – set for that
specific customer in a system-supported and
uniform Bank-wide process and in accordance
with the requirements on market valuation
methods under the Solvency Ordinance.
The internal rating is key for managing and
monitoring counterparty default risks at the
overall Bank level; collateral is currently taken
into account only at individual exposure level
as part of reaching decisions. In particular for
the calculation of the capital adequacy under
the Solvency Ordinance, collateral (through
the credit risk mitigation techniques) is largely not taken into account. Gross exposure
limits for borrower units based on rating categories, markets and customer types derived
from the business strategy are clearly defined
in the risk strategy. In addition, to strengthen individual sector portfolios, only selected
new business may be conducted in the risk
41
sectors identified by the Bank. A strict ancillary condition requires risk-oriented pricing
supported by a suitable calculation tool.
The relevant Sales and Risk Office areas monitor each individual credit decision to ensure
compliance with the risk strategy.
The quarterly MaRisk risk report for the Board
of Management, Board of Administration and
the SaarLB Risk Committee contains both an
analysis of the credit portfolio – particularly
in relation to rating categories, sectors and
countries – as well as a summary target/actual comparison with the risk strategy.
SaarLB uses the CreditRisk+ credit portfolio
model – particularly in calculating risk-bearing capacity – to analyse risks at the portfolio level. The credit portfolio model takes account of the SaarLB Group’s entire receivables
portfolio exposed to counterparty default
risk, weighted by the specific probability of
default for each borrower derived from the
rating categories. A key variable is credit value at risk, which breaks down into expected
loss – which is taken into account through the
risk-oriented pricing – and an unexpected loss.
Both the expected and unexpected loss must
be covered by risk capital in the risk-bearing
capacity calculation.
42
PORTFOLIO ANALYSIS (ECONOMIC)
The presentation in the following chapters
“Portfolio analysis (economic)” and “Sub-portfolios with increased risk profile” is based on
the internal risk management (management
approach) according to which there was a
maximum credit risk of EUR 18,345 million
(31 Dec. 2012: EUR 20,139 million). Minor deviations from the balance sheet approach (see
chapter “Portfolio analysis (balance sheet)”)
are due, among others, to consideration
given to add-ons in the determination of the
credit risk of derivative financial instruments
according to the market valuation method,
counterparty risks from securities repurchase
transactions and the recognition of credit derivatives at nominal values.
Max. credit risk by rating category (EUR million)
12,000
10,000
8,000
6,000
4,000
2,000
0
DSGV scale:
1
2-5
6 - 12
13 - 15
16 - 18
(Landesbank scale:
0-7
8-11
12-18
19-21
22-24)
31 Dec. 2012
Around 80 % of credit risk is in the investment
grade bracket (rating categories 1 to 5 according to the DSGV scale), representing a drop of
around 1 percentage point year-on-year.
SaarLB uses a value-added and risk-orientated grouping code on the borrower level
for the purposes of economic management
and strategic alignment of the sector credit
31 Dec. 2013
risk, breaking down credit risk into 32 sector
groups. Credit risk by sector groups (not including the separately reported Bank sector,
whose share of the total credit risk in the reporting period fell from 42 % to 38 %) breaks
down as follows:
43
Maximum credit risk for customers by branch (EUR million)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Real estate Sovereigns
Renewable
energy
Utilities
Automotive
Construction
31 Dec. 2012
SaarLB’s sector portfolio – particularly the
corporates portfolio – continues to be welldiversified. Real estate, the largest individual
sector (besides banks), comprises roughly
16 % of the total credit risk (including banks)
and is almost the same as in 2012 (17 %).
Steel
Wholesale +
Food +
retail trade beverages
ABS
Retail
customers
31 Dec. 2013
The credit risk in the Banks sector (not included in the chart) fell substantially by
EUR 1.5 billion in the year under review as it
did in the Real Estate sector (by EUR 340 million). The credit risk in the target sector of Renewable Energies again increased by EUR 273
million.
Max. credit risk by region (EUR million)
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Germany
France
Rest of Europe
31 Dec. 2012
44
31 Dec. 2013
North America
Other
Other
sectors
SaarLB uses the official Bundesbank codes to
give a breakdown of its credit risk in a uniform
manner for each individual country. Borrowers are encoded according to the respective
authoritative country risk, which e.g. in the
case of dependent branches, does not necessary correspond to the country in which they
are based. Regions are then grouped on the
basis of global and regional links. The focus
of SaarLB’s country portfolio is in its defined
target markets of Germany and France, which
amount to a share of around 87 % (as of 31
Dec. 2012: 85 %) of the credit risk. Another
Banks: Maximum credit risk (EUR million)
Regions
Germany
11 % (as of 31 Dec. 2012: 12 %) concerns credit
risks in the rest of Europe, whereby the credit
risks in Ireland and in the southern European
countries of Greece, Italy, Spain and Portugal amount to a total of EUR 352 million (of
which 45 % is investment grade) (as of 31 Dec.
2012: EUR 445 million). In the reporting period, the volume of French business was again
expanded by EUR 295 million (2012: +EUR 241
million), while the credit risk in Germany (primarily with banks) and outside of the target
markets fell significantly.
31 Dec. 2013
31 Dec. 2012
5,178
6,478
484
418
Rest of Europe
1,155
1,364
North America
144
213
56
69
7,017
8,542
France
Other
Total
The loans and advances to banks – including the credit substitute securities portfolio
reported under investments on the balance
sheet – are predominantly to banks headquartered in Europe, mostly in Germany. Across all
regions, the bank credit risk fell by a total of
EUR 1.5 billion in the reporting period, in absolute terms seen most substantially in Germany where it fell by EUR 1,3 billion, and as a percentage in North America where it dropped by
32 %.
45
Non-banks: Maximum credit risk (EUR million) as of 31 Dec. 2013
Sectors
Germany
Other
Western
Europe
North
America
Other
Total
Total
Sovereigns
1,520
554
284
0
10
2,369
2,264
Real estate
1,243
1,359
225
169
0
2,995
3,335
172
25
9
0
0
207
299
7
0
33
8
0
48
107
Wholesale + retail trade
198
11
1
0
0
210
242
Construction
155
191
14
0
0
361
320
Utilities
254
42
97
0
1
393
359
Steel
268
7
1
0
0
276
327
Renewable energy
505
1,452
0
0
0
1,957
1,684
Food + beverages
124
98
61
3
0
285
285
Retail customers
376
213
7
0
0
596
552
Other sectors
1,143
328
137
16
5
1,630
1,821
Total
5,966
4,281
868
197
16
11,328
11,597
Automotive
ABS
Most of the loans and advances to customers (around 98 %) – including the credit substitute securities portfolio reported under
investments on the balance sheet – are to
Banks: Maximum credit risk (EUR million)
Size category
Up to EUR 1 million
customers based or resident in Western Europe. The largest proportion of these customers, roughly 92 %, are from Germany and
France.
31 Dec. 2013
31 Dec. 2012
37
35
> EUR 1 million to 5 million
136
142
126
164
559
700
1,491
1,500
936
1,424
929
2,006
906
1,078
1,897
1,492
0
0
7,017
8,542
> EUR 500 million to 1 billion
> EUR 1 billion to 2.5 billion
Total
46
France
31 Dec.
2012
Loans to banks were mostly in larger volumes and were reduced substantially in the
reporting year. The changes in the higher size
Non-banks: Maximum credit risk (EUR million)
Size category
Up to EUR 1 million
categories result from the shift of individual
customers to adjacent classes.
31 Dec. 2013
31 Dec. 2012
698
695
1,094
1,116
1,825
1,912
3,199
3,150
2,909
3,057
814
702
537
709
251
257
11,328
11,597
Total
Loans and advances to customers are welldiversified in terms of size. In accordance
with SaarLB’s business model, most of the
new exposures were in the EUR 1 million to
EUR 50 million range.
Securitisations: Maximum credit risk (EUR million)
Rating categories
SUB-PORTFOLIOS WITH ELEVATED RISK
PROFILES
The securitisation positions held by SaarLB
largely possess a good to very good external
rating. Over 93 % of the total credit risk (in
2012: 67 %) has a rating in the investment
grade area.
31 Dec. 2013
31 Dec. 2012
1
28
46
2-5
17
26
6-8
1
17
9-12
0
11
13-15
0
4
Default categories
3
3
48
107
Total
Loans and advances from the support given
to SachsenLB were completely repaid and no
longer exist as of 31 December 2013 (as of 31
Dec. 2012: EUR 6.4 million). In terms of other
credit risk broken down by region, 13 % is attributable to Germany and 69 % is distributed
across the rest of Europe. The focal points
here are on Spain (35 %), UK (18 %) and Italy
(9 %). The share of securitisations in the North
American market is EUR 8.1 million and fell
slightly in comparison to 2012 (EUR 9.0 million).
47
The total credit risk from securitisation positions fell even more in comparison to the
reporting deadline from the previous year.
The reason for this was both the repayment
of the exposure from the support given to
SachsenLB (by roughly EUR 6.4 million), repayments of existing exposure (roughly
EUR 26.1 million) and repayments (roughly
EUR 26.6 million). These figures take into account a currency effect of EUR 1.9 million. In
2013, there was depreciation in the amount
of roughly EUR 0.8 million (2012: EUR 0.0 million). New business was not concluded in the
reporting year and also will not be concluded
in the future under SaarLB’s business and
PIIGS exposure
Maximum credit risk (EUR million)
Country
risk strategy. The securitisation portfolio resulted in a charge to the revaluation reserve
of roughly EUR 2.5 million as of the reporting
deadline (as of 31 Dec. 2012: EUR 4.0 million).
Furthermore, the 2008 reclassification to
the category of Loans and Receivables (LaR)
led to another charge to the revaluation reserve of EUR 2.7 million (as of 31 Dec. 2012:
EUR 15.6 million).
On account of the sovereign debt crisis in the
euro zone, exposure in Portugal, Ireland, Italy,
Greece and Spain (“PIIGS” countries) is currently being observed very carefully.
31 Dec. 2013
Spain
146
212
Italy
168
175
Portugal
35
39
2
19
Ireland
Greece
Total exposure
The credit portfolio continued to fall in the
reporting period. The maximum credit risk
was 45 % in the investment grade as of the
PIIGS exposure:
Sectors
Banks
0
0
352
445
reporting deadline (as of 31 Dec. 2012: 71 %)
(rating grades 0-5 according to DSGV scale).
31 Dec. 2013
199
31 Dec. 2012
303
ABS
24
71
Real estate
25
33
Sovereigns
70
0
Rest
34
37
352
445
Total exposure
SaarLB has exposure with a maximum credit
risk of roughly EUR 70 million to sovereigns
in the PIIGS countries as of 31 December 2013
(31 Dec. 2012: EUR 0.0 million). The majority of
this is in Italy (93 %), the rest in Spain (7 %).
48
31 Dec. 2012
Impairments in the amount of EUR 1.0 million
(31 Dec. 2012: EUR 3.6 million) have already
been considered in the maximum credit risk
of Spain (real estate sector).
RISK PROVISIONS
As part of risk monitoring, all exposures with
counterparty default risk are subject to a set
“early warning, intensive care and problem
loan handling process” and the relevant instructions and policies. Within this process,
exposures with warning signals are transferred to the appropriate type of support
adequate for the risk content and classified.
This is based on objective indicators pointing
to impairment of the exposure. These include:
•clear deterioration of financial
circumstances
•expectation of lower future payment
streams than those agreed
•default or delay in arranged payments of
capital and/or interest, application for
deferment or extension
•concessions to the borrower for economic
or legal reasons in connection with
financial difficulties
•breach of agreements material to lending
•high probability of insolvency proceedings
or other restructuring of the borrower
•rating-related restructuring or
reorganisation
•disappearance of an active market for this
financial asset due to financial difficulties
•country-specific evidence of impairment
•discounts in market prices of more than
15 %
also established for exposures if complete repayment of loans is improbable due entirely
to country risks. When establishing risk provisions, a distinction is made between specific
risk provisions for existing receivables and
provisions for future drawdowns (provisions
for non-balance sheet business in the credit
business). Where a default has occurred and
it has been established that there are no prospects of recovery, the receivable is written off
directly against the gain/loss.
Portfolio risk provisions are established for
financial instruments that are recognised
at amortised cost and for which no impairment has been identified. These include exposures where objective indications as listed
above did exist for an impairment but, after
subsequent examination, were not rated as
impaired. When establishing portfolio risk
provisions, it needs to be ensured that impairments not individually identified are taken
into account, thereby covering latent risks.
The portfolio risk provisions are calculated using Basel II parameters and under consideration of the loss identification period (LIP) for
portfolios with the same risks.
Adequate provision was made for any potential losses detected as part of risk monitoring
in the reporting year. The changes in risk provisions for individual risks in the SaarLB Group
(including the Landesbausparkasse and the
country risk provisions) were as follows:
When the risk analysis shows that the contractual repayment or collection of all contractual compensation for credit is improbable, a risk provision is established. The
calculation of the risk provision is made for
each business and considers all counterparty
default risks. The amount of the impairment
is fundamentally determined by the difference between the carrying value of the receivables and the anticipated future cash flows,
which are discounted with the original effective interest rate. Specific risk provisions are
49
Risk provisions for individual risks
EUR million
01 Jan. 201331 Dec. 2013
Start level
Release
01 Jan. 201231 Dec. 2012
147.1
140.8
-14.5
-13.3
Unwinding
-3.5
-4.1
Utilisation
-46.5
-20.5
Addition
39.0
44.2
End level
121.7
147.1
Direct write-downs due to credit ratings
totalled EUR 2.7 million (as of 31 Dec. 2012:
EUR 1.8 million). For latent risks in the credit
business, including financial assets measured
at amortised cost, there were portfolio risk
provisions of EUR 18.5 million (as of 31 Dec.
2012: EUR 20.9 million). Of this amount, there
were EUR 2.6 million in guarantees and irrevocable credit commitments (as of 31 December
2012: EUR 3.0 million). For financial assets,
there were write-downs due to credit ratings
for a total of EUR 0.2 million (as of 31 Dec.
2012: EUR 0.7 million).
PORTFOLIO ANALYSIS (BALANCE SHEET)
The changes in maximum credit risk based
on IFRS carrying amounts (taking account of
specific risk provisions and country risk provisions in accordance with IAS 39) in the reporting period were as follows:
By balance sheet items
31 Dec. 2013
Cash reserves
31 Dec. 2012
785
669
2,005
3,228
8,693
8,911
328
518
29
46
4,913
5,162
Positive market value of fair value hedges
Investments*
Other assets
Total
4
4
322
274
640
593
17,718
19,405
* Not including equity instruments, including securities repurchase transactions
The following tables show this maximum
credit risk, broken down by (a) financial assets that are neither past due nor impaired,
(b) financial assets that are past due, but not
50
impaired and (c) financial assets that are impaired.
Financial assets that are neither past due nor impaired:
Maximum credit risk as of 31 December 2013 by rating category (EUR million)
Balance sheet item and category*
Cash reserve (LaR)
1
2-5
31 Dec.
2012
6-12
13-15
Default
Unrated
Total
Total
-
-
0
-
-
785
785
669
Loans and advances to banks (LaR)
1,731
159
3
-
-
62
1,954
3,187
(LaR)
2,714
3,062
2,525
50
44
122
8,517
8,246
227
52
44
0
-
4
327
504
23
5
-
-
-
-
29
46
4,204
469
237
-
-
-
4,910
5,157
Available for sale
3,288
322
64
-
-
-
3,674
3,545
Fair value option
189
55
7
-
-
-
250
373
Held to maturity
522
66
5
-
-
-
593
675
Loans and receivables
205
27
161
-
-
-
393
565
-
-
-
-
-
4
4
4
30
175
110
7
-
-
322
261
97
411
91
8
-
32
640
565
9,027
4,333
3,010
66
44
1,008
17,487
18,639
Assets held for trading (HfT)
Positive market value of fair value
hedges
Investments**
Other assets
Total
* Categories are: Loans and Receivables (LaR), Held for Trading (HfT), Available for Sale (AfS), Fair Value Option (FVO) and Held to Maturity (HtM).
** Not including equity instruments, including securities repurchase transactions
The credit risk that is neither past due nor
impaired fell by roughly EUR 1.2 billion primarily due to loans and advances to banks
(by EUR 1,233 million), financial assets (by
EUR 248 million) and assets held for trading
(by EUR 177 million). This was countered by
the rise in loans and advances to customers by EUR 272 million and cash reserves by
roughly EUR 116 million.2
2
Unrated items relate to assets for which a derived rating could not be allocated in accordance with the management
approach, e.g. active balances for ledger accounts.
51
Financial assets that are past due, but not impaired:
Maximum credit risk as of 31 December 2013 by length of overdue payment (EUR million)*
< 30 days
Balance sheet item, category** and sector
LOANS AND RECEIVABLES TO BANKS
(LaR)
30 days to
3 months
3 months
to 1 year
31 Dec. 2012
> 1 year
Total
Fair value
of collateral
Max. credit risk
Fair value
of collateral
51
-
-
-
51
40
41
21
51
-
-
-
51
40
41
21
11
13
12
0
36
28
426
217
Real estate
7
2
0
0
9
7
225
115
Sovereigns
-
-
0
-
0
0
1
0
Renewable energy
-
0
-
0
0
0
100
51
Hotels
-
-
-
-
0
0
18
9
Health care
-
-
-
-
0
0
13
6
4
-
-
-
4
3
11
6
Banks / Finance
LOANS AND ADVANCES TO CUSTOMERS
(LaR)
Construction
Pharmaceuticals
-
-
-
-
0
0
10
5
0
10
12
0
23
18
48
24
0
-
-
-
0
0
14
7
-
-
-
-
0
0
11
6
Manufacturing & engineering
-
-
-
-
0
0
6
3
Construction
-
-
-
-
0
0
3
1
Other sectors
-
-
-
-
0
0
2
1
-
-
-
-
0
0
25
13
Steel
-
-
-
-
0
0
10
5
Real estate
-
-
-
-
0
0
9
4
Renewable energy
-
-
-
-
0
0
2
1
Other sectors
ASSETS HELD FOR TRADING (HfT)
Other sectors
Total
-
-
-
-
0
0
5
2
62
13
12
0
87
69
516
263
* In the event of past due receivables, the entire exposure of the borrower incl. investments, assets held for trading, contingent liabilities and irrevocable credit commitments are reported as past due.
** Categories are: Loans and Receivables (LaR), Held for Trading (HfT), Available for Sale (AfS), Fair Value Option (FVO) and Held to Maturity (HtM).
*** Not including equity instruments, including securities repurchase transactions
More than 30 days past due, but not impaired, are solely loans and advances to customers, while loans and advances to banks
are only overdue by a short period of time. The
reduction in past due, but not yet impaired
assets in the year under review by roughly
EUR 429 million takes place across almost
all balance sheet items, but is mainly due to
loans and advances to customers (decrease of
roughly EUR 390 million).
52
Financial assets that are impaired: Maximum credit risk
(EUR million)
Balance sheet item, category* and sector
LOANS AND RECEIVABLES TO BANKS (LaR)
31 Dec. 2013
Max. credit
risk
31 Dec. 2012
Fair value of
collateral
max.
Kreditrisiko
Fair value of
collateral
0
0
0
0
139
110
239
122
60
47
141
72
0
0
42
21
-
-
13
7
10
8
12
6
Construction
4
3
7
3
Renewable energy
1
1
5
2
LOANS AND ADVANCES TO CUSTOMERS (LaR)
Real estate
Retail customers
Pulp + paper
Sovereigns
Chemicals
2
1
4
2
62
49
16
8
ASSETS HELD FOR TRADING (HfT)
1
1
0
0
INVESTMENTS**
3
3
4
2
Available for sale
0
0
1
0
ABS portfolio
0
0
1
0
3
2
4
2
3
2
4
2
0
0
2
1
0
0
3
2
-
-
3
2
144
113
250
127
Other sectors
ABS portfolio
Pulp + paper
Total
* Categories are: Loans and Receivables (LaR), Held for Trading (HfT), Available for Sale (AfS), Fair Value Option (FVO) and Held to Maturity (HtM).
** Not including equity instruments, including securities repurchase transactions
The maximum credit risk of impaired assets
includes the netting of specific impairments
for roughly 121.5 million as of the reporting
deadline (as of 31 Dec. 2012: EUR 146.5 million). The maximum credit risk described
above does not contain the received standard bank securities, above all, mortgage liens,
pledges, assignments, chattel mortgages and
debt undertakings. Within the scope of security utilisation, SaarLB did not acquire any
collateral in terms of a rescue purchase in the
reporting period.
MARKET RISK
Market risk is the risk of (valuation) losses
on open (trading) positions due to unfavourable market price fluctuations. For SaarLB,
relevant market prices are in particular interest rates (in both EUR and foreign currencies),
share prices and exchange rates. Open positions are created from spot, forward and option transactions.
The strategic principles for dealing with market risk at SaarLB are set out in the risk strategy. Organisationally, the trading business
is structured around the requirements of
MaRisk. Treasury and Portfolio Management
actively manages asset and liabilities, interest rate risks from the banking book, while
53
the Savings Banks, Institutionals and High
Net Worth Individuals segment is in charge of
interest rate products and foreign exchange.
Trading transactions are processed by the
Services area. Risk controlling is responsible
for managing and monitoring market risks
and for systematically developing the tools
required to perform this.
Since the Minimum Requirements for Trading Activities (MaH) was introduced in 1996,
SaarLB has measured and limited market
price risks from both the trading book and the
banking book, including interest rate risks,
using a uniform Value at Risk (VaR) approach.
Risk controlling monitors the risks in all eight
sub-portfolios, taking account not just of
trading risks in the narrow sense, but also the
asset/liability management positions, which
hold substantial interest rate risks for the
Bank.
The Board of Management has set a maximum
potential loss limit (VaR limit) and a maximum
loss limit (target deviation limit) for each subportfolio based on the risk cover funds. Each
sub-portfolio’s value-at-risk, which is calculated daily, must not exceed the VaR limit allocated to it at any time. Negative deviations
in the sub-portfolio’s net gain/loss must not
exceed any of the target deviation limits either. The target deviation limit is usually 50 %
of the planned amount of a sub-portfolio. In
some cases, VaR limits can be supplemented
by guideline values for upper portfolio limits
and other restrictive stipulations laid down
by the member of the Board of Management
responsible for Trading.
The parameters used for calculating VaR reflect the Bank’s caution to exposing itself to
market risk. Standard deviations in market
price variations over ten trading days are calculated using the Bank’s own and sometimes
historically long timeframes and are scaled
to a one-side confidence interval with 99.5 %
Reporting to all departments and segments,
including the Board of Management, involved
in the risk monitoring and management process takes place at the start of each trading
day. It covers realised gains/losses, valuation
gains/losses, VaR and limit utilisation for the
preceding trading day.
Market risk for SaarLB:
Gross VaR
(EUR million)
Interest rate VaR
12 month comparison as of 31 Dec. 2013
Average
Maximum
Minimum
Average
Maximum
Minimum
14.6
24.1
9.6
3.7
15.5
0.9
FX VaR
0.3
0.5
0.2
0.2
0.2
0.1
Special funds VaR
2.5
8.1
0.7
13.1
18.1
0.9
17.4
32.7
10.5
17.0
33.8
2.0
Total VaR
54
statistical probability. Particular account is
taken of any recent increases in volatility.
When producing a risk summary, correlations
that minimise risks are disregarded.
Negative variations from the pro-rated forecast net gain/loss for each portfolio can affect calculated VaR and therefore the Trading Department’s room for manoeuvre. This
prevents any trading losses exceeding upper
loss limits allocated to market risks. However,
the scope for trading may also be increased
if targets are exceeded. For the (net) VaR determined under consideration of the target
values, limits totalling EUR 60.25 million were
allocated to the individual portfolios from
the risk cover funds of SaarLB as of the reporting deadline (as of 31 Dec. 2012: EUR 31.0
million). These limits were used (across all
portfolios) at an average of 26.5 % in the reporting period (2012: 18.6 %), whereby the
utilisation fluctuated between a minimum
of 14.7 % (2012: 0.0 %) and a maximum of
50.3 % (2012: 58.7 %)3. The latter corresponds
– in absolute terms – to a loss potential of
EUR 27.0 million (2012: EUR 18.2 million). As
of 31 December 2013, the VaR from market
risks was EUR 26.7 million (as of 31 Dec. 2012:
EUR 0.0 million).
The tools described above are constantly
modified to take account of changing circumstances. Risk quantification methods
Market risk for
LBS: Gross VaR
(EUR million)
Average
in particular are validated in a back-testing
procedure and refined accordingly every six
months. The risk parameters are updated on
a revolving basis every quarter.
When calculating risk-bearing capacity, the
potential losses in the daily management are
scaled at a uniform Group-wide confidence
level and holding period. In addition to quantifying ICAAP risk capital needs, forward-looking analyses based on unusual market price
changes (stress scenarios) are also carried out
here.
Each month, interest rate risk in the banking
book is assessed specifically based on monthly interest rate changes of +/-200 basis points
in line with Bundesbank specifications. The
calculated changes in net present value relative to liable capital were well below the regulatory thresholds.
Market risks at LBS arise solely in the form of
interest rate risks. Interest rate risk is managed using gap analysis, basis point value
calculations and building society actuarial
models based on the risk parameters used by
SaarLB:
12 month comparison as 31 Dec. 2012
Maximum
Minimum
Average
Maximum
Minimum
Interest rate
VaR
2.4
3.4
1.5
2.3
3.5
0.5
Total VaR
2.4
3.4
1.5
2.3
3.5
0.5
The market risks of LBS were integrated into
SaarLB’s risk-bearing capacity analyses in the
reporting year.
In the above table, the minimum (maximum) of the gross VaR (not including the target value deviations) of the respective market risk type are summarised, while the minimum (maximum) of the net VaR (including target value deviations)
is reported across all market risk types here.
3
55
LIQUIDITY RISK
SaarLB defines liquidity risk as the risk of being unable to meet payment obligations as
they fall due in full or on time or – in the case
of a liquidity crisis – only being able to obtain
funds at high rates or sell assets at discounts
to the market prices.
The strategic principles for dealing with liquidity risk at SaarLB are set out in the risk
strategy and the liquidity contingency plan.
The prime goal of liquidity risk management
and risk controlling is to ensure SaarLB’s payment obligations can be met and refinancing
obtained at all times.
Liquidity management is handled by Treasury,
which also includes the money market trading unit responsible for ensuring that liquidity is balanced on the market for maturities
of up to one year. Liquidity risk controlling is
performed by Risk Controlling.
All the liquidity flows (incoming and outgoing payments) of the Bank are included in the
measurement of liquidity risks. They include
the deterministic payment flows and, modelled on assumptions, the relevant non-deterministic payment flows (e.g. from irrevocable
credit commitments or investments). The
liquidity coverage that stands in relation to
this includes, among others, available access
to central bank money at the ECB, securities
that can be sold or loaned at short notice and
the potential for Pfandbrief issues placed at
short notice and quantifies the possibility of
covering (negative) liquidity outflows.
SaarLB has measured liquidity risks since 31
December 2012 in a net analysis, summarised
the liquidity outflows and potential liquidity
cover for (cumulative) liquidity gaps and analysed them in various scenarios:
•Basic scenario (planning view)
Illustration of the “ordinary” business activity by taking into account the contractual capital maturities and assumption of
equivalent new business at maturity.
•Bank stress scenario
Illustration of a significant downgrade of
SaarLB, which leads to liquidity outflows
by private and institutional investors
(outflow of variable portfolios).
•Market liquidity crisis scenario
Illustration of a capital market disruption (loss of confidence in the interbank
market), which has an impact on the
procurement of liquidity and leads to
outflows of liquidity with primarily institutional investors (outflow of variable
portfolios and extension difficulties).
•Combination scenario
Simultaneous illustration of the effects
from the bank stress and market liquidity crisis scenarios.
To remain solvent even in times of crisis,
SaarLB has a suitable portfolio of securities
eligible for refinancing at central banks. An
adequate facility with the ECB ensures that
any unexpected payment obligations can
be covered on the same day. SaarLB thereby
limits its short-term liquidity needs so that
the shortfall arising from liabilities maturing
overnight does not exceed the central bank
refinancing freely available at the time concerned.
The volume of ECB deposits is roughly
EUR 1.0 billion as of 31 December 2013 (as of
31 Dec. 2012: EUR 1.4 billion). Payment obligations can continue to be covered, if need
be, largely independently of other sources of
56
refinancing. The Bank did not resort to the
overnight facility of the ECB in the reporting
period (as in 2012).
The short-term refinancing needs pursuant
to BTR 3.2 MaRisk have been reported since
the end of 2011 by solely offsetting both the
ECB-eligible and GC pooling-eligible assets in
the potential liquidity coverage. This should
be sufficient in the weekly report updated
on each trading day for the coverage of the liquidity gap resulting from the “combination”
scenario and increased by an additional collateral surcharge of 10 %.
Liquidity management and monitoring for
each next 180-day period is performed using
an analysis of the cumulative liquidity gap.
The balance from the cumulative liquidity
outflows and cumulative potential liquidity
coverage should be positive in each case. The
following example shows the basic scenario
for the control-relevant 180 day point of view.
Cumulative liquidity gap in the basic scenario (EUR million)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1.1.2014
31.1.2014
2.3.2014
1.4.2014
Lastly, the range of tools available under the
supervisory liquidity regulation (LiqV) is used
to measure short-term liquidity.
The cumulative liquidity gap is also the key
for managing maturities for periods of longer
than 180 days. Suitable funding instruments
are employed by the Bank to create a balanced funding structure so it can safeguard
its solvency and ability to refinance in the
medium and long term. At present: SaarLB’s
1.5.2014
31.5.2014
30.6.2014
collateral pool – the pool of assets serving as
cover for pfandbriefs – has sufficient surplus
cover, enabling issuing activity to continue in
normal market situations. On the other hand,
the liquidity commitment schedule has been
structured so that there will be a net inflow
of liquidity in the coming years. Returns from
asset management can therefore be used as
credit.
57
Under the stress assumptions of the previously defined scenarios, the liquidity outflows as
of 31 Dec. 2013 were covered by appropriate
Minimum liquidity gap
as of 31 Dec. 2013 (EUR million)
10 days
90 days
180 days
Basic scenario
3,650
2,848
2,848
Bank stress scenario
4,222
3,597
3,597
Market liquidity crisis scenario
3,550
2,328
2,328
Combination scenario
3,438
2,011
1,670
All the tools described form part of the regular reporting to the Board of Management
and are integrated into the MaRisk risk report. In 2012 potential liquidity coverage was
sufficient to cover SaarLB’s liquidity flows at
all times.
The ongoing positive assessment of the liquidity situation is also confirmed by the
liquidity ratio (according to the regulatory
requirements under the Liquidity Ordinance
[Liquiditätsverordnung]). In its internal regulations, SaarLB’s managing and monitoring
goes further than the supervisory requirement that the liquidity ratio within the coming month must be greater than 1. The bank
sets its warning level to 1.25, which triggers
58
potential liquidity coverage from the controlrelevant 180 day point of view at all times.
counter-measures. In the year under review,
the liquidity ratio of the Bank was between
1.78 and 2.59 (in 2012: between 1.79 and 3.46);
as of the reporting deadline of 31 Dec. 2013,
it amounted to 2.15 (as of 31 Dec. 2012: 2.60).
The observance of both the regulatory and internal requirements was thus ensured at all
times. LBS also complied with the regulatory
requirements on liquidity in 2013.
In addition, a breakdown of balance sheet
financial liabilities by contractually agreed
terms to maturity (excluding home loan savings deposits which have no agreed maturity)
is given below:
up to 3 months
31 Dec. 2013
(EUR million)
>3 months to
1 year
>1 year to
5 years
>5 years
2,711
845
1,070
1,123
2,102
345
610
1,154
49
356
3,410
1,125
Off-balance sheet liabilities
0
Liabilities held for trading*
13
24
236
159
4,876
1,569
5,327
3,561
1,976
1,519
1,534
971
2,823
638
795
1,122
121
265
3,721
1,008
Off-balance sheet liabilities
867
Liabilities held for trading*
15
32
293
337
5,802
2,454
6,343
3,439
Total
31 Dec. 2012
Total
* Including negative fair values from derivative financial instruments (hedge accounting), primarily interest derivatives
In the reporting period, SaarLB was also able
to place sufficient covered issues on the capital market. There was also demand from investors for uncovered issues. In view of the
pricing involved, the Bank utilised this option, but out of business considerations used
its sufficient other refinancing possibilities.
OPERATIONAL RISK
a) General information
Operational risk describes the risk of losses
that occur in consequence of inappropriateness or the failure of internal processes and
systems, people or as a result of external
events. This definition includes legal and
model risks.
SaarLB undertakes to manage operational
risks efficiently so as to protect the Bank, its
employees and clients from financial loss, loss
of trust and loss of reputation.
The methods and processes for controlling
and managing operational risk are set out
in detail in the SaarLB OpRisk manual. The
measurement and limitation of operational
risks are also part of the risk strategy.
Operational risk is managed decentrally in
the individual business segments, with each
one being responsible for dealing with operational risks coming under its responsibility.
This in particular covers preventive measures
against risks from incomplete business processes and human error. The intention is to
avoid or at least mitigate impairments arising
from unforeseen events – especially in technical areas – through disaster recovery plans
and the use of parallel systems. The disaster
recovery plans are regularly adapted to cater
for changing structural and procedural organisational circumstances and the systems
updated on an ongoing basis.
The duties of SaarLB’s Legal Department include minimising legal risks from contractual
59
terms and conditions, provisions of national
and international law and litigation and court
decisions. Pending litigation is taken into account appropriately in the annual financial
statements.
Risk Controlling provides central monitoring
of operational risks. The used instruments
currently include in particular the systematic
collation of operational losses occurring at
SaarLB in a loss database, forward-looking
assessment of the OpRisk profile through
regular self-assessments of all of SaarLB’s
organisational units and the requisite structural and procedural organisation within the
Bank. Since 1 January 2007, SaarLB has used
the standardised approach under the Solvency Ordinance for calculating capital requirements for operational risk.
In particular, losses that have occurred and
the results of the self-assessments are analysed in a regular reporting process which is
integrated into the MaRisk risk report. In the
reporting year, 26 losses (in 2012: 23) were observed. These losses had a negative impact on
net income of around EUR 2.1 million (2012:
EUR 1.5 million). This amount is significantly
below the risk capital allocated for operational risk based on the capital requirements of
the regulatory standardised approach in the
amount of EUR 22.2 million (2012: EUR 21.5
million).
b) Accounting-related internal control and
risk management system
The following comments relate to the provision of Section 315 (2) Nr. 5 of the German
Commercial Code, in conjunction with Section 315a (1) of the German Commercial Code,
according to which corporations in terms of
Section 264d of the German Commercial Code
have to describe the significant features of
the internal control and risk management
system with regard to the Group accounting
process.
Responsibilities and goals
To ensure the appropriateness and reliability
of the accounting, the SaarLB Group has set
up an internal control system (ICS). It includes
principles, processes and measures to ensure
the effectiveness and efficiency of the accounting. Against this backdrop, the internal
control system also serves to present a true
and fair view of the SaarLB Group’s net assets,
financial position and results of operations.
The main goal of the internal control system
is to ensure that all transactions are recorded,
processed and documented correctly and in
full in accordance with the legal requirements
and standards as well as the provisions of the
articles of association and the other internal
guidelines. The internal risk management system is viewed as a component of the internal
control system.
Organisation
The SaarLB’s Board of Management (Group’s
Board of Management) bears responsibility for the Bank having a proper business organisation, which includes both appropriate
internal control processes and above all the
adequate controlling and monitoring of the
significant risks. The Group’s Board of Management is supported in this particularly by
the corporate area of Global Risk Management with its organisational units of Risk
Controlling, Financing and Reporting, and the
corporate area of Services with its IT organisational unit as well as by Internal Audit.
60
Risk management and monitoring
See “Risk management and monitoring principles” for the organisation of these areas.
Financing and Reporting
Financing and Reporting in the SaarLB Group
is responsible for the preparation of the consolidated financial statements, the development of accounting requirements, the initiation of accounting-relevant projects and for
the observance of national and international
changes in the accounting. With regard to the
creation of the consolidated financial statements, other subdivisions as well as units to
be consolidated are included.
Responsibilities in this context include primarily ensuring the appropriateness of the
accounting, in particular the uniform Group
accounting and valuation (partially in collaboration with the IT organisational unit). This
primarily consists of setting up and monitoring the effectiveness of the accounting processes as well as the implementation of the
accounting standards and statutory requirements in the area of accounting that are relevant for the SaarLB Group and are stipulated
in the accounting guidelines, the booking
logic and the posting rules. Furthermore, the
special departments and consolidation units
define the rules for business recognition,
master data maintenance and the fulfilment
of storage obligations in organisation and
process instructions. These instructions form
an essential basis for the accounting-related
internal control system.
The consolidated financial statements and
Group management report prepared on the
basis of the accounting guidelines are prepared by the Group’s Board of Management,
examined by the Group’s auditor and finally
presented to the Board of Administration
for approval. The Board of Administration
created an Audit Committee that is responsible for the review of the Group’s audit report and the preparation of the decision by
the Board of Administration to approve the
consolidated financial statements and the
Group management report prepared in accordance with the requirements of IFRS/IAS.
Furthermore, the Audit Committee addresses
the accounting process. It monitors the effectiveness of the internal control, audit and
risk management system to the extent that
this task is not handled by the Board of Administration. The Group auditor participates
in the consulting of the Audit Committee on
the consolidated financial statements and
reports on the significant results of his audit.
Internal Audit
Internal Audit audits the business operations
of the SaarLB Group and is subordinate to the
Chairman of the Group’s Board of Management. The audit activities extend fundamentally to all the SaarLB Group’s activities and
process, also to the extent that they are outsourced, on the basis of a risk-oriented audit
approach. This includes a review of the effectiveness and appropriateness of the internal
control system and the risk management.
Internal Revision carries out the tasks assigned to it independently of the activities,
processes and functions to be reviewed or
audited in accordance with the applicable legal and regulatory requirements (e.g. German
Banking Act, MaRisk).
Control environment and control process
The internal control system is based on organisation and process instructions.
The central components of these regulations
with regard to the accounting-related internal control system are:
•provisions from the so-called new product processes for the recording, valuation
and reporting,
•instructions in the Lending and Control
Manual for recording, valuing and reporting on receivables as well as
•documentation of the process for preparing the financial statements.
61
These provisions include the significant requirements for uniform Group accounting
and valuation methods in the SaarLB Group
on the basis of IFRS/IAS.
Furthermore, Financing and Reporting prepares the annual and semiannual instructions
at each reporting deadline, which contain
not only legal changes, but also primarily the
significant preparation work (including the
required proofs) and a schedule to be undertaken by the respective special departments.
The rules for the recording and controlling
of business data are at the disposal of the
respective organisational unit; these instructions are prepared decentrally and updated if
need be.
The organisation and process instructions
also include the handling of the SaarLB
Group’s significant risks with regard to the
risk management and monitoring.
The rules for risk management and monitoring are regularly reviewed and updated. On
account of the migration to the systems of
Finanz Informatik, a comprehensive revision
of all instructions and risk controlling and
monitoring was undertaken in the year under
review.
To ensure a complete and correct processing
of the transactions including the proper data
recording, booking and documentation, a variety of internal controls are performed in the
SaarLB Group. These include appropriate separations of functions, a differentiated access
authorisation system for protection against
unauthorised access, continuous controls
within the scope of the work processes under
application of the four-eye principle as well as
programmed controls within the IT systems.
As part of the internal controls, general ledgers and sub-ledgers are reconciled in SaarLB
and manually postable ledger accounts are
monitored by the responsible areas. Furthermore, controls and reconciliations are also
62
handled to ensure the proper transfer of data
between the different IT systems. Within the
process for preparing the consolidated financial statements, the correct professional presentation of the circumstances forming the
basis of the financial statements is reviewed
and the quality assurance measures are carried out for data included in the consolidated
financial statements. The IDLKONSIS serverbased software that is used for the consolidation contains multiple programmed controls
to ensure the recording of data and documentation in accordance with the Group requirements.
The SaarLB Group outsourced a portion of its
services (primarily IT services, services in the
area of payment transactions and securities
settlement) to external companies. The integration of the outsourced areas into the SaarLB Group’s internal control system is ensured.
Furthermore, Internal Audit at Saar LB considers the outsourced areas in the test process.
Where there is an audit by the Internal Audit
of the outsourcer, SaarLB’s Internal Audit regularly convinces itself of the functionability
of the respective audits by the outsourcers.
In the SaarLB Group, the accounting process
is subject to regular controls with regard to
the inherent risks in order to introduce appropriate measures for the further development
of the internal control system, if need be. This
also relates to the internal risk management
and monitoring.
Risks from unexpected behaviour by home
loan savers
Risks from unexpected behaviour by home
loan savers describes the impact of an unexpected and strong outflow of home loan
savings deposits with a simultaneously large
reduction in new business on the collective
liquidity of LBS.
The measurement and control of specific technical home loan savings risks is taken into account by LBS in a long-term simulation model
that shows the income impact in various collective scenarios. The liquidity risk consists
in the fact that unplanned outflows of home
loan savings deposits prevent LBS from meeting its payment obligations in full or on time.
The risk is measured on the basis of a stress
test with a variety of important risk drivers as
compared to a defined basic scenario. The risk
amount is calculated by LBS every quarter as
part of the LBS risk report in accordance with
MaRisk. The business and risk strategy of LBS
sets the limits and thresholds for the liquidity risk. When the thresholds are reached, the
management of LBS is notified and countermeasures are taken.
The methods and processes for the controlling and management of risks from unanticipated conduct by home loan savers is also a
part of the risk strategy. Risks are also quantified and limited within the framework of the
risk bearing capacity calculation.
Real estate risks
Real estate risks are defined as potential negative changes in value of SaarLB’s own real estate portfolio due to a worsening of the general real estate situation or a deterioration in
specific aspects of individual real estate (vacancies, changes in use options, construction
damage, etc.).
SaarLB’s own former real estate portfolio
was transferred to a closed real estate fund
in 2005. SaarLB is a 100 % shareholder of the
fund and a tenant of the space it uses. The
technical support for the properties is provided by SaarLB, while the business administration of the real estate is handled by an external service provider.
There is a regular annual evaluation of all
real estate by an independent appraisal committee, and the appraisals are presented to
SaarLB for informational purposes and possibly for a statement. They take into account
the current market conditions and the development of rental prices as well as the respective rental situation in the buildings and the
measures conducted on the properties. Appreciation due to value-increasing measures
on the properties takes place with a stable
retention in value and is done in coordination
with the corporate area of Global Risk Management at SaarLB.
The permanent technical support for the
property takes into account the engagement
of the investment committee for stability in
value. For prudent management to retain the
value of the real estate, an economic plan is
created for all real estate and presented to
the fund for approval. Ongoing measures are
taken within the framework of this economic
plan and – depending on the contractually
defined limits – presented to the fund for approval in each case. A special release of the
fund is required in each case for implementing the measures not planned in advance.
The business real estate management ensures the constant controlling and monitoring of rents with the goal of full tenancy, the
early addressing of expiring tenancies and the
optimisation of the sector mix. The investment committee sets the goals and strategy
at least once a year, and SaarLB is represented
by the Technical Director of Services and Manager of Services.
The methods and processes for the controlling and management of real estate risks is
also a part of the risk strategy. Risks are also
quantified and limited within the framework
of the risk bearing capacity calculation.
63
Reputation risk
Reputation risk describes the risk that negative publicity on SaarLB, whether accurate
or not, could harm the confidence (of parts)
of the public in the competency, integrity or
credibility of SaarLB.
The publicity on SaarLB (“its own and that
of others”) is monitored and managed in the
Bank’s Communications unit. The institutionalised complaint management makes it possible to measure and control the impact on
the Bank’s reputation. Additionally, reference
should also be made in this connection to the
close link between the business and brand
strategy of the Bank so that the reputation
risk is also limited by the factors with a regional connection, standard products and integration in the savings banks finance group
(Sparkassen-Finanzgruppe).
The methods and processes for the controlling and management of reputation risks are
also a part of the risk strategy. Risks are also
quantified and limited within the framework
of the risk bearing capacity calculation.
Strategic risks/Business risks
SaarLB understands strategic risks to be unexpected, ongoing negative impacts on the
capital and income of the Bank (or the corporate value), which are due to
1.unexpected changes in the regulatory or
other exogenous market and environmental conditions
or
2.
false or insufficient management decisions on business policy positioning.
The business risk describes unexpected
changes in the economic environment which
will lead to negative changes in the business
volume or the margins and are not due to
the other risk types. It quantifies deviations
between the planned and actual costs and
income.
64
The handling of business and strategic risks
(identification, limiting, control) is documented in the business strategy of SaarLB.
The business model, the strategic positioning
of the Bank and the annually imposed integrated strategy and planning process are described in detail.
The identification and measurement of risks
is done by analysis of the plan/actual deviations on the total bank and business segment
level within the scope of the strategy and
planning process.
A (qualitative) limiting of the risks is ensured
within the framework of the business principle of “understanding and designing” due
to the regional nature of the Bank, which
ensures almost exclusive use of standard
products and inclusion in the savings banks
finance group (Sparkassen-Finanzgruppe).
The controlling is handled in the strategy/
planning process, among others by requiring
strategic key performance indicators and the
use of so-called business segment analyses
that address in particular the treatment of
business risks on the level of the individual
business segments.
The methods and processes for the controlling and management of strategic/business
risks are also a part of the risk strategy. Risks
are also quantified and limited within the
framework of the risk bearing capacity calculation.
Summary of risk situation
Saar LB has risk cover funds that were sufficient to cover all the ICAAP risk capital needed
at any time in the year under review. Consequently, the SaarLB Group’s economic risk
bearing capacity was present at all times last
year. From a regulatory point of view in terms
of the Solvency Ordinance [SolvV] report, the
key figures in the year under review exceeded
the internal targets so that the regulatory
risk-bearing capacity was ensured at all times
without any qualifications.
FORECAST AND OPPORTUNITY REPORT
SaarLB’s business planning and the development of its earnings are based on assumptions with regard to future economic development, particularly with regard to the markets
relevant for SaarLB. These assumptions come
with uncertainties, however. A deviation in
the actual development of the market can
lead to negative and positive deviations for
the future earnings of the Bank.
As already outlined in the overview, the ownership structure will change again in 2014.
The Group structure of SaarLB is not anticipated to change from its form in the past financial year.
The SaarLB Group expects the following development for financial year 2014.
Expected framework conditions
The SaarLB Group bases its forecast of the
economic performance on the current estimates of external institutions such as e.g.
those for bank associations relevant for the
Bank.
Leading German economic research institutions forecast growth rates for Germany that
mostly range between 1.5 % and 1.8 % for the
year. Industry associations also anticipate
an improvement. Exports will play an important role, and here the Association of German
Chambers of Industry and Commerce (DIHK)
anticipates an increase of 4 % as compared
to 2013, which would be a record in absolute
terms. This could continue to have a positive
impact on employment. The autumn 2013 appraisals by the German federal government
also assume an ongoing increase in the number of employees.
Representatives of the Deutsche Bundesbank
and in the finance industry have expressed increasing concern about the ongoing low interest policy of the European Central Bank. While
representatives of the Bundesbank fear longterm negative consequences for the bank and
insurance landscape in Germany, representatives from the financial sector have stated
that the low interest policy is giving a false
signal to savers. At the same time, positive
real economic benefits cannot be seen.
After two years of declining economic output,
2014 should see the economy in Saarland return to the path of growth again. Experts even
think there is a good chance that the economy
in Saarland will outperform the economy in
Germany. The main driver of growth is again
viewed to be exports, after a substantial decline in the previous year. Positive stimulus
should also come from the higher demand for
capital goods. On the labour market, the economic revival may also produce an increase in
jobs.
Export demand and business expectations for
Rhineland-Palatinate will again increase over
the next few months, according to economic
surveys. The willingness to make investments
is, however, lower and often only shows up in
replacement investments and streamlining
measures. The development of the energy
and commodity prices is viewed as a major
risk. Furthermore, a lack of professionals also
threatens many sectors, and numerous companies think that over the long term the problem can only be solved by the immigration of
qualified professionals.
The growth forecasts for the French economy
look very positive for the first half of the year.
After the forecast at the beginning of 2013
was for very slow growth of 0.1 %, French GDP
was able to expand by 0.3 % last year. For 2014
the central bank anticipates general economic growth of 0.9 %. The positive prospects for
2014 are based on GDP growth due to a rise in
private consumption and public sector spending (roughly +1 %) and foreign trade (roughly
+3 %). After almost 2 years of major hesitancy
to make industrial investments, a noticeable
increase is forecast as a result of the required
modernisation, streamlining and expansion
measures. Additional stimulus is expected
from government structural measures to
65
promote research and development as well
as government support for defined key industries. On the other hand, the anticipated
decisions for a reduction of the historically
high government share (currently 57 %) could
have a negative impact on growth, since critical reductions in government expenditures
will result from this. Extensive administrative
and regional reform with medium-term savings potential of EUR 50 billion is also being
discussed. Furthermore, political decisions
should contribute to improving international
competitiveness. For 2014, no significant improvement of the labour market is anticipated, with the primarily goal being an end to the
negative trend from 2013.
Despite some difficulties with export demand
in Lorraine, industry will continue to grow
slowly in 2014. The situation on the order
books of the local companies is viewed as acceptable.” The investment expenditures show
a slight increase in the 4th quarter of 2013
and should continue this trend in the coming
months. The expected increase in the unemployment rate will hurt the consumption of
private households in 2014.
For the economy in Alsace, slight growth is
anticipated for 2014. Demand from France is
weaker than export demand here. While demand from the United States, China and Russia continued to move in the right direction,
the European markets are more hesitant.
The order books of companies reflect an almost normal situation. Company formations
increased by 1.6 % from the previous quarter
and differed from the national trend, which
had to accept a decline of 4.1 %.
The tendencies for Alsace and Lorraine are
viewed somewhat analogously to the national development, whereby certainly the region of Bas-Rhine in Alsace should improve its
performance somewhat due to its economic
structure, export orientation and proximity
to Germany and Switzerland. Lorraine, on the
other hand, can at best expect zero growth.
66
After the decision by the ECB in the fourth
quarter of 2013 to reduce the main refinancing rate again, we anticipate a slight rise toward 0.5 % for the three month interest rate
for unsecured interbank business in 2014 –
starting from a level of 0.22 % on average in
2013. For the long-term 10 year yield, the Bank
also expects a slight rise to roughly 1.85 %. As
before, interest rates will remain at a historically low level in the coming year.
The SaarLB Group as a whole expects stable
earnings in the coming financial year 2014.
If, however, our expectations of a stable economic development and a manageable crisis
in the eurozone are not accurate, our forecasts will not be met.
The positive assessments will also show up
in steadily good pre-tax earnings in the coming year, which will be on the current earnings
level according to our forecast for 2014. The
greatest risk for the SaarLB Group continues
to be another intensification of the sovereign
debt crisis in Europe, which could produce a
chain reaction across the entire sector and
also have a negative impact on the performance in the SaarLB Group.
Net interest income in 2014 will substantially
improve from the performance in 2013 and be
above the current level despite the restrained
money market and low interest rates. This
is due to higher income in the core business
segments on account of slightly higher new
business volumes and minor increases in net
margins as well as the development of valueoriented interest book management, which is
reflected in a moderately increasing maturity
transformation result.
In the net commission income, the trend from
2013 will continue and substantially improve
again from this level in the following years.
Particularly due to the planned expansion of
the syndication business, the Bank expects a
slight rise in commission income.
For 2014, slightly higher expenses than in 2013
are expected for personnel – among others
due to the implementation of the salary increases and a moderate increase in personnel.
This is also due to the growth-related build-up
of personnel capacities in LBS. Due to already
planned and mainly regulatory-required projects as well as the forthcoming IT migration
of LBS, administrative expenses will rise substantially from 2013 to 2014.
In gains/losses on financial assets, we expect
disposal losses from the sale of securities
from the reduction portfolio in 2014. The earnings are expected to improve considerably
from the current level, however.
Forecast for the development of the business
segments
The development of Corporate Customers
must be viewed differently, depending on the
target markets and/or target customers.
In the German target market, the business situation has improved for midsized companies
since the second half of last year. Accordingly,
we have observed a revival in investment activity, which should also continue in 2014.
Therefore, we anticipate a further increase in
credit demand. On the supply side, competition has increased in the midcap segment due
to the large number of market participants,
which should also increase pressure on margins, in our opinion. SaarLB views this as an
opportunity and is tackling the more intense
competitive situation with a quality offensive in consulting and an expansion in the
line of services in close collaboration with
cooperation partners, particularly within the
S-Finance Group (S-Finanzgruppe).
Due to the ongoing significant market position in Saarland and the continued focus
on acquisitions in Rhineland-Palatinate, we
are confident that we will see a good performance in corporate customer business in 2014
and expect slightly rising earnings.
Corporate Customers France supports both
corporate customers and particularly midcap
companies and selected municipal customers. Since the last quarter of 2013, economic
output in France has picked up after a long
phase of stagnation. We also felt this in the
rising demand for investment loans. We assume that the trend as a result of President
Hollande’s call for a corporate-friendly “pacte
de responsabilité” will lead to another revival.
In municipal business we have observed a
noticeable rise in competition, which will significantly increase the pressure on margins
and other credit conditions. We assume that
we will not entirely achieve the high level of
2013 in new lending business. We are countering this market development by collaborating
more closely with cooperation partners for
which we act as services providers and receive
commission income. We see a great opportunity here to generate not only the targeted
income from the lending business, but also
stable commission income.
As a result of the ongoing low interest phase
and higher liquidity positions, new competitors, including insurance companies, have
entered the market. Despite increasing competition over the last 12 months, the segment
of Real Estate in Germany expects regular
growth in 2014, both in the financing of portfolio real estate and selectively developer
measures for commercial real estate in lucrative locations. With respect to the real estate
market in France, the Bank expects new business that is at least at the level of the previous year. The development of the market has
suffered from oversupply and thus falling
margins and commission income for needed
financing. With a sustainable rise in interest
rates, a normalisation of competition is expected, which will offer opportunities to raise
margins and commission income above the
planned amounts in the target business and
thus improve the returns in the segment. For
both markets, the ongoing expansion of the
customer base with respect to institutional
investors in recent years, the strong sales orientation in connection with high structuring
67
and legal competency as well as the Bank’s
good market reputation are considered important factors for success.
In the Project business, the Bank anticipates
– in accordance with the development in prior
years – slightly positive, dynamic new business and ongoing stable portfolio and commission income, despite the strategically motivated outsourcing of parts of the portfolio
and new business sought in 2014. SaarLB is
profiting from its very good position in the
markets of onshore wind and photovoltaics in France, the stability of the framework
conditions there and the unchanged need for
retrofitting a portion of the renewable energy
as a percentage of the total energy produced.
In its medium term planning, SaarLB is taking
into account the politically sought amendment to the EEC in Germany and the expected
declining market potential for the domestic
market to an appropriate extent. The volume of planned new business in Germany for
2014 fell significantly in comparison to 2013.
The Bank is confident that it will be able to
achieve the targeted volumes, particularly because a claim to the EEC rates at the previous
amount is likely to continue for projects connecting to the grid until roughly the middle of
2014. After an intensive and ongoing analysis
of the current drafts and political discussions
on the EEC 2.0, the Bank continues to assume
that its portfolio business for wind and solar
park financing in Germany will not be affected by the retroactive reductions of the feed-in
rates promised in the past.
Through its initiated fund project Genesis,
SaarLB wants to outsource the financing of
RE projects, among others from its portfolio
business, for RWA control. The planned losses
from the release of existing refinancing are
connected with this. The opportunity to increase capital market interest until the initial
transfer of business to the fund would have
a very positive impact on the “syndication”
business plan due to a reduction in premature
losses.
68
Significant parts of the portfolio are refinanced via the German Investment and Development Bank (Kreditanstalt für Wiederaufbau // KfW) and are subject to a margin
requirements based on a credit rating. The
KfW rates are the benchmark on the market,
also for the majority of the Bank’s customer
projects in France. If the KfW decreases the
attractiveness of its programmes due to a
change in the capital market environment
and/or on account of the more restrictive
form of the EEC 2.0, SaarLB’s good market
position gives it a excellent opportunity to
achieve slightly better margins in the awarding of project financing.
Worth Individuals will concentrate increasingly on the deposit and service business with
institutional investors and high net worth private customers in 2014.
Furthermore, the area of Wealth Management should further increase its customer
relationships and strengthen its market
presence. With a trend toward rising interest
rates in the eurozone and an improvement in
sentiment in the relevant asset markets, the
commission income should also moderately
increase. The interest margin contribution
from the liabilities business should also increase again slightly against the backdrop of
the Bank’s interest expectations.
The greatest opportunities in the Savings
Banks, Institutionals and High Net Worth
Individuals segment will arise from rising interest contributions with increasing interest
rates. We assume that interest rates will rise
moderately with the tapering of quantitative
easing in the United States. Until then, there
will be opportunities in municipal business
with unchanged interest rates, if municipalities cover their financial needs at historically
low interest rates.
In the liabilities area, there are also opportunities due to the increase in private investors
confidence in capital and stock markets and
the interest trap with bonds. As a result, an
increase in investment volumes in high-commission stock and fund markets as well as a
more frequent shifting of investments will
reduce cash holdings.
Treasury and Portfolio Management will continue active portfolio management within the
framework of the risk and income management of the SaarLB Group. Another decline in
income contributions as well as risk assets is
expected on account of the planned reduction
of non-core business (approx. EUR 1.0 billion
in the coming two years). However, there is
the risk that parts of the reduction portfolio
could lead to an increase in the risk provision
requirement due to the negative rating migrations. We view the accelerated RWA reduction
due to the use of market opportunities for additional active sales/closings as an opportunity. In the management of the LCR portfolio,
there is also the opportunity to optimise the
portfolio with respect to its size and composition due to the specification of the final
criteria of CRR. The SaarLB Group anticipates
a stabilisation of Securities Account A’s contribution to earnings. The Bank is striving to
use these contributions and the maintaining
of sufficient collateral and risk diversification
to secure the funding.
Depending on the development of financial
markets, last but not least due to the situation in the eurozone, an increase in risk cannot be excluded in the forecast timeframe.
The introduction of value-oriented interest
book management on the entire bank level
means that the sub-segment Treasury has the
opportunity to generate higher (and also constant structural) earnings in the future. The
volatile development of financial markets
must be considered here, however, since they
have a negative impact on the achievable contributions to earnings. Treasury income from
the money market and asset-liability management should be stable over the next few
years.
The ongoing low market interest rate level will
continue to limit the income possibilities for
Landesbausparkasse in the next two years.
The liabilities side of Landesbausparkasse is
defined by interest payments on the home
loan savings deposits, while the asset side
with the credit business and investment possibilities largely depends on the current market conditions. Consequently, the net interest
income is only anticipated to rise moderately,
which is justified by increasing volumes. The
ongoing very positive new business development means that the commission income due
to the brokerage commissions that must be
paid will have a negative impact on the total
earnings of Landesbausparkasse.
Equity investments will no longer be reported as an independent segment due to their
decreasing significance. The contribution to
earnings from equity investments will be allocated to the segments as investment income
from the Bank’s own capital investments as
part of segment reporting in the future.
The Bank’s business model is determined by
the long-term credit business. In particular
against the backdrop of the restrictive requirements of Basel III/CRR – mainly from the
perspective of the required capital requirements – the Bank will expand its active RWA
management in 2014. Besides RWA management, this is also with the goal of adequately
pricing the future additional cost components that are derived from the requirements
of the CRR in new business. Driven by the low
interest environment, this can also be seen in
the fact that competitors have not adequately priced in additional regulation-driven price
components for the new business conditions,
which will lead to distortions in competition.
SaarLB sees an opportunity in the fact that
the incremental application and consideration of Basel III components in the pricing will
reduce current margin pressure and make
greater cost-covering conditions enforceable.
69
On the basis of the described economic and business development, the SaarLB Group expects
that the positive development of earnings in the operating core areas since financial year 2010
will also continue in 2014. The SaarLB Group anticipates pre-tax earnings on the current level
for 2014. The return on equity in 2014, however, will be slightly below the current level. The costincome ratio will also fall slightly due to significantly higher administrative expenses.
Saarbrücken, 13 March 2014
Landesbank Saar
Board of Management
70
Werner Severin
Frank Eloy
71
SaarLB consolidated
financial statements 2013
72
CORPORATE REPORT 2013 | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Statement of comprehensive income
FROM 1 JANUARY 2013 TO 31 DECEMBER 2013
EUR ’000s
Notes
2013
2012
Change
1 Interest income
(26)
598,226
765,432
-167,206
2 Interest expenses
(26)
-477,179
-626,717
149,538
3 Shares of profits in associated companies accounted
for using the equity method
(27)
316
114
202
4 Risk provisions in the credit business1)
(28)
-20,004
-33,038
13,034
5 Commission income
(29)
27,283
24,060
3,223
6 Commission expense
(29)
-19,474
-16,742
-2,732
7 Gains or losses on fair value measurement
(30)
19,659
37,009
-17,350
8 Gains or losses on hedge accounting
(31)
448
-151
599
9 Gains or losses on investments
(32)
-3,267
3,190
-6,457
10 Administrative expenses
(33)
-71,903
-72,398
495
11 Other income
(34)
4,573
5,124
-551
12 Other expenses
(34)
-2,694
-3,500
806
13 Income taxes2)
(35)
-20,424
-22,165
1,741
14 Consolidated net profit1), 2), 3)
35,560
60,218
-24,658
14 Consolidated net profit1), 2), 3)
35,560
60,218
-24,658
-1,112
-1,544
432
-1,624
-2,256
632
512
712
-200
-9,274
55,180
-64,454
-18,383
70,668
-89,051
of which portfolio changes due to recognition
of profits or losses
7,210
9,514
-2,304
1,899
-25,002
26,901
25,174
113,854
-88,680
15 Items not reposted to the income statement
(59)
Change in the actuarial profits/losses without
impact on profit or loss3)
Income taxes established without impact on
profit or loss3)
16 Items reposted to the income statement
Change in the revaluation reserve
of which changes in measurement
Deferred taxes without impact on profit or loss
17 Consolidated comprehensive income1), 2), 3)
(59)
Figures from 2012 have been adjusted; see note 39.
3)
1)
2)
73
Consolidated balance sheet
AS OF 31 DECEMBER 2013
Assets
EUR ’000s
Notes
1 Cash reserves
2013
2012
2011
(7), (36)
784,905
669,302
106,737
2 Loans and advances to banks
(8), (37)
2,021,687
3,246,133
4,105,613
3 Loans and advances to customers
(8), (38)
8,797,381
9,039,001
8,607,193
4 Risk provisions in the credit business1)
(9), (39)
-135,515
-161,998
-152,688
5 Assets held for trading
(10), (40)
328,264
517,917
431,629
(11), (41)
28,559
46,181
-
7 Investments
(12), (42)
4,398,146
4,698,415
5,574,215
8 Securities repurchase transactions
(6), (43)
629,146
569,969
954,197
9 Interests in entities valued at equity
(13), (44)
6,028
2,876
2,762
10 Investment property
(14), (45)
20,777
21,005
21,232
11 Property, plant and equipment
(14), (46)
21,532
22,480
23,558
12 Intangible assets
(15), (47)
2,489
2,010
1,612
13 Current income tax claims
(25), (48)
7,693
5,467
8,036
14 Deferred income tax claims2)
(25), (48)
43,616
56,977
73,933
15 Other assets
(16), (49)
4,044
3,838
4,047
16,958,752
18,739,573
19,762,076
6 Positive fair values from financial derivatives
(hedge accounting)
Total assets
74
CORPORATE REPORT 2013 | CONSOLIDATED BALANCE SHEET
Liabilities
EUR ’000s
Notes
1 Liabilities to banks
2013
2012
2011
(18), (50)
5,748,734
6,000,336
8,008,089
2 Liabilities to customers
(18), (51)
4,759,091
5,898,175
5,905,351
3 Securitised liabilities
(18), (52)
4,939,714
5,114,745
4,329,445
4 Liabilities held for trading
(19), (53)
432,882
645,331
544,131
5 Negative fair values from derivative financial instruments
(20), (54)
(hedge accounting)
29,517
31,636
32,585
6 Provisions3)
(21), (55)
37,779
35,888
34,169
7 Current income tax liabilities2)
(25), (56)
6,684
4,444
2,884
8 Deferred income tax liabilities
(25), (56)
55,886
66,362
47,166
9 Other liabilities
(22), (57)
43,677
50,394
45,290
10 Subordinated capital
(23), (58)
319,937
335,112
351,888
11 Shareholders’ equity
(59)
584,851
557,150
461,078
Subscribed capital
(59)
174,600
169,114
169,114
Hybrid capital
(23), (59)
72,413
91,453
104,258
Capital reserve
(59)
69,085
50,841
50,841
Retained earnings1), 2)
(59)
211,024
154,348
138,087
Other reserves3)
(42), (59)
30,486
40,872
-12,764
Retained profit1), 2)
(59)
27,243
50,522
11,542
16,958,752
18,739,573
19,762,076
Total liabilities
Figures from 2012 have been adjusted; see note 48 and 56.
3)
1)
2)
75
Schedule of changes in equity
EUR ’000s
as of 31 Dec. 2011
Subscribed
capital
Hybrid
capital
Capital
reserve
Retained
earnings
Other
reserves
Consolidated profit
Consolidated shareholders’
equity
169,114
104,258
50,841
137,797
-11,584
11,542
461,968
Correction for previous year1), 2)
-
-
-
290
-
-
290
Adjustment acc. to IAS 193)
-
-
-
-
-1,180
-
-1,180
as of 31 Dec. 2011
169,114
104,258
50,841
138,087
-12,764
11,542
461,078
as of 1 Jan. 2012
169,114
104,258
50,841
138,087
-12,764
11,542
461,078
Change in other reserves
Items not reposted to the income
statement3)
-
-
-
-
-1,544
-
-1,544
Items reposted to the income
statement4)
-
-
-
-
55,179
-
55,179
Total changes taken directly to equity
-
-
-
-
53,636
-
53,636
Consolidated net profit before
adjustment
-
-
-
-
-
59,388
59,388
Correction for previous year1), 2)
-
-
-
-
-
830
830
Total consolidated profit
-
-
-
-
53,635
60,218
113,854
-
-
-
4,719
-
-
4,719
-
-
-
11,542
-
-11,542
-
Decrease in hybrid capital instruments
-
-12,805
-
-
-
-
-12,805
Distributions on silent partner contributions and profit participation rights
-
-
-
-
-
-9,696
-9,696
as of 31 Dec. 2012
169,114
91,453
50,841
154,348
40,872
50,522
557,150
as of 1 Jan. 2013
169,114
91,453
50,841
154,348
40,872
50,522
557,150
Items not reposted to the income
statement3)
-
-
-
-
-1,112
-
-1,112
Items reposted to the income
statement4)
-
-
-
-
-9,274
-
-9,274
Total changes taken directly to equity
-
-
-
-
-10,386
-
-10,386
Consolidated net profit/loss
-
-
-
-
-
35,560
35,560
Total consolidated profit
-
-
-
-
-10,386
35,560
25,174
5,486
-9,733
18,244
-
-
-
13,997
-
-
-
6,154
-
-
6,154
-
-
-
50,522
-
-50,522
-
Decrease in hybrid capital instruments
-
-9,307
-
-
-
-
-9,307
Distributions on silent partner
contributions and profit
participation rights
-
-
-
-
-
-8,317
-8,317
174,600
72,413
69,085
211,024
30,486
27,243
584,851
Change due to deferred taxes (hybrid
capital)5)
Allocations to/withdrawals from
retained earnings
Change in other reserves
Capital increase/conversion of silent
reserves
Change due to deferred taxes (hybrid
capital)5)
Allocations to/withdrawals from
retained earnings
as of 31 Dec. 2013
3)
Relates to actuarial profits and losses; see note 55 for adjustment to previous year‘s amounts.
4)
Relates to the revaluation reserve
5)
See note 25
1)
2)
76
CORPORATE REPORT 2013 | SCHEDULE OF CHANGES IN EQUITY & CASH FLOW STATEMENT
Cash flow statement
EUR ’000s
Consolidated net income1) 2)
2013
2012
35,560
60,218
24,164
29,207
Non-cash items included in the consolidated net income for the year and
reconciliation to cash flow from operating activities
Write-downs, impairments and write-ups on receivables, property, plant and
equipment, investments, intangibles and investment properties
Changes in provisions3)
Changes in other non-cash items
Gains on sales of non-current assets
Other adjustments
269
-538
-37,574
-90,855
1,853
3,734
-94,884
-105,864
-106,172
-164,315
1,220,941
837,639
216,995
-484,555
210,681
-74,122
Subtotal
Change in assets and liabilities after adjusting for cash items
1)
Other operating assets
-206
209
-247,798
-1,969,531
-1,139,084
30,223
-174,565
786,003
-212,449
101,200
Other operating liabilities
-6,717
5,104
Positive/negative fair value of hedging derivatives
-1,869
-36,255
Interest paid
-450,172
-654,046
Interest received
587,865
791,413
Dividends received
Income tax payments/reimbursements1) 2) 3)
Cash flow from operating activities
Inflows from sale/repayment of investments
Inflows from disposal of property, plant and equipment, investment properties and
intangibles
Outflows for purchase of investments
Outflows for purchase of property, plant and equipment, investment properties and
intangibles
Cash flow from investing activities
Payments to shareholders
Origin of funds from subordinated capital (contribution)
Payments received from capital additions
Use of funds from subordinated capital (payment)
Cash flow from financing activities
Cash and cash equivalents at end of previous period
2,990
3,623
-15,352
-6,986
-79,353
-774,180
1,528,186
2,339,191
468
-
-1,306,055
-971,060
-2,519
-1,914
220,080
1,366,218
0
-
-
-
2,527
-
-27,650
-29,473
-25,124
-29,473
669,302
106,737
Cash flow from operating activities
-79,353
-774,180
Cash flow from investing activities
220,080
1,366,218
Cash flow from financing activities
-25,124
-29,473
784,905
669,302
Cash and cash equivalents at end of period
3)
1)
2)
77
Group Notes to the consolidated
financial statements 2013
Notes to the consolidated financial statements of SaarLB............................................................... 80
Accounting policies............................................................................................................................. 81
(1) General principles.................................................................................................................................... 81
(2) Scope of consolidation.......................................................................................................................... 84
(3) Principles of consolidation................................................................................................................... 84
(4) Currency translation.............................................................................................................................. 85
(5) Offsetting................................................................................................................................................ 85
(6) Financial instruments........................................................................................................................... 85
(7) Cash reserves.......................................................................................................................................... 92
(8) Receivables............................................................................................................................................. 92
(9) Risk provisions in the credit business................................................................................................. 93
(10) Assets held for trading........................................................................................................................ 93
(11) Positive market value of derivative financial instruments (hedge accounting).......................... 93
(12) Investments.......................................................................................................................................... 93
(13) Interests in entities valued at equity................................................................................................ 93
(14) Investment property/property, plant and equipment.................................................................... 93
(15) Intangibles............................................................................................................................................. 94
(16) Other assets.......................................................................................................................................... 94
(17) Non-current assets held for sale and disposal groups..................................................................... 95
(18) Liabilities............................................................................................................................................... 95
(19) Liabilities held for trading................................................................................................................... 95
(20) Negative fair values from derivative financial instruments (hedge accounting)....................... 95
(21) Provisions.............................................................................................................................................. 95
(22) Other liabilities.....................................................................................................................................97
(23) Hybrid capital........................................................................................................................................97
(24) Leasing transactions........................................................................................................................... 98
(25) Taxation................................................................................................................................................. 98
Segment reporting..............................................................................................................................99
Disclosures on the comprehensive income statement..................................................................... 103
(26) Net interest income............................................................................................................................103
(27) Shares of profits in associated companies accounted for using the equity method................104
(28) Risk provisions in the credit business..............................................................................................104
(29) Net commission income.....................................................................................................................105
(30) Gains or losses on fair value measurement....................................................................................106
(31) Gains/losses on hedge accounting....................................................................................................106
(32) Gains/losses on investments.............................................................................................................107
(33) Administrative expenses...................................................................................................................108
(34) Other income.......................................................................................................................................109
(35) Income taxes........................................................................................................................................ 110
Notes to the balance sheet................................................................................................................112
(36) Cash reserves........................................................................................................................................112
(37) Loans and advances to banks.............................................................................................................112
(38) Loans and advances to customers....................................................................................................112
(39) Risk provisions in the credit business...............................................................................................114
78
CORPORATE REPORT 2013 | NOTES
(40) Assets held for trading........................................................................................................................116
(41) Positive market value of derivative financial instruments (hedge accounting).........................117
(42) Investments..........................................................................................................................................117
(43) Securities repurchase transactions..................................................................................................120
(44) Interests in entities valued at equity...............................................................................................120
(45) Investment property..........................................................................................................................120
(46) Property, plant and equipment.........................................................................................................121
(47) Intangibles........................................................................................................................................... 122
(48) Current and deferred income tax claims......................................................................................... 123
(49) Other assets......................................................................................................................................... 125
(50) Liabilities to banks.............................................................................................................................126
(51) Liabilities to customers......................................................................................................................126
(52) Securitised liabilities.......................................................................................................................... 127
(53) Liabilities held for trading.................................................................................................................128
(54) Negative fair values from derivative financial instruments (hedge accounting)......................128
(55) Provisions.............................................................................................................................................129
(56) Current and deferred income tax liabilities.................................................................................... 132
(57) Other liabilities................................................................................................................................... 132
(58) Subordinated capital.......................................................................................................................... 133
(59) Shareholders’ equity.......................................................................................................................... 133
Notes on financial instruments........................................................................................................ 139
(60) Fair value of financial instruments..................................................................................................139
(61) Level information for financial instruments................................................................................... 143
(62) Financial instrument measurement categories............................................................................. 147
(63) Net gains or losses on financial instruments.................................................................................. 148
(64) Derivative transactions...................................................................................................................... 148
Notes to the cash flow statement.....................................................................................................151
(65) Notes to items in the cash flow statement.....................................................................................151
Other notes....................................................................................................................................... 152
(66) Subordinated assets.......................................................................................................................... 152
(67) Assets and liabilities in foreign currencies...................................................................................... 152
(68) Transferred, but not fully written-off financial assets.................................................................. 152
(69) Transferred, fully written-off financial assets................................................................................ 153
(70) Assets pledged as collateral.............................................................................................................. 153
(71) Collateral received that may be sold on or pledged on.................................................................. 154
(72) Leasing transactions.......................................................................................................................... 154
(73) Fiduciary transactions....................................................................................................................... 155
(74) Contingent liabilities and other obligations................................................................................... 155
(75) Other financial obligations................................................................................................................156
(76) List of shareholdings of Landesbank Saar (excerpt)......................................................................156
(77) Administrative bodies of SaarLB......................................................................................................159
(78) Related party disclosures ...................................................................................................................161
(79) Auditors’ fees....................................................................................................................................... 164
(80) Employees............................................................................................................................................165
Responsibility statement by the Board of Management.................................................................. 166
79
Notes to the consolidated financial
statements of SaarLB
The consolidated financial statements for
Landesbank Saar, Saarbrücken, a corporation established under public law (hereinafter SaarLB), for financial year 2013 have been
prepared in accordance with International
Financial Reporting Standards (IFRS), pursuant to Commission Regulation 1606/2002 of
the European Parliament and of the Council
dated 19 July 2002, and in conjunction with
Section 315a (1) of the German Commercial
Code (HGB). In addition to the IFRS-defined
standards, IFRS also comprise the International Accounting Standards (IAS), the interpretations of the International Financial
Reporting Interpretations Committee (IFRIC)
and the Standing Interpretations Committee
(SIC). All standards and interpretation which
are mandatory in the EU for the financial year
2013 have been applied. SaarLB did not apply
any standards prematurely. In addition, German Accounting Standards (DRS) 20 was applied with respect to the management report
and the risk report.
The consolidated financial statements contain the statement of comprehensive income,
consisting of the income statement with an
effect on profits and losses and without an effect on profits and losses, the balance sheet,
the schedule of changes in equity, the cash
flow statement, the Notes and the segment
reporting. The reporting currency is the euro.
Unless explicitly stated otherwise, all
amounts are given in thousands of euro
(EUR ’000s). Figures in the tables may be
rounded by +/- one unit The reported amounts
in the tables are not normally preceded by a
symbol if it is clear from the context.
80
BayernLB holds 43.92 %, Saarland 30.98 %
and Sparkassen- und Giroverband Saar (Saarland Savings Bank Association) 25.10 % of
the shares in SaarLB as of 31 December 2013.
SaarLB is included in the consolidated financial statements of BayernLB at equity.
The Group management report, which includes the risk report, has been published in a
separate section of the annual report.
Accounting policies
(1) GENERAL PRINCIPLES
Effects of new and amended IFRS
The consolidated accounts of SaarLB are
drawn up using consistent accounting policies across the Group. The accounting policies
are based on the assumption that the Group
is a going concern.
Standards and interpretations that must
be applied for the first time in the reporting
period
Income and expenses are accrued pro rata
temporis and recognised in the income statement in the period to which they are economically relevant.
Estimates and measurements required for
accounting and valuation under IFRS are
carried out in accordance with the relevant
standards. They are examined on an ongoing
basis and are based on past experience and
other factors such as expectations of future
events. The assumptions and estimates essentially relate to the calculation of the fair
values of certain financial instruments, the
identification and calculation of impairments
under IAS 39, the accounting treatment and
measurement of provisions and the realisability of future tax reliefs. Where there are risks
and uncertainties resulting from estimates
to a large extent, the relevant assumptions
are shown in the notes to the corresponding
items.
Assets are recognised when it is probable that
the SaarLB Group will derive a future economic benefit from them and the cost of acquisition or production can be reliably determined.
Debts are recognised when it is probable that
satisfaction of a current obligation will result
in an outflow of economically useful resources and the amount required to do so can be
reliably determined.
In the reporting period, the amendments to
IAS 1 “Presentation of Financial Statements”,
IAS 12 “Income Taxes”, IAS 19 “Employee Benefits”, IAS 34 “Interim Financial Reporting”
and IFRS 7 “Financial Instruments” as well as
the new standard IFRS 13 “Fair Value Measurement” must be applied. If a retrospective application from the new or amended standards
is required, the figures from the previous year
are adjusted accordingly in order to allow for
comparability with the previous year or comparable period.
The amendments to IAS 12 do not have any
relevance to SaarLB. Due to the amended
IAS 1, the statement of comprehensive income was expanded to include disclosures of
possible recycling to the income statement.
The disclosure of other comprehensive income therefore includes a division of incomecomponents that are reposted to the income
statement and components that are not reposted to the income statement.
The application of the amended IAS 19 (Employee Benefits) will lead to changes particularly in the treatment of actuarial profits and
losses. As before, pension obligations are
measured on the basis of various parameters
(incl. retirement age, life expectancy, fluctuation). The difference in amounts due to the
revaluation of obligations as of balance sheet
date under the currently valid parameters in
comparison to the amount forecast at the
beginning of the year on the basis of the expected form of the parameters is described as
an actuarial profit or loss. This actuarial profit
or loss is to be reported immediately in retained earnings according to the new rules. In
the past there was an option. SaarLB applied
the corridor method for the accounting of the
actuarial profits or losses. Depending on the
scope, this led to either a distribution of such
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actuarial profits/losses with an impact on the
income statement or the result was ignored.
In addition, a past service cost on account of
retroactive plan changes is to be taken to the
income statement immediately and in full.
Previously, this could be distributed linearly
until the claims became vested. Furthermore,
the pre-retirement topping-up payments will
be collected linearly until the end of the active phase instead of being recorded in full
at the time of the commitment, as before.
The netting of pension obligations and plan
assets will lead to the reporting of the actual
net pension obligation after taking into account the recognition of the actuarial profits
or losses. Furthermore, net interest costs are
to be calculated according to the amended
IAS 19 in the case of coverage of the pension
obligations by the plan assets. This involves
calculating the interest on the net debt or the
net assets (defined benefit obligation less fair
value of plan asset) with the use of a uniform
interest rate. In the previous standard, the requirements for the calculation of the interest
rate for the discounting of obligations and for
the calculation of the expected income from
the plan asset differed from each other. We
refer to note 55 for the implementation of
this change.
From the additions to the standard IFRS 7
“Disclosure of Financial Instruments”, there is
additional information in the notes to the financial statements for the balancing of financial instruments for financial year 2013 and
for the prior year. The new disclosure requirements apply in accordance with IFRS 7.13A
both to financial instruments for which there
are offsetting rights that meet the balancing
criteria of IAS 32.42 and thus must lead to a
balanced presentation of the affected financial instruments on the balance sheet (balancing requirement in accordance with IAS
32) and to existing comparable agreements
that include offsetting rights for certain payments, but where balancing in accordance
with IAS 32.42 is not permitted since the criteria there are not met in full. These agreements
involve e.g. global netting arrangements in
accordance with IFRS 7 and clearing agreements for derivatives and framework agreements for securities repurchase transactions
and repo transactions, as well as framework
82
agreements for securities businesses and
all rights connected with these agreements
regarding financial collateral (e.g. providing
collateral for repo transactions). Derivatives,
securities repurchase transactions and securities lending transactions are included among
the financial instruments that are affected by
the disclosure requirements.
Exempt from the aforementioned requirements for the increased disclosure of balancing options are loans and deposits by customers at the same institution if they were not
actually netted in accordance with IAS 32.42
on the balance sheet. The same applies to financial instruments that are solely subject to
a pure collateral agreement, i.e. where the collateral is not provided in connection with an
agreement that includes an offsetting right.
Likewise exempt are financial instruments for
which there are offsetting agreements with
non-financial collateral (such as property and
buildings).
Besides these amended standards, IFRS 13
“Fair Value Measurement” is to be applied
for the first time in the reporting period. Application took place prospectively, i.e. the
effects from the application are reflected in
the other comprehensive income of the current year. The standard sets guidelines for the
calculation of the fair value and defines the
comprehensive quantitative and qualitative
information for the measurement of fair value. The rules of the standard do not cover the
question of when assets and liabilities can or
must be measured at fair value. This continues to be governed by the respectively relevant standards for this. IFRS 13 defines the
fair value as the exit price, i.e. the price that
a party would receive in a regular transaction
between market participants on the measurement deadline for the sale of an asset or
would pay for the transfer of a liability.
Besides the default risk of counterparties
through the formation of so-called credit valuation adjustments (CVA) for positive derivative positions, a debit valuation adjustment
(DVA) has been taken into account for negative derivative positions since 1 January 2013
in accordance with IFRS 13. SaarLB refined
the method for the calculation of the CVA as
of the reporting deadline 31 December 2013.
This refinement and the first-time application
of IFRS 13 had an income statement effect of
EUR 1,866,000 as of 31 December 2013.
In the reporting period, an amended market
standard for the fair value calculation of collateralised derivatives was developed from
the amended market practices. SaarLB took
these these developments into account in
the annual financial statements and applied
the requirements of a multi-curve model
for collateralised derivatives. While the collateralised derivatives with an OIS curve are
discounted, a standard discounting with
conventional market liquid swap curves takes
place for uncollateralised derivatives. The
forward curve is calculated depending on the
conventional money market, FRA and swap
rates.
Passed standards and interpretations that
are to be applied in the periods following the
reporting period and are not applied in advance
The key standards approved, the mandatory
effective date and the expected impact on
SaarLB are summarised below:
Standard
Mandatory application for
financial years that begin after
31 December 2013
Description of amendments and impact on SaarLB
IAS 32 "Financial Instruments:
Disclosure"
1 January 2014 (published
13 December 2012; not yet
endorsed)
Clarification with regard to the term “current point in time” and the term “simultaneity” in connection with the netting of financial assets and liabilities.
This change will not have any major impact on the financial statements of the
SaarLB Group.
IFRS 9 “Financial Instruments”
28 October 2010, amended
on 19 November 2013; not yet
endorsed)
The new IFRS 9 contains the results of the first revision of IAS 39, which refers
to the classification and measurement of financial instruments. Accordingly,
when financial assets are recognised, they are to be allocated to the amortised
cost category or to the fair value category. Recognition at amortised cost occurs
when
•the financial asset is held in conformity with the business model in order to
receive contractual cash flows and
•the contractual conditions of the financial asset foresee payments at scheduled dates that represent interest and redemption payments on the outstanding nominal amount.
Financial assets that do not fulfil these conditions are recognised under profit
or loss on fair value.
A voluntary allocation of financial assets to the fair value category is possible
upon recognition if incongruities are eliminated or significantly reduced with
such measurement or disclosure.
For the initial recognition of equity instruments that are not held for trading
purposes, there is the option of disclosing changes in the value of these financial
assets including the gain/loss on disposals not at profit or loss, but rather in the
statement of comprehensive income without an impact on profit/loss.
A change in the business model requires a reclassification.
Financial liabilities are usually measured at amortised cost. The exceptions to
this are the trade portfolios and the financial liabilities for which the fair value
option was selected. Fair value changes to financial liabilities in the fair value option are fundamentally recognised in Total other earnings according to IFRS 9 if
the fair value changes result from a change in the credit risk. All other fair value
changes continue to be recognised at profit or loss.
The application of the new IFRS 9 will have a major impact on the classification
and measurement of the financial statements of the SaarLB Group.
The rules of IFRS 9 have not been finalized.
IFRS 10 “Consolidated Financial
Statements”
on 12 May 2011; endorsed on
11 December 2012).
Mandatory application in the EU
for financial years that begin on
or after 1 January 2014
IFRS 10 replaces the previous IAS 27 and SIC 12 with regard to the group of consolidated companies. Through this new standard, a uniform model to specify the
group of consolidated companies is introduced for all companies and is based on
the control of the subsidiary by the parent company. The control concept of IFRS
10 includes the following three elements, which must be cumulatively fulfilled:
• discretionary power,
• variable returns and
•
the possibility of influencing variable returns by exercising discretionary
power.
First-time application is mandatory for financial years that begin after 31 December 2013. SaarLB is currently reviewing the possible impact on the group
of consolidated companies. SaarLB is also taking into account the professional
decisions that are currently being discussed in the boards. Only insignificant
changes to the group of consolidated companies are expected.
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Standard
Mandatory application for
financial years that begin after
31 December 2013
Description of amendments and impact on SaarLB
IFRS 11 “Joint Arrangements”
11 December 2012).
IFRS 11 replaces IAS 31 “Interests in Joint Ventures” and eliminates the former
possibility of proportionate consolidation of joint ventures. A participant in a
joint venture is to report his interest as an equity investment and use the equity
methods pursuant to IAS 28.
At the present time, SaarLB does not have any shares in joint ventures.
IFRS 12 “Disclosure of Interests
in Other Entities”
11 December 2012).
IFRS 12 will lead to a reporting obligation for all equity investments in subsidiaries, joint ventures and associated companies as well as not-consolidated
structured units according to one standard. Accordingly, companies must provide quantitative and qualitative information that make it possible for readers
of the financial statements to identify the risks and financial effect connected
with the company’s equity investment in the business.
Fundamentally, this amendment will have an impact on the scope of the information in the notes to the financial statements of the SaarLB Group.
IAS 28 “Investments in Associates and Joint Ventures”
11 December 2012).
IFRS 11 resulted in the elimination of the proportionate consolidation of joint
venture companies. Since the joint venture companies are to be considered according to the equity method pursuant to IAS 28, the application area of IAS 28
was expanded for joint venture companies and the standard renamed accordingly.
At the present time, SaarLB does not have any shares in joint ventures.
SaarLB has refrained from early implementation of any amended or new standards and
interpretations (partially not yet endorsed)
that have been issued by the IASB and the
IFRIC and are fundamentally relevant for the
SaarLB Group where their use first becomes
mandatory as of the 2014 financial year or
later.
impact of the contractual relationships between Group companies and these excluded
companies is contained in the consolidated
financial statements.
A complete overview of the special funds and
associated companies included in the consolidated financial statements can be found in
the list of shareholdings (see note 76).
(2) SCOPE OF CONSOLIDATION
(3) PRINCIPLES OF CONSOLIDATION
The group of consolidated companies at
SaarLB includes seven (31 Dec. 2012: six) subsidiaries. These include SaarLB Bankenbeteiligungsgesellschaft mbH, Saarbrücken, LBS
Immobilien GmbH, Saarbrücken, and special
funds that are consolidated in full in accordance with IAS 27 in conjunction with SIC 12.
The consolidated financial statements do not
include entities that are only proportionately
consolidated. Three associated companies (31
Dec. 2012: two) continue to be valued according to the at-equity method.
Materiality criteria are used to determine
SaarLB’s scope of consolidation. After LBS
Immobilien GmbH, Saarbrücken, was consolidated in full for the first time as a major
subsidiary in 2013, there are only one (31 Dec.
2012: two) subsidiary and five (31 December
2012: five) associated companies neither fully
consolidated nor included at equity, since
they are insignificant for the net assets, financial position and results of operations of the
Group. The accounting and earnings-related
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Consolidation was carried out using the purchase method under IAS 27.18 in conjunction
with IFRS 3.
The costs of acquisition of the consolidation
entities were offset against their equity at
the time of acquisition for the consolidation.
To date there have been no amounts where
the costs of acquisition exceed equity as part
of first-time consolidation.
In consolidating the balance sheet and income statement and eliminating intragroup
gains, all receivables and liabilities, income
and expenses and gains arising from intragroup transactions have been eliminated.
Shares in associated companies are valued at
equity and shown under the balance sheet
item “Interests in entities valued at equity”.
Under this method, the cost of acquisition of
an investment in an associated company is
recognised at its acquisition cost at the time
of acquisition and subsequently carried over
in line with the Group’s share of the associated company’s net income or other change(s)
in its net assets.
liability or equity instrument for the other
party.
(4) CURRENCY TRANSLATION
Financial instruments are recognised on the
balance sheet from the date upon which the
company reporting becomes a contracting
party and is either entitled to obtain consideration or required to provide consideration.
All assets and liabilities denominated in a foreign currency are translated into the functional currency (EUR) at the spot rate on the day
of the business transaction on initial recognition. For the translation of currency in subsequent periods, it is necessary to distinguish
between monetary and non-monetary items
when translating currency. Monetary assets
and liabilities denominated in foreign currencies are translated using the rate on the balance sheet date. In the case of non-monetary
items valued at historic cost of acquisition
or production, currencies are translated at
the historical acquisition rate. Non-monetary
items designated at fair value are translated
using the rate on the date the fair value was
calculated. Gains and losses from monetary
items resulting from currency translation are
recognised in the income statement.
(5) OFFSETTING
Financial assets and liabilities are offset and
reported as a net amount on the balance
sheet if SaarLB has a legal right to offset the
recorded amounts and report either the balance on a net basis or simultaneously release
the liability associated with the usage of the
asset in question. The amendment to IFRS 7
“Financial Instruments: Disclosure” means
that new disclosure obligations have been introduced in connection with these offsetting
agreements. This information is taken into
account for the first time in the consolidated
financial statements for financial year 2013.
There were no significant impacts on the annual financial statements as of 31 December
2013 due to this.
(6) FINANCIAL INSTRUMENTS
Definition
A financial instrument is an agreement that
simultaneously creates a financial asset for
one of the contracting parties and a financial
Recognition and measurement
Normal purchases or sales (spot transactions)
of financial assets (regular way contracts) can
be recognised either on their trade date or
settlement date. Under IAS 39.9, purchases
and sales of financial assets where delivery
of the asset takes place in accordance with a
specified deadline in line with customary market practice are deemed to be such contracts.
At SaarLB securities are always recognised on
their trade date.
Derivatives are recognised on their trade date.
Other financial instruments are recognised on
their settlement date.
All financial instruments, including financial
derivatives, are carried in the balance sheet in
accordance with IAS 39 and allocated to categories set out in IAS 39.
Initial recognition of financial instruments is
at fair value, which generally corresponds to
the consideration (the exit price) paid or received at the time of acquisition.
Subsequent measurement
Subsequent measurement of financial instruments depends on their measurement categories under IAS 39, which differ as follows:
Financial assets and liabilities at fair value
through profit or loss:
These include financial instruments and derivatives held for trading purposes which do not
meet hedge accounting criteria under IAS 39
(held for trading), and financial instruments
not held for trading purposes where the fair
value option under IAS 39 is used.
85
•Financial instruments held for trading (HfT):
These are measured at fair value and recognised in the income statement under gains
or losses on fair value measurement. This
item also shows realised gains and losses;
current income and expenses appear under
net interest income. Derivatives in hedges
do not meet the hedge accounting criteria
under IAS 39. They are used for risk management and have not been concluded for trading purposes.
HfT financial instruments are recognised
under assets held for trading and liabilities
held for trading accordingly.
•Financial instruments in the fair value option category (FVO):
The fair value option is used for portfolios of
financial instruments managed on a fair value basis in accordance with a documented
risk management or investment strategy;
this relates primarily to securities managed
by the securities special funds. For structured products which have to be separated
the fair value option is also applied to avoid
splitting the underlying transaction and the
embedded derivative. Measurement is at
fair value. Gains and losses are recognised in
gains or losses on fair value measurement,
while current income is recognised in net interest income.
Financial instruments designated under the
fair value option are included under investments. Financial instruments which would
otherwise have to be measured at amortised cost are not categorised under the fair
value option.
Investments held to maturity (HtM):
This category covers non-derivative financial assets with fixed or determinable payments, and fixed maturities that the Bank
intends and is able to hold to maturity,
where an active market exists for them at
the time of recognition or reclassification.
Measurement is at amortised cost. Please
refer to the comments on impairments for
the calculation of required write-downs.
These financial instruments are recognised
under investments. Current gains and losses
86
and income and expense from amortisation
are recognised under net interest income.
•Loans and receivables (LaR):
These are non-derivative financial assets
with fixed or determinable payments that
are not quoted on an active market. They
are measured at amortised cost. Please refer to the comments on impairments for the
calculation of required risk provisions and
write-downs.
Financial instruments in the LaR category
are shown under cash reserves, loans and
advances to banks/customers, investments
and other assets. Current gains and losses
and income and expense from amortisation
are recognised under net interest income;
this also applies for holdings which are part
of a hedge under IAS 39. Gains and losses on
sale are shown under gains or losses on investments if they relate to investments and
under other income/expense if they relate
to receivables.
•Available for sale financial assets (AfS):
These include any non-derivative financial
assets (securities, equity investments) that
are classified as available for sale or have
not been assigned to any of the categories
above. The financial instruments in this category are measured at fair value. Any difference between fair value and amortised cost
is shown as a separate item under shareholders’ equity (the revaluation reserve)
until the asset is either sold or matures or
a permanent impairment (see comments on
impairments) has to be recognised at profit
or loss. Equity instruments for which fair
value cannot be reliably calculated are recognised at their costs of acquisition less any
impairments.
Available for sale financial instruments are
included in investments. Gains/losses on
their sale and permanent impairment are
reported in gains or losses on investments,
current income and income and expense
from amortisation are recognised under net
interest income; this also applies for holdings that are part of a hedge under IAS 39.
•Liabilities measured at amortised cost:
Liabilities measured at amortised cost include financial liabilities not held for trading purposes. They are measured at amortised cost and reported under liabilities to
banks/customers, securitised liabilities,
other liabilities and subordinated capital.
Current gains and losses and income and expense from amortisation are shown under
interest expense.
Fair value
contractually willing and independent business partners. The fair value corresponds to
the sales price (exit price). For liabilities, the
fair value is defined as the price at which the
liability could be transferred to a third party
within the framework of an ordinary transaction. For the valuation of liabilities, the individual default risk is also to be taken into account. If collateral is provided by third parties
for our liabilities (e.g. guarantees), they are
principally not to be taken into account in the
measurement, since the repayment obligation for the Bank continues to exist.
Definition of fair value
In accordance with IAS 39, all financial instruments are measured at fair value for first-time
disclosure. In the case of a financial instrument that is not classified as measured at fair
value through profit or loss, the measurement
is to take place with the inclusion of specific
transaction costs.
Subsequent measurement of financial instruments that are classified as measured at fair
value through profit or loss or available-forsale financial assets constantly takes place at
fair value. In this sense, financial instruments
measured at fair value through profit or loss
include derivatives, instruments held for trading purposes and instruments that were designated as measured at fair value.
Fair value is a market-based and not a company-specific measurement parameter. IFRS
13 defines the fair value as the price that one
would receive in an ordinary transaction between market participants in the main market (or the most advantageous market; see
the following section on “Measurement” for
a definition of the main market or the most
advantageous market) under the current market conditions on the measurement deadline
for the sale of an asset or would have paid for
the transfer of a liability.
Accordingly, the fair value of an asset according to IFRS 13 is the amount that this asset
could be sold for between knowledgeable,
The fair value is determined according to the
requirements of IAS 13. It also includes the
conditions for the valuation hierarchy. Furthermore, the respective provisions of the
standards for financial instruments, including the explanations of IAS 39 on financial
instruments, particularly the classification to
measurement categories, apply.
Measurement at fair value.
SaarLB sets the following criteria for measurement at fair value:
•the specific asset or specific liability that is
the object of measurement is
•the main market (or the most advantageous
market) for the asset or liability. In order
to identify the main market or – if there is
no main market – the most advantageous
market, it is necessary to take into account
all information that is obtained with a reasonable effort. As long as there are no substantial signs to the contrary, the market
in which SaarLB would normally pursue a
transaction for the sale of the asset or the
transfer of the liability is the main market
or – if there is no main market – the most advantageous market. If there is a main market for the asset or liability, the fair value
measurement represents the price in this
market (this price is either directly observable or is estimated by using another measurement process), even if the price is potentially more advantageous in another market
on the measurement deadline. SaarLB had
87
access to its defined main markets (or the
most advantageous markets) on the measurement deadline.
•the measurement process suited for the
calculation after taking into account the
availability of the data for the derivation of
the input parameters that represent the assumptions of the market participants in the
setting of the price of the asset or liability
and the
•hierarchy level to which the input parameters are assigned (see below).
Fair value hierarchy and measurement process
In order to increase the comparability and consistency in the fair value measurement and
the related disclosures, IFRS specifies a hierarchy for the calculation of the fair value (“fair
value hierarchy”) which assigns three levels in
the measurement process for the calculation
of the input parameters for the fair value. Accordingly, the highest priority is awarded to
prices in active markets for identical assets,
while the use of unobservable input factors
in the measurement models receives the lowest priority. The total classification of the fair
value is based on the lowest level of a used
significant input parameter.
The reliable proof for the fair value is the listed market price for an identical instrument
on an active market (measurement hierarchy
level 1) Whenever such a listed price is available, it is to be used for the measurement of
the fair value. The relevant market for the
determination of the fair value is fundamentally the market with the highest activity
(main market). In order to reflect the price
at which an asset is exchanged or a liability can be settled, the assets are measured
at the bid price and the liabilities at the ask
price. A market for financial instruments is
regarded as active if quoted prices are easily
and regularly available from an exchange, a
broker or a market platform and these prices
represent actual, regularly occurring market
transactions between knowledgeable, willing
88
and independent business partners. SaarLB
uses the exchange price, the OTC prices of
market platforms (e.g. Bloomberg) and the
prices on other active markets for the subsequent measurement of financial instruments
measured at fair value and traded on active
markets (including securities and derivative
exchange-traded contracts).
If no listed prices are available, the measurement is based on listed prices for similar assets or liabilities on active markets. If these
are also not available, the fair value is calculated by using a suitable measurement model
where the included data comes from reviewable market sources, as much as possible. If
the aforementioned requirements are met,
the classification is made in Level 2 of the
measurement hierarchy. If the fair value is
calculated according to measurement methods whose measurement parameters are directly or indirectly (e.g. derived from similar
prices) observable on the market and have a
significant impact on the calculation of the
fair value, then they are allocated to Level 2.
Derivatives that are measured solely with parameters observable on the market, are to be
allocated to Level 2.
While most measurement methods are based
on data from reviewable market sources,
certain financial instruments are measured
by using measurement models that draw on
other input values for which there is not sufficiently current reviewable market data. In
terms of possible measurement methods,
IFRS 13 differentiates between the market
approach, the income approach and the cost
approach. The market approach includes
measurement methods that rely on information about identical or comparable assets and
liabilities. The income approach reflects today’s expectations for future payment flows,
expenses or income. The income approach
also includes option price models. In the cost
approach (only permitted for non-financial
instruments), the fair value corresponds to
the current repurchase costs after taking
into account the status of the asset. These
measurement methods are naturally subject
to the assessments of management to a large
extent. These non-observable input values
can include data that is calculated in the form
of approximate values from correlated or historical data. However, market data or data
from third parties are used to the greatest
possible extent and company-specific input
values are used as little as possible (measurement hierarchy level 3)
Valuation models are also used for OTC derivatives and equity securities not traded on active markets.
If there is no active market for the financial
instruments in question, the aforementioned
measurement methods are relied on. The inputs used for this purpose must include all
inherent market expectations. Inactive markets are characterised by heavily reduced
trading volumes, extremely wide bid/offer
spreads and existing arbitration possibilities.
If the fair value is calculated with valuation
methods where the influence of valuation parameters – that are not based on observable
market data – is significant for the fair value,
they are allocated to Level 3 of the valuation
hierarchy of IFRS 13.
The net present value method is used for unconditional derivative financial instruments
(interest rate swaps, interest rate/currency
swaps, forward rate agreements and forward
foreign exchange transactions). Valuation is
based on cash flow structure taking account
of nominal values, residual maturities and
the agreed interest rate calculation method.
Credit default swaps are also treated as unconditional derivative financial instruments,
with expected defaults based on current credit spreads also being taken into account.
With securities, mainly indicative prices
from independent market data providers are
used in applying the valuation methods and
– where these are not available – prices from
other market participants (especially issue arrangers). In the process, prices or quotes are
obtained from different providers for each
financial instrument. The prices provided are
compared for plausibility. If in exceptional
circumstances only one price is available, a
credit analysis is also performed as a plausibility check. Where present, prices of securities with similar features, residual maturities
and credit ratings are used for plausibility.
This approach was used to calculate the fair
values of certain securities. In the absence
of other sources, fair values of ABS securities
were mainly calculated using prices provided
by arrangers. Securities that are measured by
means of an indicative price fall into the category of Level 3.
Fair values are calculated here using recognised valuation models based on publicly
available market inputs and, to a limited extent, internal company data. The valuation
models include the net present value method
and option pricing models.
The cash flow structure of financial instruments with contractually agreed fixed cash
flows is calculated using the cash flows
agreed. For variable rate instruments, cash
flows are determined using forward curves.
Discounting uses a yield curve in the same
currency and of matching maturity, and a riskadjusted spread. Observable market inputs
are used where spreads are publicly available.
Material equity securities held as investments that are not traded on active markets
are valued using earnings power value analysis. Expected cash flows are based on the targets of the entities in question. Non-material
holdings and holdings without reliable projected values are carried at amortised cost.
Options and other financial derivatives with
option-type characteristics are largely valued on the basis of the Black Scholes option
pricing model. The following parameters are
regularly used in the valuation process: cumulative probability distribution function for
89
standard normal distribution, option strike
prices, risk-free interest rates (for different
currencies and maturities), price volatilities,
option time to expiry, (as applicable) interest
rate and pricing barriers, and probabilities of
occurrence. Options include interest rate cap
and floor agreements, swap-tions and currency options.
The valuation models are therefore used to
calculate fair values for accounting purposes
for financial instruments in the categories
HfT and AfS. Balance sheet items and products affected are:
• OTC derivatives in assets held for trading
• equity instruments held in investments
•OTC derivatives in liabilities held for trading
For the purposes of the notes, all financial
instruments are assigned to a three-level hierarchy (Level 1 to 3) in accordance with IFRS 7
in conjunction with IFRS 13. These three levels
are defined, as described above, on the basis
of the input parameters used for fair value
measurement.
Please refer to note 60 and note 61 for the disclosures of the fair values of financial instruments and their level allocation.
Fair value for first-time recognition and day
one profit / loss
In its assessment of whether the fair value
corresponds to the transaction price in the
first-time recognition, SaarLB examined the
characteristic factors in accordance with IFRS.
Recognition at a fair value deviating from the
acquisition costs can only occur under certain
conditions. In the year under review, no such
circumstances were determined; a potential
day one profit or loss did not occur.
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Hedge accounting
Interest rate and currency risks are managed
using financial derivatives to hedge assets or
liabilities in the balance sheet. The different
measurement methods possible for the underlying transaction and the hedging transaction can give rise to asymmetric effects in the
income statement which do not reflect economic reality and, most notably, give an incomplete picture of profitability. Hedges that
qualify for the hedge accounting in terms of
IAS 39 and are designated as such are currently reported solely as fair value hedges and limited to the hedging of interest rate risks. By
applying hedge accounting, which in respect
of the hedged risk provides a valuation of the
underlying transaction through the fair value,
the frequency of asymmetric valuations is
reduced. All or a portion of an asset or liability in the balance sheet is hedged against a
change in fair value due to interest rate risk
that could affect the net income for the period. As a precondition for applying hedge accounting a high expected and actual degree
of effectiveness is needed; i.e. that changes in
the fair value of the hedged underlying transactions must stay within a range of 80-125 %
of the hedged risk and the hedging derivative.
Fair value hedge accounting uses micro-fair
value hedges. Interest rate swaps are used
as hedging instruments. Derivatives used to
hedge the fair value of assets and liabilities
held on the balance sheet are measured at
fair value; changes in value are taken to the
income statement. The carrying values of the
underlying transactions are adjusted for the
measurement gains/losses arising from the
hedged risk, which are recognised in the income statement.
Both the measurement gains/losses of hedge
transactions and measurement gains/losses
of underlying transactions are reported in
“Gains/loss on hedge accounting” on the income statement. Current income from derivatives that are part of a hedge and meet the
hedging criteria under IAS 39 is recognised
under net interest income.
Impairments
At every balance sheet date, SaarLB assesses
whether objective indicators of impairment
exist for a financial asset. A financial asset is
considered to be impaired and an impairment
loss to have occurred if:
•there are objective indicators of an impairment due to a loss event which occurred after the financial instrument was recognised
for the first time and no later than the reporting date,
•the loss event has an influence on the estimated future cash flow of the financial asset or group of financial assets and
•
a reliable estimate of the impairment
amount can be made.
For financial instruments in the categories
LaR, HtM and AfS, SaarLB initially assesses at
the individual level whether objective indicators of an impairment exist. To this end, customer relationships and securities issuers are
analysed at regular intervals (if there are debt
securities and other fixed income securities).
The following criteria are specifically regarded
as objective indicators of an impairment:
•
clear deterioration of financial circum
stances
•
expectation of lower future payment
streams than those agreed
•default or delay in arranged payments of
capital and/or interest, application for deferment or extension
•concessions to the borrower for economic
or legal reasons in connection with financial
difficulties
•breach of agreements material to lending
•high probability of insolvency proceedings
or other restructuring of the borrower
•
rating-related restructuring or reorganisation
•disappearance of an active market for this
financial asset due to financial difficulties,
•country-specific evidence of impairment
•
discounts in market prices of more than
15 % in comparison to the original buying
price.
For receivables, the amount of the specific
provision is equal to the difference between
the carrying value of the financial instrument
concerned and the net present value of expected future cash inflows calculated using
the discounted cash flow method and based
on the original effective interest rate. Cash
flows also include cash which may result from
the realisation of collateral after deduction of
the costs of acquisition and sale. The carrying
value of the financial instrument is reduced
by means of a specific risk provision, which
is shown on the assets side of the balance
sheet. The impairment expense is recognised
in the income statement as part of the risk
provisions.
Changes in expected inflows lead to releases
from or additions to risk provisions.
For securities in the LaR and HtM categories,
the amount of the impairment expense is
equal to the difference between the carrying
value and the fair value, if there is an active
market. The impairment expense is recognised as a write-down and shown in gains or
losses on investments.
As soon as a receivable or security in the LaR
or HtM category is identified as impaired, interest income ceases being recognised on the
contractual terms. Notwithstanding this, the
change in the net present value of expected
future cash inflows over time on the basis of
the initial effective interest rate (unwinding)
is reported under interest income.
For financial instruments in the LaR and HtM
categories, portfolio risk provisions are calculated on the basis of historic default probabilities for receivables where there are no objective indicators of impairment and for those
where, in the case of objective indicators, an
individual examination has revealed no need
for impairment. Historical default probabilities are updated on an ongoing basis in the
course of backtesting.
91
Country risks (transfer risk) are also reflected
through the creation of portfolio risk provisions based on country-specific probabilities
of default, unless the risks have already been
taken into account through specific risk provisions.
Irrecoverable financial instruments are
derecognised. With receivables this normally
involves utilising specific risk provisions. Defaults for which no or insufficient specific
provisions have been created were charged to
current portfolio risk provisions.
For financial instruments in the category AfS,
an assessment is also made on each reporting
date as to whether objective indicators of impairment exist.
For equity instruments classified as AfS, a
significant or lasting decline in the fair value
of the investment below the costs of acquisition constitutes an objective indicator of an
impairment. For debt instruments classified
as AfS, the existence of an impairment is determined based on the same criteria as for securities in the categories LaR and HtM.
If an impairment exists, the cumulative unrealised loss which previously was reported
under shareholders’ equity in the revaluation
reserve has to be reallocated to the income
statement for the reporting period and recognised under gains or losses on investments.
The amount to be reclassified from the revaluation reserve is the difference between the
amortised cost and the current fair value.
Where there is no further reason for impairments on debt instruments, these are reversed through the income statement up to
a maximum of amortised cost. Increases in
the value of equity instruments may only be
reversed after prior impairment against the
revaluation surplus directly to equity.
92
Derecognition
Financial liabilities are derecognised when
the contractual rights to cash flows from the
respective assets expire or the financial asset
is transferred and the transfer meets the criteria for derecognition in accordance with IAS
39. A transfer in accordance with IAS 39 occurs
when the contractual rights to the cash flows
from the financial asset are transferred to a
third party or the cash flows are forwarded to
a third party in accordance with IAS 39.19. If
such a transfer occurs, the financial asset is
derecognised when the Group has transferred
fundamentally all the rewards and risks from
the financial asset. Financial liabilities are
derecognised when the contractual obligations are settled, removed or expire.
Transfers that do not meet the criteria for
derecognition at SaarLB include in particular
real securities repurchase transactions and
securities-lending transactions. Since all the
risks and rewards connected with ownership
are primarily retained in these cases, the transferred assets continue to remain in full in the
balance sheet and are disclosed in a separate
item (note 43). The equivalent values received
from real repurchase transactions as well as
accepted cash collateral are disclosed as liabilities under liabilities to banks/customers.
Please refer to the explanations under “Assets
pledged as collateral” (note 70) for the transferred assets that continued to be recognised.
(7) CASH RESERVES
The cash reserves include cash on hand and
deposits at central banks. Disclosure was at
nominal value.
(8) RECEIVABLES
Loans to banks and customers involve nonderivative financial assets with fixed or determinable payments that are not quoted
on an active market and not held for trading
purposes. Measurement is at amortised cost
unless the receivable is not an underlying
transaction in an efficient fair-value hedge.
Premiums, discounts and fees which are part
of the effective interest rate of the financial
instruments are spread over the fixed interest
period and reported in interest income.
value of underlying transactions which result
from the hedged risk are shown under gain/
loss on hedges. Interest income and expense
from hedging derivatives are recognised in
net interest income.
(12) INVESTMENTS
Impairments on receivables are recognised in
a separate risk provision in the balance sheet
and offset against the value of the asset.
(9) RISK PROVISIONS IN THE CREDIT
BUSINESS
The risk provisions for receivables are deducted from assets; the item includes specific risk
provisions and portfolio risk provisions for receivables.
Expenses for allocations to risk provisions,
income from the release of risk provisions
and receipts on receivables written off are
reported under risk provisions in the income
statement.
(10) ASSETS HELD FOR TRADING
Assets held for trading contain exclusively
financial derivatives with positive fair values
not designated as hedging instruments under
IAS 39. Measurement is at fair value. Measurement gains/losses and realised gains/losses
on assets held for trading are recorded in the
income statement under gains or losses on
fair value measurement; current gains/losses,
with the exception of gains/losses from credit
derivatives (premium payments), are recognised in net interest income.
(11) POSITIVE MARKET VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS (HEDGE
ACCOUNTING)
This item contains financial derivatives with
positive market values which are used as
hedges and meet the hedge accounting criteria of IAS 39. These derivatives are measured
at fair value. Both changes in the fair value of
hedging instruments and changes in the fair
Investments comprise investments in the
categories HtM, LaR, FVO and AfS. Shares in
non-consolidated subsidiaries and associated
companies not consolidated under the equity
method are reported under available for sale
investments. Measurement of investments
varies according to the valuation category
to which they belong. The impairments to be
made are identified in accordance with the criteria set out in note 6.
(13) INTERESTS IN ENTITIES VALUED AT
EQUITY
Interest in entities valued at equity include
the shareholdings in three companies valued
accordingly (cf. note 44).
(14) INVESTMENT PROPERTY/PROPERTY,
PLANT AND EQUIPMENT
Investment property includes land and buildings rented to third parties or primarily held
to achieve an increase in capital value. Property, plant and equipment mainly comprises
land and buildings for own use and operating
fixtures and fittings. Where properties are
used for both purposes, the different portions are normally accounted for separately.
If the portions cannot be separately sold or
let, the properties are only regarded as investment property if the portion used for own
purposes is insignificant.
Measurement of property, plant and equipment and real estate held as an investment is
at cost of acquisition or production, which in
the case of depreciable assets is reduced on a
straight line basis in accordance with useful life.
93
The useful life is determined according to the
expected rate at which future economic use is
exhausted and therefore factors in physical
wear and tear; technical or commercial obsolescence is taken into account independently
of expected physical wear and tear.
For the determination of the useful life, additions to buildings (not incl. property) are
broken down into their main components. In
the subsequent measurement, these components of property, plant and equipment are to
be depreciated separately if they
•are significant in proportion to the total
acquisition and manufacturing costs of the
property, plant and equipment and
•differ from each other with regard to their
length of use and depreciation methods.
The identification of the components and the
assessment of the essentiality are required
at the time of the first measurement of the
asset for the execution of the component approach. The applicable methodology for the
identification of the components and the
subsequent distribution of the total costs of
property, plant and equipment for the main
components is to be handled in accordance
with prudent business judgement. As a rule,
an estimate is required in the event of an acquisition of property, plant and equipment.
Individual utilisability of a component is not
required for this.
The buildings (not incl. property) at SaarLB
are divided into the following components
with the following useful lives:
•Skeleton construction/
supporting structure
•Roof
•Facade
•Windows
•Electrical installation
•Heating / air-conditioning system •Sanitation (including sanitary objects)
•Interior expansion
•Grounds
94
90
40
40
30
30
20
30
20
40
With regard to individual buildings for the
reconstruction/renovation measures, i.e. if
major renovations are made, capitalisation of
these measures occurs unless their costs are
inessential. Ongoing maintenance costs are
taken to the income statement.
The useful life of the operating and office
equipment is between 3 and 15 years.
An impairment charge is recognised in cases
of permanent impairment (according to IAS
36) and is the difference between the (higher)
carrying value and the recoverable amount.
Where the reasons for impairments no longer
apply, they are reversed, up to a maximum of
cost of acquisition or production. The impairment process applies to components of an asset accordingly.
Impairments on investment property are
shown under other income/expense, impairments on property, plant and equipment are
reported under administrative expenses. Reversals appear under other income.
(15) INTANGIBLES
The only intangibles are purchased software.
Intangibles are carried at amortised cost and
depreciated on a linear basis over an expected
useful life of between three to five years.
An impairment charge is recognised in cases
of permanent impairment. Where the reasons
for impairments no longer apply, they are reversed, up to a maximum of cost of acquisition or production.
Depreciation of intangibles is disclosed under
administrative expenses. Reversals appear
under other income.
(16) OTHER ASSETS
Other assets include prepaid expenses and
miscellaneous assets.
(17) NON-CURRENT ASSETS HELD FOR
SALE AND DISPOSAL GROUPS
The SaarLB Group classifies non-current assets and disposal groups as being held for sale
when the intention is to realise their carrying
value by selling them. Conditions for categorising assets as being held for sale include: the
fact that the asset is immediately realisable
in its current condition; that there is a plan
for disposal; that an active search for a buyer
has started; and that the sale is expected to
be completed within one year of the time of
classification and that the price is reasonable
in relation to the current fair value.
Non-current assets and disposal groups classified as held for sale are measured at the lower
of carrying value and fair value less selling
costs; financial instruments falling within the
scope of IAS 39 are measured according to the
principles set out in IAS 39.
Operating gains and losses are reported under the same item in the income statement
as they would have been were there no intention to sell. Impairments are recognised
when fair value less selling costs is less than
carrying value. These are shown under other
income/expense.
There were no non-current assets held for sale
or disposal groups as of 31 December 2013.
(18) LIABILITIES
Liabilities to banks and customers and securitised liabilities are measured at amortised
cost where they are not underlying transactions in an effective fair value hedge. Premiums and discounts are spread over the fixed
interest period on a constant effective yield
basis and recognised under interest expense
in the income statement.
(19) LIABILITIES HELD FOR TRADING
Liabilities held for trading contain exclusively
financial derivatives with negative fair values
not designated as hedging instruments under IAS 39. Measurement is at fair value. The
measurement and recognised gain/loss on assets held for trading are recognised in the income statement under gains or losses on fair
value measurement. The ongoing gains/losses
are reported in the net interest income, with
the exception of credit derivatives, which are
also reported in fair value gains/losses.
(20) NEGATIVE FAIR VALUES FROM DERIVATIVE FINANCIAL INSTRUMENTS (HEDGE
ACCOUNTING)
This item contains financial derivatives with
negative market values which are used as
hedges and meet the hedge accounting criteria of IAS 39. These derivatives are measured
at fair value. Both changes in the fair value of
hedging instruments and changes in the fair
value of underlying transactions which result
from the hedged risk are shown under gain/
loss on hedges. Interest income and expenses
from hedging derivatives are recognised as
those of the underlying transactions in net
interest income.
(21) PROVISIONS
This item shows the provisions for pensions
and similar obligations and other obligations
as well as other provisions.
Different pension plans exist in the SaarLB
Group.
On the one hand, members of the Board of
Management receive individual pension commitments. Former members of the Board of
Management (currently 6 retirees) receive
pensions. The current and future pensions
depend on the base salary. The risks from
these pension plans consist primarily of biometric risks and the actually occurring salary
95
and pension developments in comparison to
the assumptions. There are no unusual risks.
Special investment strategies that are specifically intended for the existing obligations do
not exist due to the low number of current
and future recipients.
Furthermore, seven employees received pension commitments through so-called fee conversion, which are financed in the form of reinsurance. There were no risks.
The defined benefit plans – management
commitments and remuneration converted
to pensions – have set benefits which are provided in the event of retirement or disability
and to surviving dependants in the event of
death, and which depend on multiple factors
such as age, length of service and salary.
Pension obligations are calculated annually in
an actuarial report.
The pension provisions were calculated on the
basis of the following actuarial assumptions:
%
2013
2012
Interest rate
3.50
3.50
Increases in salaries
2.50
2.50
Increases in retirement benefits
2.00
2.00
The Heubeck 2005G mortality tables are used
as biometric parameters.
The amount of the pension obligations is
calculated using the projected unit credit
method, whereby they are measured on the
basis of the defined benefit entitlements accrued at the balance sheet date. Assumptions
about the future trend of certain parameters
which affect the value of the benefits, such as
increases in salaries and pensions, are taken
into account in this measurement.
The determination of the pension provisions
is carried over on the basis of the anticipated
actuarial parameters at the beginning of the
period so that there is usually a difference
96
between the disclosed carrying value and the
current actuarial value which is reported as
an actuarial profit or loss and included in the
consolidated financial statements in other reserves for the first time due to the amended
requirements of IAS 19 as of 31 December 2013.
As of 31 December 2012, the recognition of actuarial losses in the amount of EUR 3,980,000
reduced other reserves (see note 55 and 59).
Deferred taxes were adjusted accordingly. Actuarial profits and losses cannot be reposted
to the income statement.
SaarLB is also a voluntary member of Zusatzversorgungskasse Saarland (ZVK). The ZVK is
a joint pension plan for multiple employers.
Members are so-called obligatory members
(municipalities, municipality associations
and special-purpose associations) and voluntary members (primarily Saarland, public sector savings banks and other members of the
Kommunaler Arbeitsgeberverband e.V.).
The financing of the statutory contributions
takes place on a pay as you go basis. Due to
the inability to go bankrupt and the overwhelming number of members of the ZVK as
well as the ZVK itself, SaarLB is actually not
liable for the obligations of other employers
in the joint benefit plan.
In the case of a departure, SaarLB would have
to pay financial compensation at the amount
of the cash value of the obligations charged
to the ZVK due to the obligatory insurance
of SaarLB’s employees. Information on the financial obligation upon closure of the plan is
not available.
SaarLB’s share with regard to the number of
insured people amounts to 1 %.
Under the terms of IAS 19, the ZVK retirement
benefit plan is categorised as a defined benefit plan. However, since the Bank does not
have access to the information required to account for it as a defined benefit plan and is unable to obtain this, and under the pay as you
go arrangement is also exposed to actuarial
risks relating to active and former employees
of other members (employers), no provision
has been created in the IFRS consolidated
financial statements for the contributions
of SaarLB to the ZVK. In accordance with IAS
19.32 the commitment is recognised for convenience as a defined contribution retirement
benefit plan, so the contributions SaarLB
pays to ZVK are recognised immediately as an
expense under staff costs.
From an economic perspective all the payments SaarLB makes to ZVK, i.e. the regular
pay as you go contributions and the additional “recapitalisation payments”, represent contributions towards the ongoing financing of
ZVK. They serve neither to settle a past deficit
nor to create a capital base. The recapitalisation payments in particular are in essence
simply increased pay as you go contributions.
There is no information about any surpluses
or shortfalls in the plan which could influence
the amount of future contributions.
Other provisions are set up in accordance
with IAS 37 for present obligations both legal and constructive arising as a result of an
event where it is probable that an outflow
of resources with economic utility will be required to perform the obligation. It must also
be possible to make a reliable estimate of the
amount of the outflow of resources.
There are no other long-term provisions to be
discounted except for long-term employee
benefit provisions.
Provisions have been set up at both the individual transaction and portfolio level in the
credit business to meet contingent liabilities
and other liabilities where there is a risk of
default.
(23) HYBRID CAPITAL
Debt and equity instruments are classified
in accordance with IAS 32, taking account
of IDW recommendation RS HRA 9 dated 11
March 2011 on accounting for financial instruments. This states that a financial instrument
must be treated as equity if it:
vidences a residual interest in a share of the
e
assets of an entity after deducting all its liabilities (IAS 32.11)
nd, in particular, it contains no contractual
a
obligation to transfer cash or cash equivalents or other financial assets to the contractual partner (IAS 32.16).
The accounting and measurement methods
used in the consolidated financial statements
for the contractual terms of the hybrid capital instruments issued by SaarLB are shown
below.
Undated silent partnership contributions not
recallable by the lender meet the criteria for
inclusion under shareholders’ equity if the
usual conditions exist.
Silent partnership contributions with a fixed
term or recallable by the lender and profit
participation rights are compound financial
instruments and have to be divided into their
equity and debt components (split accounting). On initial recognition the fair value of the
debt component is determined by discounting the nominal value of the total compound
instrument at the agreed effective interest
rate. The debt component is shown under
subordinated capital. In subsequent years interest is accrued on the debt component and
the associated expense is recognised in net
interest income.
(22) OTHER LIABILITIES
Other liabilities contains deferred income,
other liabilities, accruals and amounts not yet
distributed on hybrid capital reported under
equity.
The equity component, which on initial recognition is equal to the net present value of
expected future distributions, is shown as hybrid capital under equity. Distributions are reported as part of the appropriation of profit.
97
Subordinated loans and bonds are shown under subordinated capital.
to be valid when the timing differences are
reversed, based on tax legislation which is in
force or has already been passed.
(24) LEASING TRANSACTIONS
Under IAS 17, leases are divided into finance
leases and operating leases. Agreements are
classified on the basis of the distribution of
economic risks and rewards from the leased
property. A lease is classified as a finance
lease if substantially all the risks and rewards
associated with ownership are transferred to
the lessee; otherwise it is an operating lease.
SaarLB is currently only exposed to operating
leases.
Due to the split accounting, certain issued
instruments are divided between equity and
debt components. Since the instruments represent debt in full for tax purposes, deferred
taxes are taken to equity upon receipt of the
funds. This is then reduced with an impact on
earnings to the extent that the difference in
amounts will be eliminated in the future. To
ensure an accurate reporting of the taxes, the
tax expense on the interest portion is deducted from the retained earnings with an effect
on income in the following periods.
SaarLB as lessor
The leased assets – primarily land and buildings – are reported in the balance sheet under
investment property and carried at amortised
cost. Both leasing instalments received and
depreciation and impairments are recorded in
other income.
SaarLB as lessee
Leasing payments made under operating
leases are recognised as an administrative
expense. The assets leased are operating fixtures and fittings.
Deferred tax assets from as yet unutilised tax
losses carried forward and deductible timing
differences are only capitalised if it is probable that sufficient taxable earnings will be
generated in future for the tax benefit to be
utilised.
Deferred taxes are not discounted. Deferred
tax assets and liabilities are formed and recognised in the income statement where the underlying transaction is recognised as income
or expense; where the underlying transaction
does not pass through the income statement
they are recognised directly under the respective item in equity.
(25) TAXATION
Current tax assets and liabilities are measured by applying currently valid tax rates. Income tax receivables and liabilities are carried
at the amount of the refund or payment due.
Deferred tax assets and liabilities arise from
timing difference between the different values of assets or liabilities as shown on the
balance sheet and their assigned value for
taxation purposes. These are so-called timing
differences. This gives rise to increases and decreases in income taxes that can be expected
in the future. For each entity in the Group financial statement, these are measured at the
specific applicable income tax rate expected
98
Income tax expenses and receipts arising
from normal operating activities are shown
under the income tax in the consolidated income statement.
Other taxes not dependent on income appear
under other income.
Segment reporting
Segment reporting is based on the business
structure of the SaarLB Group. In total, the
Group reports on seven segments: the six operating business areas of SaarLB, including
the Landesbausparkasse Saar and the investments segment.
The segment reporting implements the requirements of IFRS 8, according to which the
Board of Management acts as the main decision maker in terms of IFRS 8.7 and the external segment reporting follows the internal
reporting and controlling.
The divisional heads in charge of each segment are responsible for earnings and serve
as segment managers as defined in IFRS 8.8.
The reconciliation contains those amounts
that cannot be meaningfully allocated to the
operating units. The column headed Consolidation shows the results of the consolidation
of the special funds and the investments valued at equity that are included in the internal
accounting on the basis of the calculation.
For the years 2012 and 2013, the management
information for net interest and net commission income and administrative expenses was
calculated on an arithmetical basis (internal
accounting) and for the other items using the
accounting and valuation methods of IFRS;
however, unrealised gains or losses on fair value measurement which SaarLB assumes will
be reversed in subsequent years are not allocated. These amounts, together with those
above, are also presented in the Reconciliation column.
Segment assets are loans and advances to
banks and customers, bonds reported under
investments (known as credit substitute securities) and investments. The Reconciliation
item mainly contains financial assets used for
liquidity management.
Segment reporting as at 31 December 2013
EUR ’000s
Projects
Savings
Treasury
Banks,
and
InstituPortfolio
tionals and ManageHigh Net
ment
Worth Individuals
LBS
Investments
Other
Consolidapositions
tion
and reconciliation
Total
22,952
29,787
19,983
4,430
35,187
17,237
3,307
-7,354
-4,166
121,363
-6,666
-7,095
-7
29
-8,264
-95
-
2,097
-3
-20,004
3,917
1,543
4,551
3,775
-453
-2,860
-
-3,130
467
7,810
94
-
-
809
1,056
-
-
19,880
-1,732
20,107
115
-
-
-
-2,947
-
-261
-174
-
-3,267
-15,134
-8,849
-7,437
-7,410
-10,598
-10,958
-472
-10,819
-226
-71,903
1
-
-1
-1
-
560
-
652
668
1,879
5,279
15,386
17,089
1,632
13,981
3,884
2,574
1,152
-4,992
55,985
1,778,351
2,713,043
1,790,396
1,817,976
4,285,141
758,462
44,398
4,185,423
Gains or losses on fair value
measurement2)
Gains/losses on
investments
Other income
Earnings from ordinary
operating activities/
earnings before taxes
Segment assets
2)
Real
Estate
Risk provisions in the credit
business
Net interest income1)
1)
Corporate
Customers
-414,438 16,958,752
Including shares of profits in associated companies accounted for using the equity method
Including gains/losses on hedge accounting
99
Segment reporting as at 31 December 2012
EUR ’000s
Corporate
Customers
Real
Estate
Projects
Savings
TreasBanks,
ury and
InstituPortfolio
tionals and ManageHigh Net
ment
Worth Individuals
LBS
Investments
Other posi- Consolidations and
tion
reconciliation
22,253
29,318
19,952
7,374
36,787
15,244
3,510
4,363
28
138,829
Risk provisions in the credit
business3)
-1,361
-9,136
-706
160
-19,258
-469
-
-2,269
-
-33,038
3,258
1,247
5,337
1,672
1,854
-1,768
-
-3,844
-437
7,319
344
2,805
-
2,789
2
-
-
14,423
16,494
36,857
-
-
-
-
-2,583
-
-351
6,124
-
3,190
-14,798
-8,709
-6,595
-7,948
-10,515
-10,784
-489
-11,390
-1,170
-72,398
-1
-
1
-1
-
555
-
717
353
1,624
9,695
15,525
17,989
4,046
6,287
2,778
2,670
8,124
15,268
82,382
1,734,358
2,678,550
1,502,700
1,966,598
5,387,485
690,920
48,519
5,061,478
Net interest income1)
Gains/losses on fair value
measurement2)
Gains/losses on
investments
Other income
Earnings from ordinary operating activities/earnings
before taxes
Segment assets3)
Including gains/losses on hedge accounting
3)
Figures have been adjusted; see note 39.
1)
2)
Notes on the definition of segments
Corporate Customers
The segment covers the entire SME business
of the SaarLB Group in its target markets.
In Germany, this includes Saarland, Rhineland-Palatinate and the adjacent regions. In
France, the SaarLB Group concentrates on
the Grand-Est (Grand East) and here in particular on the neighbouring Alsace-Lorraine
where the Bank is represented by its SaarLB
France branch at the offices in Metz and
Strasbourg. The main product in this segment
is traditional lending. Furthermore, a full service is provided, primarily by offering investment business and interest rate and currency
management as well as the foreign trade and
payment transactions in accordance with customers’ needs and giving business advice on
how to finance companies. Furthermore, the
financing for municipalities and municipally
owned companies (with a focus on Alsace and
Lorraine).
100
Total
Real Estate
This segment is responsible for the financing of commercial real estate in the SaarLB
Group. The regional focus is also on the target
markets of Corporate Customers, whereby
the support of the French real estate financers also takes place from the office in Paris.
Additionally, this segment monitors public
private partnership measures (PPP) for investments in infrastructure and education as
well as other public construction measures in
Germany. As in the Corporate Customers segment, the main product in Real Estate is lending, whereby the SaarLB Group’s structuring
and legal expertise is significant for the business success in this segment.
Projects
This segment is responsible for the financing
of projects in the SaarLB Group, especially in
the renewable energy sector, but also in the
area of public private partnership (PPP) on
the French market. The regional focus is also
-331,035 18,739,573
on the target markets already defined in the
Corporate Customers segment. As in the Corporate Customers segment, the main product
in Projects is lending, whereby the SaarLB
Group’s structuring and legal expertise is significant for the business success in this segment.
Worth Individuals
This segment handles wealth advisory services and management for savings banks,
institutionals and high net worth individuals. The focus of the Savings Banks and Institutionals is on increasing existing customer
connections and expanding contacts with
insurance companies and pension funds in
the region and the business relationships to
savings banks in Rhineland-Palatinate. It also
deals with financing of the region’s savings
banks and municipalities. In the sub-segment
of high net worth private customers, the focus is on complete support and advising for
wealthy private customers. Lastly, as a centre
of expertise, it actively supports the other
segments in customer relationship management, especially in investment, interest rate
and currency management.
the SaarLB Group would like to dispose in the
medium term. The management of the liquidity accounts (Securities Account A and Basel
III / LCR Portfolio) are also the responsibilities
of the segment. While Securities Account A
has the goal of establishing a sound ECB securities account, Basel III / LCR Portfolio establishes a liquidity buffer for the fulfilment of
the liquidity ratio in accordance with MaRisk
and CRR.
LBS
Landesbausparkasse Saar is a legally dependent unit of SaarLB. It operates the home
loan savings business (= core business) of
Sparkassenfinanzgruppe Saar, cooperating
closely with the Saarland savings banks. It
also finances energy-saving measures for real
estate as part of the Renewable Energies Act
[Erneuerbare-Energien-Gesetz // EEG].
Investments
Investments are mainly holdings in companies in the savings bank sector and in regional
development-type companies, which are managed by the Strategic Development unit. A difference is made between strategic, finance-/
credit-related and other equity investments.
Treasury and Portfolio Management
This segment is responsible for the Treasury,
which is in charge of asset/liability management as well as the SaarLB Group’s liquidity management. Furthermore, this segment
provides active support for all portfolios
that no longer belong to the SaarLB Group’s
core business and are to be systematically returned. These primarily include investments
in international banks and corporations with
a focus on OECD countries. It does this chiefly
through involvement in loan syndications
and issues. They also include international
commercial real estate financing – primarily
via investments in consortia – with a focus on
Northern and Western European urban centres as well as diverse smaller subportfolios
with primarily German counterparties that
Explanations on reconciliation and other positions:
The Reconciliation and Other positions item
contains circumstances that are not assigned
to any specific segment in the management
reporting to the Board of Management (Other
positions) and items that are based on the
reconciliation of the internal and external accounting (Reconciliation).
The profit components of the equity components could be distributed almost entirely to
the segments.
Interest income contains the most significant
positions from the reconciliation of interest expenses for the interest-bearing equity
101
components netted across the segments in
the amount of EUR 8.3 million, which are
reported in appropriation of the result in accordance with IFRS (2012: EUR 9.7 million).
Other items are mainly the trailing negative
effects from planned measures in previous
years (EUR -7.1 million), the liquidity costs
from the liquidity received in 2012 (approx.
EUR -4 million) and effects from interest cancellation (EUR -2.9 million).
The “Other positions” in the risk provision mainly include EUR 1.9 million (2012:
EUR -2.2 million) from the net change in the
portfolio adjustment. Since these are not allocated to the segment, there is no allocation
to the segments as part of the management
reporting.
In the net commission income, the reconciliation primarily results from the differences between the internal and external accounting.
They relate mainly to expenses in connection
with silent reserves of EUR -2.9 million (2012:
EUR -2.9 million).
In the gains or losses on the fair value measurement, the Other positions mainly relates
to profits from interest- and currency-related
transactions in the amount of EUR 17.5 million (2012: EUR -1.2 million) and securities with
the application of the fair value option. These
gains are not allocated to any segment in the
internal accounting. Gains from credit derivatives (EUR 1.4 million), in deviation from the
presentation in 2012 (EUR 5.4 million), were
now fully assigned to the Treasury & Portfolio
Management segment.
The Other positions in the gains or losses on
investments is mainly influenced by the net
change in the portfolio provision for securities in LaR and HtM of EUR -157,000 (2012:
EUR +6.4 million). In the management information to the Board of Management, it is not
allocated to any segment, similar to the procedure with the risk provision.
102
The Other positions in administrative expenses mainly relate to expenses of EUR 10.8 million (2012: EUR 11.4 million) that could not be
meaningfully allocated; these primarily result
from strategic projects, overhead costs and
staff areas.
In other income/expenses, the Other positions includes almost exclusively non-allocatable effects. They mainly result from tenant income from buildings not used by the
Bank in the amount of EUR 1.3 million (2012:
EUR 1.3 million), income from the release of
provisions in the amount of EUR 1.5 million
(2012: EUR 0.9 million), disposal losses of
EUR 0.8 million (2012: EUR 0.7 million) – particularly expenses from the repurchase of own
issues – and other expenses in the amount of
EUR 1.0 million (2012: EUR 2.0 million).
No further breakdown of the income by individual product or service is available and the
cost of producing such a breakdown would be
disproportionately high.
A further breakdown of the segments by region is only undertaken in the internal reporting for Germany and France with regard to selected products. This differentiation is below
the segment level and can only be transferred
to the segment presentation with disproportionate effort.
Disclosures on the comprehensive
income statement
(26) NET INTEREST INCOME
EUR ’000s
2013
2012
598,226
765,432
302,657
374,244
3,461
4,053
85,232
128,922
Current income from shares and other non fixed-interest securities
1,463
669
Current income from non-consolidated subsidiaries and associates
as well as other investments
2,675
3,397
142
136
206,057
258,065
477,179
626,717
181,086
246,055
Interest expense for securitised liabilities
52,486
66,843
Interest expense for subordinated capital
5,759
6,651
12,989
12,805
220,063
290,225
4,796
4,139
121,047
138,715
Interest income
Interest income from credit and money market transactions
of which: Interest income from unwindings
Interest income from debt securities and other fixed-interest securities.
Current income from profit pools and profit and loss transfer agreements
Interest income from derivatives
Interest expense
Interest expense for liabilities to banks and customers
Interest expense for hybrid capital
Interest expense for derivatives
Other interest expense
Total
Total interest income from financial assets
and liabilities measured at fair value not
through profit and loss was EUR 382,178,000
(2012: EUR 494,058,000) and total interest expense was EUR 257,116,000 (2012:
EUR 336,493,000) The constant effective
yield basis from the distribution of premiums, discounts and fees is included in interest income, with income reductions of
EUR 11,961,000 (2012: EUR 5,918,000) and
declining interest expenses of EUR 3,043,000
(2012: EUR 6,987,000). Interest income in 2013
included the release of differing amounts
from the reclassification of securities for
EUR 357,000 (2012: EUR 4,184,000), which
were largely compensated by amounts from
the release of the revaluation reserve to other
reserves (note 59).
103
(27) SHARES OF PROFITS IN ASSOCIATED COMPANIES
ACCOUNTED FOR USING THE EQUITY METHOD
EUR ’000s
2013
2012
Shares of profits in associated companies accounted for
using the equity method
316
114
Total
316
114
2013
2012
Allocations
39,221
46,508
Specific risk provisions
38,997
44,056
224
806
Provisions on the individual business level
-
97
Provisions on the portfolio level
-
1,549
2,662
1,800
Releases
16,552
13,508
13,979
10,736
1,773
236
Provisions on the individual business level
487
2,536
Provisions on the portfolio level
313
-
Receipts on receivables written off
1,006
1,093
Appreciation to receivables
4,321
669
20,004
33,038
The profits derive from pro-rata recognition of
net income for matching periods.
(28) RISK PROVISIONS IN THE CREDIT
BUSINESS
EUR ’000s
Portfolio risk provisions in the reported lending business1)
Direct depreciation
Portfolio risk provisions in the reported lending business
Total
1)
The amounts include both on-balance sheet
and off-balance sheet credit business.
The appreciation to receivables relates to the
receipt of owed exposures.
104
(29) NET COMMISSION INCOME
EUR ’000s
2013
2012
27,283
24,060
5,068
4,423
11,431
12,876
Payment transactions
1,471
1,359
Home loan savings business
4,662
4,293
Other services
4,651
1,109
19,474
16,742
Securities business
3,288
5,083
Credit business
1,820
1,553
285
156
Home loan savings business
7,824
6,417
Fiduciary transactions
2,905
2,909
Other services
3,352
624
Total
7,809
7,318
Securities business
Credit business
Commission expenses
Payment transactions
The increase in commission income from the
securities business primarily results from
EUR 353,000 for the brokerage of exchange
and commission transactions as well as
EUR 285,000 for asset administration. The
decline in commission expenses in the securities business is due to lower brokerage and
consulting payments in the OTC business and
in the so-called interest and currency management.
The decline in commission income in the lending business is connected with the lower processing and structuring commissions.
The increase in commission income and
expenses in other service business is in
connection with the first-time consolidation of LBS Immobilien GmbH. The income
(EUR 3,404,000) and expenses (EUR 2,375,000)
from the brokerage of real estate are reported
here.
Commission income from financial instruments that are recognised at acquisition
cost amounts to EUR 16,080,000 (2012:
EUR 16,984,000); commission expenses from
financial instruments that are measured at
amortised acquisition cost total EUR 9,171,000
(2012: EUR 7,711,000).
In the home loan savings business, the higher
volume of new business also had an impact,
leading to an increase in closing commissions
and brokerage expenses.
105
(30) GAINS OR LOSSES ON FAIR VALUE MEASUREMENT
EUR ’000s
Net trading income
Interest rate-related transactions
2013
2012
21,028
12,165
18,702
4,791
-
1,878
762
-93
1,416
5,435
148
154
-1,369
24,844
19,659
37,009
Equity-/Index-related transactions and transactions with other risks
Currency-related transactions
Credit derivatives
Other financial transactions
Fair value gains or losses from the fair value option
Total
The gains or losses from foreign currency translation are also included here.
EUR 3,810,000 (2012: EUR -8,267,000) of them
relate to conversion differences from financial instruments that are measured at amortised acquisition cost.
Net trading income includes realised and
unrealised gains or losses attributable to derivative valuation and current income from
credit default swaps of EUR 334,000 (2012:
EUR 595,000).
EUR 0 (2012: EUR 2,533,000), investment fund
units of EUR 3,798,000 (2012: EUR -353,000)
and interest rate-related transactions of
EUR -5,167,000 (2012: EUR 22,665,000).
In the gains or losses on the fair value option,
the realised gains or losses of EUR 1,943,000
(2012: EUR 5,342,000) are reported.
Interest income and dividends on HfT securities, fair value option holdings and derivatives (except CDS) held in the portfolio during
the year are shown under net interest income.
The gains or losses from the fair value option include equity-related transactions of
(31) GAINS/LOSSES ON HEDGE ACCOUNTING
EUR ’000s
2013
2012
Gains or losses of underlying transactions
17,820
-11,027
Gains or losses of hedging instruments
-17,372
10,876
Total
106
448
-151
The risk of changes in interest rates is hedged.
The underlying transactions are receivables in
the LaR category, securities in the AfS category and liabilities in the LaC category.
(32) GAINS/LOSSES ON INVESTMENTS
EUR ’000s
Gains/losses on investments "held-to-maturity"
Income from appreciation
of which portfolio risk provisions
Expenses from write-downs
Gains/losses from investments classified as "loans and receivables"
Disposal proceeds
Gains/losses from investments "available for sale"
Disposal proceeds
Total
The disposal result for financial assets in the
LaR category mainly results from the disposal loss for four securitisations (so-called
ABS papers) of EUR 1,784,000; the sale of two
Greek bank bonds was the reason in the previous year (EUR 5,746,000). Write-downs in
the LaR category relate to two ABS papers of
EUR 607,000, while in 2012 there were writeups for three ABS papers and the release of
the portfolio provision, which included primarily EUR 4,901,000 for the release of the
aforementioned Greek bank bonds.
2013
2012
-29
13
-
13
-
13
-29
-
-29
-
-2,591
1,330
-1,656
-5,746
-
7,258
-
6,354
-935
-182
-128
-
-647
1,847
85
2,012
-
395
-732
-560
-3,267
3,190
From the expenses for the write-down
of financial assets in the AfS category,
EUR 505,000 was for other equity investments and EUR 227,000 for an ABS paper.
The decline in disposal proceeds from investments in the AfS category is connected with
the sale of bonds (EUR 1,322,000) and the buyback of an issuer’s bonds (EUR 690,000) in the
previous year.
107
(33) ADMINISTRATIVE EXPENSES
EUR ’000s
2013
2012
Staff costs
41,453
40,554
33,826
32,819
Social security contributions
4,694
4,891
Expenses for pensions and other employee benefits
2,933
2,844
27,928
29,249
Expenses of land and buildings for own use
2,648
2,502
IT costs
6,568
6,610
Office costs
301
252
Advertising
1,531
1,177
Communication and other distribution costs
2,820
2,587
Contributions, legal and consultancy fees
7,902
8,579
Other administrative costs
5,952
6,896
206
646
2,522
2,595
71,903
72,398
Wages and salaries
Other administrative expenses
Expenses for agency arrangements
Depreciation of property, plant and equipment and amortisation of intangibles
(not incl. goodwill)
Total
Personnel expenses were affected in terms of
wages and salaries by the first time consolidation of LBS Immobilien GmbH. They amounted to EUR 403,000.
The decrease in costs for contributions, legal
and consultancy fees is mainly due to consulting services rendered by BayernInvest
Kapitalanlagegesellschaft in the amount of
EUR 1,161,000 in the previous year and a decrease of EUR 860,000 in court, lawyer and
auditing costs stand in relation to the higher
contribution of EUR 1,272,000 to the deposit
security reserve for DSGV.
Other administrative expenses include the
bank fee in the amount of EUR 113,000 (2012:
EUR 566,000). Furthermore, project costs
of EUR 2,323,000 (2012: EUR 2,766,000),
108
restructuring costs of EUR 406,000
(EUR 293,000) and contributions to D&O insurance of EUR 345,000 (2012: EUR 413,000)
and in the previous year unwinding costs for
the closure of the branch in Luxembourg in
the amount of EUR 323,000 are included.
The drop in expenses from external management relate to the termination of the contract with Banque LB Lux S.A. by the Metz
branch as of 31 March 2013.
(34) OTHER INCOME
EUR ’000s
2013
2012
Other income
4,573
5,124
277
1,094
1,332
1,313
1,332
1,313
248
-
Income from the release of provisions
1,499
932
Other miscellaneous income
1,217
1,785
2,694
3,500
Expenses from the repurchase of own issues
752
741
Current expense for investment property
409
403
409
403
Disposal losses from property, plant and equipment,
intangibles, investment property and real estate
of the inventory assets
10
-
Depreciation of investment property and real estate
228
228
40
41
239
132
1,016
1,955
1,879
1,624
Income from the repurchase of own issues
Rental income
of which:
Rental income on investment property
Disposal profits from property, plant and equipment,
intangibles, investment property and real estate
Other expense
- Leased properties
Expense from loss transfers
Expense for other taxes
Other miscellaneous expenses
Total
The rest of other income includes cost reimbursement and charged-on staff and operating costs. The decrease relates to reimbursements of court, lawyer and notary costs in the
amount of EUR 225,000 and one-off income in
the amount of EUR 260,000.
The decrease in other expenses is primarily connected with offsetting expenses
with partnerships of EUR 289,000 (2012:
EUR 1,022,000).
109
(35) INCOME TAXES
EUR ’000s
2013
2012
-15,129
-12,690
German and foreign corporation tax incl. solidarity premium
-7,005
-7,770
German trade tax / foreign local taxes
-8,124
-4,920
-5,295
-9,475
German and foreign corporation tax incl. solidarity premium
-3,027
-7,249
German trade tax / foreign local taxes
-2,268
-2,226
-20,424
-22,165
Current income taxes
Deferred income taxes
Total
The net current income taxes include income
of EUR 3,000 (2012: income of EUR 21,000) not
related to the period, as well as current taxes
on hybrid capital of EUR -6,157,000 (2012:
EUR -7,105,000) that do not affect profits or
losses.
The net deferred tax expenses of
EUR -5,295,000 (2012: EUR -9,475,000) consist
of EUR 3,118,000 (2012: EUR -12,076,000) from
the expenses due to the occurrence, i.e. reversal of timing differences and from the realisation of EUR - 8,413,000 in capitalised taxable
carry-over losses (2012: deferred tax income of
EUR 2,601,000).
110
The income taxes in 2012 were adjusted (see
note 48). In particular, the composition of the
claims from the carry-over loss was amended.
The expenses in 2012 fell by EUR 559,000 as a
result. In the previous year, the actual income
taxes fell by EUR 3,023,000 and deferred tax
expenses increased by EUR 2,464,000.
The reported income tax expense of
EUR -20,424,000 deviates from the anticipated income tax expense by EUR -2,748,000 in
the reporting year. The reasons for this deviation are illustrated in the following table.
EUR ’000s
2013
2012
55,984
82,383
31.57
31.57
-17,676
-26,008
-105
-255
-1,180
-400
Effect of changes in tax rates
-
-
Effect of non-deductible taxes (especially withholding tax)
-
-
Effect of non-deductible operating expenses
-2,228
-2,744
Effect of tax-free income
1,121
1,775
Effect of permanent accounting differences
1,345
-434
Effect of transfers of basis of assessment
-966
-823
Effect of impairments/value adjustments
-21
8,136
Additions and reductions for trade tax
-938
-1,412
Other effects
224
-
-20,424
-22,165
36.48
27.16
Group income tax rate (in %)
Expected income tax expense
Effects of different local tax rates
Effect from previous years of taxes recognised in the reporting year
Effective income tax expense (-) / income (+)
Effective income tax rate (in %)
The forecast income tax expense/income was
calculated using the tax rate applicable to
companies subject to taxation in Germany. Allowing for the non-deductibility of trade tax
from the corporation tax, a corporation tax
rate of 15 %, a solidarity surcharge of 5.5 %,
and an unchanged trade tax of 15.75 %, there
was an unchanged Group income tax rate of
31.57 % on the reporting date (2012: 31.57%).
The impact of the tax-free income results
primarily from tax-free dividend income and
disposal profits as in the previous years. The
impact of non-tax-deductible operating expenses are due to expenses in relation to dividend income, non-deductible assumptions of
costs for partnerships and expenses for bank
fees pursuant to Section 12 (2) of the Restructuring Law.
111
Notes to the balance sheet
(36) CASH RESERVES
EUR ’000s
2013
2012
Cash on hand
1,263
1,321
Balances with central banks
783,642
667,981
Total
784,905
669,302
2013
2012
1,553,108
2,439,830
468,579
806,302
2,021,687
3,246,133
2013
2012
422,686
853,039
1,599,001
2,393,094
up to 3 months
340,066
708,155
621,728
854,496
620,274
830,443
16,933
0
2,021,687
3,246,133
2013
2012
Loans and advances to domestic customers
4,529,989
4,820,752
Loans and advances to foreign customers
4,267,392
4,218,249
Total
8,797,381
9,039,001
(37) LOANS AND ADVANCES TO BANKS
EUR ’000s
Loans and advances to domestic banks
Loans and advances to foreign banks
Total
Breakdown of loans and advances to banks by maturities:
EUR ’000s
Payable on demand
Fixed-term with residual maturity of
more than 5 years
Total
(38) LOANS AND ADVANCES TO CUSTOMERS
EUR ’000s
112
Breakdown of loans and advances to customers by sector:
EUR ’000s
2013
2012
Real estate
2,897,539
2,751,891
Sovereigns / public sector
1,611,610
1,510,883
Renewable energy
1,650,340
1,332,036
Retail customers
712,141
546,142
Steel
223,073
329,282
Utilities
249,826
220,212
Wholesale & retail trade
180,927
218,742
Automotive
119,928
139,867
Food & beverages
192,209
176,096
Construction
180,092
146,161
Health care
109,752
107,473
Pharmaceuticals
56,384
62,124
Aviation
37,334
36,866
576,226
1,461,226
8,797,381
9,039,001
2013
2012
8,428,824
8,666,117
up to 3 months
684,619
865,123
541,366
656,531
2,789,248
2,389,661
more than 5 years
4,413,591
4,754,802
368,557
372,884
8,797,381
9,039,001
Other
Total
Breakdown of loans and advances to customers by maturities:
EUR ’000s
Indefinite
Total
113
(39) RISK PROVISIONS IN THE CREDIT BUSINESS
EUR ’000s
Balance as of 1 January
Loans and advances to
banks
2012
2013
2012
2013
2012
-18,213
-22,675
-128,299
-115,096
-146,512
-137,771
391
249
-21,947
-29,516
-21,556
-29,267
-10
-68
-38,987
-43,988
-38,997
-44,056
388
304
13,591
10,432
13,979
10,736
13
13
3,449
4,040
3,462
4,053
1,096
4,211
45,394
16,314
46,490
20,525
1,096
-
45,394
20,525
46,490
20,525
-
4,211
-
-4,211
-
-
-16,726
-18,213
-104,852
-128,299
-121,578
-146,512
Allocations
Releases
Unwindings
Utilisations
Transfers / Other changes
Balance as of 31 December
Specific risk provisions include country risk
provisions of EUR 52,000 (2012: EUR 60,000).
114
Total
2013
Changes recognised through profit or
loss
Changes not recognised through profit
or loss
customers
The following table shows the state of the
specific risk provisions (not including country
risk provisions) by sector.
EUR ’000s
2013
2012
Real estate
57,277
49,524
Banks / financial service providers
16,726
18,213
Retail customers
14,646
23,500
Food & beverages
5,565
2,795
Construction
4,639
6,825
Machine and system construction
3,488
3,067
Automotive
3,430
15,446
Sovereigns / public sector
3,292
2,971
Suppliers / disposers
2,970
654
Aviation
2,672
2,672
Chemical industry
2,608
2,565
Wholesale & retail trade
1,753
59
Technology
1,408
1,335
Health care
608
1,241
Pulp and paper industry
443
3,243
Steel
-
6,750
Media
-
4,356
Utilities
-
967
Logistics
-
269
Other
-
-
121,525
146,452
Sector groups
Total
The unwindings are recorded by a reduction
of the specific risk provisions; the income is
disclosed in net interest income.
115
Portfolio risk provisions
EUR ’000s
Balance as of 1 January1)
banks
2012
2013
2012
2013
2012
-230
-255
-15,257
-14,663
-15,487
-14,918
72
25
1,477
-593
1,549
-568
-
-
-224
-804
-224
-804
72
25
1,701
211
1,773
236
-158
-230
-13,780
-15,257
-13,938
-15,487
Allocations1)
Releases
1)
Total
2013
Changes recognised through profit or
loss
customers
Figures from 2012 adjusted
In the financial statements, the incorrectly
too high portfolio risk provisions for loans
and advances to customers were corrected.
The amounts were adjusted by EUR 695,000
as of 31 December 2012 and by EUR 424,000
as of 31 December 2011. In corresponding
amounts, the retained earnings as of 31 December 2012 and as of 31 December 2011 increased before taking into account the tax
effects. See tax effects in note 35 for comparisons. The adjustment also reduced the allocations to the portfolio risk provisions in 2012
by EUR 271,000.
The risk provision for contingent liabilities
and other obligations is showed as a provision
for risks from the credit business.
(40) ASSETS HELD FOR TRADING
EUR ’000s
2013
2012
Positive fair values from derivative financial instruments
(not hedge accounting)
328,264
517,917
Total
328,264
517,917
Please see note 64 for the composition and
performance of derivative financial instruments.
EUR ’000s
2013
2012
328,264
517,917
4,042
14,258
19,365
24,826
167,957
211,989
more than 5 years
136,900
266,844
328,264
517,917
up to 3 months
Total
116
Breakdown of assets held for trading by contractual maturity:
(41) POSITIVE MARKET VALUE OF DERIVATIVE
FINANCIAL INSTRUMENTS (HEDGE ACCOUNTING)
EUR ’000s
2013
2012
Positive market value of fair value hedges
28,559
46,181
Total
28,559
46,181
The hedges involve securing the risk of
a change in interest rates. Underlying
transactions are securities liabilities and
promissory notes .
(42) INVESTMENTS
The investments consist of the following:
EUR ’000s
Bonds, notes and other fixed-interest securities
Money market instruments
Bonds and notes
Equities and other non-fixed-interest securities
Equities
Investment fund units
Other non-fixed-interest securities
Interest in subsidiaries
Shares in associated, not consolidated companies
Other investments
less portfolio risk provisions
Total
2013
2012
4,286,090
4,593,617
719,696
458,532
3,566,394
4,135,085
67,236
55,563
469
469
66,107
54,234
660
860
25
1,920
2,292
2,292
44,374
46,737
1,871
1,714
4,398,146
4,698,415
117
Breakdown of investments by maturity:
EUR ’000s
2013
2012
4,284,219
4,591,903
up to 3 months
944,245
411,958
818,300
601,661
2,167,780
3,094,555
353,894
483,729
113,927
106,512
4,398,146
4,698,415
more than 5 years
No maturity
Total
Recognition of shares without maturity within the next twelve months is not planned.
Reclassification
Due to the financial market crisis, debt securities with a value of EUR 1.2 billion were reclassified from the AfS to the LaR category retrospectively as of 1 July 2008 and in the fourth
quarter of 2008. Furthermore, SaarLB reclassified debt securities with a market value of
EUR 538.4 million from the AfS to the LaR category and debt securities with a market value
of EUR 1.1 billion from the AfS to HtM category as of 31 October 2008. More details on the
reclassifications can be found in SaarLB’s financial report for the 2008 financial year (see
explanations in notes 1, 6 and 42).
118
As of 31 December 2013, with separately reported security repurchase transactions of
EUR 365,459,000 (2012: EUR 275,023,000),
these reclassified securities had a fair value
of EUR 988.1 million (2012: EUR 1.2 billion).
The amortised costs of the reclassified securities amounted to EUR 982.2 million (2012:
EUR 1.2 billion).
EUR ’000s
2013
2012
Fair value
988,081
1,233,402
of which LaR
388,298
546,833
of which HtM
599,783
686,569
982,211
1,233,785
of which LaR
393,282
564,121
of which HtM
588,929
669,664
Revaluation reserve
-8,520
-15,191
of which LaR
-6,419
-12,025
of which HtM
-2,101
-3,166
-2,650
-15,574
-11,403
-29,313
8,753
13,739
Amortised cost
Revaluation reserve without reclassification
of which LaR
of which HtM
The revaluation reserve of the reclassified
securities amounts to EUR -8.5 million (2012:
EUR -15.2 million). If no reclassification had occurred, there would have been a revaluation
EUR ’000s
reserve of EUR -2.7 million (2012: EUR 15.6 million) so that the portfolio of the revaluation
reserve for the reclassified securities would
have been EUR 5.9 million lower.
2013
2012
12,924
65,670
of which LaR
17,910
54,345
of which HtM
-4,986
11,325
With reclassification
6,671
9,393
of which LaR
5,606
7,694
of which HtM
1,065
1,699
Change in the revaluation reserve
Without reclassification
The effective interest rates determined at the
time of the reclassifications on the basis of
the new acquisition costs ranged from a minimum of 2.3857 % to a maximum of 13.1024 %.
The estimated cash flows that SaarLB had
expected at the time of the reclassifications
amounted to EUR 3.5 billion.
119
(43) SECURITIES REPURCHASE TRANSACTIONS
EUR ’000s
2013
2012
629,146
569,969
Total
629,146
569,969
This item includes loans that are the object of
the securities repurchase transactions. Due
to the buyback obligation, SaarLB will continue to bear the credit rating and interest
change risk from these loans. The liabilities
connected with the securities repurchase
transactions amounted to EUR 645,473,000
(2012: EUR 577,650,000) and are reported in
liabilities to banks.
With regard to the transactions, EUR 0
(2012: EUR 82,092,000) have a term of
3 months to 1 year and EUR 629,146,000 (2012:
EUR 487,877,000) have maturities of 1 to 5
years.
Counterparties in the transactions are BayernLB, LBBW, NordLB, Sparkasse Köln-Bonn,
DZ-Bank and Commerzbank.
(44) INTERESTS IN ENTITIES VALUED AT EQUITY
EUR ’000s
2013
2012
Associated companies
6,028
2,876
Total
6,028
2,876
In the year under review, a company was newly considered at equity. Summarised financial
information about associated companies
that are valued according to the at equity
method is included in note 76.
Recognition of interests within the next
twelve months is not planned.
(45) INVESTMENT PROPERTY
EUR ’000s
120
2013
2012
Land and buildings leased
20,777
21,005
Total
20,777
21,005
Development of investment property:
EUR ’000s
2013
2012
25,089
25,089
Additions
-
-
Disposals
266
-
24,823
25,089
4,084
3,857
Scheduled amortisation
228
227
Disposals
266
-
4,046
4,084
21,005
21,232
20,777
21,005
Costs of acquisition or production
Write-ups/write-downs
Carrying values
Limitations regarding the disposability or the
generation of income and disposal proceeds
did not exist as of balance sheet date.
The fair value of the investment property and
buildings amounted to EUR 22,130,000 (2012:
EUR 22,179,000), of which EUR 22,080,000
(2012: EUR 22,130,000) was calculated by external experts. The calculation is based on the
application of the discounted cash flow process in which market and geographic data are
included.
There was no expert report for investment
property with a carrying value of EUR 49,000
(2012: EUR 49,000).
The fair values are determined by a comparison of the material asset (total of land value
and the value of the construction facilities)
and the income value (product of annual
gross yield and a so-called multiplier). Significant input parameters are mainly the construction price index and assumptions for age
reductions with respect to the material asset process, and the local comparative rents,
management costs and the multiplier with
respect to the income value process.
All fair values are assigned to the Level 3
measurement hierarchy (see note 6).
Recognition of investment property within
the next twelve months is not planned.
(46) PROPERTY, PLANT AND EQUIPMENT
EUR ’000s
2013
2012
Land and buildings for own use
19,018
19,812
Operating and office equipment
2,514
2,668
21,532
22,480
Total
121
Performance of property, plant and equipment:
EUR ’000s
Land and buildings for
own use
Operating and office
equipment
Total
2013
2012
2013
2012
2013
2012
23,327
23,327
15,099
14,711
38,426
38,038
Additions
-
-
627
388
627
388
Disposals
440
-
255
-
695
-
22,887
23,327
15,471
15,099
38,358
38,426
3,515
2,798
12,431
11,682
15,946
14,480
355
355
744
749
1,099
1,104
Impairments
-
362
-
-
-
362
Disposals
-
-
218
-
218
-
3,870
3,515
12,957
12,431
16,827
15,946
19,812
20,529
2,668
3,029
22,480
23,558
19,017
19,812
2,514
2,668
21,531
22,480
Carrying values
Property, plant and equipment with limited
disposal rights did not exist as of balance
sheet date.
Recognition of property, plant and equipment within the next twelve months is not
planned.
(47) INTANGIBLES
122
EUR ’000s
2013
2012
Other intangible assets
2,489
2,010
Total
2,489
2,010
Performance of intangible assets:
EUR ’000s
2013
2012
4,710
3,185
Additions
1,891
1,525
Disposals
133
-
6,468
4,710
2,699
1,572
1,413
1,127
-
-
133
-
3,979
2,699
2,010
1,612
2,489
2,010
Impairments
Disposals
Carrying values
Intangible assets involve exclusively standard
software.
Recognition of intangibles within the next
twelve months is not planned.
(48) CURRENT AND DEFERRED INCOME TAX CLAIMS
EUR ’000s
2013
2012
Current income tax claims
7,693
5,467
Domestic
5,733
5,467
Foreign
1,960
-
43,616
56,977
43,616
56,977
-
-
51,309
62,444
Deferred income tax claims
Domestic
1)
Foreign
Total
1)
Contracts from previous year adjusted; see notes 39, 48 and 55
123
Deferred income tax claims and obligations are distributed over the following items:
EUR ’000s
2013
Deferred tax
assets
Deferred tax
liabilities
Deferred tax
assets
Deferred tax
liabilities
-
-
-
-
392
5,735
150
7,468
2,789
-
1,516
-
-
-
32
-
Positive market value of derivative financial instruments (hedge accounting)
-
-
-
4,593
1,994
18,820
3,717
25,135
-
15
-
2
1,950
-
500
-
-
1,702
1,664
-
Cash reserves
Loans and advances to banks and customers
Risk provisions
1)
Investments
Property, plant and equipment
Other assets
Liabilities to banks and customers
2,582
-
2,666
-
30,067
-
34,631
-
-
-
-
-
3,732
-
3,398
186
110
6,730
290
73
-
22,884
-
28,905
Taxable carry-over losses1)
-
-
8,413
-
43,616
55,886
56,977
66,362
Negative fair values from derivative financial instruments (hedge
accounting)
Provisions1)
Other liabilities
Total deferred taxes after impairments and offsetting
1)
Contracts from previous year adjusted; see notes 39, 48 and 55
As in the previous year, deferred tax liabilities are in excess of deferred tax assets by
EUR 12,270,000 (2012: EUR 9,385,000).
The change in the balance of deferred income
tax claims and liabilities of EUR 2,885,000 (previous year: EUR 38,627) does not correspond
to deferred tax expenses of EUR 5,295,000
(2012: EUR 9,475,000).
The reasons for this are the changes in deferred taxes not recognised at profit or loss;
these result from bookings of EUR 2,410,000
against the revaluation reserve.
124
2012
The stock of taxable losses carried forward
where deferred tax assets are reported is
listed separately in the following table for all
types of losses carried forward in the Group.
EUR ’000s
2013
2012
-
27,140
Losses carried forward for which a deferred tax asset has been created1)
-
27,140
Losses carried forward for which no deferred tax asset has been created
-
-
-
-
Corporation tax
Balance of losses carried forward
Usable indefinitely
Trade tax
Balance of losses carried forward
-
26,184
1)
Losses carried forward for which a deferred tax asset has been created
-
26,184
Losses carried forward for which no deferred tax asset has been created
-
-
-
-
Usable indefinitely1)
1)
The levels in the previous year were adjusted to correct errors. In accordance with the already pursued recognition in the past due to the tax declaration, repatriated carry-over losses were also recognised for trade tax carry-over losses. On the contrary, capitalised corporate carry-over losses in 2012
due to a lack of ongoing impairments were reduced. Furthermore, the capitalised deferred taxes as of 31 December 2012 and 31 December 2011 were
adjusted due to the correction of the portfolio risk provisions (see note 39) and the first time recognition of actuarial losses due to the changes in IAS 19
(see note 55).
On account of the full usage of the taxable
carry-over losses in 2013, no more capitalised
deferred taxes are reported as of balance
sheet date.
(49) OTHER ASSETS
EUR ’000s
2013
2012
529
753
Other assets
3,515
3,085
Total
4,044
3,838
Prepaid expenses
The intention is to realise other assets within
the next twelve months.
125
(50) LIABILITIES TO BANKS
EUR ’000s
2013
2012
5,033,735
4,975,243
714,999
1,025,093
5,748,734
6,000,336
2013
2012
214,933
213,733
5,533,801
5,786,603
2,495,524
1,762,108
845,135
1,519,284
1,070,335
1,533,958
more than 5 years
1,122,807
971,253
5,748,734
6,000,336
2013
2012
4,475,872
5,503,630
283,219
394,545
4,759,091
5,898,175
Liabilities to domestic banks
Liabilities to foreign banks
Total
Breakdown of liabilities to banks by maturity:
EUR ’000s
Payable on demand
up to 3 months
Total
(51) LIABILITIES TO CUSTOMERS
EUR ’000s
Liabilities to domestic customers
Liabilities to foreign customers
Total
126
Breakdown of liabilities to customers by maturity:
EUR ’000s
2013
2012
4,211,213
5,378,142
2,102,020
2,822,803
344,502
637,525
610,378
795,338
1,154,313
1,122,476
547,878
520,033
4,759,091
5,898,175
2013
2012
4,939,714
5,114,745
Mortgage Pfandbriefs
299,325
350,555
Public-sector Pfandbriefs
587,630
783,647
4,052,759
3,980,543
4,939,714
5,114,745
2013
2012
49,205
120,910
355,633
265,070
3,409,526
3,720,860
more than 5 years
1,125,350
1,007,905
4,939,714
5,114,745
up to 3 months
more than 5 years
No maturity (home loan savings deposits)
Total
(52) SECURITISED LIABILITIES
EUR ’000s
Bonds and notes issued
Other bonds
Total
Breakdown of securitised liabilities by maturity:
EUR ’000s
up to 3 months
Total
127
(53) LIABILITIES HELD FOR TRADING
EUR ’000s
2013
2012
Negative fair value from derivative financial instruments
(not hedge accounting)
432,882
645,331
Total
432,882
645,331
2013
2012
up to 3 months
13,397
14,906
24,172
30,747
236,288
284,905
more than 5 years
159,025
314,773
432,882
645,331
2013
2012
Negative market values of fair value hedges
29,517
31,636
Total
29,517
31,636
Please see note 64 for the composition and performance of liabilities held for trading.
Breakdown of liabilities held for trading by contractual maturity:
EUR ’000s
Total
(54) NEGATIVE FAIR VALUES FROM DERIVATIVE FINANCIAL INSTRUMENTS
(HEDGE ACCOUNTING)
EUR ’000s
The hedges involve securing the risk of a change
in interest rates. The underlying transactions are
loans and advances to customers and fixed interest securities.
128
(55) PROVISIONS
EUR ’000s
2013
2012
30,764
28,577
7,015
7,311
Provisions for the credit business
2,749
3,549
Other provisions
4,266
3,762
37,779
35,888
Provisions for pensions and similar obligations
Other provisions
Total
Provisions for pensions and similar obligations
The accounting of provisions for pensions and
similar obligations was adjusted retroactively
on account of the amendment to IAS 19. As of
31 December 2012, the recognition of actuarial losses in the amount of EUR 3,980,000 reduced other reserves (see note 59). Deferred
EUR ’000s
tax assets increased by EUR 1,257,000 (see
note 48).
The value recorded on the balance sheet for
pension provisions is derived as follows:
2013
2012
31,376
29,168
30,764
28,577
612
591
-632
-611
20
20
30,764
28,577
2013
2012
28,577
25,901
Current service expense
922
716
Interest expense
977
1,124
Actuarial gains and losses
1,624
2,256
Benefits paid
-1,336
-1,420
30,764
28,577
Net present value of pension obligations
unfunded
funded
Fair value of plan assets
Not recognised assets (asset ceiling)
Pension provisions reported
The amount of not-recognised assets changed
by EUR 889.00.
Development of pension provision:
EUR ’000s
129
The actuarial profits and losses result from
experience-based adjustments.
Change in the fair value of the plan asset and
the reimbursement rights reported as an asset:
Paid benefits involve pension payments;
there was no payment in lieu.
EUR ’000s
2013
2012
611
710
21
26
-
-2
Employee contributions
-
-
Benefits paid
-
-123
632
611
Interest income
The plan asset consists of reinsurance claims
on insurance companies (so-called cover assets) that are backed by its investments.
There is no right of recourse to specific investments; it is therefore not possible to provide a
breakdown by equities, debt instruments and
other assets. No reimbursement rights have
been reported as assets. There is no trading of
the collateral pool on an active market.
In the last five years, the net present value of
pension obligations, the fair value of the plan
asset and the surplus/deficit in obligations as
well as adjustments based on expectations
changed as follows:
EUR ’000s
Net present value of pension obligations
Surplus/deficit in obligations
Expectation-based adjustments to value of obligations
Expectation-based adjustments to value of plan asset
Since financial year 2012, no contributions to
reinsurance have been made.
The cost of pension obligations recognised on
the income statement consists of the following:
130
2013
2012
2011
2010
2009
31,376
29,167
24,107
21,945
19,609
632
611
710
680
624
30,744
28,556
23,397
21,265
18,985
-1,625
-606
-73
-489
380
22
20
-29
-2
-1
EUR ’000s
2013
2012
Current service expense
922
716
Interest expense
998
1,124
22
26
-
-
1
1
1,899
1,815
Current return on plan asset
Effect of asset ceiling
Total
The current service expense and the expense
from the effect of the upper limit (asset ceiling) is reported under other comprehensive
income. Interest expenses offset against interest income from the plan asset and disclosure is made under net interest income. Actuarial profits are reported in other income.
It is anticipated that pension provisions of
EUR 1,610,000 will be utilised in the following
financial year. The average maturity of pension provisions is 11.5 years. The anticipated
contributions to the ZVK total EUR 2,164,000.
If there is an increase (decrease) of 0.5 percentage points, the pension provision decreases (increases) with respect to the
•interest rate by EUR 1,786,000
(EUR 1,977,000),
•the salary trend by EUR 137,000
(EUR 143,000), and
•the retirement trend by EUR 1,843,000
(EUR 1,689,000),
An increase (decrease) in the probability of death by 10 % will decrease (increase)
the pension provision by EUR 1,004,000
(EUR 1,126,000).
Other provisions
Provisions for the credit business
At individual transaction
level
EUR ’000s
Utilisation
Releases
Allocations
Other provisions
At portfolio level
2013
2012
2013
2012
2013
2012
589
3,028
2,960
1,411
3,762
3,925
-
-
-
-
553
732
487
2,536
313
-
260
364
-
97
-
1,549
1,317
933
102
589
2,647
2,960
4,266
3,762
The provisions in the credit business are created for contingent liabilities and irrevocable
credit commitments.
and early retirement) of EUR 1,261,000 (2012:
EUR 1,615,000), and for legal costs of
EUR 1,305,000 (2012: EUR 1,002,000).
The other provisions are largely provisions
for staff (length of service bonuses, provisions for pre-retirement part-time working
External expert reports form the basis of the
staff provisions.
131
Other provisions are not discounted, apart
from those related to staff, as the cash outflows are expected to take place within one
year.
(56) CURRENT AND DEFERRED INCOME TAX LIABILITIES
EUR ’000s
2013
2012
Current income tax liabilities
6,684
4,444
6,684
1,947
-
2,497
55,886
66,362
55,886
66,362
-
-
62,570
70,806
Domestic
International
Deferred income tax liabilities
Domestic
International
Total
Please see note 48 for a breakdown of the deferred tax liabilities according to the reasons
for their occurrence by balance sheet item
and the deferred tax assets.
Figures from 2012 have been adjusted; see
note 48.
(57) OTHER LIABILITIES
EUR ’000s
2013
2012
Prepaid income
131
192
Other liabilities
28,046
35,158
Accruals
15,500
15,043
Total
43,677
50,394
Other liabilities mainly comprise the proportionate, not yet paid servicing of subordinated and hybrid capital and permanent capital
contributions of silent partners amounting to
EUR 25,757,000 (2012: EUR 26,952,000).
The accruals consist of EUR 5,781,000 (2012:
EUR 7,071,000) in employee benefits due
in the short term, EUR 4,526,000 (2012:
132
EUR 2,790,000) in taxes unrelated to income
and EUR 4,192,000 (2012: EUR 4,385,000) in
outstanding invoices.
The intention is to realise other liabilities
within the next twelve months.
(58) SUBORDINATED CAPITAL
EUR ’000s
2013
2012
125,297
135,782
38,040
35,780
Capital contributions from silent partners (debt components)
156,600
163,550
Total
319,937
335,112
2013
2012
40,000
10,000
9,299
-
148,627
99,100
more than 5 years
122,011
226,012
319,937
335,112
2013
2012
174,600
169,114
150,100
132,114
24,500
37,000
72,413
91,453
459
2,720
71,954
88,733
69,085
50,841
211,024
154,753
214,121
154,348
30,486
40,872
27,243
50,522
584,851
557,150
Subordinated liabilities
Profit participation certificates (debt components)
Subordinated capital broken down by maturity:
EUR ’000s
up to 3 months
Total
(59) SHAREHOLDERS’ EQUITY
EUR ’000s
Subscribed capital
Statutory share capital
Undated capital contributions from silent partners
Hybrid capital
Profit participation certificates (equity component)
Dated silent partnership contributions (equity component)
Capital reserve
Retained earnings
Other retained earnings1)
Other reserves
1)
Retained profit
1)
Total
1)
Amounts from previous year adjusted; see notes 39, 48 and 55.
133
Hybrid capital
Retained earnings
Silent partnership contributions with a fixed
term or recallable by the lender and profit
participation rights are compound financial
instruments and have to be divided into their
equity and debt components (split accounting). The disclosure in equity takes place under hybrid capital instruments.
Amounts allocated to reserves from the previous year’s distributable earnings are booked
under retained earnings.
Capital reserve
Additional contributions by the shareholders into shareholders’ equity are listed in the
capital reserve.
Other reserves
The item contains measurement gains and
losses on AfS financial instruments, and AfS
financial instruments reclassified to LaR and
HtM instruments, taken directly to equity in
the revaluation reserve, if they occurred during the categorisation as AfS, and actuarial
losses.
The other reserve were as follows:
EUR ’000s
Revaluation reserve
2013
2012
Actuarial losses
2013
Total
2012
2013
43,595
-11,585
-2,724
-1,180
40,872
-12,764
Measurement changes taken directly to equity
-18,383
70,668
-1,624
-2,256
-20,007
68,412
Changes in deferred taxes taken directly to
equity
1,899
-25,002
512
712
2,411
-24,290
Measurement changes taken to the income
statement / recognition
7,210
9,514
-
-
7,210
9,514
34,321
43,595
-3,835
-2,724
30,486
40,872
The revaluation reserve contains reclassified securities (before deferred taxes) in the
amount of EUR -2.1 million from the HtM category and EUR -6.4 million from LaR; these will
be amortised over the expected remaining life
of the underlying investments.
Capital management
The supervisory requirements set out in the
Solvency Ordinance are key for SaarLB when
assessing and managing capital adequacy as
well as maintaining economic risk-bearing capacity.
Retained profit
Regulatory capital
The retained profit was EUR 27,243,000 (2012:
EUR 50,522,000).
The determinant figure under the German
Commercial Code for the appropriation of
profits is, as in 2012, EUR 0.00. No dividends
were paid in 2013 for the 2012 financial year.
134
2012
SaarLB has applied the relevant rules on calculating capital requirements under the Solvency Ordinance since obtaining approval from
the German Federal Financial Supervisory
Authority (BaFin) to use the Internal Ratings
Based Approach (IRBA) from 1 January 2007.
Regulatory capital – i.e. equity – comprises
core capital (essentially nominal capital, silent partner contributions and reserves, including the reserves under Section 340 g of
the Commercial Code) plus supplementary
capital (essentially profit participation rights
and long-term subordinated liabilities) after
deductible items.
The overall ratio – the ratio of capital to risk
positions calculated under Solvency Ordinance rules – must not fall below 8.0 % from a
regulatory point of view. SaarLB has specified
a stricter target ratio of 10.0 % for its Group
figure and a core capital target ratio of 8.0 %
in its internal management. The latter is the
ratio of core capital (after deductible items)
to risk exposures.
Target values are constantly maintained by
means of medium-term planning over a fiveyear timeframe. The Corporate Development
Key Solvency Ordinance (SolvV) data
segment is responsible for the strategic planning process. On the basis of the economic
conditions determined in this process, each
business area performs its own risk exposure
planning for this time period. Their figures are
then collated at Group level by Profit Controlling – the department in charge of the quantitative aspects of medium-term planning –
and compared with the equity available in the
planning period. Finally, the measures needed
to procure capital or scale back proposed business area budgeting are defined to ensure the
targets are met.
An overview of the key Solvency Ordinance
data as of the balance sheet date of 31/12/2013
and the corresponding figures from the previous year are given below. SaarLB has no longer
prepared regulatory group reports since the
middle of 2011. To this extent, the figures only
include the individual bank.
31 Dec. 2013
31 Dec. 2012
6,904
7,423
832
835
809
754
Equity ratio (Group level in %)
12.1 %
11.3 %
Core capital ratio (in %)
11.7 %
10.2 %
Risk exposure (EUR million)
Equity (EUR million)
of which: core capital (EUR million)
SaarLB’s equity ratio has increased noticeably
due to the falling risk assets. The core capital
rose from the previous year due to the additions to reserves in accordance with Section
340 g of the German Commercial Code (HGB)
(EUR 30.3 million) and a reduction in the value adjustment shortfalls (EUR 21.6 million) so
that the core capital ratio rose significantly.
SaarLB complied with the minimum regulatory ratio during the entire reporting period
at all times as well as its stricter target ratios.
Good overall capital adequacy ratios were
also reflected in the results of the required
regulatory stress tests: based on the assumption of economic weakness, the equity ratio
at the Group level was 10.2 % and the core
capital ratio was 10.0 % as of of 31 Dec. 2013.
135
ECONOMIC CAPITAL (RISK BEARING
CAPACITY)
The core aim of the SaarLB Group’s risk management, aside from complying with regulatory capital requirements, is to ensure that
economic risk-bearing capacity, which is the
difference between risk capital (risk cover
funds) and risk capital requirements, is adequate.
Risk cover funds were fundamentally determined on the basis of IFRS accounting and
indicate the maximum actual level of unexpected losses from risks entered into that can
be borne:4
Components of available cover fund
(EUR million)
31 Dec. 2013
Results after taxes (minimum YTD and proj.)
31 Dec. 2012
Change
36.0
74.1
-38.1
+ nominal capital
150.1
132.1
+18.0
+ capital reserves
69.1
50.8
+18.2
+ retained earnings
203.8
154.1
+49.7
+ undated silent partner contributions
124.5
137.0
-12.5
+ dated silent partner contributions
218.6
252.3
-33.7
8.5
38.5
-30.0
124.0
124.0
-
41.9
54.7
-12.8
976.5
1,017.7
-41.2
- intangibles
4.0
2.0
+2.0
- balance of hidden charges and silent reserves from securities (LaR and HtM)
2.6
0.4
+2.2
-12.3
-8.0
-4.3
+982.2
+1,023.3
-41.2
- losses from non-performing positions
17.8
21.3
-3.5
- anticipated losses from the risk assessment horizon
35.2
30.5
+4.7
+929.2
+971.6
-42.4
+ profit participation rights
+ subordinated liabilities
+ revaluation reserve
Risk cover funds
- corrections in equity due to the surplus of deferred taxes
Liquidation cover funds
The risk cover funds fell in comparison to the
previous deadline, primarily due to the declines in supplementary capital (dated silent
reserves and profit participation rights). The
available cover funds result from the risk cover funds due to the reductive consideration of
other effects:
In the liquidity cover funds, elements from
the cover funds are corrected if it would be
necessary to net them differently in the case
of a liquidation.
Buffers for possible reductions in the risk
cover funds are deducted over a one-year assessment horizon, which will not be explicitly
considered in the future modelling of the economic risk bearing capacity calculation.
As part of economic risk capital management,
SaarLB monitors its risk profile and ensures
its risk-bearing capacity is always adequate
by comparing each month the risk capital allocated to the available cover funds and risk
capital needed. Risk capital needed is determined by analysing all significant risk types
On account of the one-year period under consideration, the equity items as of the reporting deadline are not reported in the risk cover funds, but rather
the figures one year after the reporting deadline are recognised (if need be, reduced by maturities in the period under consideration).
4
136
in a consistent manner. The risks from across
the Group are collated into an overall assessment of the risk existing. In ICAAP, the value
at risk (VaR) method based on a confidence
level of 99.95 % is used to determine risk capital needed. The limiting takes place on the level of the individual risk types and collectively
Economic risk bearing capacity:
Capital requirement and cover funds
(in EUR million)
Counterparty risk
through the (total) allocated risk capital. The
assumptions and results of risk quantification are validated at least annually.
The ICAAP risk-bearing capacity as of 31 December 2013 is illustrated in the following
overview:
31 Dec. 2013
Capital
needed
Limit
31 Dec. 2012
Range
Capital
needed
Limit
Range
268.6
420.0
64 %
331.1
430.0
77 %
(139.9)
(180.0)
78 %
(141.2)
(180.0)
78 %
(128.7)
(240.0)
54 %
(189.9)
(250.0)
76 %
48.0
90.0
53 %
32.2
90.0
36 %
Operational risk
6.8
10.0
68 %
2.6
5.0
51 %
Reputation risk
0.0
2.0
0 %
0.0
2.0
0 %
Unexp. behaviour by home loan
savers
0.7
3.0
23 %
0.6
3.0
20 %
Real estate risk
12.6
15.0
84 %
13.3
15.0
89 %
76.6
90.0
85 %
72.7
85.0
86 %
Total
413.3
630.0
66 %
452.4
630.0
72 %
929.2
971.6
515.9
519.2
Market risk
The SaarLB Group’s risk-bearing capacity
was ensured at all times without limitations
throughout the reporting period (both in total and on the level of individual types of risk).
Besides the ICAAP risk capital needed, the risk
capital needed in multiple scenarios, was calculated among others in the case of serious
economic weakness modelled across all risk
types under consistent assumptions. With
regard to counterparty risks, a sector-specific
deterioration of the credit portfolio and a further increase in credit spreads are assumed,
and for all other types of risk, more stringent
assumptions also apply.
137
Serious economic weakness:
Capital requirement and
cover funds (in EUR million)
Counterparty risk
31 Dec. 2012
291.4
306.8
(174.3)
(155.8)
(117.1)
(151.0)
27.8
12.2
Operational risk
3.4
1.3
Reputation risk
0.0
0.0
Unexp. behaviour by home loan savers
0.2
0.5
Real estate risk
9.6
10.2
40.3
38.3
Total
372.8
369.3
515.9
519.2
Market risk
Capital requirements and free economic cover
funds changed only slightly over the course of
the year. The free economic cover funds as of
the reporting deadline continued to exceed
the capital requirements significantly.
138
31 Dec. 2013
Notes on financial instruments
The notes on the risks arising from financial
instruments under IFRS 7 are contained in the
risk report.
(60) FAIR VALUE OF FINANCIAL
INSTRUMENTS
Overview
EUR ’000s
Assets
Fair Value
Carrying
value
Fair Value
Carrying
value
2013
2013
2012
2012
17,026,984
16,873,396
19,056,136
18,643,366
784,905
784,905
669,302
669,302
Loans and advances to banks1)
2,028,688
2,004,961
3,456,062
3,227,919
Loans and advances to customers1)
8,816,572
8,692,582
9,096,375
8,910,702
328,264
328,264
517,917
517,917
28,559
28,559
46,181
46,181
4,400,164
4,398,146
4,692,650
4,698,415
632,999
629,146
574,688
569,969
6,028
6,028
2,876
2,876
805
805
85
85
16,323,209
16,271,261
18,156,121
18,063,168
5,755,571
5,748,734
6,052,162
6,000,336
4,750,719
4,759,091
5,917,771
5,898,175
4,991,676
4,939,714
5,133,337
5,114,745
432,882
432,882
645,331
645,331
Negative fair values from derivative financial instruments
(hedge accounting)
29,517
29,517
31,636
31,636
Other liabilities
41,386
41,386
37,833
37,833
321,458
319,937
338,051
335,112
Cash reserves
Positive market value of derivative financial instruments
(hedge accounting)
Investments
Interests in entities valued at equity
Other assets
Liabilities
1)
fter deduction of individual risk provisions, before the deduction of the portfolio risk provision. The carrying values in 2012 were adjusted for loans
A
and advances to customers; see note 39.
The difference between fair values and
carrying values is EUR 153,588,000 (previous year: EUR 412,770,000) for assets and EUR 51,948,000 (previous year:
EUR 92,953,000) for liabilities.
For the purposes of the notes, the fair value
of loans measured at amortised cost and reported in loans and advances and liabilities to
banks and customers as well as subordinated
capital is determined using the net present
value method. In the case of receivables the
139
discounting process uses:
•risk-free yield curves of the same maturity
and in the same currency
•liquidity spreads
•consistent administration cost premiums,
•risk-adjusted spreads (credit risk)
•rating-related cost of capital premiums.
Risk-adjusted spreads are calculated by taking the rating, the fixed interest period and
the size of capital repayments.
In the case of liabilities, risk-adjusted spreads
and rating-related cost of equity premiums
are not used.
The cash reserves, the other accounts included in loans and advances and liabilities
to banks and customers as well as the items
reported in other assets and liabilities are disclosed at their nominal amounts.
The fair values for the securitised liabilities
are based on the prices that the Bank determined itself as issuer.
See note 6 on the methods and assumptions
for the fair value calculation in assets and liabilities held for trading (including the negative market value from derivative financial
instruments from hedge accounting) and
financial assets (including securities repurchase transactions).
140
FAIR VALUES BY CLASSES
Assets
EUR ’000s
Cash reserves
Fair Value
Fair Value
2013
2012
784,905
669,302
2,028,688
3,456,062
Clearing and current accounts
421,679
261,715
Overnight and time deposits
985,099
1,692,365
Loans
563,074
1,444,607
58,836
57,375
8,816,572
9,096,375
201,757
224,641
254,978
319,364
8,328,701
8,511,568
31,136
40,802
328,264
517,917
324,745
513,948
2,671
1,734
384
1,945
Credit derivatives
464
290
28,559
46,181
28,559
46,181
4,400,164
4,692,650
4,286,237
4,586,138
719,696
458,532
3,566,541
4,127,606
67,236
55,563
469
469
66,107
54,234
660
860
25
1,920
2,292
2,292
44,374
46,737
632,999
574,688
6,028
2,876
805
85
Other loans and advances
Loans
Equity-related transactions
Positive market value of derivative financial instruments (hedge accounting)
Investments
Bonds and notes
Equities and other non-fixed-interest securities
Equities
Other non-fixed-interest securities
Interest in subsidiaries
Associates not consolidated
Other investments
Other assets
141
Liabilities
EUR ’000s
Fair value
2013
2012
5,755,571
6,052,162
598,852
697,275
2,156,687
1,973,106
Loans
2,860,258
3,326,936
139,774
54,844
4,750,719
5,917,771
933,739
1,144,450
1,141,201
1,797,323
Loans
2,094,835
2,292,229
548,420
514,301
32,524
169,467
4,991,676
5,133,337
432,882
645,331
426,617
640,252
2,671
1,734
3,241
1,750
353
1,595
29,517
31,636
29,517
31,636
41,386
37,833
321,458
338,051
Other liabilities
Home loan savings deposits and savings deposits
Other liabilities
Credit derivatives
Negative fair values from derivative financial instruments (hedge accounting)
Other liabilities
142
Fair value
(61) LEVEL INFORMATION FOR FINANCIAL INSTRUMENTS
General level information for financial instruments measured at fair value
EUR ’000s
Level 1
Level 2
Level 3
Total
2013
2012
2013
2012
2013
2012
2013
2012
5,500
3,589
350,863
514,053
460
275
356,823
517,917
Interest rate-related
transactions
2,828
1,855
320,774
512,093
-
-
323,602
513,948
2,672
1,734
-
-
-
-
2,672
1,734
-
-
1,526
1,945
-
-
1,526
1,945
Credit derivatives
-
-
4
15
460
275
464
290
Positive market value of derivative financial instruments
(hedge accounting)
-
-
28,559
46,181
-
-
28,559
46,181
transactions
-
-
28,559
46,181
-
-
28,559
46,181
Investments
1,424,149
655,492 1,409,797 2,320,626
946,293
747,694 3,780,239 3,722,022
Bonds, notes and other fixedinterest securities
1,358,042
601,258 1,409,137 2,319,766
899,134
703,045 3,666,313 3,624,069
-
-
-
0
719,696
458,532
719,696.0
458,532
1,358,042
601,258
1,409,137
2,319,766
179,438
244,513
2,946,617
3,165,537
66,107
54,234
660
860
469
469
67,236
55,563
66,107
54,234
-
-
469
469
66,576
54,703
-
-
-
-
-
-
-
0
Other non-fixed-interest
securities
-
-
660.0
860
-
-
660
860
Subsidiaries
-
-
-
-
0
1,790
-
1,790
Associates not consolidated
-
-
-
-
-
-
-
0
Other investments
-
-
-
-
46,690
42,390
46,690
42,390
57,500
-
206,188
294,850
-
-
263,687
294,850
5,169
3,832
457,230
641,499
-
-
462,399
645,331
transactions
2,497
2,098
451,049
638,397
-
-
453,546
640,495
2,672
1,734
-
-
-
-
2,672
1,734
-
-
5,827
1,507
-
-
5,827
1,507
Credit derivatives
-
-
354
1,595
-
-
354
1,595
Negative fair values from
derivative financial instruments
(hedge accounting)
-
-
29,517
31,636
-
-
29,517
31,636
transactions
-
-
29,517
31,636
-
-
29,517
31,636
Bonds and notes
Equities and other non-fixedinterest securities
Equities
Securities repurchase
transactions
143
Level 1:
Level 3:
Level 1 consists of those financial instruments
for which a transaction-based price could be
determined at a not insignificant trading
volume. For derivatives, these include in particular prices that were determined on the
EUREX. The SaarLB Group reports securities
that have a price listed on an active market
and OTC derivatives under Level 1.
Level 3 consists of financial instruments
where the criteria for allocation to Level 1 or 2
were absent, i.e. where input parameters that
are not observed on the market have a significant influence on the determination of the
fair value. These include loans and debt securities for which only the indicative courses
are present (counterparty prices that do not
represent an offer). SaarLB partially derives
spreads from internal ratings for CDS; consequently, these derivatives are allocated to
Level 3 on account of the significant influence
of credit spreads on the fair value. Furthermore, this level contains investments which
are measured at fair value.
Level 2:
Level 2 consists of financial instruments
where the input parameters for applied measurement models that significantly impact
the fair value are exclusively observed on
the market for the determination of the fair
value. This relates in particular to derivatives
not traded over-the-counter where valuation
models with input parameters observable
on the market are used to determine their
fair value (primarily observable interest and
spread curves). Securities that do not meet
the criteria for Level 1, but where their price
can be observed on the market or reference
prices of similar products are available on active markets, are assigned to Level 2.
144
Level information for financial instruments
that are not reported at fair value
In the following table, SaarLB shows the information in accordance with IFRS 13.97 for
the first time. Due to the first-time and prospective application of IFRS 13 in the reporting period, the figures from the previous year
are not shown.
EUR ’000s
Level 1
Level 2
Level 3
Total
2013
2013
2013
2013
Cash reserves
-
784,904
-
784,904
-
1,813,249
215,437
2,028,686
-
1,688,995
7,127,576
8,816,571
Investments
195,263
706,374
87,600
989,237
195,263
337,062
87,600
619,925
-
-
-
-
195,263
337,062
87,600
619,925
-
369,312
-
369,312
Non-consolidated subsidiaries
-
-
25
25
-
6,028
6,028
Other assets
-
805
-
805
-
3,458,723
2,296,848
5,755,571
-
4,213,132
537,587
4,750,719
-
4,991,676
-
4,991,676
Bonds and notes
Other liabilities
41,386
41,386
-
Sensitivity analyses:
If the spread as an input parameter varies by
10 % for a CDS assigned to Level 3 – i.e. starting from a measurement with a spread of
56 basis points, this produces an interval of
50 - 62 basis points – then the fair value would
change by approx. 4.55 %. The fair value of the
CDS allocated to Level 3 and valued in this way
amounts to EUR 461,000 (2012: EUR 275,000).
If the spreads fall by 10 %, the positive market
value rises accordingly to EUR 482,000 (2012:
EUR 304,000).
-
321,458
321,458
(2012: EUR 4,127,000). If only one input parameter varies by 10 %, the change in the fair
value is less.
No stress test for the input parameters was
made for Level 3 financial instruments that
were valued with an indicative price.
There were no significant reclassifications between Level 1 and 2. The method for the determination of the time of unwinding is set by
SaarLB at the respective balance sheet deadline. The rules for the level system specified in
note 6 shall apply.
The investments are particularly valued on
the basis of the so-called risk-free interest
and a risk surcharge, which consists of the
market risk premium and the beta factor (representation of sector volatility). If the input
parameters are uniformly raised (reduced)
by 10 %, the value of the investments of
EUR 30,552,000 (2012: EUR 42,390,000) measured at fair value rises (falls) by EUR 4,842,000
(2012: EUR 4,530,000) or by EUR 3,937,000
145
Special disclosures on Level 3
EUR ’000s
Start level
146
Financial assets held for trading and measured at fair value
through profit or loss
Available for sale financial assets
investments
275
747,694
Total of profits or losses
185
9,491
on income statement
185
2,070
in revaluation reserve
-
7,421
Purchases
-
717,864
Disposals
-
-1,790
Redemptions
-
-530,877
Exchange rate effects
-
-30
Transfers from Level 3
-
-
Transfers to Level 3
-
83
Equity investments measured at fair value for the
first time
-
5,992
Equity investments no longer measured at fair value
-
-2,132
End level
460
946,294
Total of measurement profits/losses for assets that were
in the portfolio at the end of the period
185
9,491
(62) FINANCIAL INSTRUMENT MEASUREMENT CATEGORIES
EUR ’000s
2013
2012
644,741
944,941
316,477
427,024
316,477
427,024
328,264
517,917
328,264
517,917
588,789
674,478
Investments
223,330
399,360
365,459
275,118
11,999,353
13,523,097
784,905
669,302
2,021,687
3,246,133
Loans and advances to customers1)
8,797,381
9,039,001
Investments
394,575
568,576
Other assets
805
85
3,727,451
3,598,306
3,463,764
3,303,455
263,687
294,851
-
-
28,559
46,181
432,882
645,331
-
-
432,882
645,331
432,882
645,331
15,808,862
17,386,201
5,748,734
6,000,336
4,759,091
5,898,175
4,939,714
5,114,745
319,937
335,112
41,386
37,833
29,517
31,636
Assets
Financial assets measured at fair value through profit or loss
Fair value option
Investments
Financial assets held for trading
Investments held to maturity
Cash reserves
1)
Financial assets available for sale
Investments
Other assets
Positive fair values from derivative financial instruments
(hedge accounting)
Liabilities
Financial liabilities measured at fair value through profit or loss
Fair value option
Financial liabilities held for trading (held-for-trading)
Liabilities measured at amortised cost
Other liabilities
Negative fair values from derivative financial instruments
(hedge accounting)
1)
Before deducting risk provisions
147
(63) NET GAINS OR LOSSES ON FINANCIAL
INSTRUMENTS
For each category, net gains or losses on financial instruments include both measurement gains and losses and gains or losses on
disposal.
EUR ’000s
Net interest
income
Risk provisions
Gains/losses on
fair value measurement
Gains/losses on
hedge accounting
Gains/losses on
investments
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Financial assets and
liabilities measured
at fair value through
profit and loss
-4,015
-18,736
-
-
19,659
37,009
-17,372
10,876
-
-
-1,728
29,149
Fair value option
9,974
13,424
-
-
-1,369
24,844
-
-
-
-
8,605
38,268
-13,989
-32,160
-
-
21,028
12,165
-17,372
10,876
-
-
-10,333
-9,119
308,967 384,996
-20,004
-33,038
-
-
-4,244
5,640
-2,591
Financial assets held
for trading1)
Loans and receivables2)
1,330 282,128 358,928
Financial assets
available for sale3)
62,817
94,272
-
-
-
-
-6
225
-647
1,847
62,164
96,344
Investments held to
maturity
10,710
14,791
-
-
-
-
-
-
-29
13
10,681
14,804
Liabilities measured at
-257,116 -336,493
amortised cost
-
-
-
-
22,070
-16,892
-
Including gains/losses on currency conversion
Including financial assets in the category of loans and receivables; amount for the risk provision in 2012 adjusted (see note 39)
3)
1)
2)
Gains amounting to EUR -18,383,000 (2012:
EUR 70,668,000) on fair value measurement
of available for sale financial assets was taken
straight to the revaluation reserve in equity
(see note 59).
148
Total
(64) DERIVATIVE TRANSACTIONS
Interest and foreign currency-related and
other forward transactions and credit derivatives not settled at the balance sheet date are
shown in the tables below. Most of the deals
were concluded to hedge fluctuations in interest rates, exchange rates or market prices
and trading on behalf of customers.
- -235,046 -353,385
Volumes
Nominal value
EUR ’000s
Positive
fair value
Negative
fair value
2013
2013
2013
2012
12,632,905
13,658,119
346,059
-447,750
1,414,206
1,093,096
28,559
-29,517
-
-
-
-
Caps, floors
1,512,129
1,275,776
3,274
-3,299
Futures
1,012,939
903,148
2,828
-2,497
15,157,973
15,837,043
352,161
-453,546
203,834
267,504
384
-3,241
27,243
30,803
1,142
-2,586
-
50,532
-
-
- Purchases
-
25,266
-
-
- Sales
-
25,266
-
-
231,077
348,839
1,526
-5,827
Index options
232,386
156,674
632
-632
- Purchases
116,193
78,337
632
-
- Sales
116,193
78,337
-
-632
Equity options
87,220
54,844
1,046
-1,046
- Purchases
43,610
27,422
1,046
-
- Sales
43,610
27,422
-
-1,046
46,449
25,196
994
-994
366,055
236,714
2,672
-2,672
Protection buyer
-
-
-
-
Protection seller
50,000
65,000
464
-354
50,000
65,000
464
-354
15,805,105
16,487,596
356,823
-462,399
Interest-rate risks
Interest rate swaps
of which interest rate swaps under hedge
accounting
FRAs
Total interest rate risk
Currency risks
Forward foreign exchange transactions
Currency swaps, currency/interest swaps
Foreign exchange options
Total currency risks
Equity and other price risks
Futures
Total equity and other price risks
Credit derivative risks
Total credit derivative risks
Total
149
Breakdown of maturities
Nominal value
Interest-rate risks
EUR ’000s
Currency risks
Equity and other price
risks
Credit derivative risks
2013
2012
2013
2012
2013
2012
2013
2012
528,725
709,152
203,356
278,315
341,897
227,900
5,000
5,000
up to 1 year
1,435,957
1,817,049
27,394
42,306
24,072
8,798
-
-
up to 5 years
7,275,573
7,579,737
327
28,218
86
16
45,000
60,000
more than 5
years
5,917,718
5,731,105
-
-
-
-
-
-
15,157,973
15,837,043
231,077
348,839
366,055
236,714
50,000
65,000
Residual terms
up to 3 months
Total
The information is based on contractual residual maturities.
Breakdown by counterparty
Nominal value
EUR ’000s
OECD banks
Public-sector entities within the OECD
Other counterparties
Total
150
Positive fair value
Negative fair value
2013
2012
2013
2012
2013
2012
12,858,381
13,664,695
258,068
408,593
-457,234
-670,679
340,642
744,968
3,108
5,854
-468
-436
2,606,082
2,077,933
95,647
149,650
-4,697
-5,851
15,805,105
16,487,596
356,823
564,097
-462,399
-676,966
Notes to the cash flow statement
(65) NOTES TO ITEMS IN THE CASH FLOW
STATEMENT
The cash flow statement shows the cash
flows resulting from operating activities, investing activities and financing activities for
the financial year.
Cash and cash equivalents reported is equal
to the cash reserves item on the balance
sheet, which comprises cash on hand and deposits at central banks.
Cash and cash equivalents are not subject to
any restrictions on the right of disposal.
Payments from loans and advances to banks/
customers, securities (unless investments),
derivatives and other assets are shown as
cash flows from operating activities. Payments from liabilities to banks/customers,
securitised liabilities and other liabilities are
also assigned to operating activities. Interest
and dividend payments from operating activities are also included under cash flows from
operating activities.
Cash flows from investing activities shows
payments for investments and property,
plant and equipment (including intangibles).
The cash flow from financing activities includes payments to silent partners and holders of profit participation rights and changes
in subordinated capital.
151
Other notes
(66) SUBORDINATED ASSETS
The following balance sheet items contain
subordinated assets:
EUR ’000s
2013
2012
12,000
12,000
-
8,845
12,000
20,845
2013
2012
685,492
735,455
CAD
15,926
18,813
CHF
240,344
207,668
GBP
70,312
61,984
HKD
318
1
3,175
6,116
320,005
381,825
35,412
59,048
610,294
708,405
CAD
2,193
2,464
CHF
112,491
116,516
GBP
30,706
40,934
HKD
314
-
53
6
442,262
528,113
22,275
20,372
Investments
Total
(67) ASSETS AND LIABILITIES IN FOREIGN
CURRENCIES
EUR ’000s
Foreign currency assets
JPY
USD
Other currencies
Foreign currency liabilities
JPY
USD
Other currencies
(68) TRANSFERRED, BUT NOT FULLY
WRITTEN-OFF FINANCIAL ASSETS
As of 31 Dec. 2013, SaarLB did not have any
such assets.
152
(69) TRANSFERRED, FULLY WRITTEN-OFF
FINANCIAL ASSETS
In 2012, SaarLB transferred a financial asset
that was written off in full, but in which it
still had ongoing exposure. The ongoing exposure consisted of the repayment option
for the written-off receivable if the shares in
the borrower are sold with income in the next
12 years. The claim was sold for EUR 1 and it
could not be assumed that the shares in the
borrower will be sold for a profit. For this
reason, the fair value of the ongoing exposure
as of 31 December 2012 amounted to EUR 0.
There is no loss risk from the ongoing exposure for SaarLB. At the time of the transfer of
the financial asset, SaarLB incurred a loss of
EUR 2,782,000.
No use was made of the option to repay in
2013.
(70) ASSETS PLEDGED AS COLLATERAL
The collateral pledged relates to securities
repurchase transactions, tender transactions
with the European Central Bank (ECB), transactions on the European Exchange (EUREX),
with Clearstream Banking of Frankfurt am
Main and Clearstream Banking Luxembourg.
EUR ’000s
Loans and advances to banks and customers
Investments
of which:
Collateral that may be sold on or pledged on by the recipient
Total
In these cases substantially all risks and rewards associated with ownership of the transferred assets remain with the SaarLB Group.
Assets pledged as collateral relate to the following balance sheet items:
2013
2012
495,276
316,000
2,057,715
1,963,472
629,146
569,969
2,552,991
2,279,472
The transferred assets back liabilities in
the amount of EUR 1,405,618,000 (2012:
EUR 1,405,618,000).
These transactions were executed at standard market conditions.
153
(71) COLLATERAL RECEIVED THAT MAY BE
SOLD ON OR PLEDGED ON
As part of securities repurchase transactions
and securities lending transactions we receive
assets lodged as collateral that may be sold on
or pledged on without the collateral provider
defaulting. We held no such securities in the
portfolio on 31 December 2013.
(72) LEASING TRANSACTIONS
Operating leases
The SaarLB Group as lessor:
EUR ’000s
2013
2012
Lease agreements (residual maturities)
4,556
5,708
up to 1 year
1,237
1,243
2,553
3,480
766
985
more than 5 years
The leased assets are real estate. The leasing agreements include some with fixed maturities and some which are open-ended. The
longest fixed maturity expires on 30 September 2025. In some cases on expiry, the lessee
has the unilateral option to extend the agreement or the option to a contractually agreed
extension provided the other party does not
object. There are no conditional payments.
The SaarLB Group as lessee:
EUR ’000s
2013
2012
Future minimum leasing payments from noncallable lease agreements
(residual maturities)
1,410
1,880
up to 1 year
715
700
695
952
-
228
more than 5 years
The leasing agreements mainly relate to the
rental of fixtures and fittings. They have fixed
154
terms of three to five years. There are no options or conditional payments.
(73) FIDUCIARY TRANSACTIONS
Fiduciary transactions break down as follows:
EUR ’000s
2013
2012
105,324
105,753
12,185
10,805
93,139
94,948
-
-
105,324
105,753
4,152
4,154
1,153
1,580
100,019
100,019
2013
2012
322,006
274,333
322,006
274,333
639,660
592,900
639,660
592,900
961,666
867,233
Fiduciary assets
Fiduciary liabilities
Other liabilities
(74) CONTINGENT LIABILITIES AND OTHER
OBLIGATIONS
EUR ’000s
Liabilities for guarantees and warranty agreements
Other obligations
Total
The provisions (note 55) were established for
guarantees and warranty agreements where
an impairment was determined, if usage is
viewed as probable.
155
(75) OTHER FINANCIAL OBLIGATIONS
EUR ’000s
2013
2012
16,733
21,527
Additional obligations and additional co-liability for other shareholders
7,012
7,012
Commitments not yet called
2,315
2,315
Obligations to acquire shares
3,448
6,505
Additional funding obligations to security reserve of the Landesbanks
Furthermore, there are financial obligations
under operating leases and in relation to
rental, usage, service and maintenance agreements (see note 72).
Moreover, under the articles of the deposit
insurance fund run by the Landesbanks and
giro associations, SaarLB has undertaken to
indemnify the Deutscher Sparkassen- und
(76) LIST OF SHAREHOLDINGS OF
LANDESBANK SAAR (EXCERPT)
The following table includes the list of shareholdings for the parent company financial
statements (except where these are of minor
importance), pursuant to Section 285 (11) of
the German Commercial Code, and for the
consolidated financial statements of SaarLB
pursuant to Section 315a in conjunction with
Section 313 (2) of the German Commercial
Code.
156
Giroverband e. V. (German Savings Bank Association), as the owner of the deposit security reserve of the Landesbanks and giro
associations, against any losses which may
be incurred due to measures taken in favour
of banks in which SaarLB holds shares. As
members of deposit protection schemes, the
branches are also liable under the provisions
governing those schemes.
Name
Notes
Share
in %
Equity/fund Total assets
assets
Total
liabilities
Income
Net income
EUR ’000s3)
EUR ’000s
EUR ’000s
EUR ’000s
EUR ’000s4)
Special funds included in the
consolidated financial statements
LB ImmoInvest Saar-Fonds, Hamburg
1)
100.00
41,107
42,786
1,679
1,929
987
SaarLB 1-Fonds, Munich
2)
100.00
157,533
157,864
331
5,789
5,757
SBLB-Fonds, Munich
2)
100.00
66,377
66,377
-
707
680
SBLB-2-Fonds, Munich
2)
100.00
66,493
66,493
-
229
203
SBLBHALBS-Fonds, Munich
2)
100.00
31,317
31,317
-
154
129
SaarLB-Bankenbeteiligungsgesellschaft
mbH, Saarbrücken
5)
100.00
15,577
17,384
1,807
1,807
1,807
LBS Immobilien GmbH, Saarbrücken
5)
100.00
105
1,073
968
3,404
352
Gekoba-Gesellschaft für Gewerbe- und
Kommunalbauten mbH, Saarbrücken
38.00
6,294
22,672
16,378
10,289
203
GSW-Saarländische Wohnungsbau
gesellschaft mbH, Saarbrücken
28.57
8,413
16,464
8,051
5,681
422
NBV Beteiligungs GmbH, Hamburg
21.33
19,862
19,868
6
2,267
2,215
100.00
25
218
193
897
141
TEGES Grundstücksvermietungs
gesellschaft mbH, Berlin
50.00
19
26
7
36
-
TEGES Grundstücksvermietungsgesellschaft mbH & Co. Objekt Berlin KG, Berlin
47.01
-7,368
10,375
17,743
1,536
1
Gesellschaft für Wirtschaftsförderung
Untere Saar mbH, Saarlouis
33.33
348
441
93
-
-36
Saarländische Kapitalbeteiligungs
gesellschaft mbH, Saarbrücken
33.33
6,857
44,253
37,396
3,315
291
Saarländische Wagnisfinanzierungs
gesellschaft mbH, Saarbrücken (direct
equity investment)
30.43
7,143
12,140
4,997
1,495
760
Subsidiaries included in the consolidated
financial statements
Associated companies included in the
Subsidiaries not included in the
LBS Vertriebs GmbH, Saarbrücken
5)
Associated companies
157
Notes:
1)
Income relates to rental income less administrative expenses
2)
Income relates to interest income, commission income and gains or losses on fair value
measurement less interest expense and
commission expense
3)
Shareholders’ funds as defined in Section
266 (3A) in conjunction with Section 272 of
the German Commercial Code (HGB)
4)
Net income/loss for the year as defined in
Section 275 (2) No. 20 of the German Commercial Code (HGB)
5)
There is a profit transfer agreement with
this company
An interest of less than 20% with voting
rights of more than 5% is held in Saarländi
sche Investitionskreditbank AG.
158
(77) ADMINISTRATIVE BODIES OF SAARLB
Board of Administration
Jan-Christian Dreesen
Franz Josef Schumann
Dr. Alfons Lauer
Dr. Micheal Braun
Manfred Fichter
Gunar Feth
Dr. Winfried Freygang
Thomas Klein
Marcus Kramer
Heiko Maas
Fred Metzken
Anke Rehlinger
Susanne Ries
Thomas Roß
Ralph Singer
Stephan Toscani
Deputy Chairman of the Board of
Management, FC Bayern München AG,
Munich,
Chairman
President, Saar Association of Savings Banks,
Saarbrücken
Deputy Chairman
(from 10 February 2014)
Bank employee, Landesbank Saar,
Saarbrücken
(until 30 June 2013)
Tutzing
Member of the Board of Management of
Bayerische Landesbank, Munich
Chief Financial Officer
CEO of Dillinger Hüttenwerke and
Saarstahl AG,
Dillingen
Saarbrücken
Saarbrücken
(from 1 July 2013)
President, Saar Association of Savings Banks,
Saarbrücken
Deputy Chairman
(until 31 December 2013)
Segment Manager for Corporate Strategy
and Corporate Communication at Bayerische
Landesbank, Munich
(until 31 January 2014)
Chairman of the Board of Management,
Kreissparkasse Saarpfalz, Homburg
Bank employee,
Landesbank Saar, Saarbrücken
Minister, Ministry of Economic Affairs,
Labour, Energy and Traffic, Saarbrücken
(until 16 December 2013)
Minister, Ministry of Economic Affairs,
Bank employee,
Landesbank Saar, Saarbrücken
Minister, Ministry of Finance and Europe,
Saarbrücken
Representative of the regulatory body:
Iris Jung
Undersecretary, Ministry of Economic Affairs,
159
Board of Management
Chairman of the Board of Management
Frank Eloy
Member of the Board of Management
160
Werner Severin
Deputy Chairman of the Board of
Management
(78) RELATED PARTY DISCLOSURES
Companies and persons are deemed to be related where one party directly or indirectly
controls the other or can exercise significant
influence on its operating and business decisions. Related parties of the SaarLB Group as
of 31 December 2013 include:
•BayernLB and its subsidiaries and joint venture companies
•the subsidiaries of joint ventures of BayernLB (except for the last level),
•all subsidiaries and joint ventures of subsidiaries of BayernLB (except for the last level),
•Saarland and its subsidiaries and joint venture companies,
•all subsidiaries of joint ventures of Saarland
(except for the last level),
•all subsidiaries and joint ventures of subsidiaries of Saarland (except for the last level),
•the Free State of Bavaria and its subsidiaries and joint venture companies,
•all subsidiaries of joint ventures of the Free
State of Bavaria (except for the last level),
•all subsidiaries and joint ventures of subsidiaries of the Free State of Bavaria (except
for the last level),
•BayernLB Holding AG and its subsidiaries
and joint ventures,
•all subsidiaries of joint ventures of BayernLB Holding AG (except for the last level),
•all subsidiaries and joint ventures of subsidiaries of BayernLB Holding AG (except for
the last level),
•the subsidiaries and associates of SaarLB,
•all joint ventures and associates of subsidiaries of SaarLB (except for the last level),
•all subsidiaries of associates of SaarLB (except for the last level)
•the Saar Association of Savings Banks and
its subsidiaries and joint venture companies,
•People occupying key positions and close
members of their families, and companies
controlled or significantly influenced by
these people or their close family members
or in which they hold a significant share of
the voting rights; people in key positions are
those with direct and indirect responsibility
for planning, managing and monitoring the
activities of SaarLB. This includes members
of the Board of Management and Board of
Administration of SaarLB, chief representatives and their close family members. There
were changes during the year, including by
FC Bayern Munich AG, which became a related party for the first time via the Board of
Administration.
•
The fund management company for pension plans for SaarLB employees, which are
used after the end of the employment relationship.
The SaarLB Group has business dealings with
related companies and persons. Transactions
with such persons and companies fall within
the normal course of business and are always
on the same terms (including interest rates
and collateral) as for comparable transactions
conducted at the same time with third parties. These transactions did not have unusually high risks of recovery or other unfavourable characteristics.
Details of the subsidiaries and associated
companies in which SaarLB holds an interest
can be found in the list of shareholdings.
Financial assets and liabilities as well as hybrid capital with respect to related parties1):
161
EUR ’000s
31 Dec. 2013
31 Dec. 2012
532,231
932,748
503,460
838,281
Subsidiary and joint venture company of BayernLB
13,460
74,637
Subsidiary and joint venture company of Saarland
15,311
19,830
467,354
617,832
35,259
-
BayernLB
Saarland
Subsidiary and joint venture company of Saarland2)
Subsidiaries
Consolidated associated companies
56,173
212,410
307,768
331,660
28,631
29,249
5,121
5,474
34,402
39,039
47,033
75,744
7,862
17,028
28,886
40,160
Subsidiary and joint venture company of Saarland2)
10,285
18,556
72,565
53,725
-
-
Associated companies not consolidated
BayernLB
Investments
BayernLB
Saarland
EUR ’000s
BayernLB
-
-
72,565
53,725
31 Dec. 2013
31 Dec. 2012
825,670
1,357,219
707,402
1,280,104
2,887
9,282
115,381
67,833
19,989
64,800
33,231
58,714
208
-
17,475
20,256
Subsidiary of the Free State of Bavaria
Sparkassenverband Saar
Saarland
35
3,851
9,164
26,728
541
2,039
60
138
Subsidiaries
Consolidated associated companies
Associated companies not consolidated
BayernLB
BayernLB
5,748
5,702
1,505,000
1,825,000
1,505,000
1,825,000
77,666
114,053
77,524
113,107
-
-
142
946
-
-
-
-
Hybrid capital
62,954
58,927
BayernLB
62,954
58,927
-
-
2)
BayernLB
Amounts not incl. accrued interest
Adjustment to the amount in the previous year
3)
Includes EUR 10,648,000 (2012: EUR 15,547,000) of negative fair values from financial derivatives (hedge accounting)
1)
2)
162
Amounts due from/to ZVK
EUR ’000s
31 Dec. 2013
31 Dec. 2012
3,963
37
29,272
29,235
21,672
21,635
7,600
7,600
31 Dec. 2013
31 Dec. 2012
9,708
12,322
9,708
12,318
-
4
47,344
12,586
47,344
12,582
-
4
31 Dec. 2013
31 Dec. 2012
12
18
Members of the Board of Management of SaarLB
-
-
People in key positions
-
1
12
17
567
390
225
147
-
1
342
242
Receivables
Liabilities
There were the following expenses and income from credit agreements and deposits as
well as rendered services in connection with
related parties and people:
EUR ’000s
Income
Interest
Commissions
Expenses
Interest
Commissions
Amounts due from/to members of the Board
of Management and the Board of Administration of SaarLB
The total amount of loans granted to and deposits made by the members of the Board of
Management or the Board of Administration
at SaarLB (including their immediate family
members) breaks down as follows:
EUR ’000s
Receivables
1)
Members of the Board of Administration of SaarLB
Liabilities
People in key positions
1)
1)
Key positions were redefined in the year under review.
163
SaarLB received deposits of EUR 42,000 from
close family members (2012: EUR 36,000) and
extended credit in the amount of EUR 1,000
(2012: EUR 0)
Remuneration paid to members of the Board
of Management and the Board of Administration of SaarLB
EUR ’000s
2013
2012
2,555
2,175
1,633
1,459
922
716
922
716
558
388
Benefits due in the short term for supervisory board activities
178
167
Benefits due in the short term for work performance
380
221
1,335
1,298
Pension provisions established for members of the Board of Management of
SaarLB
11,094
8,892
Pension provisions established for former members of the Board of Management
of SaarLB and their dependants
19,670
19,684
2013
2012
Audit
897
835
Other audit and valuation services
198
164
4
85
758
317
1,857
1,401
Benefits due in the short term
Benefits due after the end of the employment relationship
Expenses for defined benefit plans
Former members of the Board of Management of SaarLB and their dependants
The interest accrued on pension provisions amounted to EUR 977,000 (2012:
EUR 1,097,000) and is reported as an interest
expense.
(79) AUDITORS’ FEES
External auditor’s fees reported as an expense
in the year under review are broken down as
follows:
EUR ’000s
Tax consulting services
Other services
Total
164
(80) EMPLOYEES
The average number of people employed during the year was:
2013
2012
539
518
of which full time employees
415
409
of which part time employees
104
90
20
19
Female
263
248
Male
276
270
Average number of employees in the year
of which trainees
The average number of people employed in
associates consolidated at equity during the
year was 29 (previous year: 43).
165
Responsibility statement by the Board
of Management
We affirm that to the best of our knowledge
and in accordance with the applicable reporting principles the consolidated financial
statements give a true and fair view of the net
assets, financial position and results of operations of the Group and the management report of the Group includes a fair review of the
development and performance of the business and the position of the Group, together
with a description of the principal opportunities and risks associated with the expected
development of the Group.
Landesbank Saar
Board of Management
166
Werner Severin
Frank Eloy
Independent Auditors’ Report
We have audited the consolidated financial
statements, comprising the consolidated balance sheet, the Group statement of comprehensive income, the schedule of changes in
equity, the cash flow statement, the Group
notes to the consolidated financial statements and the Group management report of
Landesbank Saar, Saarbrücken for the financial year from 1 January to 31 December 2013.
It is the responsibility of the Board of Management of the company to draw up the consolidated financial statements and the Group
management report in accordance with IFRS
as applicable in the EU, the extra legal requirements applicable under Section 315a (1) of the
German Commercial Code and the additional
provisions of the articles of association. Our
responsibility is to express an opinion on the
consolidated financial statements and the
Group management report, based on the audit we have conducted.
We carried out our audit of the consolidated
financial statements in accordance with Section 317 of the Commercial Code and German
generally accepted standards for the audit
of financial statements promulgated by the
Institut der Wirtschaftsprüfer (IDW). These
require that we plan and perform the audit
in such a way that misstatements materially
affecting the presentation of the net assets,
financial position and results of operations in
the consolidated financial statements under
the applicable accounting standards and in
the Group management report are detected
with reasonable assurance. Knowledge of the
business activities and the economic and legal environment and expectations as to possible misstatements are taken into account
in setting the audit procedures. In the audit,
the effectiveness of the internal accounting
control system and the evidence supporting
the disclosures in the consolidated financial
statements and Group management report
are examined primarily on a test basis. The
audit includes examining the annual financial
statements of consolidated companies, setting the scope of consolidation, assessing the
accounting policies used, evaluating significant estimates made by the Board of Management and considering the overall presentation of the consolidated financial statements
and the Group management report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our
audit the consolidated financial statements
are in accordance with IFRS as applicable in
the EU, the additional legal requirements
applicable under Section 315a (1) of the Commercial Code and the additional provisions of
the articles of association and present a true
and fair view of the net assets, financial position and results of operations of the Group.
The Group management report is consistent
with the consolidated financial statements
and taken as a whole provides an accurate
view of the state of the Group and accurately
presents the risks and opportunities of future
developments.
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Jürgen Breisch
Isabel Rösler
WirtschaftsprüferWirtschaftsprüferin
(German Public Auditor)
(German Public Auditor)
167
Report of the Board of Administration
In the past year the Board of Administration
monitored the Board of Management’s conducting of business. The Board of Administration and the Risk Committee have regularly
received reports on the Bank’s performance
and business situation, as well as on important transactions and discussed them in detail with the Bank’s Board of Management.
The Audit Committee addressed the audit of
the financial statements and the internal control processes of the bank and discussed them
with the Board of Management. At the meetings of the Board of Administration, reports
were regularly given on significant matters at
the meetings of the Risk Committee and the
Audit Committee.
In the close and trusting collaboration with
the Board of Management, the Board of Administration followed the regular reports,
particularly on the contribution and conversion of silent reserves of Saarland savings
banks and the ensuing change in the articles
of association in light of CRD IV and CRR, the
adjustment of the bye-laws of the Risk Committee and the Audit Committee to the CRD
IV Implementation Act and the now completed transfer of BayernLB’s remaining shares in
SaarLB to Saarland.
The Board of Administration and the Risk
Committee have, to the extent provided by
the articles of association, participated in
the Bank’s business and passed the requisite
resolutions.
At their meetings on 3 April 2014, the Bank’s
corporate bodies discussed compliance with
the Bank’s own corporate governance principles, to which SaarLB has voluntarily bound
itself, and stated that there were no indications of which they were aware that were in
contradiction to compliance with these principles in the 2013 financial year.
The Board of Administration discussed the
management report, the annual financial
statements, the Group management report
168
and the consolidated financial statements for
the period ending 31 December 2013 and the
proposed appropriation of distributable earnings with the Board of Management.
The annual financial statements and the
management report as well as the consolidated financial statements and the Group
management report for the period ending 31
December 2013 were audited by the auditors,
PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft, and received an unqualified auditor’s opinion.
The Board of Administration has taken note
of the audit findings and approved the annual
financial statements in accordance with the
German Commercial Code for the period ending 31 December 2013, in which the company
broke even, at its meeting on 3 April 2014. The
IFRS consolidated financial statements for
the financial year ending 31 December 2013
were approved by the Board of Administration. The Board of Management was granted
discharge.
Saarbrücken, 3 April 2014
Chairman of the Board of Administration
Jan-Christian Dreesen
169
Organisational chart
MARKET 1
CORPORATE DEVELOPMENT/
MARKET 2
OPERATIONS/MANAGEMENT
Frank Eloy
Werner Severin
Corporate Customers
Michael Heß
Corporate Development
Dr. Matthias Böcker
Bank Management
Bernd Heublein
∙ Corporate Customers Germany
∙ Corporate Customers France
- Branch of Landesbank Saar,
Metz
- Centre d’affaires Entreprises,
Strasbourg
∙ Payments and foreign trade
∙ Communication and BoM
Support
∙ Human Resources
∙ Strategic Development
∙ Legal Services
∙ Financing and Reporting
∙ Profit Controlling
∙ Risk Controlling
Real Estate and Projects
Manfred Thinnes
∙ Real Estate Germany
∙ Real Estate France
Roger Lang
- Centre d’affaires Financement
Immobilier, Paris
∙ Project Financing
Daniel Koebnick
∙ Branch Management
∙ Syndication and syndicated
business
Central Sales Management
Savings Banks, Institutionals and
High Net Worth Individuals
Andreas Hauck
∙ Savings Banks, Institutionals
∙ High Net Worth Individuals
∙ Savings Banks Relationship
Management
∙ Interest and Currency
Management
Klaus Bingel
∙ Wealth Management
Treasury and
Portfolio Management
Christian Mathe
∙ Portfolio Management
∙ Treasury
Services
Barbara Wagner
∙ IT
∙ Organisation and Logistics
∙ Performance Coordination
∙ Customer and Accounts
∙ Project and Process
Management
Compliance
∙ Market and Sales
∙ Organisation and IT
∙ LBS Immobilien GmbH
∙ LBS Vertriebs GmbH
Data Protection
∙ Principle
∙ Markt Service
∙ Accounting and Controlling
Internal Audit
Jörg Melde
As of: 13 March 2014
∙ Renewable Energies/Projects
∙ Real Estate Germany/France
∙ Credit Consult
∙ Credit Office
∙ Recourse
∙ Departmental Information
Processing
∙ Technical Information Processing
LBS Market
Dirk Hoffmann
LBS Risk Office
Jörg Welter
170
Risk Office
Frank-Oliver Groß
CORPORATE REPORT 2013 | ORGANISATIONAL CHART & SHAREHOLDERS
Shareholders
Bayerische Landesbank, Munich
43.92 %
Saarland
30.98 %
Saar Association of Savings Banks, Saarbrücken
14.9 %
Sparkassen-Finanzgruppe Saar
Aggregate premium volume in
insurance business
EUR 272.1 million
Aggregate total assets
in bank business
EUR 33.1 billion
Staff 4,867
7 savings banks
Landesbank Saar
SAARLAND Versicherungen
Aggregate total assets
EUR 16.1 billion
Total assets
EUR 17.0 billion (IFRS)
Staff
573
Staff
3,755
Staff
539
Premium volumes
Non-life:
EUR 115,593,000
Life:
EUR 156,542,000
Branches
258
Self-service branches
57
Advisory centres
42
Landesbausparkasse Saar
Portfolio of contracts:
106,443 contracts
Savings contract total
EUR 3.1 billion
Investments
Feuerversicherung AG
EUR 136,763,000
Lebensversicherung AG
EUR 1,246,863,000
Sparkassenverband Saar
Association members: 7 savings banks and their municipal owners, as well as Saarland and the Bayerische
Landesbank, owners of SaarLB.
As of: 31 December 2013
171
172
CORPORATE REPORT 2013 | LEGAL NOTICE
Legal notice
Publisher
Landesbank Saar
Ursulinenstraße 2
66111 Saarbrücken
Editors
Communication and BoM Support
E-mail: [email protected]
This report was completed on 13 March 2014.
Design
FBO – Agentur für Marketing und Neue Medien
Heinrich-Barth-Straße 27
D-66115 Saarbrücken
PhotosKoren Brothers, iStockphoto, Andrew Wakeford
Print
repa druck GmbH
Zum Gerlen 6
66131 Saarbrücken
173
address Landesbank Saar
Ursulinenstraße 2
66111 Saarbrücken / Germany
po box 66104 Saarbrücken / Germany
phone
+49 681 383-01
fax
+49 681 383-1200
internet www.saarlb.de
e-mail [email protected]
bic/swift SALADE55
sort code 590 500 00
SaarLB France, Branch of Landesbank Saar
address 2, place Raymond Mondon
57000 Metz
France
phone +33 387 6968-60
fax +33 387 5708-91
SaarLB France, Centre d’affaires Entreprises
address 9, rue du Maréchal Joffre
67000 Strasbourg
France
phone +33 388 3758-70
fax +33 388 3693-78
SaarLB France, Centre d’affaires Financement Immobilier
address
203, rue du Faubourg
Saint Honoré
75008 Paris
France
phone +33 145 6363-52
fax
+33 145 6371-22
[email protected]
address LBS Landesbausparkasse Saar
Beethovenstraße 35 – 39
po box
Postfach 10 19 62
phone +49 681 383-290
fax +49 681 383-2100
internet www.lbs-saar.de
Weitsicht
DURCH NÄHE

Annual report 2013 - financial report of SaarLB

Transcription

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