Annual Report 2009
LGT Group
3
Contents
Contents
Corporate bodies 4
Financial highlights 5
Chairman’s report 6
Corporate governance 8
Consolidated financial statements 9
LGT Group Foundation 73
International presence and imprint 88
4
Corporate bodies as of April 2010
Board of Trustees H.S.H. Prince Philipp von und zu Liechtenstein, Chairman
Dr. Rodolfo Bogni 1
K B Chandrasekar 2
Dr. Phillip Colebatch 1
Sir Ronald Grierson 2
Dr. Dominik Koechlin 1, 2
Prof. Dr. Conrad Meyer 2
Internal Audit Michael Rubach
Senior Management Board H.S.H. Prince Max von und zu Liechtenstein, Group CEO
Dr. André Lagger, CEO of LGT Financial Services
Dr. Roberto Paganoni, CEO of LGT Capital Partners
Olivier de Perregaux, Group CFO
Thomas Piske, CEO of LGT Wealth Management
Torsten de Santos , CEO of LGT Capital Management
External Audit PricewaterhouseCoopers AG, Zurich
Corporate bodies as of April 2010
1 Member of the Management Development and Compensation Committee2 Member of the Audit Committee
5
Financial highlights
Assets under administration CHF m
of which client assets under administration CHF m
of which LGT’s Princely Portfolio CHF m
Net asset inflow CHF m
of which net new money CHF m
of which through acquisition CHF m
Total operating income CHF m
Group profit CHF m
Appropriation of Foundation earnings and dividends CHF m
Group equity capital after
appropriation of Foundation earnings and dividends CHF m
Total assets CHF m
Ratios
Tier 1 %
Cost/income %
Performance of LGT’s Princely Portfolio %
Headcount at 31 December
Rating 2
Moody’s
Standard & Poor’s
1 Proposed2 LGT Bank in Liechtenstein Ltd., Vaduz
Financial highlights
2009 2008 2007 2006 2005
89,023 78,030 102,750 88,028 76,684
86,604 75,912 99,868 85,370 74,274
2,419 2,118 2,882 2,658 2,410
4,550 (1,265) 11,000 7,466 5,739
(3,651) (1,265) 11,000 7,466 5,739
8,201 0 0 0 0
779 788 879 727 595
106 163 255 181 145
(75)1 (75) (150) (100) (100)
2,883 2,486 3,245 2,923 2,553
24,793 22,795 21,369 17,886 15,595
18.5 16.5 17.8 18.6 20.9
74 68 66 70 69
15.7 (24.1) 15.5 17.6 10.8
1,985 1,870 1,689 1,484 1,356
Aa3 Aa3 Aa3 Aa3 Aa3
A+ A+ AA- AA- AA-
6 Chairman´s report
H.S.H. Prince Philipp von und zu Liechtenstein, Chairman of the Board of Trustees (left) and H.S.H. Prince Max von und zu Liechtenstein, Group CEO (right)
Chairman’s report
Annual results 2009 and outlook
With the results for the 2009 financial year, LGT Group
has proved to be financially strong, resistant and pro -
active. The Group set a number of important business
milestones, including the acquisition of Dresdner Bank
(Switzerland) on 1 December and the sale of its trust
and fiduciary businesses at the beginning of 2009.
With its strong balance sheet and healthy earnings
capacity, LGT sees itself well positioned for the future
and will continue to invest in its international growth
strategy. Our long-term and regionally diversified
strategy, focusing on the attractive market segments of
wealth and asset management, the simple yet stable
ownership structure as a family-owned company and
the culture shaped by the alignment of interests
among clients, owners and employees, comprise the
strong foundation stones of our company.
Strong balance sheet, high liquidity and
solid capitalization
In 2009, LGT Group’s earnings reflected a decline in
client assets coupled with a clear shift into lower-mar-
gin interest-bearing products. However, LGT Group’s
total operating income almost matched the figure of
the previous year, decreasing only 1 percent overall
to CHF 779 million in 2009. Net interest income
increased 36 percent, while income from services
declined 25 percent. Income from trading activities
and other operating income climbed 119 percent
as a result of profits realized on the Group’s own
securities. In 2009, total operating expenses increased
6 percent to CHF 623 million. Business and office
expenses were cut by 4 percent, while personnel
expenses grew 14 percent despite a 16 percent
reduction in bonus payments. This increase was due
in part to the full-year effect of new staff hired during
the 2008 financial year. Added to this, the second
half of 2009 saw the increase of long-term salary
components totaling CHF 12.7 million whose future
payment will be subject to the development of the
equity capital.
The development of costs in 2009 was shaped by a
combination of ongoing investment in the international
business on the one hand, and targeted cost-cutting
measures on the other. LGT Group’s countercyclical
investment approach is reflected in an increase in the
cost/income ratio, up from 68 percent to 74 percent
in 2009. The profit of the Group declined accordingly
by 35 percent, from CHF 163 million in the previous
year to CHF 106 million.
A sound balance sheet and high liquidity characterize
the LGT Group. Group equity capital resources in -
creased in 2009 by 16 percent to CHF 3.0 billion. The
core capital ratio (Tier 1 Ratio) on 31 December 2009
stood at 18.5 percent (end of 2008: 16.5 percent) and
is thus consistently much higher than the statutory
minimum of 8 percent. Further factors underline the
financial solidity of the Group and its subsidiaries:
LGT Bank in Liechtenstein Ltd., Vaduz, is one of the
few internationally active private banks to have its
creditworthiness rated by well-known independent
rating agencies. Since 1996, when the first ratings
were produced, LGT Bank has consistently received very
high ratings (Moody’s: Aa3; Standard & Poor’s: A+).
7Chairman´s report
Net new money develops positively in local
markets and asset management
On 31 December 2009, LGT Group managed assets
with a value of CHF 89.0 billion, which corresponds to
an increase on the previous year of 14 percent, or CHF
11.0 billion. This development reflects the addition of
CHF 8.2 billion in assets acquired with Dresdner Bank
(Switzerland) on 1 December 2009, and growth of
CHF 6.5 billion due to positive market developments.
The sale of the trust and fiduciary business, tax
amnesties, the implementation of the new US policy,
and the debate on tax, all impacted the development
of net new money, leading as anticipated to outflows
of assets from Liechtenstein. There were net asset in -
flows at all of LGT’s international locations in Germany,
Austria and Switzerland, as well as in Asia and in asset
management. The overall result was a net outflow of
CHF 3.7 billion.
International diversification remains important
for investors
Private clients will continue to diversify their national
market risks, currency and political risks. In this con-
text the important advantages of Liechtenstein and
Switzerland continue to be their political and economic
stability, as well as the considerable competence in
wealth and asset management. To date, Liechtenstein
has signed twelve Tax Information Exchange Agree -
ments and four double taxation treaties with other
countries. In addition to this, the Liechtenstein Disclo -
sure Facility initiated with the UK has set new stand -
ards in terms of creating a new legal framework that
works in the interests of everyone involved. LGT fully
supports Liechtenstein’s proactive approach in this
matter.
Positive outlook for 2010
The strategy that has been implemented continuously
since 1999 and the fundamental values of LGT have
proved to be stable and have made it possible to adapt
rapidly to a changing environment. LGT remains firmly
committed to its growth strategy and is prepared to
accept temporary investment-related reductions in
earnings. Regarding the inflow of new money, for 2010
we expect positive growth; the current year has started
very well in this respect. In addition to the expansion
in wealth management in our onshore and growth
markets, our attention is focused on strengthening
our positions in traditional as well as alternative asset
management. Profiting from the expertise gained
over several years in fund-of-hedge-funds and in the
private equity business, there are good opportunities
for LGT to win new market shares. In traditional asset
management the main thrust of our work involves
increasing asset inflows from our client base in wealth
management, as well as gradually increasing sales in
our business with institutional clients – thus opening
up a new source of income. Having overcome the
financial crisis well, in comparison with many of our
competitors, LGT Group now has opportunities to
strengthen its market position. The long-term potential
for development remains very promising – the com-
mitted staff and thriving corporate culture will be the
main drivers of quality, performance and security. As a
family business with a long-term horizon, we are con-
vinced that this approach will best serve the interests
of our clients and our staff and enable us to position
ourselves as an attractive partner for the future.
8
Corporate governance
LGT Group and its holding company, LGT Group
Foundation, are 100 percent controlled by the Prince
of Liechtenstein Foundation (POLF). H.S.H. Reigning
Prince Hans-Adam II. von und zu Liechtenstein is the
main beneficiary of the POLF. The POLF names the
Board of Trustees of LGT Group Foundation. The
Group’s Board of Trustees meets at least four times
a year and has constituted two separate committees
(Audit Committee; Management Development and
Compensation Committee). The Chairman of the
Group’s Board of Trustees is H.S.H. Prince Philipp von
und zu Liechtenstein. The Group’s Board of Trustees
has appointed the Group CEO, H.S.H. Prince Max
von und zu Liechtenstein, who is responsible for the
strategic and operational management of the Group.
The competencies and responsibilities of the Group’s
Board of Trustees and the Group CEO are specified in
written form.
The compensation system is supervised by the Man -
agement Development and Compensation Committee,
and consists of a fixed salary component, a yearly
bonus and a long-term incentive scheme (LTIS). As a
privately held company, LGT has developed an internal
LTIS based on an option scheme. Senior management
and other key people are entitled to participate in the
LTIS. The LTIS is calculated according to a predefined
formula which includes, in particular, the result of
operating activities, the investment performance of
the Princely Portfolio and the Group’s cost of capital.
LTIS options are granted yearly and can be exercised
between three to seven years after grant. In addition
to direct compensation, the management has the
possibility to co-invest directly in client products.
These co-investments are at the full risk/benefit of
the subscribing employee.
Internal Audit reports directly to the Group’s Board
of Trustees. In accordance with a general principle,
the external auditors are re-evaluated every seven to
nine years.
The consolidated LGT Group is supervised by the
Liechtenstein Financial Market Authority (FMA). Local
companies are supervised by their local authorities.
Although it is a privately held company, LGT aims to
follow the standard practices of public companies;
therefore LGT applies a transparent and proactive
communication policy. LGT Bank in Liechtenstein Ltd.
is rated by Moody’s and Standard & Poor’s. The LGT
Group has applied International Financial Reporting
Standards (IFRS) since 1996.
Corporate governance
9
Consolidated financial statements
10
Report of the group auditors
Report of the group auditor
11
Consolidated income statement
Consolidated income statement (TCHF) Note
Net interest and similar income 1
Income from services 2
Income from trading activities 3
Other operating income 4
Total operating income
Personnel expenses 5
Business and office expenses 6
Other operating expenses 7
Total operating expenses
Operating profit before tax
Tax expense 8
Net profit before minority interests
Minority interests
Net profit of LGT Group
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated income statement
2009 2008 Changeabsolute %
166,385 122,653 43,732 36
439,604 586,424 (146,820) (25)
171,355 73,027 98,328 135
1,689 6,171 (4,482) (73)
779,033 788,275 (9,242) (1)
(413,571) (363,439) (50,132) 14
(164,091) (171,588) 7,497 (4)
(45,671) (52,963) 7,292 (14)
(623,333) (587,990) (35,343) 6
155,700 200,285 (44,585) (22)
(45,192) (30,228) (14,964) 50
110,508 170,057 (59,549) (35)
(4,974) (7,339) 2,365 (32)
105,534 162,718 (57,184) (35)
12
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income Note(TCHF)
Net profit before minority interests
Other comprehensive income
Changes in cumulative translation adjustments
Net change in revaluation reserves, net of tax
thereof investments in associates
thereof available-for-sale securities
thereof cash flow hedge
Total other comprehensive income
Total comprehensive income before minority interests
Minority interests
Total comprehensive income of LGT Group
The accompanying notes form an integral part of the consolidated financial statements.
2009 2008 Changeabsolute %
110,508 170,057 (59,549) (35)
819 (22,592) 23,411 (104)
25 367,816 (820,868) 1,188,684 (145)
301,595 (784,675) 1,086,270 (138)
66,026 (47,272) 113,298 (240)
195 11,079 (10,884) (98)
368,635 (843,460) 1,212,095 (144)
479,143 (673,403) 1,152,546 (171)
(4,974) (7,338) 2,364 (32)
474,169 (680,741) 1,154,910 (170)
13Consolidated balance sheet
Consolidated balance sheet (TCHF) Note
Assets
Cash in hand, balances with central banks 9
Loans and advances to banks 10
Loans and advances to customers 11
Securities held for trading purposes 12
Derivative financial instruments 30
Financial assets designated at fair value 13
Other investment securities 14
Investments in associates 15
Property and equipment 16
Intangible assets 17
Prepayments and accrued income
Deferred tax assets 8
Other assets 18
Total assets
Liabilities
Amounts due to banks 19
Amounts due to customers 20
Derivative financial instruments 30
Financial liabilities designated at fair value 21
Certificated debt 22
Accruals and deferred income
Current tax liabilities
Deferred tax liabilities 8
Other liabilities 23
Provisions 24
Total liabilities
Group equity capital
Foundation capital
Retained earnings
Cumulative translation adjustments
Other reserves 25
Total Group equity capital and reserves attributable to LGT’s equity holder
Minority interests
Total Group equity capital
Total liabilities and Group equity capital
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated balance sheet
2009 2008 Changeabsolute %
746,774 540,894 205,880 38
8,216,711 5,973,907 2,242,804 38
5,690,962 4,886,103 804,859 16
73,618 25,931 47,687 184
829,375 2,126,114 (1,296,739) (61)
3,005,441 3,472,118 (466,677) (13)
2,788,574 3,047,828 (259,254) (9)
2,419,334 2,117,739 301,595 14
199,476 124,207 75,269 61
330,903 253,229 77,674 31
93,197 125,246 (32,049) (26)
37,707 28,671 9,036 32
361,399 73,417 287,982 392
24,793,471 22,795,404 1,998,067 9
1,454,580 622,209 832,371 134
16,210,051 14,668,111 1,541,940 11
803,618 1,924,676 (1,121,058) (58)
1,120,200 1,271,236 (151,036) (12)
1,672,317 1,263,208 409,109 32
96,344 103,006 (6,662) (6)
18,001 18,775 (774) (4)
107,986 65,428 42,558 65
243,725 236,714 7,011 3
108,272 61,364 46,908 76
21,835,094 20,234,727 1,600,367 8
339,044 339,044 0 0
1,782,940 1,752,406 30,534 2
(33,236) (34,055) 819 (2)
862,987 495,171 367,816 74
2,951,735 2,552,566 399,169 16
6,642 8,111 (1,469) (18)
2,958,377 2,560,677 397,700 16
24,793,471 22,795,404 1,998,067 9
14
Changes in group equity capital
Changes in group equity capital (TCHF)
Attributable to LGT’s equity holder
Foundation capital1
Retained earnings
Cumulative translation adjustments
Other reserves (see note 25)
Total attributable to LGT’s equity holder
Minority interests
Total
Attributable to LGT’s equity holder
Foundation capital1
Retained earnings
Cumulative translation adjustments
Other reserves (see note 25)
Total attributable to LGT’s equity holder
Minority interests
Total
1 Foundation capital is fully paid and cannot be broken down into units.
The accompanying notes form an integral part of the consolidated financial statements.
Changes in group equity capital
1 January Total com- Appropriation Changes 31 December2009 prehensive of Foundation through 2009
income for earnings and acquisition/the year dividends disposal
339,044 0 0 0 339,044
1,752,406 105,534 (75,000) 0 1,782,940
(34,055) 819 0 0 (33,236)
495,171 367,816 0 0 862,987
2,552,566 474,169 (75,000) 0 2,951,735
8,111 4,974 (7,005) 562 6,642
2,560,677 479,143 (82,005) 562 2,958,377
1 January Total com- Appropriation Changes 31 December2008 prehensive of Foundation through 2008
income for earnings and acquisition/the year dividends disposal
339,044 0 0 0 339,044
1,739,688 162,718 (150,000) 0 1,752,406
(11,463) (22,592) 0 0 (34,055)
1,316,038 (820,867) 0 0 495,171
3,383,307 (680,741) (150,000) 0 2,552,566
12,037 7,338 (11,264) 0 8,111
3,395,344 (673,403) (161,264) 0 2,560,677
15Consolidated cash flow statement
Consolidated cash flow statement (TCHF) Note
Cash flow from operating activities
Profit after tax
Impairment, depreciation, provisions
Impairment on available-for-sale securities 4
Tax expense 8
Changes in accrued income and expenses
Interest and similar income received
Interest paid
Income tax paid
Cash flow from operating activities before changes in operating assets and liabilities
Loans and advances to banks
Loans and advances to customers
Trading securities and financial instruments designated at fair value
Amounts due to banks
Amounts due to customers
Other assets and other liabilities
Cash flow from changes in operating assets and liabilities
Net cash flow from operating activities
Cash flow from investing activities
Proceeds from sales of property and equipment
Purchase of property and equipment 16
Purchase of intangible assets 17
Cash outflow on acquisition 38
Cash inflow from sale of subsidiaries
Additions/disposals of share of investments in associates 15
Proceeds from sales of investment securities 14
Purchase of investment securities 14
Net cash flow from investing activities
Cash flow from financing activities
Issue of certificated debt
Repayment of certificated debt
Dividends paid to minority interests
Dividends paid to beneficiary
Net cash flow from financing activities
Effects of exchange rate changes on cash
Change in cash in hand, balances with central banks
At the beginning of the period 9
At the end of the period 9
Change in cash in hand, balances with central banks
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated cash flow statement
2009 2008
110,508 170,057
39,592 47,534
7 0
45,192 30,228
(116,924) (162,634)
321,957 419,644
(83,898) (279,136)
(19,131) (13,564)
297,303 212,129
(1,573,095) (2,212,534)
(260,262) 732,677
66,188 (722,115)
736,296 (1,069,129)
388,885 3,667,496
35,048 506,448
(606,940) 902,843
(309,637) 1,114,972
3,701 1,898
(32,426) (26,449)
(32,906) (70,907)
(138,428) (14,994)
19,090 0
0 (20,029)
5,725,910 5,842,255
(5,356,505) (6,038,087)
188,436 (326,313)
627,330 70,415
(218,939) (282,742)
(6,443) (11,264)
(75,000) (150,000)
326,948 (373,591)
133 3,304
205,880 418,372
540,894 122,522
746,774 540,894
205,880 418,372
16
Introduction
LGT Group Foundation, Herrengasse 12, Vaduz,
Principality of Liechtenstein, is the holding company
of LGT Group, a global financial services institution.
The beneficiary of LGT Group Foundation is the Prince
of Liechtenstein Foundation. The main economic
beneficiary of the Prince of Liechtenstein Foundation
is the reigning prince of Liechtenstein, H.S.H. Prince
Hans-Adam II. of Liechtenstein.
The terms “LGT Group”, “LGT” or “Group” mean
LGT Group Foundation together with its subsidiary
undertakings and the term “Company” refers to
LGT Group Foundation.
Presentation of amounts
The Group publishes its financial statements in thou-
sand Swiss Francs (TCHF) unless otherwise stated.
Accounting principles
The consolidated financial statements for the financial
year 2009 are prepared in accordance with Interna -
tional Financial Reporting Standards (IFRS). LGT has
applied IFRS rules since 1996. The consolidated finan-
cial statements are prepared on the historical cost
convention, as modified by revaluation of available-
for-sale financial assets, financial assets and liabilities
held at fair value through profit or loss and all
derivative instruments. A summary of the principal
Group accounting policies is set out below.
The Group CEO and the Group CFO considered the
consolidated financial statements on 6 April 2010. They
were approved for issue by the Audit Committee of
the LGT Group Foundation Board on 28 April 2010. The
Foundation Board approved the consolidated financial
statements for issue on 29 April 2010. The accounts
were presented for approval at the Foundation Meeting
to the Supervisory Board on 29 April 2010. The Foun -
dation Board proposed to the Foundation Meeting of
29 April 2010 the payment of CHF 75,000,000 to the
Prince of Liechtenstein Foundation. The accounts on
pages 11 to 72 were approved by the Foundation
Board on 29 April 2010 and are signed on its behalf
by H.S.H. Prince Philipp of Liechtenstein, Chairman,
and Olivier de Perregaux, Group CFO.
Basis of consolidation
Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. Inter-company
transactions, balances and unrealized gains on trans-
actions between Group companies are eliminated.
Subsidiaries are deconsolidated from the date that
control ceases. The purchase method of accounting is
used to account for the acquisition of subsidiaries by
the Group. The cost of an acquisition is measured at
the fair value of the assets given, equity instruments
issued and liabilities incurred or assumed at the date
of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities
and contingent liabilities assu med in a business com-
bination are measured initially at their fair values at
the acquisition date, irrespective of the extent of any
minority interest. The excess of the cost of acquisition
over the fair value of the Group’s share of the identi-
fiable net assets acquired is recorded as goodwill. If
the cost of acquisition is less than the fair value of the
net assets of the subsidiary acquired, the difference is
recognized directly in the income statement.
A list of the Group’s principal subsidiary undertakings
is provided in note 32.
Investments in associates
Investments in associates are investments in companies
over which the Group has significant influence but
not control, generally accompanying a shareholding
of between 20 percent and 50 percent of the eco -
nomical rights. LGT associates are accounted for by
the equity method of accounting and are initially
recognized at cost. Unrealized gains on transactions
between the Group and its associates are elimi nated
unless the transaction provides evidence of an impair-
ment of the asset transferred. Accounting policies have
been changed where necessary to ensure consistency
with the policies adopted by the Group. The invest-
ments in associates are reported in note 15.
The Group’s share of its associates’ post-acquisition
profit or loss is recognized in the income statement,
or in other reserves. Its share of post-acquisition
movements in reserves is recognized in reserves. The
cumulative post-acquisition movements are adjusted
against the carrying amount of the investment.
Notes to the consolidated financial statementsGroup accounting principles
Notes to the consolidated financial statements
17
Foreign currencies
Functional and presentation currency
Items included in the financial statements of each of
the Group’s entities are measured using the currency
of the primary economic environment in which the
entity operates (“the functional currency”).
The conso lidated financial statements are presented in
Swiss Francs, which is the Group’s presentation currency.
Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing
on the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such
transactions and from the trans lation at year-end ex -
change rates of monetary assets and liabilities denomin -
ated in foreign currencies are recognized in the income
statement, except when deferred in equity as qualifying
cash flow hedges and qualifying net investment hedges.
Translation differences on non-monetary items, such
as equities held at fair value through profit or loss, are
reported as part of the fair value gain or loss. Trans -
lation differences on non-monetary items, such as
equities classified as available-for-sale financial assets,
are included in the fair value reserve in equity.
Group companies
The results and financial position of all the Group
entities that have a functional currency different from
the presentation currency are translated into the
presentation currency as follows:
■ assets and liabilities for each balance sheet presented
are translated at the closing rate on the date of
that balance sheet;
■ income and expenses for each account of the income
statement are translated at average exchange rates;
■ all resulting exchange differences are recognized as
a separate component of equity.
On consolidation, exchange differences arising from
the translation of the net investment in foreign entities,
and of borrowings and other currency instruments
designated as hedges of such investments, are taken
to shareholders’ equity. When a foreign operation is
sold, such exchange differences are recognized in the
income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets
and liabilities of the foreign entity and translated at
the closing rate.
Foreign exchange rates
The foreign exchange rates for the major currencies
which have been applied are as follows:
2009Average rate Year-end rate
CHF per 1 USD 1.0814 1.0296
CHF per 1 EUR 1.5059 1.4832
CHF per 1 GBP 1.6856 1.6712
2008Average rate Year-end rate
CHF per 1 USD 1.0806 1.0719
CHF per 1 EUR 1.5847 1.4892
CHF per 1 GBP 1.9993 1.5642
Interest income and expense
Interest income and expense are recognized in the
income statement for all instruments measured at
amortized cost using the effective interest method.
The effective interest method is a method of calcula ting
the amortized cost of a financial asset or a financial
liability and of allocating the interest income or interest
expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future
cash payments or receipts through the expected life of
the financial instrument or, when appropriate, a shorter
period to the net carrying amount of the financial asset
or financial liability. When calculating the effective inter -
est rate, the Group estimates cash flows considering
all contractual terms of the financial instrument (for
example, prepayment options) but does not consider
future credit losses. The calculation includes all fees
and interest points paid or received between parties to
the contract that are an integral part of the effective
interest rate, transaction costs and all other premiums
or discounts. Once a financial asset or a group of similar
financial assets has been written down as a result of an
impairment loss, interest income is recognized using the
rate of interest used to discount the future cash flows
for the purpose of measuring the impairment loss.
Notes to the consolidated financial statements
18
Commission income
Commission income and any associated expense ari sing
from the provision of private banking and investment
management services, credit commissions and interest
are all accounted for using the accrual method. Fixed
commissions receivable and payable are accounted for
evenly over the life of the relevant contract.
Performance fees are defined as management fees
payable for the provision of investment management
services, but which are conditional on the performance
of the fund or account under contract, com pared to
the performance of a specified benchmark. They are
accrued according to the contract terms for the meas-
urement period when they can be reliably measured,
and are invoiced only after confirmation of the per-
formance fee calculation.
Property and equipment
Property and equipment and their subsequent costs
are stated at cost less accumulated depreciation and
accumulated impairment losses. All other repairs and
maintenance are charged to the income statement
during the financial period in which they are incurred.
Property and equipment are periodically reviewed for
impairment. An asset’s carrying amount is written
down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated
recoverable amount. The recoverable amount is the
higher of the asset’s fair value less costs to sell and
value in use. Depreciation on it is provided, on a
straight-line basis, from the date of purchase, over
the estimated useful life of the asset. The assets’
residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
Estimated asset lives vary in line with the following:
Freehold buildings 50 years
Leasehold improvements period of lease
IT equipment 3–5 years
Office equipment 5 years
Motor vehicles 4 years
Intangible assets
Goodwill
Goodwill represents the excess of the cost of a business
combination over the fair value of the Group’s share of
the net identifiable assets of the acquired subsidiary/
associate at the date of acquisition. Goodwill on a
business combination of subsidiaries is included in
“goodwill and other intangible assets”. Goodwill on a
business combination of investments in associates is
included in “investments in associates”. Goodwill is
tested annually for impairment and carried at cost less
accumulated impairment losses. Gains and losses on
the disposal of an entity in clude the carrying amount
of goodwill relating to the entity sold.
Software
Software acquired by the Group is stated at cost less
accumulated amortization and accumulated impairment
losses. Subsequent expenditure on software assets is
capitalized only when it increases the future economic
benefits embodied in the specific asset to which it
relates. All other expenditure is expensed as incurred.
Amortization is recognized in the income statement on
a straight-line basis over the estimated useful life of the
software, from the date that it is available for use. The
estimated useful life of software is three to ten years.
Other intangible assets
Other intangible assets are recognized on the balance
sheet at cost determined at the date of acquisition
and are amortized using the straight-line method over
their estimated useful economic life, not exceeding
20 years. The amortization is recognized in other oper-
ating expenses in the income statement.
At each balance sheet date other intangible assets are
reviewed for indications of impairment or changes in
estimated future benefits. If such indication exists, an
analysis is performed to assess whether the carrying
amount of other intangible assets is fully recoverable.
An impairment is charged if the carrying amount
exceeds the recoverable amount.
Notes to the consolidated financial statements
19
Financial instruments
Financial assets
Purchases and sales of financial assets at fair value
through profit or loss, held to maturity and available
for sale are recognized on the trade-date – the date
on which the Group commits to purchase or sell the
asset. Loans are recognized when cash is advanced to
the borrowers. Financial assets are initially recognized
at fair value plus transaction costs for all financial
assets not carried at fair value through profit or loss.
Financial assets are derecognized when the rights to
receive cash flows from the financial assets have ex -
pired or where the Group has transferred substantially
all risks and rewards of ownership.
Loans and advances
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market. They arise when the
Group provides money, goods or services directly to
a debtor with no intention of trading the receivable.
Loans and advances to customers and to banks are
reported at their amortized cost less allowances for
any impairment or losses.
Investment securities
Investment securities are classified as financial assets at
fair value through profit or loss, available-for-sale and
held-to-maturity securities. They are recog nized on the
balance sheet and initially measured at cost, which is
the fair value on the consideration given or received to
acquire them. Subsequent to initial recognition, securi -
ties are remeasured to fair value, except held-to-maturity
securities which are carried at amortized cost subject to
a test for impairment. To the extent that quoted prices
are not readily available, fair value is based on either
internal valuation models or management’s estimate of
amounts that could be realized, based on observable
market data, assuming an orderly liquidation over a
reasonable period of time.
Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets
held for trading, and those designated at fair value
through profit or loss at inception. A financial asset is
classified in this category if acquired principally for the
purpose of selling in the short term or if so designated
by management. Derivatives are also categorized as
held for trading unless they are designated as hedges.
The Group designates financial assets and liabilities at
fair value through profit or loss when either
the assets or liabilities are managed, evaluated
and reported internally on a fair value basis;
the designation eliminates or significantly reduces an
accounting mismatch which would otherwise arise;
the asset or liability contains an embedded derivative
that significantly modifies the cash flows that would
otherwise be required under the contract.
Held-to-maturity securities
Held-to-maturity securities are financial assets with fixed
or determinable payments and fixed maturity that LGT
has the positive intention and ability to hold to maturity.
Held-to-maturity securities are carried at amortized cost
subject to a test for impairment. The difference between
initial recognition and nominal value is amortized over
the period to maturity. This amount and interest income
are stated as net interest income.
Available-for-sale securities
Available-for-sale securities are those securities that do
not properly belong in trading securities or held-to-
maturity securities. They are initially recognized at cost
(which includes transaction costs). Available-for-sale
securities are subsequently remeasured at fair value or
amounts derived from cash flow models. Fair values for
unlisted equity securities are estimated using applicable
price/earnings or price/cash flow ratios refined to reflect
the specific circumstances of the issuer. Unrealized
gains and losses arising from changes in the fair value
of securities classified as available-for-sale are recog-
nized in equity. Equity securities for which fair values
cannot be measured reliably are recognized at cost less
impairment. When the securities are disposed of or im -
paired, the related accumulated fair value adjustments
are included in the income state ment as income from
investment securities.
Notes to the consolidated financial statements
20
Borrowings
Borrowings are recognized initially at fair value, being
their issue proceeds (fair value of consideration
received) net of transaction cost incurred. Borrowings
are subsequently stated at amortized cost, any differ-
ence between proceeds net of transaction costs and
the redemption value is recognized in the income
statement over the period of the borrowing using the
effective interest method.
Other liabilities
Other liabilities are reported at amortized cost.
Interest and discounts are taken to net interest and
similar income on an accrual basis.
Derivative financial instruments and hedging
Derivatives are initially recognized at fair value on the
date on which a derivative contract is entered into
and are subsequently remeasured at their fair value.
Fair values are obtained from quoted market prices in
active markets and valuation techniques, including
discounted cash flow models and option pricing
models, as appro priate. All derivatives are carried as
assets when fair value is positive and as liabilities
when fair value is negative.
In the case of hedging transactions involving derivative
financial instruments, on the inception of transaction it
is determined whether the specific transaction is
a hedge of the value of a balance sheet item
(a fair value hedge), or
a hedge of a future cash flow or obligation
(a cash flow hedge).
Derivatives categorized in this manner are treated
as hedging instruments in the financial statements if
they fulfill the following criteria:
existence of documentation that specifies the
under lying transaction (balance sheet item
or cashflow), the hedging instrument as well as
the hedging strategy/relationship,
effective elimination of the hedged risks through
the hedging transaction during the entire reporting
period (high correlation),
sustained high effectiveness of the hedging
transaction.
A hedge is regarded as highly effective if actual results
are within a range of 80 percent to 125 percent.
Changes in the fair value of derivatives that are
designated and qualify as fair value hedges and that
prove to be highly effective in relation to hedged risk
are recorded in the income statement, along with the
corresponding change in the fair value of the hedged
asset or liability that is attributable to that specific
hedged risk.
If the hedge no longer meets the criteria for hedge
accounting, in the case of interest-bearing financial
instruments the difference between the carrying
amount of the hedged position at that time and the
value that this position would have exhibited without
hedging is amortized to net profit or loss over the
remaining period to maturity of the original hedge. In
the case of non-interest-bearing financial instruments,
on the other hand, this difference is immediately
recorded in the income statement.
Changes in the fair value of derivatives that have been
recorded as a cash flow hedge, that fulfill the criteria
mentioned above and that prove to be effective in
hedging risk are reported under other reserves in Group
equity capital. If a future financial transaction or an
obligation results in a balance sheet item, the gains or
losses previously recorded in shareholders’ equity are
derecognized and set off against the cost of this
balance sheet item. If the hedged cash flow or the
obligation leads to direct recognition in the income
statement, the hedging instrument’s cumulative gains
or losses from previous periods in Group equity capital
are included in the income statement in the same
period as the hedged transaction.
Certain derivative transactions represent financial
hedging transactions and are in line with the risk
management principles of the Group. However, in
view of the strict and specific guidelines of IFRS, they
do not fulfill the criteria to be treated as hedging
transactions for accounting purposes. They are there-
fore reported as trading positions. Changes in value
are recorded in the income statement in the corres -
ponding period.
Notes to the consolidated financial statements
21
Determination of fair values
For financial instruments traded in active markets, the
determination of fair values of financial assets and
financial liabilities is based on quoted market prices or
dealer price quotations. This includes listed equity
securities and quoted debt instruments on major
exchanges as well as exchange traded derivatives.
A financial instrument is regarded as quoted on an
active market if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency, and those
prices represent actual and regularly occurring market
transactions on an arm’s length basis. If the above crite -
ria are not met, the market is regarded as being inactive.
For all other financial instruments, fair value is deter-
mined using valuation techniques. In these techniques,
fair values are estimated from observable data in
respect of similar financial instruments, using models
to estimate the present value of expected future cash
flows or other valuation techniques, using inputs (for
example, LIBOR yield curve or FX rates) existing at the
consolidated balance sheet dates.
The Group uses widely recognised valuation models for
determining fair values of non-standardized financial
instruments of lower complexity, such as options or
interest rate and currency swaps. For these financial
instruments, inputs into models are generally market-
observable.
For more complex instruments, the Group uses intern ally
developed models, which are usually based on valuation
methods and techniques generally recognised as stand -
ard within the industry. Valuation models are used pri-
marily to value derivatives transacted in the over-the-
counter market. Some of the inputs to these models
may not be market observable and are therefore estima -
ted based on assumptions. The impact on net profit of
financial instrument valuations reflecting non-market ob -
servable inputs (level 3 valuations) is disclosed in note 29.
The output of a model is always an estimate or approxi -
mation of a value that cannot be determined with
certainty, and valuation techniques employed may not
fully reflect all factors relevant to the positions the
Group holds. Price data and parameters used in the
measurement procedures applied are generally
reviewed carefully and adjusted, if necessary – particu -
larly in view of the current market developments.
The fair value of over-the-counter (OTC) derivatives is
determined using valuation methods that are commonly
accepted in the financial markets, such as present
value techniques and option pricing models. The fair
value of foreign exchange forwards is generally based
on current forward exchange rates.
Private equity investments for which market quotations
are not readily available are valued at their fair values
as determined in good faith by the respective Board of
Directors in consultation with the investment manager.
In this respect, investments in other investment com-
panies (fund investments) which are not publicly traded
are normally valued at the underlying net asset value
as advised by the managers or administrators of these
investment companies, unless the respective Board of
Directors are aware of good reasons why such a valu-
ation would not be the most appropriate indicator of
fair value.
In estimating the fair value of private equity fund in -
vestments, the respective Board of Directors considers
all appropriate and applicable factors (including a sen-
sitivity to non-observable market factors) relevant to
their value, including but not limited to the following:
reference to the fund investment’s reporting informa -
tion including consideration of any time lags between
the date of the latest available reporting and the
balance sheet date of the respective Group entity in
those situations where no December valuation of the
underlying fund is available. This includes a detailed
analysis of exits (trade sales, initial public offerings,
etc.) which the fund investments have gone through
in the period between the latest available reporting
and the balance sheet date of the respective Group
entity, as well as other relevant valuation information.
This information is a result of continuous contact
with the investment managers and, specifically, by
monitoring calls made to the investment managers,
distribution notices received from the investment
managers in the period between the latest available
report and the balance sheet date of the respective
Notes to the consolidated financial statements
22
Group entity, as well as the monitoring of other finan -
cial information sources and the assessment thereof;
reference to transaction prices;
result of operational and environmental assessments:
periodic valuation reviews are made of the valuations
of the underlying investments as reported by the
investment managers to determine if the values are
reasonable, accurate and reliable. These reviews in -
clude a fair value estimation using widely recognised
valuation methods such as multiple analysis and
discounted cash flow analysis;
review of management information provided by the
managers/administrators of the fund investments
on a regular basis; and
mark-to-market valuations for quoted investments held
by the managers/administrators of the fund investments
which make up a significant portion of the relevant
Group entity’s net asset value.
If the respective Board of Directors comes to the con-
clusion upon recommendation of the investment man -
ager after applying the above-mentioned valuation
methods, that the most recent valuation reported by
the manager/administrator of a fund investment is
materially misstated, it will make the necessary adjust -
ments using the results of its own review and analysis.
Typically, the fair value of such investments are remeas -
ured based on the receipt of periodic (usually quarterly)
reporting provided to the investors in such vehicles by
the managers or administrators. For new investments
in such vehicles, prior to the receipt of fund reporting,
the investments are usually valued at the amount con -
tributed, which is considered to be the best indicator
of fair value.
In cases when the fair value of unlisted equity instru-
ments cannot be determined reliably, the instruments
are carried at cost less impairment.
Impairment of financial assets
Assets carried at amortized cost
The Group assesses at each balance sheet date whether
there is objective evidence that a financial asset or a
group of financial assets is impaired. A financial asset or
a group of financial assets is impaired and impairment
losses are incurred if, and only if, there is objective
evidence of impairment as a result of one or more
events that occurred after the initial recognition of the
asset (a “loss event”) and that loss event (or events)
has an impact on the estimated future cash flows of
the financial asset or group of financial assets that can
be reliably estimated. Objective evidence that a finan-
cial asset or group of assets is impaired includes
observable data that comes to the attention of the
Group about the following loss events:
significant financial difficulty of the issuer or obligor;
a breach of contract, such as a default or delin-
quency in interest or principal payments;
the Group granting to the borrower, for economic
or legal reasons relating to the borrower’s financial
difficulty, a concession that the lender would not
otherwise consider;
it becoming probable that the borrower will enter
bankruptcy or other financial reorganization;
the disappearance of an active market for that
financial asset because of financial difficulties;
observable data indicating that there is a measurable
decrease in the estimated future cash flows from a
group of financial assets since the initial recognition
of those assets, although the decrease cannot yet be
identified with the individual financial assets in the
group, including:
– adverse changes in the payment status of
borrowers in the group; or
– national or local economic conditions that
correlate with defaults on the assets in the group.
The Group first assesses whether objective evidence of
impairment exists individually for financial assets that are
individually significant, and individually or collectively
for financial assets that are not individually significant.
If the Group determines that no objective evidence of
impairment exists for an individually assessed financial
asset, whether significant or not, it includes the asset
in a group of financial assets with similar credit risk
characteristics and collectively assesses them for
impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or
continues to be recognized are not included in a
collective assessment of impairment.
If there is objective evidence that an impairment loss on
loans and receivables or held-to-maturity investments
carried at amortized cost has been incurred, the amount
Notes to the consolidated financial statements
23
of the loss is measured as the difference between the
asset’s carrying amount and the present value of esti-
mated future cash flows (excluding future credit losses
that have not been incurred) discounted at the finan-
cial asset’s original effective interest rate. The carrying
amount of the asset is reduced through the use of an
allowance account and the amount of the loss is rec-
ognized in the income statement. If a loan or held-to-
maturity investment has a variable interest rate, the
discount rate for measuring any impairment loss is
the current effective interest rate determined under
the contract. As a practical expedient, the Group may
measure impairment on the basis of an instrument’s
fair value using an observable market price.
The calculation of the present value of the estimated
future cash flows of a collateralized financial asset
reflects the cash flows that may result from foreclosure
less costs for obtaining and selling the collateral,
whether or not foreclosure is probable.
For the purposes of a collective evaluation of impair-
ment, financial assets are grouped on the basis of
similar credit risk characteristics (i.e. on the basis of
the Group’s grading process that considers asset type,
industry, geographical location, collateral type, past-due
status and other relevant factors). Those characteristics
are relevant to the estimation of future cash flows
for groups of such assets by being indicative of the
debtors’ ability to pay all amounts due according to
the contractual terms of the assets being evaluated.
Future cash flows in a group of financial assets that are
collectively evaluated for impairment are estimated on
the basis of the contractual cash flows of the assets in
the group and historical loss experience for assets with
credit risk characteristics similar to those in the group.
Historical loss experience is adjusted on the basis of
current observable data to reflect the effects of current
conditions that did not affect the period on which the
historical loss experience is based and to remove the
effects of conditions in the historical period that do
not exist currently.
Estimates of changes in future cash flows for groups
of assets should reflect and be directionally consistent
with changes in related observable data from period to
period (for example, changes in unemployment rates,
property prices, payment status, or other factors indica-
tive of changes in the probability of losses in the group
and their magnitude). The methodology and assump-
tions used for estimating future cash flows are reviewed
regularly by the Group to reduce any differences
between loss estimates and actual loss experience.
When a loan is uncollectible, it is written off against
the related provision for loan impairment. Such loans
are written off after all the necessary procedures have
been completed and the amount of the loss has been
determined. Subsequent recoveries of amounts pre -
viously written off decrease the amount of the provi-
sion for loan impairment in the income statement.
If, in a subsequent period, the amount of the impair-
ment loss decreases and the decrease can be related
objectively to an event occurring after the impairment
was recognized (such as an improvement in the debtor’s
credit rating), the previously recognized impairment
loss is reversed by adjusting the allowance ac count.
The amount of the reversal is recognized in the income
statement.
Assets carried at fair value
The Group assesses at each balance sheet date whether
there is objective evidence that a financial asset or a
group of financial assets is impaired. In the case of
equity investments classified as available-for-sale, a
signi ficant or prolonged decline in the fair value of the
security below its cost is considered in determining
whet her the assets are impaired. If any such evidence
exists for available-for-sale financial assets, the cumu-
lative loss – measured as the difference between the
acquisition cost and the current fair value, less any
impairment loss on that financial asset previously rec-
ognized in profit or loss – is removed from equity and
recognized in the income statement. Impairment losses
recognized in profit or loss on equity instruments are
not reversed through the income statement, they are
reversed through equity. If, in a subsequent period, the
fair value of a debt instrument classified as available-
for-sale increases and the increase can be objectively
related to an event occurring after the impairment
loss was recognized in profit or loss, the impairment
loss is reversed through the income statement.
Notes to the consolidated financial statements
24
Renegotiated loans
Loans that are either subject to collective impairment
assessment or individually significant and whose terms
have been renegotiated are no longer considered to be
past due but are treated as new loans. In subsequent
years, the asset is considered to be past due and dis-
closed only if renegotiated.
Provisions
Provisions for restructuring costs, legal claims and other
operational risk are recognized, when the Group has a
present legal or constructive obligation as a result of
past events, when it is more likely than not that an out -
flow of resources will be required to settle the obliga-
tion and when the amount has been reliably estimated.
Fiduciary transactions
The Group commonly acts as trustees and in other
fiduciary capacities that result in the holding or placing
of assets on behalf of individuals, trusts, retirement
benefit plans and other institutions. These assets and
income arising thereon are excluded from these finan-
cial statements, as they are not assets of the Group.
Repurchase and reverse repurchase transactions
(repo transactions)
Repo transactions are used to refinance and fund money
market transactions. They are entered in the balance
sheet as advances against collateral and cash contribu -
tions or with pledging of securities held in the Group’s
own account. Securities provided to serve as collateral
thus continue to be posted in the corresponding balance
sheet positions – securities received to serve as collateral
are not reported in the balance sheet. Interest resulting
from the trans actions is posted as net interest income.
Contingent liabilities
A contingent liability is a possible obligation that arises
from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the con -
trol of the entity. Or a contingent liability is a present
obligation that arises from past events but is not rec-
ognized because it is not probable that an out flow of
resources embodying economic benefits will be required
to settle the obligation or the amount of the obligation
cannot be measured with sufficient reliability.
Leasing
The leases entered into by the Group are operating
leases. The expenses from operating leases (the rights
and responsibilities of ownership remain with the lessor)
are disclosed in business and office expenses.
Cash in hand
For the purpose of the consolidated cash flow state-
ment, cash in hand comprises liquid assets including
cash and balances with central banks and post offices.
Taxation
Corporate tax payable is provided on the taxable profits
of LGT Group companies at the applicable current rates.
Deferred income tax is provided in full, using the liabil -
ity method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted
by the balance sheet date and are expected to apply
when the related deferred income tax asset is realized
or the deferred income tax liability is settled. Deferred
tax assets are recognized where it is probable that
future taxable profit will be available against which
the temporary differences can be utilized.
Employee benefits
Short-term benefits
Salaries are recognized in the income statement upon
payment. The amount for bonuses is accrued and will
be paid at the beginning of the following year.
Medium-term benefits
Senior management and other key people of the Group
are entitled to participate in a long-term incentive
scheme. The incentive scheme gives the holder the possi -
bility to participate in the development of the economic
value added of the Group. In principle, the economic
value added represents the operating profit of the
Group and the return on LGT’s Princely Portfolio after
adjustments for capital and refinancing costs. Options
granted under the scheme will, in normal circumstances,
only be exercisable within 3 to 7 years from the date
of grant of option. The annual costs of the scheme are
charged to the profit and loss account. The accruals
are shown as other liabilities until their realization.
Notes to the consolidated financial statements
25
Pension obligations
Group companies operate various pension schemes.
The schemes are generally funded through payments
to insurance companies or trustee-administered funds,
determined by periodic actuarial calculations. The
Group has both defined benefit and defined contribu -
tion plans. A defined benefit plan is a pension plan
that defines an amount of pension benefit that an
employee will receive on retirement, usually dependent
on one or more factors such as age, years of service
and compensation. A defined contribution plan is a
pension plan under which the Group pays fixed con-
tributions into a separate entity.
The liability recognized in the balance sheet in respect
of defined benefit pension plans is the present value
of the defined benefit obligation at the balance sheet
date less the fair value of plan assets, together with
adjustments for unrecognized actuarial gains or losses
and past service costs. The defined benefit obligation
is calculated annually by independent actuaries using
the projected unit credit method. The present value
of the defined benefit obligation is determined by
discounting the estimated future cash outflows using
interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will
be paid, and that have terms to maturity approximating
to the terms of the related pension liability.
Based on the corridor approach, actuarial gains and loss-
es arising from experience adjustments and changes in
actuarial assumptions are charged or credited to income
over the employees expected remaining average work-
ing lives if the net cumulative unrecognized actuarial
gains and losses exceed the greater of 10 percent of the
defined benefit obligation and 10 percent of the fair
value of any pension plan assets. Past-service costs are
recognized immediately in income, unless the changes
to the pension plan are conditional on the employees
remaining in service for a specified period of time (the
vesting period). In this case, the past-service costs are
amortized on a straight-line basis over the vesting period.
For defined contribution plans, the Group pays contri-
butions to privately administered pension insurance
plans on a mandatory, contractual or voluntary basis.
The contributions are recognized as employee benefit
expense when they are due. Prepaid contributions are
recognized as an asset to the extent that a cash refund
or a reduction in the future payments is available.
Client assets under administration
Client assets under administration are stated according
to the provisions of the Liechtenstein banking law.
Events after the reporting period
There are no events to report that had an influence
on the balance sheet and income statement for 2009.
Management’s judgments
The Group makes estimates and assumptions that affect
the reported amounts of assets and liabilities within the
next financial year. Estimates and jud gments are con -
tinually evaluated and are based on historical experi-
ence and other factors, including expectations that are
believed to be reasonable under the circumstances.
Impairment losses on loans and advances
The Group reviews its loan portfolios to assess impair -
ment at least on a quarterly basis. In determining
whether an impairment loss should be recorded in the
income statement, the Group makes judgments as to
whether there is any observable data indicating that
there is a measurable decrease in the estimated future
cash flows from a portfolio of loans before the decrease
can be identified with an individual loan in that port-
folio. This evidence may include observable data indi-
cating that there has been an adverse change in the
payment status of borrowers in a group, or national or
local economic conditions that correlate with defaults
on assets in the group.
Management uses estimates based on historical loss
experience for assets with credit risk characteristics and
objective evidence of impairment similar to those in the
portfolio when scheduling its future cash flows. The
methodology and assumptions used for estimating both
the amount and timing of future cash flows are reviewed
regularly to reduce any differences between loss estima-
tes and actual loss experience. To the extent that the net
present value of estimated cash flows differs by +5 per -
cent, the provision would be estimated 351 (2008: 1,854)
lower. If the net present value differs by –5 percent, the
provision would be estimated 351 (2008: 1,855) higher.
Notes to the consolidated financial statements
26
Impairment of goodwill
The fair value of goodwill is reviewed annually and
management assesses whether an impairment charge
needs to be recognized.
Fair value of derivatives
The fair value of financial instruments that are not
quoted in active markets are determined by using valu -
ation techniques. Where valuation techniques (for
example, models) are used to determine fair values,
they are validated and periodically reviewed by qualified
personnel independent of the area that created them.
Changes in assumptions could affect reported fair value
of financial instruments. For example, to the extent
that management used a tightening of 20 basis points
in the credit spread, the fair value of derivative finan-
cial instruments would be estimated at 25,952 (2008:
201,140) as compared to their reported fair value of
25,757 (2008: 201,438) at the balance sheet date.
Impairment of available-for-sale equity
investments
The Group determines that available-for-sale equity
investments are impaired when there has been a
significant or prolonged decline in the fair value below
their cost (cost is defined as historical cost). This deter -
mination of what is significant or prolonged requires
judgment. In making this judgment the Group
evaluates the following factors: (i) extent of the decline
is substantial (in excess of 20 percent of cost) or, (ii) the
fair value is three balance sheet dates in succession
(on a semi-annual basis) or more below cost. In addi-
tion, impairment may be appropriate when there is
evidence of a deterioration in the financial health of the
investee, industry and sector performance, changes in
technology, and operational and financing cash flows.
Had all the declines in fair value below cost been
considered significant or prolonged, the Group would
suffer an additional 12,763 (2008: 23,567) loss in its
financial statements, being the transfer of the total
fair value reserve to the income statement.
Held-to-maturity investments
The Group follows the guidance of IAS 39 on classi -
fying non-derivative financial assets with fixed or
determinable payments and fixed maturity as held-to-
maturity. This classification requires significant judg-
ment. In making this judgment, the Group evaluates
its intention and ability to hold such investments to
maturity. If the Group fails to keep these investments
to maturity other than for the specific circumstances –
for example, selling an insigni ficant amount close to
maturity – it will be required to reclassify the entire
class as available-for-sale. The investments would there -
fore be measured at fair value, not amortized cost.
If the entire class of held-to-maturity investments is
tainted, the fair value would increase by 52 (2008: 92),
with a corresponding entry in other reserves in Group
equity capital.
Income taxes
The Group is subject to income taxes in numerous
jurisdictions. Significant estimates are required in de -
termining the worldwide provision for income taxes.
There are many transactions and calculations for which
the ultimate tax determination is uncertain during the
ordinary course of business. The Group recognizes
liabilities for anticipated tax audit issues based on
estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is differ -
ent from the amounts that were initially recorded, such
differences will impact the income tax and deferred tax
provisions in the period in which such determination
is made.
Based on the final outcome of the above-mentioned
judgment areas, the Group would need to decrease
income tax by 1,095 (2008: 1,526), in case of favor-
able market conditions, and decrease income tax by
1,158 (2008: 1,785), in case of unfavorable market
conditions.
Notes to the consolidated financial statements
27
Changes in accounting principles and presentation
Standards and interpretations that have been
adopted
The Group applied the following new and revised
standards and interpretations for the first time in the
financial year beginning on 1 January 2009:
IFRS 2 Share-based Payment – Amendment relating
to vesting conditions and cancellations
(effective 1 January 2009)
IFRS 7 Financial Instruments: Disclosures –
Amendments enhancing disclosures about fair
value and liquidity risk (effective 1 January 2009)
IFRS 8 Operating Segments (effective 1 January 2009)
IAS 1 Presentation of Financial Statements –
Comprehensive revision including requiring a
statement of comprehensive income
(effective 1 January 2009)
IAS 23 Borrowing Costs (effective 1 January 2009)
IAS 32 Financial Instruments – Amendments relating
to puttable instruments and obligations arising on
liquidation (effective 1 January 2009)
IFRIC 13 Customer Loyalty Programmes
(effective 1 July 2008)
IFRIC 15 Agreements for Construction of Real Estate
(effective 1 January 2009)
IFRIC 16 Hedges of a Net Investment in a Foreign
Operation (effective 1 October 2008)
Improvements to International Financial Reporting
Standards 2008 (issue date: May 2008; effective
date: dealt with on a standard by standard basis,
generally 1 January 2009)
The adoption has not led to any changes in the Group
Accounting Principles but to changes in presentation
and disclosures. The interpretations have no impact on
the reported results or financial position of the Group.
Standards and interpretations that have not yet
been adopted
Numerous new and revised standards and interpreta-
tions were published that must be applied for financial
years beginning on or after 1 January 2010. The Group
has chosen not to adopt these in advance. The new
and revised standards and interpretations that will be
relevant to the Group are as follows:
IFRS 3 Business Combinations, and IAS 27
Consolidated and Separate Financial Statements
(effective 1 July 2009)
The changes to the two revised standards relate to
the treatment of specific issues in the case of busi-
ness combinations (e.g. the valuation of minority
interests, the treatment of business combinations
achieved in stages, the recording of conditional
consideration and the determination of acquisition
costs) as well as subsequent changes in ownership
interests with or without a loss of control.
The revised standard does not have any impact on the
reported results or financial position of the Group.
Other new and revised standards and interpretations:
Based on initial analyses, the following new and revised
standards and interpretations which have to be applied
for financial years beginning on or after 1 January 2010
are not expected to have any significant impact on
the reported results or financial position of the Group:
IAS 28 Investments in Associates – Consequential
amendments arising from amendments to IFRS 3
(effective 1 July 2009)
IAS 31 Investments in Joint Ventures – Consequential
amendments arising from amendments to IFRS 3
(effective 1 July 2009)
IAS 39 Financial Instruments: Recognition and
Measurement – Amendments for eligible hedged
items (effective 1 July 2009)
IFRIC 17 Distributions of Non-cash Assets to Owners
(effective 1 July 2009)
IFRIC 18 Transfers of Assets from Customers
(to be applied prospectively to transfers of assets
from customers received on or after 1 July 2009)
IFRIC 19 Extinguishing financial liabilities with equity
instruments (effective 1 July 2010)
Improvements to International Financial Reporting
Standards 2009 (issue date: April 2009; effective
date: dealt with on a standard by standard basis,
generally 1 January 2010)
Notes to the consolidated financial statements
28 Notes to the consolidated financial statements
1 Net interest and similar income (TCHF)
Interest earned and similar income
Banks
Customers
Interest income from investment securities
Dividend income from investment securities
Total interest earned and similar income
Interest expense
Banks
Interest on certificated debt
Customers
Total interest expense
Net interest and similar income
2 Income from services (TCHF)
Commission income from securities and investment business
Investment management fees
Brokerage fees
Honoraria and consulting
Administration fees and other income from investment business
Total commission income from securities and investment business
Commission income from other services
Lending business
Accounts and clearing business
Total commission income from other services
Commission expenses
Total income from services
3 Income from trading activities (TCHF)
Foreign exchange, notes
Translation gain/(loss)
Transaction gain/(loss)
Interest and dividend income
Loss on securities trading
Profit/(loss) on financial instruments designated at fair value
Other trading activities
Total income from trading activities
Details on the consolidated income statement
2009 2008
90,087 190,003
111,193 178,750
86,701 101,944
124 105
288,105 470,802
(7,995) (44,652)
(27,229) (24,567)
(86,496) (278,930)
(121,720) (348,149)
166,385 122,653
2009 2008
272,209 357,950
88,452 93,939
1,487 38,913
75,829 92,774
437,977 583,576
2,975 2,487
11,138 10,807
14,113 13,294
(12,486) (10,446)
439,604 586,424
2009 2008
9,226 51,130
31,085 44,623
52,454 82,004
(10,094) (20,957)
88,924 (76,383)
(240) (7,390)
171,355 73,027
29Notes to the consolidated financial statements
4 Other operating income (TCHF)
Income from investment securities
Realized net result on available-for-sale securities
Impairment losses on available-for-sale securities
Total income from investment securities
Realized net result on disposals of subsidiaries
Other
Total other operating income
5 Personnel expenses (TCHF)
Personnel expenses, including Directors’ emoluments, consisting of
salaries
bonuses
pension costs
social security costs
other personnel expenses
Total personnel expenses before long-term incentive scheme
Long-term incentive scheme
Total personnel expenses
Headcount at 31 December
6 Business and office expenses (TCHF)
Business and office expenses, consisting of
rents and office expenses
IT expenses
information and communication expenses
travel and entertainment expenses
legal and professional expenses
advertising expenses
general expenses
Total business and office expenses
2009 2008
2,685 (134)
(7) 0
2,678 (134)
(15,346) 0
14,357 6,305
1,689 6,171
2009 2008
214,772 214,943
103,161 123,221
36,716 13,102
24,422 24,672
21,757 23,544
400,828 399,482
12,743 (36,043)
413,571 363,439
1,985 1,870
2009 2008
33,439 31,028
34,930 25,937
20,113 20,552
11,458 17,444
30,223 27,020
18,037 33,643
15,891 15,964
164,091 171,588
30 Notes to the consolidated financial statements
7 Other operating expenses (TCHF) Note
Depreciation on property and equipment
Amortisation of intangible assets
Total depreciation and amortisation
Credit losses 11
Recovery of credit losses 11
Other
Total credit losses/(recoveries)
Provision for operational risks
Other provisions
Total changes in provisions and other losses
Total other operating expenses
8 Taxation (TCHF)
Tax expense
Current income tax expense
Deferred income tax expense
Total income tax expense
Capital tax expense
Total tax expense
Reconciliation of the expected to the effective income tax expense
Profit before tax
Income tax expense calculated at a tax rate of 9% (2008: 7%)1
Tax rate difference from local differences in domestic tax rates
Tax rate difference on income components subject to foreign taxes
Income not subject to tax
Total income tax expense
1 The rate used is the average income tax rate of the Group.
2009 2008
20,847 17,870
14,854 458
35,701 18,328
8,320 12,277
(12,606) (4,666)
596 968
(3,690) 8,579
(623) 4,794
14,283 21,262
13,660 26,056
45,671 52,963
2009 2008
20,509 18,077
19,581 6,708
40,090 24,785
5,102 5,443
45,192 30,228
155,700 200,285
14,013 14,020
25,822 11,084
4,660 (500)
(4,405) 181
40,090 24,785
31Notes to the consolidated financial statements
Deferred income tax expense comprises the following temporary differences
Losses available for offset against future taxable income
Accelerated depreciation for tax purposes
Provisions
Financial instruments
Other temporary differences
Total deferred income tax expense
Deferred income tax assets and liabilities relate to the following items
Deferred income tax liabilities
Accelerated depreciation for tax purposes
Provisions
Financial instruments
Other temporary differences
Total deferred income tax liabilities
Deferred income tax assets
Losses available for offset against future taxable income
Accelerated depreciation for tax purposes
Provisions
Other temporary differences
Total deferred income tax assets
Movement on the deferred income tax assets and liabilities is as follows
At 1 January
Income statement charge
Available-for-sale securities: fair value measurement
Other changes
At 31 December
Income tax on othercomprehensive income
Change in revaluation reserves
Cumulative translation adjustments
Other comprehensive income
2009 2008
(8,715) (7,372)
(936) (291)
28,054 14,613
(528) (53)
1,706 (189)
19,581 6,708
2,662 (2,583)
102,111 66,084
1,046 1,935
2,167 (8)
107,986 65,428
38,535 29,820
(1) 232
2 4
(829) (1,385)
37,707 28,671
36,757 26,072
19,581 6,708
(1,103) 1,217
15,044 2,760
70,279 36,757
2009 2008Before tax Tax (expense) Net of tax Before tax Tax (expense) Net of tax
/Tax benefit /Tax benefit
366,713 1,103 367,816 (819,650) (1,217) (820,867)
819 0 819 (22,592) 0 (22,592)
367,532 1,103 368,635 (842,242) (1,217) (843,459)
32
9 Cash in hand, balances with central banks (TCHF)
Cash in hand
Balances with central banks
Balances with post offices
Total cash in hand, balances with central banks
10 Loans and advances to banks (TCHF)
Loans and advances to OECD banks
Loans and advances to non-OECD banks
Total loans and advances to banks
11 Loans and advances to customers (TCHF)
Mortgage-backed
Other collateral
Without collateral
Total loans and advances to customers
Mortgage-backed
Other collateral
Without collateral
Total loans and advances to customers
Details on the consolidated balance sheet
Notes to the consolidated financial statements
2009 2008
36,331 39,394
593,764 499,495
116,679 2,005
746,774 540,894
2009 2008
8,114,930 5,598,844
101,781 375,063
8,216,711 5,973,907
2009 2008
2,301,938 2,085,669
2,994,574 2,376,169
394,450 424,265
5,690,962 4,886,103
2009 2008Gross Impairment Carrying Gross Impairment Carrying
amount allowance amount amount allowance amount
2,306,746 (4,808) 2,301,938 2,089,730 (4,061) 2,085,669
2,998,368 (3,794) 2,994,574 2,388,959 (12,790) 2,376,169
406,694 (12,244) 394,450 434,389 (10,124) 424,265
5,711,808 (20,846) 5,690,962 4,913,078 (26,975) 4,886,103
33
Specific allowancefor impairment
At 1 January
Charges to allowance
Addition through acquisition
Release of allowance
Allowance utilized
Reclassifications
Currency translation
At 31 December
Portfolio allowancefor impairment
At 1 January
Charges to allowance
Release of allowance
Currency translation
At 31 December
Total allowance for impairment
Additional information on credit risks
Non-performing customers’ loans
Additional information about loans and advances is shown separately in the risk management notes.
Notes to the consolidated financial statements
2009 2008Mortgage- Other Without Total Mortgage- Other Without Total
backed collateral collateral backed collateral collateral
4,061 12,790 4,039 20,890 6,611 2,506 11,813 20,930
270 1,779 6,271 8,320 1,083 9,688 1,506 12,277
1,133 0 0 1,133 0 0 0 0
(1,249) (9,881) (1,011) (12,141) (3,673) 0 (832) (4,505)
25 (246) (2,706) (2,927) 0 0 (7,429) (7,429)
568 (624) 56 0 40 1,074 (324) 790
0 (24) (25) (49) 0 (478) (695) (1,173)
4,808 3,794 6,624 15,226 4,061 12,790 4,039 20,890
0 0 6,085 6,085 0 0 6,246 6,246
0 0 0 0 0 0 0 0
0 0 (465) (465) 0 0 (161) (161)
0 0 0 0 0 0 0 0
0 0 5,620 5,620 0 0 6,085 6,085
20,846 26,975
2009 2008
54,316 3,207
34
12 Securities held for trading purposes (TCHF)
Total securities held for trading purposes
thereof listed
13 Financial assets designated at fair value (TCHF)
Securities designated at fair value to match financial liabilities through profit or loss
Loans and advances to customers designated at fair value to
match financial liabilities through profit or loss
Other securities designated at fair value through profit or loss1,2
Total financial assets designated at fair value
1 Thereof listed 1,691,136 (2008: 1,939,958)2 Thereof subordinated securities 58,799 (2008: 36,687)
At 31 December 2009 the maximum exposure to credit risk on loans and advances at fair value through profit or loss was 51,913 (2008: 74,461).
Notes to the consolidated financial statements
2009 2008
73,618 25,931
21,266 20,904
2009 2008
1,080,473 1,215,632
51,913 74,461
1,873,055 2,182,025
3,005,441 3,472,118
35
14 Investment securities (TCHF)
Held-to-maturity securities
At 1 January
Redemption
Revaluations
At 31 December
Available-for-sale securities
At 1 January
Currency translation
Additions
Disposals and redemption
Revaluations
Less allowance for impairment
At 31 December
Total investment securities
thereof fixed-income securities maturing within one year
thereof listed
Specific allowance for impairment on available-for-sale securities
At 1 January
Charges to allowance
Other changes
At 31 December
Notes to the consolidated financial statements
2009 2008
6,982 6,963
(5,000) 0
16 19
1,998 6,982
3,040,846 3,018,433
(320) (232,044)
5,356,505 6,038,087
(5,725,910) (5,842,255)
115,462 58,667
(7) (42)
2,786,576 3,040,846
2,788,574 3,047,828
1,623,748 1,806,216
1,176,641 1,026,415
4,913 4,871
7 0
0 42
4,920 4,913
36
15 Investments in associates (TCHF)
At 1 January
Additions
Revaluation through equity
At 31 December
Details of investments in associates as open-end investment companies
Fixed-income
Real estate investment trusts
Equities
Hedge fund investments
Private equity investments
Cash
Total investments in associates
LGT’s investments in associates at 31 December 2009
Name Principal activity
LGT Capital Invest Limited, Grand Cayman Open-end investment company
Geschäftshaus Spitalgasse Waisenhausplatz AG, Berne
LGT’s investments in associates at 31 December 2008
Name Principal activity
LGT Capital Invest Limited, Grand Cayman Open-end investment company
Geschäftshaus Spitalgasse Waisenhausplatz AG, Berne
Notes to the consolidated financial statements
2009 2008
2,117,739 2,882,384
0 20,029
301,595 (784,674)
2,419,334 2,117,739
611,480 433,757
39,925 30,408
643,980 401,071
546,939 652,916
580,856 531,112
(3,846) 68,475
2,419,334 2,117,739
Ownership interest in %of ordinary/participation
shares held
36.29
36.84
Ownership interest in %of ordinary/participation
shares held
30.35
36.84
37
16 Property and equipment (TCHF)
Cost
At 1 January 2009
Currency translation
Additions
Additions through acquisitions
Reclassifications
Disposals
At 31 December 2009
Accumulated depreciation
At 1 January 2009
Currency translation
Charge for the year
Additions through acquisitions
Reclassifications
Disposals
At 31 December 2009
Net book value
At 31 December 2009
Property and equipment(TCHF)
Cost
At 1 January 2008
Currency translation
Additions
Additions through acquisitions
Reclassifications
Disposals
At 31 December 2008
Accumulated depreciation
At 1 January 2008
Currency translation
Charge for the year
Additions through acquisitions
Disposals
At 31 December 2008
Net book value
At 31 December 2008
Insurance value of tangible assets
Insurance value
Notes to the consolidated financial statements
Freehold Other Leasehold Office Motor Totalbank freehold improve- equipment vehicles
premises property ments
170,262 2,447 32,816 69,070 1,725 276,320
0 (21) (72) (108) (4) (205)
21,790 21 45 10,570 0 32,426
65,680 0 0 2,853 0 68,533
13,582 0 (13,582) 0 0 0
(101) (396) (5,382) (13,174) (512) (19,565)
271,213 2,051 13,825 69,211 1,209 357,509
90,175 812 15,123 45,171 832 152,113
(5) (4) (37) (130) (1) (177)
7,687 74 1,088 11,796 202 20,847
0 0 0 1,114 0 1,114
5,101 0 (5,101) 0 0 0
0 (7) (3,657) (11,975) (225) (15,864)
102,958 875 7,416 45,976 808 158,033
168,255 1,176 6,409 23,235 401 199,476
Freehold Other Leasehold Office Motor Totalbank freehold improve- equipment vehicles
premises property ments
155,902 2,439 30,216 63,202 1,890 253,649
0 (27) (302) (756) (19) (1,104)
14,360 11 3,471 8,302 305 26,449
0 0 45 77 0 122
0 24 (24) 0 0 0
0 0 (590) (1,755) (451) (2,796)
170,262 2,447 32,816 69,070 1,725 276,320
85,980 731 12,169 36,546 717 136,143
0 (3) (60) (431) (17) (511)
4,195 84 3,086 10,191 314 17,870
0 0 45 57 0 102
0 0 (117) (1,192) (182) (1,491)
90,175 812 15,123 45,171 832 152,113
80,087 1,635 17,693 23,899 893 124,207
2009 2008
338,356 389,808
38
17 Intangible assets (TCHF)
Cost
At 1 January 2009
Currency translation
Additions
Disposals
At 31 December 2009
Accumulated amortization and impairment
At 1 January 2009
Currency translation
Charge for the year
Disposals
At 31 December 2009
Net book value at 31 December 2009
Intangible assets (TCHF)
Cost
At 1 January 2008
Currency translation
Additions
Disposals
At 31 December 2008
Accumulated amortization and impairment
At 1 January 2008
Currency translation
Charge for the year
Disposals
At 31 December 2008
Net book value at 31 December 2008
Goodwill
Goodwill is allocated to the following organizational units (cash-generating units; CGUs) based on the anticipated synergies:
LGT Bank (Schweiz) AG, Basel
LGT Capital Partners AG, Pfäffikon
Total
The two organizational units represent the level at which the goodwill is monitored for internal management purposes.
The calculation of the realizable amount of the units was based on the respective fair value less costs to sell. The level of the premium
for client assets was determined on the market prices of companies with similar business activities, for 2009 in the range of 2-4%.
The realizable amount exceeded the book value of all units, so that an impairment was considered unnecessary. An additional
calculation of the realizable amount of the two organizational units based on their value in use was therefore not determined.
Notes to the consolidated financial statements
Goodwill Software Other Totalintangible assets
112,955 117,378 23,354 253,687
0 0 (164) (164)
35,047 32,906 24,736 92,689
0 0 0 0
148,002 150,284 47,926 346,212
0 0 458 458
0 0 (3) (3)
0 13,274 1,580 14,854
0 0 0 0
0 13,274 2,035 15,309
148,002 137,010 45,891 330,903
Goodwill Software Other Totalintangible assets
100,470 46,471 10,102 157,043
0 0 (486) (486)
12,485 70,907 13,738 97,130
0 0 0 0
112,955 117,378 23,354 253,687
0 0 0 0
0 0 0 0
0 0 458 458
0 0 0 0
0 0 458 458
112,955 117,378 22,896 253,229
2009 2008
135,517 100,470
12,485 12,485
148,002 112,955
39
18 Other assets (TCHF)
Precious metals
Client settlement accounts
Pensions
Other
Total other assets
19 Amounts due to banks (TCHF)
Deposits on demand
Time deposits
Total amounts due to banks
20 Amounts due to customers (TCHF)
Deposits on demand
Time deposits
Savings deposits
Total amounts due to customers
21 Financial liabilities designated at fair value (TCHF)
Bond issues designated at fair value
Other liabilities designated at fair value
Total financial liabilities designated at fair value
There were no gains or losses attributable to changes in the credit risk for those financial liabilities designated at fair value in 2009 (2008: 0).
Notes to the consolidated financial statements
2009 2008
287,152 1,586
294 10,742
19,255 28,091
54,698 32,998
361,399 73,417
2009 2008
548,330 204,108
906,250 418,101
1,454,580 622,209
2009 2008
6,156,868 5,057,686
9,013,718 9,076,873
1,039,465 533,552
16,210,051 14,668,111
2009 2008
1,068,287 1,196,775
51,913 74,461
1,120,200 1,271,236
40
Bond issues designated at fair value at 31 December (TCHF)
Product Date of issue Nominal value Interest Maturity‘000 rate %
LGT GIM Index Certificates1 up to 2004 EUR – 28.02.2012
LGT GIM Index Certificates II 2 up to 2006 EUR – 30.06.2014
LGT GIM Index Certificates II/2 3 2006 EUR – 31.03.2016
LGT GIM Index Certificates III 4 up to 2008 EUR – 31.07.2016
LGT GIM Index Certificates IV 5 continuously EUR – 31.03.2018
Crown Performance Linked Notes I 6 28.01.2002 EUR – 27.01.2009
Crown Performance Linked Notes II 6 26.04.2002 USD – 28.05.2009
Crown Performance Linked Notes III 6 26.06.2002 EUR – 30.06.2009
Castle Private Equity Performance
Linked Notes 7 02.06.2003 USD – 02.06.2010
Crown Absolute Return Index
Certificates I 8 continuously EUR – 30.11.2013
Crown Absolute Return Index
Certificates II 9 continuously EUR – 30.06.2014
Crown Alternative SV Index Certificates 10 continuously EUR – 30.06.2017
Crown Alternative Bond Index
Certificates11 continuously EUR – 30.11.2017
LGT GATS Index Certificates12 continuously EUR – 30.09.2014
LGT Multi Manager Equity Emerging
Leaders Index Certificates13 continuously USD – 30.04.2016
LGT M-Smart Allocator Index
Certificates14 continuously EUR – 31.08.2017
LGT ex Equities Emerging Markets
Leaders Certificates15 continuously USD – 31.12.2027
LGT ex Equities GEM Index Certificates16 continuously USD – 31.12.2027
LGT ex Fixed Income Emerging Markets
Index Certificates17 continuously USD – 31.12.2027
LGT ex Hedge Funds GIM Index
Certificates18 continuously USD – 31.12.2027
LGT ex Hedge Funds GATS Index
Certificates19 continuously USD – 31.12.2027
LGT ex Private Equity IV Index
Certificates20 continuously USD – 31.12.2027
Total bond issues designated at fair value at 31 December
1 Linked to the performance of LGT Premium Strategy GIM (EUR) index administered by LGT Capital Management Ltd. with a duration from 2002 to 2012
incl. two 5-year extension options.2 Linked to the performance of LGT Premium Strategy GIM II (EUR) index administered by LGT Capital Management Ltd. with a duration from 2004 to 2014
incl. two 5-year extension options.3 Linked to the performance of LGT Premium Strategy GIM II (EUR) index administered by LGT Capital Management Ltd. with a duration from 2006 to 2016
incl. two 5-year extension options.4 Linked to the performance of LGT Premium Strategy GIM III (EUR) index administered by LGT Capital Management Ltd. with a duration from 2006 to 2016
incl. two 5-year extension options.5 Linked to the performance of LGT Premium Strategy GIM IV (EUR) index administered by LGT Capital Management Ltd. with a duration from 2008 to 2018
incl. two 5-year extension options.6 Linked to the performance of the Crown Absolute Return Diversified (USD) Class Fund.7 Linked to the Castle Note issued by Castle HoldCo Ltd. based on the performance of listed Castle Private Equity shares.8 Linked to the Crown Absolute Return I (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2003 to 2013 incl. two 5-year extension options.9 Linked to the Crown Absolute Return II (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2004 to 2014 incl. two 5-year extension options.
10 Linked to the Crown Alternative SV (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2017 incl. two 5-year extension options.11 Linked to the Crown Alternative Bond (EUR) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2017 incl. two 5-year extension options.
Notes to the consolidated financial statements
Fair Fairvalue value2009 2008
66,906 99,237 100,578
215,796 320,073 318,317
53,621 79,532 69,335
141,642 210,086 199,282
705 1,045 414
0 0 1,987
0 0 7,664
0 0 26,032
9,373 9,650 5,603
4,426 6,564 50,304
1,347 1,998 3,181
30,138 44,701 70,503
155 230 4,397
63,584 94,309 104,386
0 0 13,506
32,563 48,298 39,143
9,950 10,244 7,176
11,988 12,342 12,124
28,420 29,260 24,382
60,977 62,779 75,316
31,884 32,826 50,081
4,966 5,113 13,064
1,068,287 1,196,775
41
22 Certificated debt (TCHF)
Bond issues (net book value)1
Subordinated cash bonds (fixed-rate medium term notes)2
Other cash bonds (fixed-rate medium term notes)
Total certificated debt
1 Net book value of bond issues is calculated using the effective interest method. Bonds held by LGT Group companies are eliminated.2 Interest 2009 is payable on the subordinated cash bonds at various rates ranging from 2.0625% to 4.15%. The interest charge for the year on these bonds
was 115 (2008: 116).
Bond issues at 31 December (TCHF)
Issuer Date of issue Nominal value Interest Maturityrate %
LGT Finance Limited 08.12.2004 CHF 150,000 2.00 08.12.2009
LGT Finance Limited 09.06.2006 CHF 250,000 2.625 09.06.2010
LGT Finance Limited 11.02.2004 CHF 200,000 2.50 11.02.2011
LGT Finance Limited 18.05.2005 CHF 250,000 2.00 18.05.2012
LGT Finance Limited 08.10.2009 CHF 250,000 2.125 08.07.2013
LGT Finance Limited 10.02.2006 CHF 250,000 2.25 10.02.2014
LGT Finance Limited 08.12.2009 CHF 300,000 2.75 08.12.2016
Total bond issues at 31 December
Notes to the consolidated financial statements
12 Linked to the performance of LGT Premium Strategy GATS (EUR) index administered by LGT Capital Management Ltd. with a duration from 2004 to 2014
incl. two 5-year extension options.13 Linked to the performance of LGT Multi Manager Equity Emerging Leaders (USD) index administered by LGT Capital Management Ltd. with a duration from 2006
to 2016 incl. two 5-year extension options.14 Linked to the LGT M-Smart Allocator (EUR) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2017 incl. two 5-year extension options.15 Linked to the LGT ex Equity Emerging Markets II (USD) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2027 incl. two 5-year exten-
sion options.16 Linked to the LGT ex Equity Emerging Markets III (USD) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2027 incl. two 5-year
extension options.17 Linked to the LGT ex Fixed Income Emerging Markets II (USD) index administered by LGT Capital Management Ltd. with a duration from 2007 to 2027 incl. two 5-year
extension options.18 Linked to the LGT ex Hedge Funds GIM IU (USD) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2027 incl. two 5-year extension
options.19 Linked to the LGT ex Hedge Funds GATS IU (USD) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2027 incl. two 5-year extension
options.20 Linked to the LGT ex Private Equity IV (USD) index administered by LGT Capital Partners Ltd. with a duration from 2007 to 2027 incl. two 5-year extension options.
2009 2008
1,482,525 1,004,476
3,170 3,202
186,622 255,530
1,672,317 1,263,208
Net book Net bookvalue value2009 2008
0 145,743
249,516 225,234
199,847 186,326
248,974 230,516
249,113 0
244,149 216,657
290,926 0
1,482,525 1,004,476
42
23 Other liabilities (TCHF)
Capital tax
Amounts due to long-term incentive scheme
Amounts due to bonuses
Client settlement accounts
Other
Total other liabilities
24 Provisions (TCHF)
At 1 January
Current year expense
Provisions released
Provisions utilized
Currency translation
Other changes due to acquisition
At 31 December
25 Other reserves (TCHF)
Revaluation reserves – investments in associates
Revaluation reserves – available-for-sale securities
Revaluation reserves – cash flow hedge
Total other reserves
Revaluation reserves – investments in associates
At 1 January
Net gain/(loss) from change in fair value
At 31 December
Revaluation reserves – available-for-sale securities
At 1 January
Net gain/(loss) from change in fair value
Deferred income tax
At 31 December
Revaluation reserves – cash flow hedge
At 1 January 9,873
Net gain/(loss) from change in fair value 195
At 31 December 10,068
Notes to the consolidated financial statements
2009 2008
6,099 5,748
17,785 35,347
120,672 125,515
0 91
99,169 70,013
243,725 236,714
2009 2008
61,364 42,297
29,544 30,932
(21,366) (10,124)
(4,959) (1,739)
(114) (331)
43,803 329
108,272 61,364
2009 2008
846,687 545,092
6,232 (59,794)
10,068 9,873
862,987 495,171
545,092 1,329,766
301,595 (784,674)
846,687 545,092
(59,794) (12,522)
64,923 (46,055)
1,103 (1,217)
6,232 (59,794)
(1,206)
11,079
9,873
43
26 Contingent assets, contingent liabilities, commitments andfiduciary transactions (TCHF)
Contingent assets
Contingent liabilities
Committed credit lines and other commitments
of which irrevocable commitments
Fiduciary transactions
Fiduciary investments
Fiduciary loans and other financial transactions in a fiduciary capacity
Total fiduciary transactions
Information about derivative financial instruments is shown separately in note 30.
27 Pledged and assigned assets/assets subject to reservation of ownership, which are used to secure own liabilities (TCHF)1
Book value of pledged and assigned assets (as collateral)
of which investment securities
of which financial assets designated at fair value
Actual commitments
There are no assets subject to reservation of ownership.
The assets are pledged for commitments in respect of Lombard limits at central banks, for securities deposits relating to X-Clear/Swiss Stock Exchange and limits
for cash settlement of securities transactions with EUROCLEAR BANK SA.
28 Lending transactions and pension transactions with securities (TCHF)1
Claims from cash deposits in connection with securities borrowing and
reverse repurchase transactions
Liabilities from cash deposits in connection with securities lending and
repurchase transactions
Own securities lent or provided as collateral within the scope of securities
lending or borrowing transactions, as well as own securities transferred from
repurchase transactions
of which capable of being resold or further pledged without restrictions
Securities borrowed or accepted as collateral within the scope of securities
lending or borrowing transactions, as well as securities received from reverse
repurchase transactions, which are capable of being resold or further
pledged without restrictions
of which resold or further pledged
1 These transactions are conducted under terms that are usual and customary to standard lending, and securities borrowing and lending activities, as well as
requirements determined by exchanges where the bank acts as an intermediary.
Notes to the consolidated financial statements
2009 2008
4,333 4,333
412,752 301,078
218,817 228,204
218,817 228,204
5,475,219 5,588,851
4,900 128,538
5,480,119 5,717,389
2009 2008
480,031 524,875
263,489 340,410
216,542 184,465
299,566 347,861
2009 2008
0 0
0 0
921,545 64,032
371,573 64,032
5,180,165 661,294
424,680 57,932
44 Notes to the consolidated financial statements
29 Financial instruments measured at fair value (TCHF)
Fair value hierarchy
IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or
unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Group’s
market assumptions. These two types of inputs have created the following fair value hierarchy:
Level 1
Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities and debt
instruments on exchanges and exchange traded derivatives.
Level 2
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices). This level includes investments in hedge funds, mutual funds, the majority of OTC
derivative contracts and structured debt.
Level 3
Inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level includes mainly
private equity investments, issued structured debt as well as equity investments with significant unobservable components.
This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market
prices in its valuations where possible.
Fair value measurement at the end of the period
Assets
Securities held for trading purposes
Derivative financial instruments
Financial assets designated at fair value
Available-for-sale securities
Total assets measured at fair value
Liabilities
Derivative financial instruments
Financial liabilities designated at fair value
Total liabilities measured at fair value
There have been no transfers from Level 2 to Level 1 and vice versa.
2009Level 1 Level 2 Level 3 Total
21,266 52,102 250 73,618
53 829,322 0 829,375
1,700,786 1,294,940 9,715 3,005,441
1,174,643 1,607,803 4,130 2,786,576
2,896,748 3,784,167 14,095 6,695,010
11 803,607 0 803,618
0 1,120,200 0 1,120,200
11 1,923,807 0 1,923,818
45Notes to the consolidated financial statements
Reconciliation of Level 3 items
Assets
At 1 January
Total gains or losses
thereof in profit or loss
thereof in other comprehensive income
Purchases
Sales
Redemptions
Transfers in/out of Level 3
At 31 December
There have been no transfers either in or out of Level 3 in 2009.
Gains or losses included in profit or loss for financial instruments measured at fair value based on Level 3
Total gains or losses included in profit or loss for the period
Total gains or losses for the period included in profit or loss
for assets/liabilities held at the end of the reporting period
Securities held Financial assets Available-for- 2009for trading designated at sale securities Total
purposes fair value
0 6,732 39,570 46,302
10 938 (3,431) (2,483)
10 938 (2,363) (1,415)
0 0 (1,068) (1,068)
240 3,368 13,555 17,163
0 0 (44,066) (44,066)
0 (1,323) (1,498) (2,821)
0 0 0 0
250 9,715 4,130 14,095
2009
(1,415)
1,357
46 Notes to the consolidated financial statements
30 Derivative financial instruments
In the normal course of business, LGT Group and its subsidiaries use various derivative financial instruments to meet the financial
needs of their customers, to generate revenues through trading and market-making activities, and to manage their exposure to
fluctuations in interest and foreign exchange rates. Derivatives used for trading purposes include foreign exchange forwards, stock
options and warrants as well as forward rate agreements (FRAs). Within the context of asset and liability management, interest
rate swaps are primarily employed. Foreign exchange and precious metal OTC options are entered into for customer transactions
only. LGT Group controls the credit risk from derivative financial instruments through its credit approval process and the use of
control limits and monitoring procedures. LGT Group uses the same credit procedures when entering into derivatives as it does for
traditional lending products.
The following table summarizes the total outstanding volumes in derivative financial instruments. Positive and negative replace-
ment values are stated at gross values, without taking into consideration the effect of master netting agreements.
Types of derivativefinancial instruments heldfor trading (TCHF)
Interest rate products
Interest rate swaps
Interest rate OTC options
Foreign exchange products
Foreign exchange forwards
Foreign exchange swaps
Foreign exchange OTC options
Precious metal products
Precious metal forwards
Precious metal swaps
Precious metal OTC options
Derivatives on shares and indices
Futures
Other products
Total contracts
Types of derivativefinancial instruments heldfor hedging (TCHF)
Interest rate products
Interest rate swaps
2009 2008Notional Positive Negative Notional Positive Negativeamount replacement replacement amount replacement replacement
value value value value
736,071 7,385 13,319 817,736 3,383 8,758
0 0 0 6,000 0 0
69,652,755 781,235 762,159 72,468,986 2,083,720 1,886,474
0 0 0 22,476 2,399 213
645,933 3,284 3,309 266,097 9,140 9,304
345,764 21,815 1,064 656,223 16,018 17,342
295,790 3,045 19,592 0 0 0
112,508 1,455 1,459 70,972 1,491 1,478
48,156 53 11 0 0 0
6,078 1,035 2,705 6,732 0 1,107
71,843,055 819,307 803,618 74,315,222 2,116,151 1,924,676
2009 2008Notional Positive Negative Notional Positive Negativeamount replacement replacement amount replacement replacement
value value value value
320,000 10,068 0 240,000 9,963 0
47Notes to the consolidated financial statements
31 Capital resources
Capital adequacy and the use of capital are monitored by the Group and by individual operating units, employing techniques
based on the guidelines developed by the Basel Committee on Banking Supervision and implemented by the Liechtenstein
Government for supervisory purposes.
The Basel Committee guidelines require minimum risk ratios for all international banks of 8%. These ratios measure capital ade-
quacy by comparing the Group’s eligible capital with balance sheet assets, off-balance sheet commitments and market positions
at weighted amounts to reflect their relative risk. Assets are weighted according to broad categories of notional risk, first being
multiplied by a conversion factor and then being assigned a risk weighting according to the amount of capital deemed to be
necessary for them. Off-balance sheet commitments and default risk positions are also multiplied and risk-weighted. Market risk
is calculated with the standard approach.
The Group and its individually regulated operations have complied with all externally imposed capital requirements throughout
the period.
The following table analyzes the Group’s capital resources as defined for regulatory purposes.
Capital adequacy data (TCHF)
Total tier 1 capital
Total tier 2 capital
Less supervisory deductions1
Total net capital resources
Risk-weighted assets (TCHF)
On-balance sheet
Off-balance sheet
Default risk positions 2
Market risk in trading 3
Operational risk 4
Total risk-weighted assets
Capital ratios
Tier 1 ratio
Risk asset ratio
1 Mainly intangible assets.2 Forwards and long positions in securities, money market instruments and options. 3 Risk-weighted figure calculated by taking 12.5 times the capital adequacy requirement according to the standard approach.4 For the assessment of operational risk LGT Group uses the basic indicator approach.
2009 2008
2,672,282 2,341,397
756 1,346
(330,903) (253,229)
2,342,135 2,089,514
4,969,689 5,326,428
309,184 497,432
4,618,314 4,902,577
1,305,463 624,075
1,461,995 1,340,904
12,664,645 12,691,416
18.5% 16.5%
18.5% 16.5%
48
32 Subsidiaries
The Group’s principal subsidiary undertakings at 31 December 2009 were:
Name Principal activity Registered office Ownershipinterest in %
of ordinary shares held1
LGT Bank in Liechtenstein Ltd. Banking and investment Vaduz – Liechtenstein 100.0
management
LGT Swiss Life Non Traditional Advisers Ltd. Investment advisers Vaduz – Liechtenstein 56.3
LGT Private Equity Advisers Ltd. Investment advisers Vaduz – Liechtenstein 60.0
LGT Capital Management Ltd. Investment management Vaduz – Liechtenstein 100.0
LGT Funds Ltd. Investment advisers Vaduz – Liechtenstein 100.02
LGT Funds II Ltd. Investment advisers Vaduz – Liechtenstein 100.02
LGT Investments Ltd. Investment advisers Vaduz – Liechtenstein 100.02
LGT Premium Strategy Ltd. Investment advisers Vaduz – Liechtenstein 100.02
LGT Fondsleitung Ltd. Investment advisers Vaduz – Liechtenstein 100.0
LGT Capital Partners Advisers Ltd. Investment advisers Vaduz – Liechtenstein 100.0
LGT Financial Services Ltd. Services company Vaduz – Liechtenstein 100.0
Castle HoldCo Ltd. Investment management Vaduz – Liechtenstein 100.0
LGT Audit Revisions AG 3 Audit services Vaduz – Liechtenstein 100.0
LGT Bank (Switzerland) Ltd. Banking and investment Basel and branches – Switzerland 100.0
management
Artinba Ltd. 4 Fine art services Basel – Switzerland 100.0
LGT Capital Management Ltd. Investment advisers Pfäffikon SZ – Switzerland 100.0
LGT Capital Partners Ltd. Investment advisers Pfäffikon SZ – Switzerland 100.0
LGT Holding International Ltd. Holding company Pfäffikon SZ – Switzerland 100.0
Dresdner Bank (Switzerland) Ltd. 5 Banking and investment Zurich – Switzerland 99.8
management
LGT Bank Deutschland & Co. OHG Banking and investment Frankfurt and branches – Germany 100.0
formerly LGT Bank in Liechtenstein & Co. OHG management
LGT Financial Consulting GmbH Consulting Frankfurt – Germany 100.0
Crown Verwaltungsgesellschaft mbH Investment advisers Munich – Germany 50.0
LGT Bank (Österreich) AG Banking and investment Vienna – Austria 100.0
management
LGT Capital Partners (U.K.) Ltd. Fund distribution London – United Kingdom 100.0
LGT Bank (Ireland) Ltd. Banking Dublin – Ireland 100.0
LGT Capital Partners (Ireland) Ltd. Investment advisers Dublin – Ireland 100.0
LGT Fund Managers (Ireland) Ltd. Fund services Dublin – Ireland 100.0
Notes to the consolidated financial statements
49
Name Principal activity Registered office Ownershipinterest in %
of ordinary shares held1
LGT Holding Denmark ApS Holding company Copenhagen – Denmark 100.0
LGT Bank (Singapore) Ltd. Banking and investment Singapore 100.0
formerly LGT Bank in Liechtenstein (Singapore) Ltd. management
LGT Trust (Singapore) Ltd. Trust services Singapore 100.0
LGT Management Services Trust services Singapore 100.0
(Singapore) Pte. Ltd.
LGT Investment Management (Asia) Ltd. Consulting and advisers Hong Kong – China 100.0
LGT Management Services (HK) Ltd. Trust services Hong Kong – China 100.0
LGT Capital Partners (Asia-Pacific) Ltd. Investment management Hong Kong – China 100.0
LGT Investment Management (Japan) KK Consulting and advisers Tokyo – Japan 100.0
LGT Holding (Malaysia) Ltd. Holding company Labuan – Malaysia 100.0
LGT Capital Partners (USA) Inc. Research services New York – USA 100.0
LGT Bank in Liechtenstein (Cayman) Ltd. Banking and investment Grand Cayman – Cayman Islands 100.0
management
LGT Finance Ltd. Financing Grand Cayman – Cayman Islands 100.0
LGT Investments Ltd. Investment management Grand Cayman – Cayman Islands 100.0
LGT Global Invest Ltd. Investment management Grand Cayman – Cayman Islands 100.0
LGT Participations Ltd. Investment management Grand Cayman – Cayman Islands 100.0
LGT Certificates Ltd. Investment management Grand Cayman – Cayman Islands 100.0
KGR Capital Management Ltd. Investment management Grand Cayman – Cayman Islands 100.0
1 Ownership interest equals voting interest.2 Companies with variable share capital structure, only part of fund manager fully consolidated.3 Formerly held via LGT Treuhand AG, which was sold as per 1 January 2009.4 Formerly held via Gérance Holding SA, which was sold as per 1 January 2009.5 Acquisition as per 1 December 2009.
LGT Treuhand AG, LGT Trust Management Ltd., LGT Schweizerische Treuhandgesellschaft, STG Schweizerische Treuhandgesellschaft, LGT (Latin America) S.A.,
LGT Trust & Management Services S.A., LGT Consultora y Administradora S.A. as well as Gérance Holding SA were sold as per 1 January 2009.
Notes to the consolidated financial statements
50
Operating segments at 31 December 2009(TCHF)
Total external operating income
Total internal operating income1
Total segment operating income (total revenue)
Operating expenses
Segment result before tax
Tax expense2
Minority interests
Net profit of LGT Group
Net interest and similar income3
Income from services
Income from trading activities
Depreciation
Credit (losses) recoveries
Change in provisions and other losses
Profit/(loss) of associates
Headcount
Assets under administration in CHFm 4
Segment assets
Segment liabilities
Investments in associates
Goodwill and other intangible assets
Capital expenditure
Operating segments at 31 December 2008(TCHF)
Total external operating income
Total internal operating income1
Total segment operating income (total revenue)
Operating expenses
Segment result before tax
Tax expense2
Minority interests
Net profit of LGT Group
Net interest and similar income3
Income from services
Income from trading activities
Depreciation
Credit (losses) recoveries
Change in provisions and other losses
Profit/(loss) of associates
Headcount
Assets under administration in CHFm 4
Segment assets
Segment liabilities
Investments in associates
Goodwill and other intangible assets
Capital expenditure
33 Operating segments
Headquartered in Vaduz, Principality of Liechtenstein, LGT
Group is the Wealth & Asset Management Group of the
Princely House of Liechtenstein. The Group’s segmental
reporting comprises the five operating business units Wealth
Management International, Wealth Management Asia,
Traditional Asset Management, Alternative Asset Manage -
ment and Operations & Technology. The remaining not
directly connected revenue and expenses including consoli-
dation adjustments are shown under Corporate Center.
LGT’s reportable segments are strategic business units that
offer different products and services to external and internal
customers. They are managed separately because each business
unit requires different technology and marketing strategies.
The segment reporting reflects the internal management
structure. The segments are based upon the products and
services provided or the type of customer served, and they
reflect the manner in which financial information is currently
evaluated by management. Results of these lines of business
are presented on a managed basis. Both the external and the
internal reports are prepared in accordance with International
Financial Reporting Standards (IFRS).
Wealth Management International and Wealth Management
Asia offer private clients comprehensive wealth management
services around the world. Traditional Asset Managment
(LGT Capital Management) is a specialist in the allocation of
assets and selection of investment managers, and manages
and monitors a wide range of investment funds. Alternative
Asset Management (LGT Capital Partners) is a specialist in
the alternative asset classes of hedge funds and private
equity. Operations & Technology (LGT Financial Ser vices) is
the IT and business service provider.
The accounting policies of the operating segments are the
same as those described in the summary of the Group
accounting principles. Income and expenses are assigned to
the individual business lines in accordance with current market
prices and based on the client relationships. Indirect costs
resulting from services provided internally are accounted for
according to the principle of causation and are recorded as
a revenue increase for the service provider and as a cost
increase for the service beneficiary. Depreciation and pro -
visions are stated at effective costs.
Information about the revenues from external customers for
each product and service, or group of similar products and
services, is not available and the cost to develop it would
be excessive.
1 Revenue from transactions with other segments at market prices.2 The Group does not allocate tax expense (tax income) to reportable segments.3 Management primarily relies on net interest income, not the gross income and expense, in managing the segments.4 Assets under administration include double-counted assets and LGT’s Princely Portfolio.5 Corporate Center includes the net result of the Princely Portfolio, net Group financing cost, the cost of all Group functions and consolidation adjustments.
Notes to the consolidated financial statements
Wealth Manage-ment International
618,849
16,872
635,721
(432,962)
202,759
169,477
313,098
145,109
(5,589)
(2,746)
(11,751)
0
1,091
51,844
28,748,393
25,149,728
0
164,125
23,078
Wealth Manage-ment International
688,113
5,748
693,861
(451,640)
242,221
161,490
419,063
109,502
(4,215)
(7,986)
(12,061)
0
993
43,498
27,017,534
23,810,210
0
100,470
19,896
51Notes to the consolidated financial statements
Wealth Manage- Traditional Asset Alternative Asset Operations & Corporate Groupment Asia Management Management Technology Center5
69,380 15,112 73,576 9,347 (7,231) 779,033
480 40,075 20,690 120,912 (199,029) 0
69,860 55,187 94,266 130,259 (206,260) 779,033
(73,313) (57,652) (74,619) (121,391) 136,604 (623,333)
(3,453) (2,465) 19,647 8,868 (69,656) 155,700
(45,192)
(4,974)
105,534
12,846 (60) (24) 3,905 (19,759) 166,385
49,634 55,724 92,301 122,526 (193,679) 439,604
5,994 (666) (160) 1,281 19,797 171,355
(983) (24) (2,212) (18,564) (8,329) (35,701)
(30) 0 0 0 6,466 3,690
(174) 0 0 0 (1,735) (13,660)
0 0 0 0 301,595 301,595
186 125 152 280 151 1,985
8,682 13,424 13,214 0 1,859 89,023
1,730,855 72,431 108,284 395,854 (6,262,346) 24,793,471
1,449,999 45,611 77,338 292,374 (5,179,956) 21,835,094
0 0 0 0 2,419,334 2,419,334
0 0 21,360 145,418 0 330,903
1,672 0 562 7,114 0 32,426
Wealth Manage- Traditional Asset Alternative Asset Operations & Corporate Groupment Asia Management Management Technology Center5
88,822 16,359 92,661 5,547 (103,227) 788,275
2,080 51,459 28,994 106,230 (194,511) 0
90,902 67,818 121,655 111,777 (297,738) 788,275
(78,419) (49,446) (75,428) (96,389) 163,332 (587,990)
12,483 18,372 46,227 15,388 (134,406) 200,285
(30,228)
(7,339)
162,718
15,117 1,208 1,184 2,861 (59,207) 122,653
69,829 66,987 118,807 108,163 (196,425) 586,424
4,151 (350) (228) 293 (40,341) 73,027
(682) (1) (2,119) (6,078) (5,233) (18,328)
(47) 0 0 0 (546) (8,579)
(164) 0 (56) 0 (13,775) (26,056)
0 0 0 0 (784,674) (784,674)
194 121 157 269 136 1,870
7,449 10,857 14,374 0 1,852 78,030
1,646,678 82,406 115,336 471,564 (6,538,114) 22,795,404
1,416,613 47,889 75,923 374,243 (5,490,151) 20,234,727
0 0 0 0 2,117,739 2,117,739
0 0 25,765 126,994 0 253,229
591 0 958 5,004 0 26,449
52
Geographical information at 31 December 2009 (TCHF)
Liechtenstein
Switzerland
Other Europe
Americas2
Asia
Group
Geographical information at 31 December 2008 (TCHF)
Liechtenstein
Switzerland
Other Europe
Americas2
Asia
Group
1 Revenues are attributed to countries/regions on the basis of the LGT Group companies domicile.2 Revenues: mainly fee income from Class Funds.
Notes to the consolidated financial statements
Revenues1 Capital expenditure
373,672 23,460
67,250 6,316
36,095 917
286,094 30
15,922 1,703
779,033 32,426
929,588 19,422
76,267 4,416
17,988 1,155
(246,277) 708
10,709 748
788,275 26,449
53
34 Client assets under administration (CHF m)
Client assets under administration (excluding Princely Portfolio) which are stated according to the provisions of the Liechtenstein
banking law are as follows:
Client assets in own-managed funds
Client assets under management
Other client assets under administration
Total client assets under administration (including double counting)
thereof double counting
Net asset inflow
thereof net new money
thereof through acquisition
Client assets in own-managed funds
This item covers the assets of all the actively marketed investment funds of LGT Group.
Client assets under management
The calculation of assets with management mandate takes into account client deposits as well as the market value of securities,
loan-stock rights, precious metals and fiduciary investments placed with third-party institutions. The information covers both assets
deposited with Group companies and assets deposited at third-party institutions for which Group companies hold a discretionary
mandate.
Other client assets under administration
The calculation of other client assets under administration takes into account client deposits as well as the market value of securities,
loan-stock rights, precious metals and fiduciary investments placed with third-party institutions. The information covers assets for
which an administrative or advisory mandate is exercised.
Double counting
This item covers investment fund units from own-managed funds as well as certain assets that are included in client assets under
management.
Custodian assets
Custodian assets are excluded.
Notes to the consolidated financial statements
2009 2008
20,332 19,599
22,161 21,088
44,111 35,225
86,604 75,912
13,563 13,383
4,550 (1,265)
(3,651) (1,265)
8,201 0
54
35 Pensions
Principal actuarial assumptions
Discount rate
Expected net return on plan assets
Average future salary increases
Future pension increases
Mortality tables used
Average retirement age
Employees covered by the major plans1
Retirees covered by the major plans
The average life expectancy in years of a pensioner retiring at age 60 is as follows:
Male
Female
Balance sheet (end of year)
Fair value of plan assets
Defined benefit obligation
Funded status
Unrecognized asset due to IAS 19.58
Unrecognized past service cost
Unrecognized actuarial (gain)/loss
Net asset/(liability)
Income statement
Service cost
Past service cost
Interest cost
Expected return on plan assets
Net actuarial gain/(loss) recognized in year
Curtailment
Change of unrecognized asset
Employees’ contributions
Net pension expenses
Actual return on plan assets
Movement in the asset/(liability) recognized in the balance sheet
At 1 January
Change in consolidation scope
Net pension expenses
Employer’s contributions
At 31 December
Prepaid/(accrued) pension cost 2
1 Apprentices, trainees and certain part-time employees are not covered by the plans.2 i.e. the net of employer’s contributions and net pension expenses.
Notes to the consolidated financial statements
2009 2008
3.50% 3.50%
5.00% 5.00%
1.00% 1.00%
0.50% 0.50%
BVG 2000 BVG 2000
60/60 60/60
1,528 1,544
372 339
21.8 21.8
25.5 25.5
719,063 557,438
(813,508) (736,398)
(94,445) (178,960)
0 0
13,402 0
100,298 207,051
19,255 28,091
(37,318) (34,427)
(113) 0
(25,796) (24,098)
26,348 32,755
(11,842) (24,755)
(1,274) 0
0 24,219
15,990 17,435
(34,005) (8,871)
105,250 (149,196)
28,091 7,273
(1,744) 0
(34,005) (8,871)
26,913 29,689
19,255 28,091
(7,092) 20,818
55
Movement in the defined benefit obligation
At 1 January
Change in consolidation scope
Current service cost
Past service cost
Interest cost
Curtailment
Actuarial gains/(losses)
Benefits paid
At 31 December
Movement in the fair value of plan assets
At 1 January
Change in consolidation scope
Expected return on plan assets
Actuarial gains/(losses)
Employer’s contributions
Employees’ contributions
Benefits paid
At 31 December
Major categories of plan assets as a percentage of the fair value of total plan assets
Equity instruments
Debt instruments
Property
Alternative investments
Cash
Other
The plan assets include property occupied by the Group with a fair value of 16,822 (2008: 16,737).
The expected return on plan assets is determined by considering the expected returns available on the assets underlying the current
investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date.
Expected returns on equity and property investments reflect long-term real rates of return experienced in the respective markets.
The history of the plans for the current and prior periods is as follows:
Present value of defined benefit obligation
Fair value of plan assets
Surplus/(deficit) in the plan
Experience adjustments on plan liabilities
Experience adjustments on plan assets
The Group expects to contribute 26,786 to its defined benefit pension plans in 2010 (2009: 30,153).
The measurement date for the Group’s defined benefit plans is 31 December.
Notes to the consolidated financial statements
2009 2008
(736,398) (650,498)
(68,970) 0
(37,318) (34,427)
0 0
(25,796) (24,098)
(1,274) 0
16,009 (20,201)
40,239 (7,174)
(813,508) (736,398)
557,438 652,336
53,711 0
26,348 32,755
78,902 (181,951)
26,913 29,689
15,990 17,435
(40,239) 7,174
719,063 557,438
29% 26%
29% 37%
19% 18%
19% 15%
2% 3%
1% 1%
2009 2008 2007 2006 2005
(813,508) (736,398) (650,498) (559,896) (508,121)
719,063 557,438 652,336 567,662 499,008
(94,445) (178,960) 1,838 7,766 (9,113)
16,009 (20,201) (43,355) (7,507) (19,136)
78,902 (181,951) 17,029 10,765 37,462
56
36 Long-term incentive scheme
Movements in the number of options outstanding
Number of seriesYear of issueDuration fromDuration to
At 1 January 2009
Granted
Exercised
Lapsed
At 31 December 2009
Number of seriesYear of issueDuration fromDuration to
At 1 January 2008
Granted
Exercised
Lapsed
At 31 December 2008
Options outstanding at the end of the year were as follows:
Number of series Year of issue Expiry date Exercise price (CHF)
5 2003 1.4.2010 22,779
6 2004 1.4.2011 22,541
7 2005 1.4.2012 25,769
8 2006 1.4.2013 28,194
9 2007 1.4.2014 32,634
10 2008 1.4.2015 37,061
11 2009 1.4.2016
In 2009, the fair value changes of the options of 12,743 were charged to personnel expenses. In 2008, the fair value changes of
the options of 36,043 were released from personnel expenses.
Significant inputs to determine the fair value of the options are the economic value added as described in the Group accounting
principles under employee medium-term benefits and the exercise price shown above.
Notes to the consolidated financial statements
5 6 7 8 9 10 11 Total2003 2004 2005 2006 2007 2008 2009
1.4.03 1.4.04 1.4.05 1.4.06 1.4.07 1.4.08 1.4.091.4.10 1.4.11 1.4.12 1.4.13 1.4.14 1.4.15 1.4.16
298 680 1,332 2,876 3,049 3,103 0 11,338
0 0 0 0 0 0 3,070 3,070
(284) (654) (1,236) (2,196) 0 0 0 (4,370)
0 0 0 (10) (143) (161) (37) (351)
14 26 96 670 2,906 2,942 3,033 9,687
5 6 7 8 9 10 Total2003 2004 2005 2006 2007 2008
1.4.03 1.4.04 1.4.05 1.4.06 1.4.07 1.4.081.4.10 1.4.11 1.4.12 1.4.13 1.4.14 1.4.15
1,698 2,132 2,805 2,947 3,172 0 12,754
0 0 0 0 0 3,193 3,193
(1,397) (1,448) (1,463) 0 0 0 (4,308)
(3) (4) (10) (71) (123) (90) (301)
298 680 1,332 2,876 3,049 3,103 11,338
2009 2008
14 298
26 680
96 1,332
670 2,876
2,906 3,049
2,942 3,103
3,033 0
9,687 11,338
57
37 Related-party transactions (TCHF)
The following emoluments were made by the Group to the members of the Foundation Board
and to Group and business unit executives during the year.
Total emoluments of Foundation Board members
Salaries and bonuses
Long-term incentive scheme
Total emoluments of Group and business unit executives
The following loans, advances and commitments made by the Group to and on behalf
of the above-mentioned related parties were outstanding at year-end
Advances
Mortgages and other loans
Total
Hedge fund and private equity coinvestment plan of senior LGT managers
Each year the employees of LGT Capital Partners Ltd., which acts as investment manager for LGT’s alternative assets investment
vehicles, and members of LGT Group’s management are invited to invest in the same private equity and hedge fund investments
as LGT’s customers. At 31 December 2009, LGT’s employees had committed a total of USD 38.4 million (2008: USD 41.1 million)
to the alternative investment coinvestment plans.
Transactions with the Prince of Liechtenstein Foundation
A number of Group transactions were concluded with the Prince of Liechtenstein Foundation (POLF), the beneficiary of the
LGT Group Foundation, in the normal course of business, including loans, deposits and other transactions. The transactions were
carried out at commercial terms and market rates and were reported as follows:
Deposits
Guarantees (put option)
Transactions with post-employment benefit plans
A number of Group transactions were concluded with post-employment benefit plans in the normal course of business, including
loans, deposits and other transactions. The transactions were carried out at commercial terms and market rates and were reported
as follows:
Deposits
Advances to and due to investments in associates
A number of Group transactions were concluded with investments in associates in the normal course of business, including loans,
deposits and other transactions. The transactions were carried out at commercial terms and market rates and were reported as
follows:
Loans
Financial assets at fair value and investment securities
Deposits
Notes to the consolidated financial statements
2009 2008
2,997 3,098
15,128 19,234
6,471 13,309
21,599 32,543
6,749 2,365
2,040 4,402
8,789 6,767
2009 2008
3,173 13,632
0 9,647
2009 2008
11,774 16,930
2009 2008
155,758 141,658
2,419,334 2,117,739
222,486 205,358
58
38 Business combinations (TCHF)
On 1 December 2009, 99,76% of the share capital and the voting rights of Dresdner Bank (Schweiz) AG (incl. subsidiary under -
takings) was acquired. Since this date, Dresdner Bank (Schweiz) AG with all its subsidiaries has been fully consolidated according
to the purchase method.
The company contributed 5,754 to operating income and 5,386 to LGT's Group profit in the period from 1 to 31 December 2009.
If the company had been already purchased on 1 January 2009, the operating income of LGT Group would have been amounted
to 871,327 and the Group profit to 117,375.
Details of the net assets acquired and goodwill are as follows:
Cash paid
Deferred payment
Direct costs relating to the acquisition
Total purchase price (provisional)
Fair value of net assets acquired
Total goodwill
The goodwill arising from the acquisition consists largely of the synergies expected from combining the operations of LGT and
Dresdner Bank (Schweiz) AG as well as the personnel know-how.
The assets and liabilities arising from the acquisition are as follows:
Cash in hand, balances with central banks
Loans and advances to banks
Loans and advances to customers
Derivative financial instruments
Other investment securities
Property and equipment
Intangible assets
Deferred tax assets
Other assets
Amounts due to banks
Amounts due to customers
Derivative financial instruments
Provisions
Deferred tax liabilities
Other liabilities
Net assets
Minority interests
Net assets acquired
Purchase price paid in cash or cash equivalents
Cash and cash equivalents in purchased entity
Cash outflow on acquisition
Notes to the consolidated financial statements
289,413
(903)
4,716
293,226
258,179
35,047
Book value Step-up to Fair valuefair value
150,985 150,985
669,709 669,709
538,468 538,468
3,867 3,867
121,874 3,381 125,255
41,027 26,451 67,478
0 24,736 24,736
0 382 382
19,868 (1,744) 18,124
96,075 96,075
1,153,055 1,153,055
3,409 3,409
80,293 (36,490) 43,803
0 15,150 15,150
28,771 28,771
184,195 74,546 258,741
(562)
258,179
289,413
150,985
(138,428)
59
Risk management framework and process
Risk is defined by the adverse impact on profitability of several distinct sources of uncertainty. Taking risk is inherent to the financial
business and an inevitable consequence of being in business. This note presents information about the Group’s risk exposure and the
objectives, policies and processes for measuring and managing the different risk categories.
The risk policy of LGT Group comprises two key elements. The risk strategy, which details the overall approach to risk-taking desired by
the Board, and risk principles, which translate the risk strategy into operating standards for both the risk organization and required risk
processes. The Group is exposed to various risks.
The aim is to achieve an appropriate balance between risk and return and minimize potentially adverse effects on the financial per-
formance of the Group. Based on this general guideline several risk management policies are designed to identify and analyze the
different risk categories, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of
reliable and up-to-date information systems.
The Foundation Board is responsible for the Group’s risk policy and its regular review. On a daily basis risk management is conducted
by the line management. The overall responsibility lies within the executive management teams of each business unit. The risk control-
ling unit oversees the risk-taking activities of the Group.
The five equivalent key elements of the LGT Group risk process are:
The control of risk is conducted outside of and independently of line management. LGT Group has one risk controlling team which
is responsible for risk supervising and risk reporting for the whole Group.
The most important types of risk LGT Group is exposed to are market risk, liquidity risk, credit risk and operational risk. Market risk
includes currency risk, interest rate and other price risk.
Additional information in the context of Basel II is shown under www.lgt.com.
Risk management
Notes to the consolidated financial statements
Risk identification Risk guidelines Risk management Risk control Risk review
Risk control/containment
Operational Market risk/ Credit Corporate Investment Wealth Mgt. risk Personnelrisk financing risk structure risk product risk client policies risk
Fraud Equity Counterparty Legal structure Performance Client acceptance Key people retention
Business practices Interest rates Concentration Tax Structures policy Incentives
Physical damage Foreign exchange Collateral Formal requirements Commitments Education
Execution, processes ALM Credit structures Asset management Succession
Employment practices Dividends Compliance Contracts
Workplace safety Equity capital Product concentration
Business disruption Liquidity Liquidity
Refinancing
Financing structure
Strategy/reputation/regulatory risk
60
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risks arise from open positions in interest rate, currency and equity products, all of which are exposed to general and
specific market movements and changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign
exchange rates and equity prices. The Group separates exposures to market risk into either trading or non-trading portfolios.
The market risk arising from trading and non-trading activities is monitored by Group Risk Controlling and for the trading portfolios by
the Risk Management of the Trading Department. Regular reports are submitted to Group Management and the heads of the business
units.
Trading portfolios also include those positions arising from market-making transactions where the Group acts as principal in the market.
Non-trading portfolios primarily arise from the interest rate management of the Group’s banking assets and liabilities. Non-trading
portfolios also consist of foreign exchange and equity risks arising from the Group’s held-to-maturity and available-for-sale investments.
Market risk measurement
As part of the management of market risk, the most important measurement category for the Group is the sensitivity analysis of its
trading and non-trading portfolios, to estimate the market risk of positions held, based on assumptions for changes in interest rates,
foreign exchange rates, equity prices and volatility. The Board sets limits on the total market value change that may be accepted for the
Group, trading and non-trading separately. These limits are monitored by Group Risk Controlling for the trading portfolios on a daily
basis, and for the non-trading portfolios on a monthly basis. On the basis of the sensitivity analysis the Group undertakes various
hedging strategies and also enters into interest rate swaps to match the interest rate risk associated with the fixed-rate debt securities
and loans to which the fair value option has been applied.
In addition, market risks on the trading portfolios are managed by limiting the volume and maximum loss accepted overall and by
position.
LGT Group performs stress tests to get an indication of the potential size of losses that could arise in extreme conditions. The stress
testing applies stress movements of each risk category and ad hoc stress testing, which includes applying possible stress events to
specific positions or regions. The stress testing is tailored to the business and typically uses scenario analysis.
Market risk organization and reporting
Responsibility for risk control lies with the AL Committee which defines basic principles for the refinancing activity of the LGT Group
(focussing on medium to long-term money) and advises the Group CEO on capital market transactions.
The control of the ALM risks is primarily applied by way of an active management of the repricing gaps in the different time bands.
Transactions carried out in the ALM area must be notified to the AL Committee by a representative of Group Risk Controlling at the
next meeting.
Notes to the consolidated financial statements
61Notes to the consolidated financial statements
Summary sensitivity analysis
Negative fair value change at 31 December 2009 (TCHF)
Trading portfolio/designated at fair value
Non-trading portfolios
Total
Negative fair value change at 31 December 2008 (TCHF)
Trading portfolio/designated at fair value
Non-trading portfolios
Total
Foreign exchange risk
The Group takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position
and cash flows. The Board sets limits on the level of exposure by currency and in aggregate for both overnight and intraday positions,
which are monitored daily.
Foreign exchange risk strategy and measurement
Exchange rate risk control is implemented within the framework of LGT Group’s overall appetite for risk. The aim of an appropriate
AL risk management system is to manage the exchange rate risk of LGT Group and the Group companies to optimum effect.
The limits must be applied using appropriate limit types to reflect the risk. In this context gap limits for limiting matching maturities
within specific maturity segments are used.
The following table summarizes the Group’s exposure to foreign currency exchange rate risk at 31 December. Included in the table are
the Group’s financial instruments at carrying amounts, categorized by currency.
Interest rate Foreign exchange Equity price+100 bp –20% –10%
4,133 186,785 4,815
31,326 334,921 22,443
35,459 521,706 27,258
Interest rate Foreign exchange Equity price+100 bp –20% –10%
11,321 384,359 15,261
36,663 154,645 2,417
47,984 539,004 17,678
62
Foreign exchange exposureat 31 December 2009 (TCHF)
Cash in hand, balances with central banks
Loans and advances to banks
Loans and advances to customers
Securities held for trading purposes
Financial assets designated at fair value
Available-for-sale securities
Held-to-maturity securities
Investments in associates
Remaining assets
Total assets
Amounts due to banks
Amounts due to customers
Financial liabilities designated at fair value
Certificated debt
Remaining liabilities
Total liabilities
Net foreign exchange exposure of balance sheet
Derivative financial instruments
Total net foreign exchange exposure
Foreign exchange exposureat 31 December 2008 (TCHF)
Cash in hand, balances with central banks
Loans and advances to banks
Loans and advances to customers
Securities held for trading purposes
Financial assets designated at fair value
Available-for-sale securities
Held-to-maturity securities
Investments in associates
Remaining assets
Total assets
Amounts due to banks
Amounts due to customers
Financial liabilities designated at fair value
Certificated debt
Remaining liabilities
Total liabilities
Net foreign exchange exposure of balance sheet
Derivative financial instruments
Total net foreign exchange exposure
Notes to the consolidated financial statements
Swiss Francs Euros US Dollars Other Total
704,608 38,033 2,026 2,107 746,774
1,188,063 3,720,449 2,461,514 846,685 8,216,711
3,205,367 582,743 1,400,964 501,888 5,690,962
16,542 29 57,047 0 73,618
995,755 1,259,493 340,806 409,387 3,005,441
1,113,670 486,375 448,192 738,339 2,786,576
1,998 0 0 0 1,998
2,419,334 0 0 0 2,419,334
1,428,413 64,687 79,372 279,585 1,852,057
11,073,750 6,151,809 4,789,921 2,777,991 24,793,471
695,081 428,115 103,388 227,996 1,454,580
4,134,320 5,227,997 5,038,828 1,808,906 16,210,051
0 957,986 162,214 0 1,120,200
1,672,317 0 0 0 1,672,317
1,338,850 24,826 11,332 2,938 1,377,946
7,840,568 6,638,924 5,315,762 2,039,840 21,835,094
3,233,182 (487,115) (525,841) 738,151 2,958,377
(551,440) 789,455 502,097 (716,595) 23,517
2,681,742 302,340 (23,744) 21,556 2,981,894
Swiss Francs Euros US Dollars Other Total
501,303 36,749 1,920 922 540,894
2,128,322 1,481,370 1,426,011 938,204 5,973,907
2,851,604 533,333 906,792 594,374 4,886,103
18,736 2,749 4,446 0 25,931
1,409,261 1,374,460 471,963 216,434 3,472,118
981,153 1,047,440 440,306 571,947 3,040,846
6,982 0 0 0 6,982
2,117,739 0 0 0 2,117,739
2,707,735 14,859 2,547 5,743 2,730,884
12,722,835 4,490,960 3,253,985 2,327,624 22,795,404
163,533 201,948 60,687 196,041 622,209
3,171,823 4,946,587 5,170,394 1,379,307 14,668,111
0 1,062,320 208,916 0 1,271,236
1,263,208 0 0 0 1,263,208
2,399,182 (4,183) 8,538 6,426 2,409,963
6,997,746 6,206,672 5,448,535 1,581,774 20,234,727
5,725,089 (1,715,712) (2,194,550) 745,850 2,560,677
(2,975,452) 1,797,536 2,111,454 (725,453) 208,085
2,749,637 81,824 (83,096) 20,397 2,768,762
63Notes to the consolidated financial statements
Interest rate risk
Interest rate risk associated with non-trading financial instruments (loans and advances, fixed-income securities, term deposits, certificated
debt, and derivative financial instruments) is part of the Group's asset and liability management process. Interest rate risk is measured
by the use of gap analysis and interest rate sensitivities. The Asset and Liability Committee decides on any appropriate use of derivative
financial instruments. The principal interest-related derivatives used are interest rate swaps and forward rate agreements.
Interest rate risk strategy and measurement
Interest rate risk control is implemented within the framework of LGT Group’s overall appetite for risk. The aim of an appropriate AL risk
management system is to manage the interest rate risk of LGT Group and the Group companies to optimum effect. The limits must be
applied using appropriate limit types to reflect the risk. The following limit types are used in this context:
Gap limits for limiting matching maturities within specific maturity segments.
Interest rate sensitivity limits for limiting the maximum potential loss on the market value of shareholders’ equity resulting from
detrimental market movements in interest rates.
The analysis shows the absolute changes in market values given a change of the respective key rate by +100 basis points.
Interest rate sensitivity analysis (CHF m)
All currencies 2009
All currencies 2008
CHF 2009
CHF 2008
USD 2009
USD 2008
EUR 2009
EUR 2008
The table below summarizes the average interest rate by major currencies for monetary financial instruments not carried at fair value
through profit or loss:
Assets
Loans and advances to banks
Loans and advances to customers
Available-for-sale securities
Held-to-maturity securities
Liabilities
Amounts due to banks
Amounts due to customers
Certificated debt
Within More than More than More than Total6 months 6 and 1 and 5 years
less than less than 12 months 5 years
2,4 (6,9) (23,6) 16,4 (11,7)
(1,1) (9,8) (18,8) (2,8) (32,5)
2,6 (3,5) (21,1) 16,6 (5,4)
2,6 (0,1) (17,1) (2,7) (17,3)
1,8 (1,7) (0,4) 0,0 (0,3)
(1,9) (4,1) (0,1) 0,0 (6,1)
(0,2) (0,1) (1,4) (0,1) (1,8)
(0,8) (2,2) (1,0) (0,1) (4,1)
31 December 2009 31 December 2008CHF in % EUR in % USD in % CHF in % EUR in % USD in %
0.29 0.50 0.33 0.93 2.75 1.43
2.07 2.11 1.87 3.00 4.74 5.29
2.76 0.56 1.04 2.60 2.70 2.32
4.50 – – 4.12 – –
0.39 0.27 0.91 1.66 2.21 0.50
0.25 0.23 0.12 0.65 2.39 0.66
2.50 – – 2.46 – –
64 Notes to the consolidated financial statements
Liquidity risk
Liquidity risk is the risk that an entity will be unable to meet a financial commitment to a customer, creditor or investor in whatever
location or currency. The management of liquidity is primarily directed toward ensuring that local funding requirements can be met.
The distribution of sources and maturities of deposits is managed actively in order to ensure access to funds and to avoid a concen-
tration of funding demand at any one time or from any one source. Sources of liquidity are regularly reviewed by a separate team in
Group Treasury to maintain a wide diversification by currency, geography, provider, product and term.
Liquidity management is subject to the overall monitoring and control of Group Treasury, which also manages excess liquidity for
individual entities. LGT Bank in Liechtenstein Ltd., Vaduz, which attracts the majority of customers’ cash deposits within the Group,
also performs the Group Treasury function.
The Group’s liquidity management process includes:
day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. The Group maintains an
active presence in global money markets to enable this to happen;
maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption
to cash flow;
monitoring balance sheet liquidity ratios against internal and regulatory requirements; and
managing the concentration and profile of debt maturities.
Group Treasury also monitors unmatched medium-term assets, the level and type of undrawn lending commitments, the usage of
overdraft facilities and the impact of contingent liabilities such as standby letters of credit and guarantees. The assumptions regarding
gross loan commitments are based on expert opinions and also differentiated by the type of limit and the client type.
In the following table, assets and liabilities are structured according to contractual terms. It summarizes the overall funding and
investment structure of the Group.
65Notes to the consolidated financial statements
Cash flow of assets and liabilities at 31 December 2009 (TCHF)
Cash in hand, balances with central banks
Loans and advances to banks
Loans and advances to customers
Securities held for trading purposes
Derivative financial instruments
Financial assets designated at fair value
Available-for-sale securities
Held-to-maturity securities
Investments in associates
Total assets
Amounts due to banks
Amounts due to customers
Derivative financial instruments
Financial liabilities designated at fair value
Certificated debt
Total liabilities
Commited credit lines
Cash flow of assets and liabilities at 31 December 2008 (TCHF)
Cash in hand, balances with central banks
Loans and advances to banks
Loans and advances to customers
Securities held for trading purposes
Derivative financial instruments
Financial assets designated at fair value
Available-for-sale securities
Held-to-maturity securities
Investments in associates
Total assets
Amounts due to banks
Amounts due to customers
Derivative financial instruments
Financial liabilities designated at fair value
Certificated debt
Total liabilities
Commited credit lines
Within More than More than More than More than Total1 month 1 and 3 and 1 and 5 years
less than less than less than 3 months 12 months 5 years
746,774 0 0 0 0 746,774
6,119,447 1,314,681 449,999 0 0 7,884,127
2,004,293 787,840 925,064 1,480,173 171,368 5,368,738
0 73,630 0 0 0 73,630
52,194,982 9,549,385 8,378,703 253,942 6,345 70,383,357
155,058 1,534,076 542,738 807,563 43,073 3,082,508
365,417 1,021,618 571,338 836,141 32,175 2,826,689
0 0 2,088 0 0 2,088
0 2,419,334 0 0 0 2,419,334
61,585,971 16,700,564 10,869,930 3,377,819 252,961 92,787,245
1,019,086 239,115 170,747 0 0 1,428,948
13,928,038 546,752 908,175 297,161 0 15,680,126
52,176,387 9,515,267 8,402,608 238,097 6,212 70,338,571
0 1,120,200 0 0 0 1,120,200
11,453 25,941 353,972 1,117,790 313,563 1,822,719
67,134,964 11,447,275 9,835,502 1,653,048 319,775 90,390,564
17,058 19,528 30,092 140,861 11,278 218,817
Within More than More than More than More than Total1 month 1 and 3 and 1 and 5 years
less than less than less than 3 months 12 months 5 years
540,894 0 0 0 0 540,894
4,372,341 1,290,807 355,592 0 0 6,018,740
2,054,946 543,735 1,089,953 1,209,819 162,702 5,061,155
0 25,931 0 0 0 25,931
24,549,125 31,977,123 18,357,784 130,362 4,748 75,019,142
0 3,472,118 0 0 0 3,472,118
672,623 318,549 2,266,531 1,880,333 97,630 5,235,666
0 0 5,288 2,088 0 7,376
0 2,117,739 0 0 0 2,117,739
32,189,929 39,746,002 22,075,148 3,222,602 265,080 97,498,761
482,427 127,856 16,243 0 0 626,526
11,901,098 1,770,439 743,743 305,195 0 14,720,475
24,453,266 31,776,744 18,443,065 128,074 4,870 74,806,019
0 1,271,236 0 0 0 1,271,236
14,372 28,229 227,535 860,495 227,700 1,358,331
36,851,163 34,974,504 19,430,586 1,293,764 232,570 92,782,587
78,319 4,403 0 127,412 18,070 228,204
66
Derivative cash flowsat 31 December 2009 (TCHF)
Derivatives held for trading/hedging
Foreign exchange derivatives
Outflow
Inflow
Interest rate derivatives
Outflow
Inflow
Other derivatives
Outflow
Inflow
Total outflow
Total inflow
Derivative cash flowsat 31 December 2008 (TCHF)
Derivatives held for trading/hedging
Foreign exchange derivatives
Outflow
Inflow
Interest rate derivatives
Outflow
Inflow
Other derivatives
Outflow
Inflow
Total outflow
Total inflow
Notes to the consolidated financial statements
Within More than More than More than More than Total1 month 1 and 3 and 1 and 5 years
less than less than less than 3 months 12 months 5 years
52,176,219 9,512,328 8,388,500 184,748 0 70,261,795
52,194,563 9,543,500 8,359,726 187,522 0 70,285,311
168 2,939 14,108 53,349 6,212 76,776
420 5,885 18,977 66,420 6,345 98,047
0 0 0 0 0 0
0 0 0 0 0 0
52,176,387 9,515,267 8,402,608 238,097 6,212 70,338,571
52,194,983 9,549,385 8,378,703 253,942 6,345 70,383,358
Within More than More than More than More than Total1 month 1 and 3 and 1 and 5 years
less than less than less than 3 months 12 months 5 years
24,452,603 31,769,602 18,428,892 92,977 0 74,744,074
24,548,231 31,971,789 18,341,970 90,362 0 74,952,352
663 7,142 14,174 35,097 4,870 61,946
894 5,334 15,814 40,000 4,748 66,790
0 0 0 0 0 0
0 0 0 0 0 0
24,453,266 31,776,744 18,443,066 128,074 4,870 74,806,020
24,549,125 31,977,123 18,357,784 130,362 4,748 75,019,142
67Notes to the consolidated financial statements
Credit risk
Credit risk is the risk that a counterparty of a financial instrument fails to meet its contractual obligation and causes LGT Group to incur
a financial loss. Credit risk exposures arise principally in lending activities that lead to loans and advances, and investment activities that
bring debt securities and other bills into the Group’s asset portfolio. Further there is also credit risk in derivative financial instruments
and off-balance sheet financial instruments, such as loan commitments and financial guarantee contracts.
Within LGT Group credit risk is primarily incurred by LGT Bank in Liechtenstein Ltd., Vaduz. Therefore the credit risk management and
control are centralized in this unit. The conservative lending policy is established by internal directives, guidelines and written policy
papers. These guidelines include: (i) limits on total commercial, mortgage and syndicated loan volume, (ii) limits on unsecured lending
exposures to any one customer or customer group, (iii) percentage limits on borrower concentration within the Group’s credit portfolio
and (iv) strict credit handling procedures and internal controls.
Credit risk strategy
Lending is an integrated part of the business philosophy of LGT Group and thus complementary to the wealth management services
offered. Any transaction must be viewed in the context of the whole client relationship. It is not the policy of LGT Group to extend
credit facilities on a stand alone basis, but only in conjunction with assets deposited or to be deposited with LGT Group. The risk
appetite of LGT is low to moderate. The center for lending business within LGT Group is the credit function at LGT Bank Vaduz.
As part of its comprehensive system for monitoring lending exposures, regular reports are provided at a Group level to the Foundation
Board on (i) credit risk ratings, (ii) allowances, (iii) country exposures and (iv) bank limits. Stress Testing on securities and property
collateral is executed regularly and on an ad hoc basis if requested by management. In addition, ad hoc reports of special events, as
well as daily reports of global exposures to specific customers, are also provided on request.
Credit risk measurement
Loans and advances
In measuring credit risk of loans and advances to customers and to banks at a counterparty level, the Group assesses the probability of
default of individual counterparties using internal rating tools. They have been developed internally and combine statistical analysis with
credit officer judgment and are validated, where appropriate, by comparison with externally available rating data. The Group regularly
validates the performance of the rating tools and their predictive power with regard to default events.
Debt securities and other bills
For debt securities and other bills, external ratings such as Standard & Poor’s or Moody’s are used for managing the credit risk exposures.
The credit function at LGT Bank Vaduz is responsible for extending counterparty limits, while Treasury is managing the individual positions
within these limits. The investments in those securities and bills are viewed as a way to gain a better credit quality mapping and maintain
a readily available source to meet the funding requirement at the same time.
Assets by countries
In addition to the limitation of credit exposures of customers or customer groups, LGT Group has restricted the group of countries in
which credit risks may be incurred. Limits are established for these countries which are reviewed by the Foundation Board at least
annually. The table below shows the allocation of assets by countries:
Assets by countries/country groups (TCHF)1
Liechtenstein and Switzerland
Europe
Americas 2
Asia
Other countries
Total
1 Based on risk domicile of the assets.2 Mainly Class Funds
2009 in % 2008 in %
6,217,621 25.1 5,119,259 22.4
10,227,070 41.2 9,847,685 43.2
5,646,702 22.8 5,368,244 23.6
1,202,053 4.8 1,435,045 6.3
1,500,025 6.1 1,025,171 4.5
24,793,471 100.0 22,795,404 100.0
68
Derivative financial instruments
The Group maintains strict control limits on net open derivative positions. At any one time, the amount subject to credit risk is limited
to the current fair value of instruments that are favorable to the Group, which in relation to derivatives is only a small fraction of the
contract, or notional values used to express the volume of instruments outstanding. This credit risk exposure is managed as part of the
overall lending limits with customers, together with potential exposures from market movements (an add-on factor is calculated
depending on underlying risks and time to maturity of the contract).
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a corresponding
receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to cover the aggregate of all settlement
risk arising from the Group’s market transactions on any single day. As member of the CLS (Continuous Linked Settlement) network
LGT is able to mitigate major parts of its daily settlement risk via forex netting.
Off-balance sheet financial instruments
The primary purpose of off-balance sheet financial instruments is to ensure that funds are available to a customer as required. LGT Group
has credit commitments in the form of guarantees and standby letters. These credit commitments carry the same credit risk as loans,
and therefore the same lending criteria and identical limitation processes are applied.
Risk limit control and mitigation policies
LGT Group systematically manages, limits and controls concentrations of credit risk. As part of the credit risk management policy,
exposures are structured by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers, and to
geographical segments. The risks and their changes are closely monitored on a revolving basis and subject to an annual or more
frequent review, when considered necessary. Centralized loan approval procedures ensure a consistent lending process.
In line with the conservative credit policy a major part of the Group’s credit exposure is mitigated. The principal collaterals used within
LGT Group are mortgages over residential properties and charges over financial instruments such as debt securities, equities and funds.
Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly used for the
corresponding assets. In subsequent periods, the fair value is updated by reference to market prices or indexes of similar assets.
Because of the fact that mortgages are granted primarily within Liechtenstein and Switzerland, LGT Group is exposed to the market
trends of the real estate sector in these countries.
Collateral accepted as security for assets (TCHF)
Fair value of financial assets accepted as collateral that the Group
is permitted to sell or repledge in the absence of default
Notes to the consolidated financial statements
2009 2008
17,742,643 11,882,706
69Notes to the consolidated financial statements
Impairment and provisioning policies
The Group’s policy requires the review of individual financial assets that are above materiality thresholds at least annually or more
regularly when individual circumstances require it. Impairment allowances on individually assessed accounts are determined by an
evaluation of the incurred loss at balance-sheet date on a case-by-case basis, and are applied to all individually significant accounts.
The assessment normally encompasses collateral held (including reconfirmation of its enforceability) and the anticipated receipts for
that individual account.
Assets are summarized separately if contractual interest or principal payments are past due but the Group believes that impairment
is not appropriate yet.
Distribution of loans and advancesby credit quality (TCHF)
Neither past due nor impaired
Past due but not impaired
Impaired
Total loans and advances (gross)
Less allowance for impairment
Total loans and advances (net)
Distribution of loans and advanceswhich where past duebut not impaired (TCHF)
Past due up to 30 days
Past due 31–60 days
Past due more than 60 days
Total
Collectively assessed impairment allowances are provided for: (i) portfolios of homogenous assets that are individually below materiality
thresholds; and (ii) losses that have been incurred but have not yet been identified, by using the available historical experience, experi-
enced judgment and statistical techniques.
Impaired loans and advances (TCHF)
Specific allowance for impairment
Portfolio allowance for impairment
Total
LGT Group obtained assets by taking possession of collateral held as security. Repossessed properties are sold as soon as practicable,
with the proceeds used to reduce the outstanding indebtedness.
Carrying amount of collateral and other credit enhancements obtained (TCHF)
Residential, commercial and industrial property
2009 2008Loans and Loans and Loans and Loans andadvances advances advances advances
to customers to banks to customers to banks
5,424,181 8,216,711 4,734,358 5,973,907
245,324 0 79,583 0
42,303 0 99,137 0
5,711,808 8,216,711 4,913,078 5,973,907
20,846 0 26,975 0
5,690,962 8,216,711 4,886,103 5,973,907
2009 2008Loans and Loans and Loans and Loans andadvances advances advances advances
to customers to banks to customers to banks
180,642 0 47,970 0
9,372 0 7,433 0
55,310 0 24,180 0
245,324 0 79,583 0
2009 2008Loans and Loans and Loans and Loans andadvances advances advances advances
to customers to banks to customers to banks
15,226 0 20,890 0
5,620 0 6,085 0
20,846 0 26,975 0
2009 2008
481 481
70
Operational risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from exter-
nal events. By their nature, operational risks are difficult to identify, measure and manage. They can be caused deliberately or acciden-
tally or be of natural origin and encompass all elements of the organization. Operational risks are inherent in all types of products,
activities, processes and systems.
LGT Group has established a group-wide Operational Risk Committee which provides the Group CEO with support in the early identifi-
cation of these risks and in implementing appropriate measures. These tasks are based on the principles stipulated in the ‘Sound
Practices for the Management and Supervision of Operational Risk’ issued by the Basel Committee on Banking Supervision. The set
guidelines ensure that risk management takes care of all defined risk categories:
Internal and external fraud
Employment practices and workplace safety
Customers, products and business practices
Damage to physical assets
Business disruption and system failures
Execution, delivery and process management.
Operational risk measurement
The operational risk measurement approach is based on the one hand on appropriate measures adapted for business units, such as an
internal monitoring system and on the other hand on three dimensions in which the above risk categories are assessed.
Risk self-assessment
The risk self-assessment represents a qualitative judgment of the risk situation. On a regular basis the group functions identify and
measure operational risk through estimates based on the consensus opinion of members of the management and/or the staff. The
main objective of this process is the identification, assessment and mitigation of operational risk.
Key risk indicators
Key risk indicators evaluated on a quantitative basis give insight into the extent of stress of an activity. These indicators are used to
monitor and foresee trends and serve as an early warning system. For monitoring operational efficiency and demonstrating the
effectiveness of controls, every business unit has built up a selection of business data considered useful for the purpose of risk tracking.
Error event data base
Every business unit captures and accumulates individual error events across risk types. Such a data base is a tool to measure, quantify
and provide financial operational risk data.
Exception procedure
The business units and group functions immediately inform Group Risk Controlling about essential operational risk events (e.g. essential
error events, essential near-losses).
Notes to the consolidated financial statements
71Notes to the consolidated financial statements
Operational risk organization and reporting
The preparation, processing and analysis of relevant data are centralized, as in other risk categories, in Group Risk Controlling.
Definition of the roles within the operational risk organization
The Foundation Board has the overall responsibility for the management of operational risks and the constitution of the operational
risk policy.
The Group CEO/Senior Management Board are responsible for the establishment and maintenance of an appropriate risk organiza-
tion to manage operational risks for LGT Group.
The Operational Risk Committee identifies and evaluates the operational risks and submits recommendations to Group Risk
Controlling.
Line management is responsible for the identification and assessment of operational risk in their business unit. This includes
(i) management of operational risk according to the operational risk principles, (ii) definition of appropriate standards for the manage-
ment of operational risks, (iii) ensuring operational risk processes are efficiently documented, followed and reviewed, (iv) measuring
and reporting operational risks on a timely basis to Risk Controlling, (v) determining and updating process and system requirements
to maintain adequate risk management tools, (vi) identification and review of risk profiles, (vii) definition and implementation of
actions.
Group Risk Controlling is responsible for operational risk control. This includes (i) group-wide coordination of operational risk
management issues and efforts, (ii) ensuring compliance of risk management with the operational risk principles, (iii) collecting and
analyzing error events, assessments and risk indicators, (iv) regular reporting to the Audit Committee, the Group CEO and the Senior
Management Board and (v) monitoring of actions taken.
72
Fair value of financial instruments not carried at fair value
Fair value information is used for business purposes in determining an enterprise’s overall financial position. Fair value information
permits comparisons of financial instruments having substantially the same economic characteristics.
Financial assets (TCHF)
Loans and advances to banks
Loans and advances to customers
Held-to-maturity securities
Financial liabilities (TCHF)
Amounts due to banks
Amounts due to customers
Certificated debt
Loans and advances to banks
The estimated fair value of loans and advances to banks is based on discounted cash flows using prevailing market interest rates
for debts with similar credit risk and remaining maturity.
Loans and advances to customers
Loans and advances are stated net of impairments. The estimated fair value of loans and advances to customers represents the
discounted amount of estimated future cash flows expected to be received.
Held-to-maturity securities
Held-to-maturity securities include fixed-income securities. Their fair value is estimated on the basis of the discounted cash flows.
Amounts due to banks or to customers
The calculation of the fair values of the amounts due to banks or customers is based on the discounted cash flow method using
interest rates for new debts with similar remaining maturity.
Certificated debt
The aggregated fair values are calculated under the discounted cash flow method. The model is based on a current yield curve
appropriate for the remaining term to maturity.
Notes to the consolidated financial statements
2009 2008Carrying amount Fair value Carrying amount Fair value
8,216,711 8,228,223 5,973,907 6,009,815
5,690,962 5,818,991 4,886,103 4,989,354
1,998 2,078 6,982 7,284
1,454,580 1,455,619 622,209 625,767
16,210,051 16,210,872 14,668,111 14,690,757
1,672,317 1,740,881 1,263,208 1,310,592
73
LGT Group Foundation
74 LGT Group Foundation – Report of the statutory auditor
Report of the statutory auditors
75
Income statement (TCHF) Note
Interest and dividend income
Interest earned
Interest paid and similar charges
Net interest
Current income from participations
Total interest and dividend income
Income from commission and service fee activities
Commission expenses
Income from financial transactions (all from trading activities)
Other operating income 1
Total operating income
Administrative expenses
Personnel expenses 2
Business and office expenses 3
Total administrative expenses
Other operating expenses
Allowances for impaired loans and increase of provisions for
contingent liabilities and credit risk
Release of allowances for impaired loans and for provisions for
contingent liabilities and credit risk
Depreciation, allowances and provision on subsidiary undertakings,
affiliated companies and securities treated as current assets
Profit for the period
Appropriation of available Foundation earnings
Balance at the beginning of the period
Profit for the period
The Foundation Board proposes to the Foundation Meeting of 29 April 2010:
Payment to the Prince of Liechtenstein Foundation
Balance to be carried forward
The accounting principles and the notes on pages 77 to 86 form part of these accounts.
The accounts on pages 75 to 86 were approved by the Foundation Board on 29 April 2010 and are signed
on its behalf by H.S.H. Prince Philipp von und zu Liechtenstein, Chairman, and Olivier de Perregaux, CFO.
Income statement
LGT Group Foundation – Income statement
2009 2008
2,228 7,372
(8,456) (21,817)
(6,228) (14,445)
160,161 153,972
153,933 139,527
(6) (410)
2,780 (11,119)
64,073 50,480
220,780 178,478
(13,046) (9,323)
(15,027) (15,430)
(28,073) (24,753)
(10,827) (12,500)
(5,955) (4,761)
19,425 0
(8,243) 0
187,107 136,464
133,100 71,636
187,107 136,464
320,207 208,100
(75,000) (75,000)
245,207 133,100
76
Balance sheet (TCHF) Note
Assets
Loans and advances to banks (subsidiary undertakings) 4
of which on demand
Other loans and advances to customers (subsidiary undertakings) 5
Participations (shares in associated companies) 6
Other assets 7
Prepayments and accrued income
Total assets
Liabilities
Amounts due to banks 8
of which other loans
Other liabilities 9
Accrued expenses and deferred income
Provisions 10
Foundation capital
Profit/loss to be carried forward
Profit for the period 11
Total liabilities
Off-balance sheet items (TCHF)
Collateralization guarantees and similar instruments
Guarantees and similar instruments
of which for affiliated companies
Put options 1
Contract volume
The guarantees and similar instruments are valued with the carrying amount except 3 (2008: except 4) guarantees without specified amount, which are valued with their
pro memoria value.
1 Put option in favor of a Group company.
The accounting principles and the notes on pages 77 to 86 form part of these accounts.
Balance sheet
LGT Group Foundation – Balance sheet
2009 2008
792 6,235
792 2,235
521,508 537,847
1,067,895 1,029,615
142,114 112,112
339 5,366
1,732,648 1,691,175
1,017,500 846,984
1,017,500 846,984
8,691 232,586
3,879 7,536
43,327 56,925
339,044 339,044
133,100 71,636
187,107 136,464
1,732,648 1,691,175
6,067 6,091
1,765,176 1,760,315
1,765,176 1,760,315
16,334 20,967
77
Introduction
The accounting principles are in accordance with the
Liechtenstein Law on Persons and Companies (PGR)
and the Liechtenstein Banking Law and its directives.
A summary of the most important accounting prin -
ciples, which have been applied consistently, is set
out below.
Basis of accounting
The accounts are prepared using the historical cost
convention. All transactions are recorded on a trade
date basis.
Foreign currencies
Revenue items denominated in foreign currencies are
translated at the exchange rates ruling on the dates of
the transactions. Assets and liabilities denominated in
foreign currencies are translated at the exchange rates
ruling on the balance sheet date, except financial fixed
assets, which are translated at historical rates. Exchange
differences are entered in the income statement.
Participations
Participations represent investments in subsidiary
undertakings and are stated at cost, less any provision
for permanent diminution in value.
Debt instruments and shares
Realized gains or losses arising from the disposal of
securities are entered in the income statement.
Securities held as current assets (short-term assets) are
shown at market value. Other securities are stated at
the lower of cost or market value.
Dividends
Proposed dividends from subsidiary undertakings are
accrued as receivables in the accounts.
Loans and advances
These items are calculated at nominal values. Value
adjustments for identifiable individual risks are set off
against the corresponding asset positions.
Financial liabilities and provisions
These items are shown at nominal values. Provisions
have been created for operational and other risks.
Derivative financial instruments
Derivative financial instruments that are held for trad-
ing purposes are valued at their fair market value with
changes in fair market value recognized in income from
trading activities. The related positive and negative
replacement values are stated at gross values. Income
and expense arising on derivatives used in the context
of asset and liability management, primarily interest
rate swaps and forward rate agreements, are recog-
nized on an accrual basis, as this reflects the Group’s
risk management.
Risk management
Risks are defined by the adverse impact on profitability
of several distinct sources of uncertainty. LGT Group
Foundation is exposed to market risks, credit risks,
liquidity risks, operational and business event risks.
The Foundation Board is responsible for the risk policy
and its regular review. The risk policy comprises two
key elements:
■ risk strategy, which details the overall approach to
risk-taking desired by the Board; and
■ risk principles, which translate the risk strategy into
operating standards for both the risk organization
and required risk processes.
Risk management on a daily basis is conducted by the
line management. The overall responsibility lies within
the executive management teams of each business
unit. The risk controlling unit oversees the risk-taking
activities of LGT Group Foundation and reports directly
to the Board.
Notes to the financial statementsAccounting principles
LGT Group Foundation – Notes to the financial statements
78
Overview
LGT Group Foundation was established on 20 July 2001 and is the top holding company of LGT Group. Its purpose is the holding of
the majority of the subsidiaries of LGT Group. For a complete list of subsidiary undertakings see note 6 below.
The profit for the business year 2009 amounts to 187,107. The balance sheet total increased by 41,473 or 2.45% to 1,732,648.
1 Other operating income (TCHF)
Income from subsidiary undertakings (licence fees, income from
service level agreements and service charge for comfort letters)
Realized net result from investment securities
Others
Total other operating income
2 Personnel expenses (TCHF)
Personnel expenses, including Foundation Board members, consisting of
salaries
bonuses
pension costs
social security costs
other personnel expenses
Personnel expenses before long-term incentive scheme
Long-term incentive scheme
Total personnel expenses
3 Business and office expenses (TCHF)
Business and office expenses, consisting of
information and communication expenses
travel and entertainment expenses
legal and professional expenses
advertising expenses
other expenses
Total business and office expenses
Details on the income statement and balance sheet
LGT Group Foundation – Notes to the financial statements
2009 2008
45,725 46,150
10,778 0
7,570 4,330
64,073 50,480
2009 2008
3,192 3,781
5,272 6,608
627 1,594
745 1,200
1,579 236
11,415 13,419
1,631 (4,096)
13,046 9,323
2009 2008
46 56
607 1,187
11,383 6,853
2,991 7,288
0 46
15,027 15,430
79
4 Loans and advances to banks (subsidiary undertakings) on demand
The loans and advances to banks are bank accounts with LGT Bank in Liechtenstein Ltd., Vaduz.
5 Other loans and advances to customers
The loans and advances are due from subsidiaries and are not secured by collateral.
6 Participations (TCHF)
Acquisition cost
Accumulated depreciation
Opening balance
Investments
Depreciation
Disposals
Repayment of capital
Closing balance
All participations of LGT Group Foundation are unlisted.
LGT Group Foundation – Notes to the financial statements
2009 2008
1,136,926 975,015
(107,311) (107,311)
1,029,615 867,704
51,937 163,161
(8,243) 0
(5,414) 0
0 (1,250)
1,067,895 1,029,615
80
Name Principal activity
LGT Bank in Liechtenstein Ltd. Banking and investment management
LGT Swiss Life Non Traditional Advisers Ltd. Investment advisers
LGT Private Equity Advisers Ltd. Investment advisers
LGT Capital Management Ltd. Investment management
LGT Funds Ltd.1 Investment advisers
LGT Investments Ltd.1 Investment advisers
LGT Premium Strategy Ltd.1 Investment advisers
LGT Funds II Ltd.1 Investment advisers
LGT Fondsleitung Ltd. Investment advisers
LGT Capital Partners Advisers Ltd. Investment advisers
LGT Financial Services Ltd. Services company
LGT Audit Revisions AG 2 Trust services
Castle HoldCo Ltd. Investment management
LGT Bank (Singapore) Ltd. Banking and investment management
formerly LGT Bank in Liechtenstein (Singapore) Ltd.
LGT Trust (Singapore) Ltd. Trust services
LGT Management Services (Singapore) Ltd. Trust services
LGT Investment Management (Asia) Ltd. Consulting and advisers
LGT Management Services (HK) Ltd. Trust services
LGT Holding (Malaysia) Ltd. Holding company
LGT Bank in Liechtenstein (Cayman) Ltd. Banking and investment management
LGT Finance Ltd. Financing
LGT Global Invest Ltd. Investment management
LGT Participations Ltd. Investment management
LGT Certificates Ltd.6 Investment management
1 Companies with variable share capital structure, only part of fund manager held by LGT Group Foundation.2 LGT Audit Revisions AG bought on 1 January 2009. 3 Partly held via LGT Global Invest Ltd., Grand Cayman.4 Voting rights held via LGT Bank in Liechtenstein Ltd., Vaduz.5 Partly held via LGT Bank in Liechtenstein Ltd., Vaduz.6 Company with variable share capital structure, only founder’s shares held by LGT Group Foundation.7 LGT Treuhand AG, LGT Trust Management Ltd., LGT (Latin America) S.A., LGT Trust & Management S.A. as well as
LGT Consultora y Administradora S.A. were sold as per 1 January 2009.
The subsidiary undertakings
of LGT Group Foundation
at 31 December 2009 were:
LGT Group Foundation – Notes to the financial statements
81LGT Group Foundation – Notes to the financial statements
Registered office
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Vaduz – Liechtenstein
Singapore
Singapore
Singapore
Hong Kong – China
Hong Kong – China
Labuan – Malaysia
Grand Cayman – Cayman Islands
Grand Cayman – Cayman Islands
Grand Cayman – Cayman Islands
Grand Cayman – Cayman Islands
Grand Cayman – Cayman Islands
The book value of the participations in banks and finance companies is CHF 808,351,526.
% of voting rights % of capital Share capital (paid in) Net profit of theheld held subsidiary in business
year 2009 (‘000)
100.0 100.0 CHF 291,200,800 CHF 185,955
56.3 56.3 CHF 1,000,000 CHF 4,976
60.0 60.0 CHF 1,000,000 CHF 7,124
100.0 100.0 CHF 1,000,000 CHF 5,156
100.0 100.0 CHF 50,000 CHF 0
100.0 100.0 CHF 50,000 CHF (14)
100.0 100.0 CHF 50,000 CHF 0
100.0 100.0 CHF 50,000 CHF 0
100.0 100.0 CHF 1,000,000 CHF 0
100.0 100.0 CHF 250,000 CHF 3,619
100.0 100.0 CHF 1,000,000 CHF 2,366
100.0 100.0 CHF 100,000 CHF 7
100.0 100.0 USD 33,445 USD 0
100.0 100.0 SGD 370,000,000 SGD (1,098)
100.0 100.0 SGD 3,300,000 SGD (1,312)
100.0 100.0 SGD 2 SGD (12)
100.0 3 100.0 3 HKD 24,000,000 HKD 8,217
100.0 3 100.0 3 HKD 20 HKD 263
100.0 100.0 CHF 100,000 CHF 840
100.0 4 100.0 5 USD 600,000 CHF 13,911
100.0 100.0 USD 50,001 CHF 1,347
100.0 100.0 CHF 4 CHF (234,788)
100.0 100.0 CHF 7 CHF (253,361)
100.0 100.0 CHF 1 CHF 0
82
7 Other assets (TCHF)
Dividend proposed from LGT Bank in Liechtenstein Ltd., Vaduz
Receivables from subsidiary undertakings
Receivables from others
Total
8 Amounts due to banks (TCHF)
Amounts due to LGT Bank in Liechtenstein Ltd., Vaduz
Total
9 Other liabilities (TCHF)
Loans from subsidiary undertakings
Bonuses
Salaries
Long-term incentive scheme
Social security costs
Others
Total
10 Provisions (TCHF)
Opening balance
Current year expenses
Provisions released
Closing balance
11 Statement of changes in equity (TCHF)
Equity at the beginning of the business year
Payment to the Prince of Liechtenstein Foundation
Profit for the period
Total equity at the end of the business year
12 Headcount
Headcount at 31 December
LGT Group Foundation – Notes to the financial statements
2009 2008
119,392 112,112
6,632 0
16,090 0
142,114 112,112
2009 2008
1,017,500 846,984
1,017,500 846,984
2009 2008
0 220,000
5,246 5,601
540 540
2,186 4,580
621 1,526
98 339
8,691 232,586
2009 2008
56,925 42,664
10,827 17,261
(24,425) (3,000)
43,327 56,925
2009 2008
547,144 560,680
(75,000) (150,000)
187,107 136,464
659,251 547,144
2009 2008
7 8
83
13 Analysis of balance sheet by originat 31 December 2009 (TCHF)
Assets
Loans and advances to banks
Other loans and advances
Participations
Other assets
Prepayments and accrued income
Total assets
Liabilities
Amounts due to banks
Other liabilities
Accrued expenses and deferred income
Provisions
Foundation capital
Total liabilities
Analysis of balance sheet by originat 31 December 2008 (TCHF)
Assets
Loans and advances to banks
Other loans and advances
Participations
Other assets
Prepayments and accrued income
Total assets
Liabilities
Amounts due to banks
Other liabilities
Accrued expenses and deferred income
Provisions
Foundation capital
Total liabilities
LGT Group Foundation – Notes to the financial statements
Foreign % Domestic % Total %
0 0.00 792 100.00 792 100.00
521,508 100.00 0 0.00 521,508 100.00
545,926 51.12 521,969 48.88 1,067,895 100.00
0 0.00 142,114 100.00 142,114 100.00
339 100.00 0 0.00 339 100.00
1,067,773 61.63 664,875 38.37 1,732,648 100.00
0 0.00 1,017,500 100.00 1,017,500 100.00
0 0.00 8,691 100.00 8,691 100.00
2,834 73.06 1,045 26.94 3,879 100.00
0 0.00 43,327 100.00 43,327 100.00
0 0.00 659,251 100.00 659,251 100.00
2,834 0.16 1,729,814 99.84 1,732,648 100.00
Foreign % Domestic % Total %
0 0.00 6,235 100.00 6,235 100.00
537,847 100.00 0 0.00 537,847 100.00
502,333 48.79 527,282 51.21 1,029,615 100.00
0 0.00 112,112 100.00 112,112 100.00
3,288 61.27 2,078 38.73 5,366 100.00
1,043,468 61.70 647,707 38.30 1,691,175 100.00
0 0.00 846,984 100.00 846,984 100.00
220,000 94.59 12,586 5.41 232,586 100.00
4,516 59.93 3,020 40.07 7,536 100.00
0 0.00 56,925 100.00 56,925 100.00
0 0.00 547,144 100.00 547,144 100.00
224,516 13.28 1,466,659 86.72 1,691,175 100.00
84
14 Breakdown of assets according tocountry/country group (TCHF)
Liechtenstein
Europe excl. Liechtenstein
Americas
Asia
Total assets
LGT Group Foundation – Notes to the financial statements
2009 % 2008 %
664,875 38.37 647,707 38.30
339 0.02 1,036 0.06
255,224 14.73 490,681 29.01
812,210 46.88 551,751 32.63
1,732,648 100.00 1,691,175 100.00
85
15 Foreign exchange exposure at 31 December 2009 (TCHF)
Assets
Loans and advances to banks
Other loans and advances
Participations
Other assets
Prepayments and accrued income
Total assets
Liabilities
Amounts due to banks
Other liabilities
Accrued expenses and deferred income
Provisions
Foundation capital
Total liabilities
Foreign exchange exposure at 31 December 2008 (TCHF)
Assets
Loans and advances to banks
Other loans and advances
Participations
Other assets
Prepayments and accrued income
Total assets
Liabilities
Amounts due to banks
Other liabilities
Accrued expenses and deferred income
Provisions
Foundation capital
Total liabilities
LGT Group Foundation – Notes to the financial statements
Swiss Francs US Dollars Euros Other Total
792 0 0 0 792
521,508 0 0 0 521,508
777,069 224 0 290,602 1,067,895
142,114 0 0 0 142,114
339 0 0 0 339
1,441,822 224 0 290,602 1,732,648
1,017,500 0 0 0 1,017,500
8,691 0 0 0 8,691
3,879 0 0 0 3,879
43,327 0 0 0 43,327
659,251 0 0 0 659,251
1,732,648 0 0 0 1,732,648
Swiss Francs US Dollars Euros Other Total
6,235 0 0 0 6,235
537,847 0 0 0 537,847
787,982 345 0 241,288 1,029,615
112,112 0 0 0 112,112
4,330 0 1,036 0 5,366
1,448,506 345 1,036 241,288 1,691,175
846,984 0 0 0 846,984
232,586 0 0 0 232,586
7,425 111 0 0 7,536
56,925 0 0 0 56,925
547,144 0 0 0 547,144
1,691,064 111 0 0 1,691,175
86
16 Analysis of current assets and liabilities by maturityat 31 December 2009 (TCHF)
Current assets
Loans and advances to banks
Other loans and advances
Other assets
Prepayments and accrued income
Total current assets
Current liabilities
Amounts due to banks
Other liabilities
Accrued expenses and deferred income
Total current liabilities
Analysis of current assets and liabilities by maturityat 31 December 2008 (TCHF)
Current assets
Loans and advances to banks
Other loans and advances
Other assets
Prepayments and accrued income
Total current assets
Current liabilities
Amounts due to banks
Other liabilities
Accrued expenses and deferred income
Total current liabilities
17 Emoluments to members of the management
The emoluments to the members of the Foundation Board and to the Group and business unit executives employed
by the Foundation are disclosed under note 37 in the consolidated financial statements of LGT Group Foundation.
LGT Group Foundation – Notes to the financial statements
On demand Within More than 3 More than Total3 months and less than 12 months
12 months
792 0 0 0 792
521,508 0 0 0 521,508
0 7,722 119,392 15,000 142,114
0 339 0 0 339
522,300 8,061 119,392 15,000 664,753
0 1,017,500 0 0 1,017,500
719 7,972 0 0 8,691
0 3,879 0 0 3,879
719 1,029,351 0 0 1,030,070
On demand Within More than 3 More than Total3 months and less than 12 months
12 months
2,235 4,000 0 0 6,235
310,363 227,484 0 0 537,847
0 0 112,112 0 112,112
0 5,366 0 0 5,366
312,598 236,850 112,112 0 661,560
0 846,984 0 0 846,984
0 221,865 10,721 0 232,586
0 7,536 0 0 7,536
0 1,076,385 10,721 0 1,087,106
87
International presence and imprint
Austria Vienna
Bahrain Manama
Germany Berlin
Cologne
Frankfurt am Main
Hamburg
Mannheim
Munich
Stuttgart
Hong Kong Hong Kong
Ireland Dublin
Liechtenstein Vaduz
Singapore Singapore
Switzerland Basel
Berne
Chur
Davos
Geneva
Lausanne
Lucerne
Lugano
Pfäffikon
Zurich
United Kingdom London
United States of America New York
Uruguay Montevideo
Media Relations Christof Buri
Phone +423 235 23 03
Dispatch Evelyn Frühauf
Phone +423 235 15 97
International presence and imprint88
Portrait of the Future Prince Alois I of LiechtensteinThe painting is one of a series of eight family portraits dating from theyear 1776. Until 1944 this was integrated in wall paneling at EisgrubCastle. The young Prince is seated under a colonnade, wearing redceremonial uniform with blue cape and saber. The coloured globe,books and rolls of drawings indicate the importance placed upon education as well as an interest in geography and architecture. Thedrawing on the table depicts Feldsberg Castle, which was generouslymodernized under his rule. The Prince played a significant role in theplanning of the landscaped gardens.
© Collections of the Prince of Liechtenstein, Vaduz – ViennaLIECHTENSTEIN MUSEUM, Vienna. www.liechtensteinmuseum.at
The illustrations in this brochure are details fromFriedrich Oelenhainz, "Portrait of the Future Prince Alois I of Liechtenstein", 1776
5002
7en
0510
1.5
T BV
D
LGT Group FoundationHerrengasse 12FL-9490 VaduzPhone +423 235 11 22Fax +423 235 16 [email protected]
www.lgt.com
LGT Group is represented in 29 locations in Europe, Asia and the Middle East. A complete address list can be seen at www.lgt.com