142 nd Annual report 2014 “What sets BSI apart are the origins which shape our approach to private banking. To our clients we offer all the certainties derived from over 140 years of Swiss private banking experience, together with the characteristics born of our Latin roots: the passion and that human touch we bring to each professional relationship. Together these characteristics ensure the flexibility and responsiveness critical to serving clients in a changing world. BSI is excited about the future and committed to creating an even more dynamic and innovative international Bank to meet the evolving needs of our clients wherever they are in the world.” Stefano Coduri Group CEO BSI – Contents Contents Annual report as submitted to the Ordinary General Shareholders’ Meeting of 21 April 2015 Highlights 2014 5 Foreword 7 Corporate governance 10 Human resources 18 BSI and Corporate Responsibility 19 Our identity 27 Management report 2014 31 Group financial statements 37 Consolidated balance sheet as of 31 December 2014 Consolidated profit and loss statement 2014 Consolidated cash flow statement 2014 Notes to the 2014 Group financial statements Report of the statutory auditor on the consolidated financial statements BSI Ltd. financial statements 77 Parent Bank balance sheet as of 31 December 2014 Parent Bank profit and loss statement 2014 Notes to the 2014 Parent Bank financial statements Report of the statutory auditor on the financial statements Glossary of selected terms and abbreviations 88 Contacts 91 This is a translation into English of the Annual Report issued in the Italian language and is intended solely for the convenience of English-speaking readers. This report includes information specifically required by Swiss law. In the event of contradic- tions or inconsistencies between the Italian and the English version of the Annual Report, the Italian version shall prevail. 3 BSI – Highlights 2014 Highlights 2014 BSI Group 2014 2013 CHF 1’000 CHF 1’000 Profit and loss statement Net operating result 871’435 863’070 Operating expenses -698’657 -666’510 Gross profit 172’778 196’560 Depreciation of fixed assets -42’310 -796’301 Value adjustments, provisions, and losses -193’615 -144’658 Extraordinary income / expenses 78’574 39’755 Taxes -13’180 -17’311 Net result for the year 2’247 -721’955 Balance sheet Total assets 23’995’419 24’871’343 Shareholders’ equity, including net result for the year 1’672’978 1’720’895 CHF million CHF million Client assets Total 92’330 89’376 Headcount (in FTEs) Unit Unit Total 1’928 1’989 of which: in Switzerland 1’280 1’335 abroad 648 654 Capital ratios (Basel III) % % Total Capital Ratio 17.08 18.17 CET1 Ratio 16.29 17.35 BSI Ltd. 2014 2013 CHF 1’000 CHF 1’000 Profit and loss statement Net operating result 692’069 625’883 Operating expenses -520’502 -471’703 Gross profit 171’567 154’180 Net result for the year -21’068 -737’121 Balance sheet Total assets 20’226’108 19’102’055 Shareholders’ equity after appropriation of net result for the year 1’493’495 1’538’163 5 “For us, the commitment to art represents an opportunity to share a passion with our clients and with the communities we work in.” Stefano Coduri Group CEO BSI and Art Since its establishment in 1873, BSI has been at the forefront in promoting and popularising moments of great interest in the field of art, a theme to which the supplements to this Annual Report are dedicated. A commitment that comes from the belief that the value of any asset, not just financial or real estate, is a valuable treasure to the communities in which the Bank conducts its business. Among the numerous artistic activities promoted by the Bank in 2014 is “Allegro Giusto”, an exhibition of BSI Art Collection works at Villa Maraini, prestigious seat of the Istituto Svizzero di Roma. “Allegro Giusto” is an expression, on one hand, of the art BSI Art Collection collector’s spirit that distinguishes BSI and on the other, of The contemporary art collection of the Bank, the BSI Art Col- the willingness to cooperate by creating cultural synergies lection, was founded in 2000 with the aim to connect the fi- with important cultural institutions, such as the Istituto Svizze- nancial institution to the universe of art. It takes shape over ro di Roma. the years through a substantial series of acquisitions designed to locate some of the most influential post-war art personali- ties, such as Daniel Buren, John Chamberlain, Tony Cragg, Mario Merz and Giulio Paolini. These artists of recognised in- ternational importance form the starting core at the origin of the growth of a collection that develops between different generations and nationalities, drawing a time line that from the avant-gardes that matured in the mid-1960s reaches our present day. The expansion of the collection over the years is meant chiefly to decorate the branch offices of BSI around the world. Painting, sculpture, graphics, photography, video and site-specific projects, such as Palazzo BSI in Lugano, give life to a mixture of expressive languages, respecting the coher- ence with the project’s source. However, the collection also includes works that are severed from a precise target, by vir- tue of size or specific techniques that require more attention from the conservative and expository point of view. The com- mitment aimed at fostering creative avant-garde expressions of very young artists, still in the process of rising to fame, merges with the desire to reinterpret the personality of previ- ous generations. In line with this goal, the works of the BSI Art Collection often are lent out to temporary exhibitions at cul- tural institutions of recognised importance. Palazzo BSI, Lugano © Claudio Bader © Peggy Guggenheim Collection, Venice Palazzo Venier dei Leoni, Venice, view from the Grand Canal BSI institutional collaborations The commitment that BSI has been carrying on for years in the art world today represents a vital element for the Bank and a unique opportunity to share this passion with our clients and with the communities in which the Bank operates. The support to primary cultural institutions like the Peggy Guggenheim Collection in Venice and the Istituto Svizzero di Roma, of which BSI is a partner and encourages the development of its artistic projects internationally, is in keeping with this philosophy. Peggy Guggenheim Collection, Venice Since 2001, BSI, as Institutional Patron of the Peggy Guggenheim Collection in Venice, has the opportunity to actively participate in the contemporary dialogue between business and culture and support the growth of the museum and its schedule of events. One of the exhibition halls reserved to temporary art displays is dedicated to BSI. The Peggy Guggenheim Collection is a museum of modern art. It was found in the 20th century in Venice by the Swiss-born American Heiress, Peggy Guggenheim (1898-1979). Palazzo Venier dei Leoni, an unfinished 18th century building on the Grand Canal, bought by the collector in 1949 and her home for over thirty years, houses masterpieces of Cubist art, crossing over to Futurism, Metaphysical Painting, European Abstraction, Surre- alism and American Abstract Expressionism. The exhibition has come to include the most important European and American avant-garde artworks of the 20th century. The collection, the result of the advice of friends, artists and art critics such as Marcel Duchamp, Herbert Read, Nellie van Doesburg and Howard Put- zel, is one of the most important worldwide. The museum hosts temporary exhibitions every year and displays 26 paintings of the Gianni Mattioli Collection on permanent display, including some masterpieces of Italian Futurism. In the Garden of Sculptures Patsy R. and Raymond D. Nasher, as in the other outdoor spaces of the museum and on the terrace overlooking the Grand Canal, the works from the Peggy Guggenheim Collection and the Solomon R. Guggenheim Foundation mix with works on permanent display of the Nasher Sculpture Centre in Dallas and other foundations or galleries, further enriching the exhibition. Since October 2012, the collection also hosts eighty Italian, European and American artworks from after World War II, a legacy of American collector Hannelore B. Schulhof and her husband Rudolph B. Schulhof. The Peggy Guggenheim Collection, property of the Solomon R. Guggenheim Foundation, is part of the international circuit of Guggenheim museums (New York, Venice, Bilbao and soon to open in Abu Dhabi) and uniquely combines an internationally acclaimed, permanent collection and a rich programme of exhi- bitions and activities. Villa Maraini, Istituto Svizzero di Roma, Rome © Agostino Osio Istituto Svizzero di Roma, Rome-Milan The Istituto Svizzero di Roma (ISR), of which BSI has been a partner since 2005, is a foundation created by the Swiss Confederation in 1947 with the mission of promoting scientific and artistic ex- changes between Switzerland and Italy. The head office in Villa Maraini in Rome was donated by the Countess native of Lugano, Carolina Maraini-Sommaruga with the express mandate that the villa was “to be perpetually at the service of culture, in a sign of cooperation between Italy and Switzerland”. Since its founda- tion, the Institute has been attracting scholars and artists in Swit- zerland and has been the focal point of Swiss artistic and scientific activities in Italy. With its two offices in Rome and Milan, the Insti- tute is the main cultural centre of Switzerland in Italy and favours dialogue and exchange with cultural actors present on the terri- tory thanks to a varied participation that attracts an evergrowing and qualified audience. Its distinctive feature is the coexistence among people from different academic and artistic disciplines. A cultural outpost in the heart of the Mediterranean, today it embarks on a path to adapt its activities to contemporary reality, institutionally as much as from a historical and social point of view.