annual report 2009 - lgt group

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



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


Consolidated balance sheet


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


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


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.


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


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.


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.


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.


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.


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


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


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.


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.


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.


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.


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


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


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


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


IAS 31 Investments in Joint Ventures – Consequential

amendments arising from amendments to IFRS 3


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


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)


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


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


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


Deferred income tax expense comprises the following temporary differences

Losses available for offset against future taxable income

Accelerated depreciation for tax purposes

Provisions


Other temporary differences

Total deferred income tax expense

Deferred income tax assets and liabilities relate to the following items

Deferred income tax liabilities


Provisions



Total deferred income tax liabilities

Deferred income tax assets

Losses available for offset against future taxable income


Provisions


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


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


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


Release of allowance


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.


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).


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)


At 1 January

Redemption

Revaluations

At 31 December


At 1 January


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


Other changes

At 31 December


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


LGT Capital Invest Limited, Grand Cayman Open-end investment company

Geschäftshaus Spitalgasse Waisenhausplatz AG, Berne


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


Additions

Additions through acquisitions

Reclassifications

Disposals

At 31 December 2009

Accumulated depreciation

At 1 January 2009


Charge for the year


Reclassifications

Disposals

At 31 December 2009

Net book value

At 31 December 2009

Property and equipment(TCHF)

Cost

At 1 January 2008


Additions


Reclassifications

Disposals

At 31 December 2008


At 1 January 2008


Charge for the year


Disposals

At 31 December 2008

Net book value

At 31 December 2008

Insurance value of tangible assets

Insurance value


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


Additions

Disposals

At 31 December 2009

Accumulated amortization and impairment

At 1 January 2009


Charge for the year

Disposals

At 31 December 2009

Net book value at 31 December 2009

Intangible assets (TCHF)

Cost

At 1 January 2008


Additions

Disposals

At 31 December 2008

Accumulated amortization and impairment

At 1 January 2008


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.


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).


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


LGT ex Private Equity IV Index


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.


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







Total bond issues at 31 December


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


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


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.


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


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


Total assets measured at fair value

Liabilities


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


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


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


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


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.


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 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


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 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


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.


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


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.


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.


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.


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


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


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.


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.


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


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


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




Other investment securities

Property and equipment

Intangible assets

Deferred tax assets

Other assets




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


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


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.



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)









Remaining assets

Total assets




Certificated debt

Remaining liabilities

Total liabilities

Net foreign exchange exposure of balance sheet


Total net foreign exchange exposure

Foreign exchange exposureat 31 December 2008 (TCHF)









Remaining assets

Total assets




Certificated debt

Remaining liabilities

Total liabilities

Net foreign exchange exposure of balance sheet


Total net foreign exchange exposure


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


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





Liabilities



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 – –


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.


Cash flow of assets and liabilities at 31 December 2009 (TCHF)










Total assets





Certificated debt

Total liabilities

Commited credit lines

Cash flow of assets and liabilities at 31 December 2008 (TCHF)










Total assets





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



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




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



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


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


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


2009 2008

17,742,643 11,882,706


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



180,642 0 47,970 0

9,372 0 7,433 0

55,310 0 24,180 0

245,324 0 79,583 0



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).



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)




Financial liabilities (TCHF)



Certificated debt


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 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 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.


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


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


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 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


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


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


Opening balance

Investments

Depreciation

Disposals

Repayment of capital

Closing balance

All participations of LGT Group Foundation are unlisted.


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


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:


81LGT Group Foundation – Notes to the financial statements

Registered office

Vaduz – Liechtenstein













Singapore

Singapore

Singapore

Hong Kong – China

Hong Kong – China

Labuan – Malaysia

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


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


Total equity at the end of the business year

12 Headcount



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


Other loans and advances

Participations

Other assets


Total assets

Liabilities


Other liabilities


Provisions

Foundation capital

Total liabilities

Analysis of balance sheet by originat 31 December 2008 (TCHF)

Assets



Participations

Other assets


Total assets

Liabilities


Other liabilities


Provisions

Foundation capital

Total liabilities


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


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



Participations

Other assets


Total assets

Liabilities


Other liabilities


Provisions

Foundation capital

Total liabilities

Foreign exchange exposure at 31 December 2008 (TCHF)

Assets



Participations

Other assets


Total assets

Liabilities


Other liabilities


Provisions

Foundation capital

Total liabilities


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



Other assets


Total current assets

Current liabilities


Other liabilities


Total current liabilities

Analysis of current assets and liabilities by maturityat 31 December 2008 (TCHF)

Current assets



Other assets


Total current assets

Current liabilities


Other liabilities


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.


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

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

[email protected]

Dispatch Evelyn Frühauf

Phone +423 235 15 97

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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

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LGT Group FoundationHerrengasse 12FL-9490 VaduzPhone +423 235 11 22Fax +423 235 16 [email protected]

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