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2 – 3 Introduction

4 Board of Directors and Management

5 – 9 Directors’ report

10 – 11 Independent auditor’s report

12 Balance sheet

13 Off-balance sheet

14 – 15 Profit and loss account

17 – 40 Notes to the annual accounts

42 – 43 Principal offices

contents

Eurobank EFG Private Bank Luxembourg SA is engaged in the business

of providing Private Banking, Wealth Management, Investment and

Advisory services for corporate and private clients.

In addition to the standard products and the classic services of a

private bank, the Bank offers to its clientele a range of other services

some of which are:

• Financial Engineering

• Estate planning

• Fiduciary agreements

• Discretionary Asset Management

• Investment funds

• Alternative investment consultancy

Beside its Private Banking activity, the Bank is providing administrative

and custody Services for Investment Funds.

The Bank is engaged in the Corporate Loans business, whereby the

Bank is an off-shore location for corporate loans of EFG Eurobank

Ergasias SA, Athens, and its subsidiaries (the “Eurobank EFG Group”).

Eurobank EFG Private Bank Luxembourg SA is an authorized credit

institution and subject to the prudential supervision of the financial

supervisory authority in Luxembourg, the Commission de Surveillance

du Secteur Financier and a member of the Association of Banks and

Bankers of Luxembourg.

The Bank is a subsidiary of EFG Eurobank Ergasias SA, one of

Greece’s leading banking and financial institutions.

Eurobank EFG Group is a European banking organization with total

assets of € 76.8bn, offering universal banking across Southeastern

Europe, London and Luxembourg. Greece’s second largest bank,

Eurobank EFG, offers universal banking services in 10 countries, also

enjoys leading positions in Bulgaria, Romania and Serbia.

introduction

eurobank eFG Private Bank Luxembourg sA 3

4 --- Annual report 11

Board of directors

Mr François RIES Chairman

Mrs Lena LASCARI Managing Director

Mr Dimosthenis ARCHONTIDIS Director

Mr René FALTZ Director

Mr Nicholas KARAMOUZIS Director

Mr Nicholas NANOPOULOS Director

Mr Périclès PETALAS Director

Mr Jean-Louis de POTESTA Director

Mr Giorgio PRADELLI Director

Mrs Yasmine RALLI Director

Mr Vincenzo LOMONACO Secretary to the Board

and General Manager

Management

Mrs Lena LASCARI Managing Director, CEO

Mr Vincenzo LOMONACO General Manager, COO

senior officers

Mr George KORLIRAS First Vice-President

Mr Adriano FOSSATI Vice-President

Mrs Helen FOTINEAS Vice-President

Mr Markos FOURMOUZIS Vice-President

Mr Christophe LANGUE Vice-President

Mr Fabio MACCHINI Vice-President

Mr Athanasios TELIS Vice-President

Auditors

PricewaterhouseCoopers, Luxembourg

eurobank eFG Private Bank Luxembourg sA 5

Within the current challenging and turbulent

environment, the Bank’s main concern is to continue

to be the Bank-of-choice and offer top level services

to its clients, while proceeding to all necessary

actions, in order to secure and ring-fence it’s Balance

Sheet against any specific concentration of risk. As

a result of these actions, the Bank is in a position to

face any forthcoming challenge while also being able

to maintain and improve the level of services offered

to its clients. We are pleased to present our report for

the year ended December 31, 2011.

y

2011 Global overview

Global economic activity has slowed remarkably

over the summer of 2011, owing to the fiscal and

financial uncertainty that skyrocketed since August,

as the European sovereign debt crisis took a turn

for the worse. For the whole 2011, global growth

at market exchange rates decelerated to 2.8% from

4.1% in 2010. Although the significant deceleration

of economic growth in most parts of the developed

world along with monetary tightening in large parts

of the emerging world has led to a moderation in the

pace of expansion in emerging economies in 2011,

their growth remained fairly robust, contributing

more than two thirds to global economic growth.

US economic activity decelerated significantly to 1.7%

in 2011, from 3.0% in 2010, largely due to higher oil

prices and Japanese-related automotive supply-chain

disruptions, as well as the fiscal constraint at the

federal, state and local level. The European sovereign

debt crisis, the S&P downgrade of US sovereign debt

and the political controversy over US public finances

have led to continued market stress and widespread

business and consumer pessimism. Worried about

the state of the US economy, the FOMC has kept fed

funds rates at a record low of 0-0.25%, completed

QE2 and announced at its September 2011 meeting

another round of monetary easing implemented

between October 2011-June 2012. Under its new

Maturity Extension Program (“Operation Twist”), the

Fed will sell $400bn short-term Treasury securities

and reinvest the proceeds in longer-term Treasury

securities in order to put downward pressure on long-

term interest rates and create more accommodative

financial conditions. Moreover, the FOMC announced

the reinvestment of principal payments on agency

securities in agency mortgage-backed securities

rather than in Treasuries to support conditions in

mortgage markets. Although the US economy did not

fall into a renewed recession as many observers had

feared, it still remained fundamentally weak during

most of the year, as the slow labor market recovery,

the depressed housing market and the substantial

erosion of household net worth have contributed to

the subdued pace of economic recovery.

The euro area economy continued recovering in 2011

with real GDP growing by a 1.5%, annual rate. The

main driver of economic growth was external demand,

markedly in the first half of 2011. Open economies,

most notably Germany and Ireland, printed strong

growth rates in the first two quarters of the year.

directors’ rePort


At the same time, economic activity remained anemic

or contracted sharply in the debt laden periphery,

where strict and frontloaded fiscal consolidation took

a heavy toll on growth. Unsustainable borrowing

costs led Portugal to request financial assistance

from the EU and the IMF, becoming the third euro

area country (after Greece and Ireland) to accept a

bailout program, worth €78bn. In the Greek debt

front, a 53.5% haircut was agreed with private

holders of Greek government bonds in order to

reduce the country’s public debt level, as the debt

dynamics proved unsustainable due to sharper GDP

contraction and poor program implementation. With

respect to monetary policy, despite the striking

growth divergence between core and periphery,

the ECB hiked rates by 50 basis points to 1.5% in

order to address rising inflation expectations, mainly

attributed to increasing energy prices. However, in

the second half of 2011, the ECB lowered its policy

rate back to 1%, as the sovereign debt crisis took

a turn for the worse, downside risks materialized

and borrowing costs for systemic economies rose to

unsustainable levels. In addition to cutting its policy

rate, the ECB increased its credit easing measures

in order to contain the banking sector’s liquidity risk

and avert excessive deleveraging.

y

Key Financials Review of financial statements 2011

a) Balance Sheet Throughout the last years and within this turbulent

environment, the Bank continued to pursue

initiatives that would bring it on a position to

strengthen its balance sheet and improve its capital

position. Further to this, within the first half of 2011

the Bank sold its Greek Government Bond portfolio

and related hedging instruments at a total loss of

EUR 9.1 million. Since the Bank had not granted any

loans to Greek Government controlled institutions,

the Bank’s exposure to Greek sovereign risk is zero.

The Bank has used the proceeds from the sale of

its Greek Bonds portfolio and invested in high-

rated ECB eligible bonds. Additionally, within 2011

the Bank continued to capitalize on its initiative to

strengthen and ring-fence its Balance Sheet from

specific risk concentrations. To this respect it has

reduced its exposure to the parent Company, thus

further reducing its exposure to Greek risk.

The deposits from customers have increased by

24% to a total of EUR 1.1 billion demonstrating the

Customers’ trust in the Bank. “Loans and advances

to Credit institutions” have significantly decreased

while “Loans and advances to Customers” have

increased. The vast majority of these loans are cross

border loans referred by EFG Eurobank Ergasias or

its subsidiaries and are cash collateralized and fully

guaranteed, with zero risk for the Bank.

The Bank’s Capital Base has increased, mainly due

to the profitable financial year. The total capital base

stands at EUR 371.1 million (of which EUR 214.4 is

Tier I) while the Capital Adequacy Ratio has reached

25.1%, well above industry standards.

In addition, the Bank has prepared a contingency

plan, according to which all strategies and actions are

in place in order to be able to respond to any extreme

adverse scenario coming from the current financial

turmoil and European Sovereign debt crisis. Through

proactive planning against any future risk, the Board

solidifies its resolve to assure the Bank’s business

continuity and client servicing. The contingency plan

was reviewed by PricewaterhouseCoopers in October

2011 and thereafter the Bank continues to monitor

and maintain it.

b) Income StatementThe Bank has been able to maintain solid profitability

despite the adverse market conditions. By containing

directors’ report ( continued )

7eurobank eFG Private Bank Luxembourg sA

costs and careful pricing of new and existing loans the

Bank has been able to increase its income basis and

fairly recover most part of the loss on the sale of Greek

Government Bonds.

Both “Interest receivable and similar income”

and “Interest payable and similar charges” have

significantly increased when compared to 2010, mainly

due to increased volumes throughout the financial year

and increased funding cost, which has successfully

been transferred to loans. Net interest income is also

significantly increased due to both increased volumes

and better pricing.

Losses from “Value adjustments in respect of

transferable securities held as financial fixed assets,

participating interests and shares in affiliated

undertakings” and “Other operating charges” have

increased, these being a one-off effect form the sale

of the Greek Government Bonds and the unwinding

of the related hedging derivative respectively.

The Bank’s net profit after taxation for the financial

year 2011 amounted to EUR 17.2 million.

y

distribution of Profits

The Board of Directors proposes that the 2011 annual

accounts be approved, and that the Total Net Profit

available for distribution be appropriated as follows:

Profit for the financial year EUR 17,203,142

Profit brought forward EUR 100,855,454

Total net profit available

for distribution EUR 118,058,596

Allocation to Legal Reserve EUR (860,157)

Allocation to Net Wealth Tax

Special Reserves EUR (3,310)

Profit carried forward EUR 117,195,129

risk Management overview

The responsibility of risk management in Eurobank

EFG Private Bank Luxembourg SA lies with its

Executive Management and its Board of Directors.

In its supervisory mission, the Board of Directors,

monitor the implementation by the authorized

management of the strategy and objectives in relation

to risk taking and management, and in relation to

capital planning, management and adequacy, as per

parent-company guidelines.

The Board of Directors is committed to maintaining

and strengthening the control environment to ensure

that risks are minimized and properly monitored

and has the ultimate responsibility for Eurobank

EFG Private Bank Luxembourg SA risk-taking and

associated capital assessment.

On November 13, 1995 the Commission de

Surveillance du Secteur Financier (CSSF) in

accordance with point 20 of part XVI of Circular

06/273 “Compliance with large exposure limits”

exempted the Bank to take into account the risks of

its related entities.

y

risk Management strategy

The aim is to ensure that all risks assumed in the

context of the Bank’s business are recognized

instantaneously and are properly managed. We

achieve this by fully integrating risk management into

daily business activities and developing our business

consistently with a defined risk appetite, allowing us to

achieve sustained growth in a controlled environment.

The strategy of the Bank is based on its core activities:

Private Banking, General Banking, Investment Fund


Administration business, Treasury and Discretionary

Asset Management. Our Bank continuously identifies

the risks inherent in its operations and has adopted

processes for how they are to be managed.

The risk process also provides a clear description

of the Bank’s risk profile, which serves as the basis

for the internal capital adequacy assessment process.

This process, in turn, is an evaluation based on capital

needed to support the Bank’s overall risk level and

business strategy. The aim is to ensure efficient use

of capital and at the same time ensure that the Bank,

even in adverse market conditions, will meet the

minimum legal capital requirement.

The system for measurement of risks is an essential

part of risk management. Market risks are quantified

by using Value-at-Risk (VaR) complemented by various

types of sensitivity measures. Credit risks are quantified

through the internal rating system in combination with

assessments based on local competence. As all risks,

operational risks are evaluated on the basis of the

likelihood that an event will occur and the financial

consequence of such an event.

The Bank’s risk appetite is determined by the Board

of Directors which aims for a balance between risk,

return and capital. The risk appetite can be described

in terms of a number of overall statements. These

statements shall apply under all situations, and in

particular to both the, current and planned risk (or

business) positioning of the Bank:

X The regulatory capital and/or the internal capital,

are the target capital ratios of the Bank.

X The Bank’s capital adequacy ratio shall exceed

the regulatory minimum requirement set by the

Basel Committee on Banking Supervision in it’s

“Basel III: a global prudential framework for more

resilient banks and banking system, of December

2010” to be transposed in Luxembourg’s regulatory

environment, by at least 100 bps under normal

business conditions.

X Under stress conditions and corresponding manage-

ment actions, the above ratio shall be maintained

above the regulatory minimum required.

X Zero tolerance – referred business should be fully

secured, it is covered by matched funding up to

maturity, securities, and/or Group counter Letter of

Guarantees (LG’s).

X Trading of securities is not permitted.

The Bank’s risk management function covers the

measures for early identification of risk, risk control

and risk monitoring with regard to banking risks.

y

Global economic outlook for 2012

Global economic growth is set to slow further in

2012 as a result of fiscal consolidation in developed

economies, most notably in Europe. The most recent

IMF forecasts point to global growth of 2.5% in 2012,

a slight deceleration relative to last year’s rate of 2.8%

(at market exchange rates).

Despite stronger short-term momentum late in 2011,

our longer-term view of the US economy includes a

below-trend growth around 2% in 2012, mainly due

to the expected fiscal retrenchment and spillovers

from the European sovereign debt crisis. Given

the agreement that has been reached between the

House of Representatives and the Senate for the

extension of the 2% payroll tax cut and the emergency

unemployment benefits through the end of 2012, the

average fiscal effect on 2012 real growth is expected

to be around 0.6-0.7%, marginally higher than the

average fiscal drag on 2011 growth. The biggest

threat to the recent strength of the US economy is

the European crisis, as it could have a lagged long

lived impact on US growth through trade, tightening

of financial market conditions and bank lending. The



FOMC downgraded its economic forecasts for 2012

to 2.2-2.7% at its January 2012 meeting (from 2.5-

2.9% in November 2011), and it currently anticipates

exceptionally low levels for the fed funds rate at

least through late 2014. A new round of quantitative

easing (QE3) is likely to be considered in 2012 if

real economic activity weakens over the next few

months. In such a case, renewed asset purchases of

long-term Treasuries and agency mortgage-backed

securities (MBS) could help inflate away some

public and private sector debt and, therefore, aid the

deleveraging process.

The Euro area economy is expected to go through a

mild recession around the turn of the year, gaining

some traction later in 2012. Overall, the economy is

expected to stall, printing zero annual growth in 2012.

The growth divergence between core and periphery is

expected to continue this year, although less marked

than in 2011, as core countries are also affected

by the prolonged debt crisis tensions. Domestic

demand is anticipated to be a drag on growth due

to fiscal tightening and weak economic sentiment.

On the other hand, external demand due to brighter

economic prospects in emerging markets and the US

are likely to boost Euro area exports.

Risks to the Euro area economic outlook are to the

downside. The simultaneous deleveraging of the public

and private sector may cause excessive damage to

economic growth, especially in the periphery. Approval

of the second bailout program for Greece has eased

concerns stemming from a disorderly Greek default.

Nonetheless, uncertainty due to the debt crisis is likely

to remain a drag on the economy as implementation

risk on behalf of Greece remains, while a permanent

solution to the debt crisis is not in place, yet. We are

cautiously optimistic that the agreement on a strict

fiscal compact may pave the way for further support

from Germany and the ECB, backstopping borrowing

costs of weak Euro area countries. Overall, we remain

optimistic that the ECB will keep providing ample

liquidity to banks to assuage financial tensions and

avert aggressive deleveraging.

As regards the emerging and developing economies,

growth is expected to slow to 5.4% (in ppp terms)

from 6.2% in 2011, mainly on the back of weaknesses

in the developed economies.

Commodity markets have started 2012 positively,

underpinned by expectations of an improvement in

global economic environment. We expect commodity

prices to remain around current elevated levels

through the end of 2012, supported by better demand

prospects. In particular, in the US, leading indicators

point to accelerating economic activity. In the oil

market, risks of a disruption in global supply, that

could push oil prices to new highs, have increased

recently due to growing concerns over Iran’s nuclear

program that have led the European Union to ban

oil imports from Iran after July 1, 2012. Note that

Iran is the world’s third largest oil exporter, while

the European Union is one of the major importers of

Iranian oil.

y

Business outlook 2011

Greek banks continue to experience the negative

effects of the recession of the Greek Economy.

Increased dependency on Eurosystem funding

and balance sheet deleveraging compensated for

deposit outflows that by November dropped 18% ytd

according to BoG data. The results of the PSI+ and

the Blackrock diagnostic exercise will be the major

parameters that will affect the Greek banking sector

the most in the immediate future.

In this difficult environment EFG Eurobank Ergasias

SA took a number of initiatives to strengthen its

balance sheet and improve its capital position with


most prominent among them the agreement to sell a

majority stake in the Polish operations to Raiffeisen

Bank International, the absorption of Dias closed-end

fund and the announced intention to sell its Turkish

subsidiary, Eurobank Tekfen.

The Boards of Directors of EFG Eurobank Ergasias

SA (“Eurobank”) and Alpha Bank AE (“Alpha Bank”)

publicly announced on 29 August 2011 that they had

reached agreement on a combination of Eurobank and

Alpha Bank by way of a merger. On 15 November

2011, each of the Extraordinary General Meetings of

Eurobank and Alpha Bank resolved the merger of

Eurobank with Alpha Bank under the new corporate

name “Alpha Eurobank SA” with the condition that

all Greek regulatory permits will be given. These

permits have already been obtained. On 30 January

2012, Alpha Bank publicly announced that it could

not provide an accurate estimate of the timetable, and

overall development, of the merger between Alpha

Bank and Eurobank due to current macroeconomic

developments directly impacting the banking sector

(the PSI). Alpha Bank has also stated that it intends

to await the finalisation of the terms of the PSI

and would then convene a General Meeting of its

shareholders, so that they could be duly informed and

resolved accordingly.

Eurobank does not share this view. It deems that

all the legal requirements for the completion of the

merger are in place and no actual events occurred in

the meantime that could, by law, inhibit its completion.

As a result, it is imperative the parties to fulfill their

respective legal obligations for the completion of the

merger. For this reason, Eurobank has asked Alpha

Bank to cooperate and expedite the completion of the

merger within a reasonable timeframe.

Eurobank EFG Private Bank Luxembourg SA is

today a stand alone, autonomous, profitable, well

capitalized and independent Bank with no exposure

to Greek sovereign risk. From the KPMG Insights

study performed in 2011 our Bank was ranked 12th

out of 147 banks in Luxembourg, in terms of assets,

with a Balance Sheet total of €15 billion. The Bank is

incorporated under Luxembourg law and regulated

by the Commission de Surveillance du Secteur

Financier (CSSF). As a subsidiary of EFG Eurobank

Ergasias SA it will continue in 2012 to contribute to

the Group’s international development strategy and

further exploit the synergies and expand our cross

selling potential within the Group’s enlarged network.

In 2011, the measures proactively taken by our Bank,

will in 2012 continue to assure security to our clients

as well as maintaining the Bank’s autonomous and

independent nature further isolated from any Greek

risk. Aligned with the Group, our Bank follows a

consistent credit policy and as such, the lending will

continue to be granted on a fully guaranteed and / or

collateralized basis.

There has been no significant subsequent event as of

the date of this report which could have a material

impact on the 2011 Annual Accounts.

On behalf of the Board of Directors, we would like

to express our deep appreciation to our customers

for their loyalty to the Bank and our gratitude to the

management and personnel for their enthusiasm,

consistency and dedication.

February 24, 2012

François ries Lena Lascari

Chairman Managing Director



report on the annual accounts

We have audited the accompanying annual accounts of Eurobank EFG Private Bank Luxembourg SA, which comprise

the balance sheet as at 31 December 2011, the profit and loss account for the year then ended and a summary of

significant accounting policies and other explanatory information.

y

Board of directors’ responsibility for the annual accounts

The Board of Directors is responsible for the preparation and fair presentation of these annual accounts in

accordance with Luxembourg legal and regulatory requirements relating to the preparation of the annual

accounts, and for such internal control as the Board of Directors determines is necessary to enable the

preparation of annual accounts that are free from material misstatement, whether due to fraud or error.

y

responsibility of the “réviseur d’entreprise agréé”

Our responsibility is to express an opinion on these annual accounts based on our audit. We conducted our

audit in accordance with International Standards on Auditing as adopted for Luxembourg by the “Commission

de Surveillance du Secteur Financier”. Those standards require that we comply with ethical requirements and

plan and perform the audit to obtain reasonable assurance whether the annual accounts are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

annual accounts. The procedures selected depend on the judgment of the “Réviseur d’entreprises agréé”,

including the assessment of the risks of material misstatement of the annual accounts, whether due to fraud or

error. In making those risk assessments, the “Réviseur d’entreprises agréé” considers internal control relevant

To the Board of Directors of Eurobank EFG Private Bank Luxembourg SA

indePendent Auditor’s rePort


to the entity’s preparation and fair presentation of the annual accounts in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall

presentation of the annual accounts.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

y

opinion

In our opinion, these annual accounts give a true and fair view of the financial position of Eurobank EFG

Private Bank Luxembourg S.A as of 31 December 2011, and of the results of its operations for the year then

ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the

annual accounts.

y

report on other legal and regulatory requirements

The Directors’ report, which is the responsibility of the Board of Directors, is consistent with the annual

accounts.

PricewaterhouseCoopers S.à.r.l Luxembourg, February 24, 2012

Réviseur d’entreprises

Represented by

Philippe Sergiel


BALAnce sheet As At deceMBer 31, 2011(expressed in euro)

The accompanying notes form an integral part of these annual accounts.

Note(s) 2011

EUR

2010

EURAssets

yCash in hand, balances with central banks and post office banks 3.2, 4 26,668,205 38,692,177

yLoans and advances to credit institutions:

X repayable on demand 3.2, 6.2 60,286,996 353,994,243

X other loans and advances 3.2, 6.2 1,491,301,673 4,988,387,451

1,551,588,669 5,342,381,694y

Loans and advances to customers 3.2, 6.2 13,163,599,448 8,839,309,326y

Bonds and other fixed-income transferable

securities:

X issued by public bodies 3.2, 5.1, 5.3, 5.4, 7 75,701,320 218,948,330

X issued by other borrowers 3.2, 5.1, 5.3, 5.4, 7 134,729,609 4,771,313

210,430,929 223,719,643y

Shares and other variable-yield securities 3.2, 5.2 – 10,139

Participating interests 3.2, 5.2, 6.1, 7 7,141 7,661

Shares in affiliated undertakings 3.2, 5.2, 6.1, 7 410 410

Intangible assets 2.6, 7 837,820 1,044,290

Tangible assets 2.6, 7 1,117,806 1,354,240

Other assets 8,245,688 7,993,780

Prepayments and accrued income 83,818,794 39,166,605y

Total assets 15,046,314,910 14,493,679,965



Note(s) 2011

EUR

2010

EURLiABiLities

yAmounts owed to credit institutions:


X with agreed maturity dates or periods of notice 3.2, 6.2 12,744,926,754 12,732,884,136

13,446,244,251 13,171,867,803y

Amounts owed to customers:

other debts


X with agreed maturity dates or periods of notice 3.2, 6.2 1,019,431,955 866,730,053

1,148,611,968 927,084,985y

Other liabilities 1,475,102 1,314,280y

Accruals and deferred income 73,532,026 34,662,487y

Provisions:

X provisions for taxation 1,897,389 1,826,329

X other provisions 3,420,684 2,993,733

5,318,073 4,820,062y

Subordinated liabilities 6.2, 8 156,752,491 156,752,491y

Subscribed capital 9, 11 70,000,000 70,000,000y

Reserves 10, 11 26,322,403 24,716,213y

Profit brought forward 11 100,855,454 81,929,038y

Profit for the financial year 17,203,142 20,532,606y

Total liabilities 15,046,314,910 14,493,679,965


oFF BALAnce sheet As At deceMBer 31, 2011(expressed in euro)


Note(s) 2011

EUR

2010

EUR

yContingent liabilities 13.1 30,651,868 17,475,362

of which:

X guarantees and assets pledged as collateral security 30,651,868 17,475,362y

Commitments 13.2 1,220,769,039 1,585,437,018y

Fiduciary transactions 13.2 483,317,830 220,260,138


ProFit And Loss Account For the yeAr ended deceMBer 31, 2011(expressed in euro)


Note(s) 2011

EUR

2010

EUR

y

Interest receivable and similar incomeof which: arising from bonds and otherfixed-income transferable securities

492,110,308

9,228,019

322,417,410

11,884,908y

Interest payable and similar charges (456,631,829) (295,903,065)y

Income from transferable securities income from participating interests 177 657

y

Commissions receivable 6,906,433 6,924,629y

Commissions payable (2,774,064) (4,310,703)y

Net profit on financial operations 273,547 1,607,654y

Other operating income 14.2 666,620 3,305,350y

General administrative expenses X staff costs of which:— wages and salaries— social security costs— of which: pension costs

(7,015,270)(5,917,357)(1,022,713)

(752,674)

(6,829,854)(5,670,943)

(926,650)(719,944)

X other administrative expenses (5,078,413) (4,589,963)

Value adjustments in respect of intangible and tangible assets 7 (807,737) (691,850)

Other operating charges 14.3 (7,127,411) (793,356)

Value adjustments in respect of loans and advances and provisions for contingent liabilities and commitments (3,654) (3,335)

Value re-adjustments in respect of loans/advances and provisions for contingent liabilities and commitments – 2,667

Value adjustments in respect of transferable securities held as financial fixed assets, participating interests and shares in affiliated undertakings (2,725,219) –

Value re-adjustments in respect of transferable security held on financial fixed assets, participating interests and shares in affiliated undertakings 641 108,833

Tax on profit on ordinary activities 14.4 (590,987) (712,468)y

Profit on ordinary activities after tax 17,203,142 20,532,606y

Profit for the financial year 17,203,142 20,532,606

eurobank eFG Private Bank Luxembourg sA 19eurobank eFG Private Bank Luxembourg sA

note 1 – General

Eurobank EFG Private Bank Luxembourg S.A

(the “Bank”) was incorporated in Luxembourg on

August 26, 1986, as a “Société Anonyme” under the

name of Banque de Dépôts (Luxembourg) S.A. The

Extraordinary General Meeting of Shareholders held

on August 6, 1997 resolved to change the name of the

Bank to EFG Private Bank (Luxembourg) S.A with

effect from September 10, 1997.

The Extraordinary General Meeting of Shareholders

held on September 17, 2008 resolved to change the

name of the Bank to Eurobank EFG Private Bank

Luxembourg S.A with effect from October 1, 2008.

The Bank is engaged in the business of providing

private banking, investment and advisory services for

corporate and private clients as well as administrative

and custody services for investment funds. The Bank

is active in the money markets, deposit taking and

lending and engages in spot and forward foreign

exchange business as well as undertaking transactions

in securities and off balance sheet instruments, both

for its own account and on behalf of customers.

Eurobank EFG Private Bank Luxembourg S.A is

included in the consolidated annual accounts of

European Financial Group EFG (Luxembourg) S.A,

whose registered office is in Luxembourg, where the

consolidated annual accounts are available.

Eurobank EFG Private Bank Luxembourg S.A is also

included in the consolidated annual accounts of EFG

Eurobank Ergasias S.A, whose registered office is in

Athens, where the consolidated annual accounts are

available.

y

note 2 – summary of significant accounting policies

2.1 – Basis of presentation These annual accounts have been prepared in

conformity with accounting principles generally

accepted in the banking sector in the Grand Duchy

of Luxembourg. The accounting policies and the

principles of valuation are determined and applied

by the Board of Directors, except those, which are

defined by Luxembourg law and regulations.

On the basis of the criteria set out by the Luxembourg

law, the Bank is exempted from preparing consolidated

annual accounts. In accordance with the amended

law of June 17, 1992, the present annual accounts

are consequently prepared on an unconsolidated

basis for approval by the Annual General Meeting of

Shareholders.

as at December 31, 2011

notes to the AnnuAL Accounts


2.2 – Foreign currenciesThe Bank has adopted a multicurrency accounting

system, as a result of which assets and liabilities

are recorded in the currencies in which they have

occurred. For the preparation of the annual accounts,

amounts in foreign currencies are translated into euro

(EUR) on the following basis:

2.2.1 Spot transactionsAssets and liabilities in foreign currencies are

translated into euro at exchange rates applicable at

the balance sheet date.

Income, charges and purchases of fixed assets

are recorded in the currency in which they are

collected or disbursed and are translated into euro

at rates approximating those ruling at the time of the

transaction.

Exchange gains and losses arising from the Bank’s net

open currency spot position are taken to the profit

and loss account in the current year.

Unsettled spot foreign exchange transactions are

translated into euro at the spot rate of exchange

prevailing on the balance sheet date.

Foreign exchange gains and losses resulting from

spot transactions hedged by forward transactions

are neutralised through “prepayments and accrued

income” and “accruals and deferred income”

accounts. Premiums or discounts arising due to

the difference between spot and forward exchange

rates are amortised in the profit and loss account on

a pro-rata basis.

2.2.2 Forward transactionsUnsettled forward exchange transactions are translated

into euro at the forward rate prevailing on the balance

sheet date for the remaining maturity.

Unrealised exchange losses on un-hedged forward

exchange contracts are recognised in the profit and loss

account at the forward rate prevailing on the balance

sheet date for the remaining term of the contract.

Unrealised exchange gains on forward exchange

contracts are not included, and are only recognised

when ultimately realised, except when such contracts

form an economic unit with off setting foreign exchange

transactions.

2.2.3 SwapsGains and losses on currency swap transactions are

accrued on the straight-line basis over the period

of the swap contract and are included in interest

receivable or payable in the profit and loss account,

as appropriate.

2.3 – Loans and advancesLoans and advances are stated at disbursement value

less repayments made and any value adjustments

required. Accrued interest are recorded in balance

sheet caption “Prepayments and accrued income”.

The policy of the Bank is to establish specific value

adjustments for doubtful debts in accordance with the

circumstances and for amounts specified by the Board

of Directors. These value adjustments are deducted

from the appropriate asset account balances.

2.4 – Valuation of fixed-income transferable securitiesThe Bank has divided its portfolio of fixed-income

transferable securities into three categories for

valuation purposes:

2.4.1 Investment portfolio of financial fixed assetsThis portfolio comprises fixed-income transferable

securities, which are intended to be held on a

long-term basis.

notes to the annual accounts ( continued )


X Principle of valuation at acquisition cost

Fixed-income transferable securities are recorded at

historical acquisition cost in their original currency.

The acquisition cost includes the costs to purchase

the asset. A value adjustment is made where the

market value at the balance sheet date is lower than

the acquisition cost and when the Board of Directors

considers the depreciation to be permanent.

The premium resulting from the purchase of bonds

and other fixed-income transferable securities having

the characteristics of financial fixed assets, at a

price exceeding the amount repayable at maturity,

is amortised in the profit and loss account over the

period remaining until final repayment.

The discount resulting from the acquisition of bonds

and other fixed-income transferable securities having

the characteristics of financial fixed assets, at a price

less than the amount repayable at maturity, is released

to income in instalments over the period remaining

until repayment.

X Principle of valuation at “lower of cost or market”

Fixed-income transferable securities having the

characteristics of financial fixed assets are valued at

lower of their amortised acquisition cost and their

market value. The value adjustment, corresponding

to the negative difference between the market value

and the acquisition cost, is not maintained if the

reasons for which the value adjustment was made

no longer exist.

2.4.2 Trading portfolioThis portfolio comprises fixed-income transferable

securities purchased with the intention of selling them

in the immediate short term. These securities are

traded on a market whose liquidity can be assumed to

be certain and their market price is at all times available

to third parties. These securities are valued at the lower

of their acquisition cost and their market value.

During the year, the Bank did not hold any trading

portfolio.

2.4.3 Structural portfolioThis portfolio comprises fixed-income transferable

securities and asset swaps purchased for their

investment return or yield or held to establish a

particular asset structure or a secondary source of

liquidity. It also includes fixed-income transferable

securities not contained in the other two categories.

Securities in this portfolio are valued at the lower

of their amortised acquisition cost and their market

value. The value adjustments, corresponding to the

negative difference between the market value and the

amortised acquisition cost, are not maintained if the

reasons for which the value adjustments were made

no longer exist.

Premiums included in the acquisition cost and

resulting from the purchase of bonds and other

fixed-income transferable securities included in this

portfolio at a price exceeding the amount repayable

at maturity are amortised in the profit and loss

account over the period remaining until repayment.

Asset swaps held in this portfolio are packaged deals

made of a fixed income transferable security and

a perfect cash flow swap, swapping the fixed rate

received on the fixed income transferable security for

a short term floating rate. Consequently, asset swaps

held in the structural portfolio are booked at their

par value and maintained at their par value.

2.5 – Valuation of variable-yield transferable securitiesParticipating interests and shares in affiliated

undertakings are recorded in the balance sheet at

their acquisition cost in their original currency. The

acquisition cost includes the costs to purchase the

assets. A value adjustment is made if the Board of


Directors considers that a permanent impairment

exists in their carrying value at the balance sheet date.

Companies in which the Bank directly and indirectly

exercises a significant influence are considered to

be affiliated undertakings. Participating interests

comprise rights in the capital of other undertakings,

the purpose of which is to contribute to the activity of

the company through a durable link.

2.6 – Intangible and tangible fixed assets2.6.1 Intangible assetsIntangible assets are valued at cost less accumulated

amortisation. They are amortised on a straight-line

basis over 5 years.

2.6.2 Tangible assetsTangible assets are used by the Bank for its own

operations. Tangible assets are valued at cost less

depreciation to date. Depreciation is calculated

on a straight-line basis over the life of the assets

concerned. The rates used for this purpose are:

2011 2010

% %

Furniture 18.0 18.0

Machinery and equipment 25.0 25.0

Vehicles 20.0 20.0

Hardware and software 25.0 25.0

Premises fixtures 10.0 10.0

Premises fixtures in leased offices are amortised over

the remaining lease period but not over more than

10 years.

2.7 – Derivative instruments2.7.1 Interest rate swapsInterest on interest rate swaps is included in the

balance sheet captions “Prepayments and accrued

income” and “Accruals and deferred income”. It is

credited or charged to interest receivable or payable

in the profit and loss account.

Interest rate swaps, which are not held for hedging

purposes, are marked to market. Provisions are made

for unrealised valuation losses whereas unrealised

valuation gains are not taken into account until

maturity. Interest rate swaps entered into for hedging

purposes are not valued.

2.7.2 Cross currency interest rate swaps (CCIRS)The currency element in a CCIRS is recorded as

explained in note 2.2.3 and the interest element as

stated in note 2.7.1 above.

As at December 31, 2011, the Bank does not hold any

CCIRS.

2.7.3 Forward Exchange transactionsValuation rules for forward exchange contracts are

explained in note 2.2.2 above.

2.8 – Lump-sum provisionA general provision for potential losses on assets and

off balance sheet items is recorded on a risk weighted

basis. This provision, which is tax deductible, is

compensated with the related assets; the portion of

the provision relating to the off balance sheet items is

included in the caption “other provisions”.



note 3 – use of financial instruments

3.1 – Strategy in using financial instruments The Bank’s treasury activities are primarily related to

the use of financial instruments including derivatives.

Since 2006 all treasury activities of the Bank are

carried out with the Treasury Department of the

Bank’s parent company in Athens, EFG Eurobank

Ergasias SA.

Asset/Liability Management of the Bank is taking

into account other banking activities including private

banking client accounts, investment funds and inter-

bank activity mainly with EFG Eurobank Ergasias

S.A, Athens.

The Bank aims to use funds from customer

operations, investment funds operations and other

market deposits that have been raised at fixed and

floating rates and for various periods seeking to

earn profitable margins by investing these funds

in high quality assets. Such operations are only

executed following the limits, as well as defined

products determined with the approval of the Board

of Directors. Limits are currently set in such a way

that restricts the Treasury and Foreign Exchange

Department of the Bank from taking large exposures.

During periods of falling interest rates, the Bank

seeks to increase its margins by favouring short-term

funding and lending for longer periods at higher

rates whilst maintaining sufficient liquidity to meet

all claims that might fall due. During periods of

increasing interest rates, the Bank aims to increase

these margins by lending and borrowing in the short

term and by hedging its assets and liabilities.

Related issues and decisions are taken by the Asset

and Liability Committee of the Bank.

The Bank also raises its interest margin by obtaining

profitable margins through lending to business and

retail borrowers with a good credit standing. Loans

are given only when adequate collateral exists and

after the approval by the Credit Committee of the

Bank. The Bank also enters into guarantees and other

commitments such as letters of credit and letters

of guarantee.

The monitoring of limits and margins is carried out by

the Middle Office of the Bank on the basis of the daily

positions provided by the IT department. Middle

Office reports are communicated daily amongst

others to Local Management and the Head of Group

Treasury in Athens.

When limits are exceeded and margins not respected,

Local Management as well as the responsible Manager

are informed immediately. The excesses are also

reported to the Board of Directors on a quarterly basis.

The Bank hedges part of its existing interest rate

risk resulting from any potential decrease in the fair

value of fixed rate assets denominated both in local

and foreign currencies using interest rate and cross

currency interest rate swaps.

The Bank hedges a proportion of foreign exchange

risk it expects to assume as a result of cash flows from

debt securities using forward exchange transactions.


3.2 – Analysis of financial instruments3.2.1 Information on primary financial instrumentsThe table below analyses the level of primary financial

instruments (primary non-trading instruments and

primary trading instruments) of the Bank, in terms of

carrying amounts, into relevant maturity groupings

based on the remaining period at balance sheet date

to the contractual maturity date. Additional indication

of aggregate fair values of trading instruments is

disclosed where they differ materially from the

amounts at which they are included in the accounts.

“Fair value” is understood as being the amount

at which an asset could be exchanged or a liability

settled as part of an ordinary transaction entered

into under normal terms and conditions between

independent, informed and willing parties, other than

in a forced or liquidation sale.


y


Figures as at December 31, 2011

Less than

3 months

> 3 months

to 1 year

> 1 year

to 5 years> 5 years No maturity Total

y

Instrument class (financial assets)y

Cash in hand, balances with central banks and post office banks – – – – 26,668,205 26,668,205

Loans & advances to credit institutions 1,329,092,907 78,276,181 127,217,634 6,846,622 10,155,325 1,551,588,669

Loans & advances to customers 11,825,070,733 515,578,779 623,840,145 148,397,760 50,712,031 13,163,599,448

Bonds – – 76,540,929 133,890,000 – 210,430,929

Shares – – – – 7,551 7,551y

Total financial assets 13,154,163,640 593,854,960 827,598,708 289,134,382 87,543,112 14,952,294,802y

Non financial assets – – – – 94,020,108 94,020,108y

Total assets 13,154,163,640 593,854,960 827,598,708 289,134,382 181,563,220 15,046,314,910

Instrument class (financial liabilities)y

Amounts owed to credit institutions:

Repayable on demand 701,119,464 – – – 198,033 701,317,497

With agreed maturity dates or periods of notice 11,315,259,085 578,047,866 735,152,840 116,466,963 – 12,744,926,754


Repayable on demand 28,674,411 – – – 100,505,602 129,180,013

Repayable at term or with notice 957,741,636 61,690,319 – – – 1,019,431,955

yTotal financial liabilities 13,002,794,596 639,738,185 735,152,840 116,466,963 100,703,635 14,594,856,219

y

Non financial liabilities – – – – 451 458 691 451 458 691y

Total liabilities 13,002,794,596 639,738,185 735,152,840 116,466,963 552,162,326 15,046,314,910

3.2.1.1 Analysis of financial instruments – Primary non-trading instruments (at carrying amount – EUR)

As at December 31, 2011, the Bank held no primary trading financial instruments.



3.2.1.1 Analysis of financial instruments – Primary non-trading instruments (at carrying amount – in euros) (continued)


Less than

3 months

> 3 months

to 1 year

> 1 year

to 5 years

> 5 years No maturity Total

y

Instrument class (financial assets)y

Cash in hand, balances with central banks and post office banks – – – – 38,692,177 38,692,177

Loans & advances to credit institutions 4,714,535,196 306,014,792 308,319,568 6,945,096 6,567,042 5,342,381,694

Loans & advances to customers 7,186,916,705 523,361,000 767,456,572 280,847,422 80,727,627 8,839,309,326

Bonds – 13,012,748 103,478,102 107,228,793 – 223,719,643

Shares – – – – 18,210 18,210y

Total financial assets 11,901,451,901 842,388,540 1,179,254,242 395,021,311 126,005,056 14,444,121,050y

Non financial assets – – – – 49,558,915 49,558,915y

Total assets 11,901,451,901 842,388,540 1,179,254,242 395,021,311 175,563,971 14,493,679,965

Instrument class (financial liabilities)y

Amounts owed to credit institutions:


With agreed maturity dates or periods of notice 10,674,247,663 750,728,466 1,059,417,344 248,490,663 – 12,732,884,136



Repayable at term or with notice 743,254,631 87,132,013 – – 36,343,409 866,730,053

yTotal financial liabilities 11,849,492,877 837,860,479 1,059,417,344 248,490,663 103,691,425 14,098,952,788

y

Non financial liabilities – – – – 394,727,177 394,727,177y

Total liabilities 11,849,492,877 837,860,479 1,059,417,344 248,490,663 498,418,602 14,493,679,965

As at December 31, 2010, the Bank held no primary trading financial instruments.


3.2.1.2 Description of derivative financial instruments used The Bank enters into the following derivative financial

instruments:

X Forward Exchange Transations represents commit -

ments to purchase foreign and domestic currency,

including undelivered spot transactions.

X Currency and interest rate swaps are commitments

to exchange one set of cash flows for another. Swaps

result in an economic exchange of currencies or

interest rates (for example, fixed rate for floating

rate) or a combination of all these (i.e. cross-currency

interest rate swaps). Except for certain currency

swaps, no exchange of principal takes place.

3.2.1.3 Analysis of derivative financial instrumentsThe table below analyses the level of derivative finan-

cial instruments (trading and non-trading) of the

Bank, broken down in terms of notional amount, into

relevant maturity groupings based on the remaining

period at balance sheet date to the contractual matu-

rity date. The Bank held only OTC derivative finan-

cial instruments as at December 31, 2011.

The notional amounts of certain types of financial

instruments provide a basis for comparison with

instruments recognised on the balance sheet but

do not necessarily indicate the amounts of future

cash flows involved or the current fair value of the

instruments and, therefore, do not indicate the Bank’s

exposure to credit or price risks. The derivative

instruments become favourable or unfavourable as

a result of fluctuations in market interest rates or

foreign exchange rates relative to their terms.

The aggregate contractual or notional amount

of derivative financial instruments on hand, the

extent to which instruments are favourable or

unfavourable and, thus the aggregate fair values of

derivative financial assets and liabilities can fluctuate

significantly from time to time.

y

Nominal amounts Net fair valuey


Less than

3 months

> 3 months

to 1 year

> 1 year

to 5 years

> 5 years Total Total

yInterest rates:Swaps – – 153,285,725 – 153,285,725 (6,796,678)

yForeign exchange:Forwards 968,832,510 27,383,550 – – 996,216,060 –

y

Total 968,832,510 27,383,550 153,285,725 – 1,149,501,785 (6,796,678)

derivatives non-trading instruments otc as at december 31, 2011


3.3 – Credit risk3.3.1 Description of credit risk The Bank takes on exposure to credit risk. The Bank

structures the levels of credit risk it undertakes

by placing limits on the amount of risk accepted in

relation to one borrower or groups of borrowers, and

to geographical segments. Such risks are monitored

on a revolving basis and subject to monthly reviews.

Limits are approved by the Board of Directors and

reviewed at least annually. Under delegation of the

Board of Directors, Management has the possibility

to approve country limits up to a predetermined level.

The Board of Directors also determines who has the

authority to approve excesses and up to what level. The

excesses exceeding amounts and tenor defined within

Group Risk Guidelines are immediately reported

to Local Management and the Group Risk Unit in

Geneva (EFG Bank European Financial Group).

The exposure to any borrower including banks and

brokers is further restricted by sub-limits covering

on and off-balance sheet exposures. Actual exposures

against limits are monitored daily.

Exposure to credit risk is managed through regular

analysis of the ability of borrowers and potential

borrowers to meet interest and capital repayment

obligations and by changing these lending limits

where appropriate. Exposure to credit risk is primarily

managed by obtaining collateral and corporate and

personal guarantees.

The Group Risk Unit is setting types of collateral as

well as minimum margins. The Bank imposes more

strict collateral rules than those set by the group

based on careful analysis, internal policies and the

market environment. The Bank has a clear procedure

to approve “eligible” collateral and it periodically

reviews approved collateral.

On currency and interest rate swaps, the Bank’s

credit risk represents the potential cost to replace


Nominal amounts Net fair valuey


Less than

3 months

> 3 months

to 1 year

> 1 year

to 5 years

> 5 years Total Total

yInterest rates:Swaps – 4,000,000 53,000,000 68,000,000 125,000,000 (12,051,413)

yForeign exchange:Forwards 97,862,750 576,884,016 – – 674,746,664 –

y

Total 97,862,750 580,884,016 53,000,000 68,000,000 799,746,766 (12,051,413)

derivatives non-trading instruments otc as at december 31, 2010

The Bank held no exchange-traded derivative financial instrument and no trading OTC derivative financial

instrument as at December 31, 2011.

y


the swap contracts if counterparties fail to perform

their obligation. This risk is monitored on an ongoing

basis with reference to the current fair value and the

liquidity of the market. To control the level of credit

risk taken, the Bank assesses counterparties using the

same techniques as for its lending activities.

3.3.2 Measures of credit risk exposureInformation on credit risk as it relates to financial

instruments is disclosed on the basis of the carrying

amount that best represents the maximum credit risk

exposure at the balance sheet date without taking

account of any collateral.

With respect to derivative instruments not dealt on

a recognised, regulated market (OTC), the carrying

amount (principal or notional amount) does not

reflect the maximum risk exposure. The maximum

exposure to credit risk is determined by the value of

the overall replacement cost.

The table below discloses the level of credit exposure

in terms of notional amounts, replacement cost,

potential future credit exposure and net risk exposure

adjusted for any collateral, broken down by the

degree of creditworthiness of the counterparty based

on internal or external ratings.

Counterparty solvency (based on external/ internal ratings)

Notional

amount

Current

Replacement

cost

Potential

future

replacement

cost

Overall

replacement

cost Collateral

Net risk

exposure

(1) (2) (3)(4) = (2) + (3) –

Provision (5) (6) = (4) – (5)y

External rating:

BB 606,039,461 12,373,678 5,487,180 17,860,858 – 17,860,858y

Sub-total 1 17,860,858

Internal Rating:y

Customer & Fund

2 5,449,149 56,454 54,491 110,945 – 110,945y

4 499,735,053 25,419,557 4,997,351 30,416,908 – 30,416,908y

5 38,642,863 1,602,229 193,214 1,795,443 – 1,795,443y

Sub-total 2 32,323,296

Total 50,184,154

credit risk on otc derivative instruments (use of market risk method) as at december 31, 2011

y



credit risk on otc derivative instruments (use of market risk method) as at december 31, 2010

Counterparty solvency (based on external/ internal ratings)

Notional amount

Current Replacement

cost

Potential future

replacement cost

Overall replacement

cost CollateralNet risk exposure

(1) (2) (3)(4) = (2) + (3) –

Provision (5) (6) = (4) – (5)y

External rating:y

BB 460,532,826 4,475,863 4,640,328 9,116,191 – 9,116,191y

Sub-total 1 9,116,191 y

Internal Rating:y

Customer & Fundy

1 666,769 772 6,668 7,440 – 7,440y

2 20,881,523 275,023 208,815 483,838 – 483,838y

4 317,916,291 7,500,675 3,179,163 10,679,838 – 10,679,838y

Sub-total 2 11,171,116

Total 20,287,307

y

3.3.3 Concentration of credit riskThe table below shows credit risk concentration as it relates to financial instruments from on–and off balance

sheet exposures by geographic location and economic sector.

Geographic credit risk concentrations

Geographical zone (by country or zone)

Credits and other balance sheet OTC derivatives

2011 2010 2011 2010y

Luxembourg 3,283,591,031 4,813,837,474 477,876,139 311,745,013y

Other European Monetary Union (EMU) countries 8,275,055,552 6,184,870,773 620,272,482 475,346,184

y

Other countries 3,487,668,327 3,494,971,718 51,353,164 12,655,569y

Total 15,046,314,910 14,493,679,965 1,149,501,785 799,746,766


As the Bank is mainly active on the European markets, it has a significant concentration of credit risk with other

European financial institutions. In total, credit risk exposure is estimated to EUR 16,195,816,695 at December

31, 2011 (2010: EUR 15,293,426,731) of which EUR 1,149,501,785 (2010: EUR,799,746,766) consisted of derivative

financial instruments.

y

economic sector credit risk concentrations

The table below shows that credit exposure on credit institutions including financial intermediaries constitutes

over 33% of the total balance sheet credit risk of the Bank as at December 31, 2011 (69% as at December 31, 2010).

3.4 – Market risk The Bank takes on exposure to market risks.

Market risks arise from open positions in interest

rate, currency and equity products, all of which are

exposed to general and specific market movements.

Interest rate risk is monitored daily and reported to

local management and the Head of Group Treasury.

On a monthly basis, the Bank applies a “value at

risk” (VAR) methodology to estimate the market

risk of positions held and the potential maximum

losses expected. The Board of Directors sets limits

on the value of risk that may be accepted, which is

monitored as deemed appropriate.

Economic sector

Credits and other balance sheet items OTC derivatives

2011 2010 2011 2010y

Credit institutions 1,666,713,720 5,357,766,912 619,775,399 464,429,785y

Households 229,255,446 244,432,898 – 579,866y

Investment funds 43,091,349 111,533,094 477,876,139 311,745,013y

Activity ancillary to financial intermediation and insurance 7,832,410,284 1,977,987,972 – –

y

Non financial corporations 1,321,530,385 1,460,354,357 2,788,846 18,020,088y

Governments 75,701,320 218,948,330 – –y

Central banks 56,464,492 38,557,732 – –y

Financial holding companies 3,290,431,966 4,639,404,057 – –y

Others 530,715,948 444,694,613 49,061,401 4,972,014y

Total 15,046,314,910 14,493,679,965 1,149,501,785 799,746,766

y



The Bank’s market risk reporting and the limit

structure is based on a measure of potential loss

under normal market conditions. The parameters

used are:

X A 99% one tailed confidence level. This means that

the potential loss amount is the maximum amount

that could be lost, on average, on 99% of trading

days. Conversely it is the minimum loss that should

be expected on 1% of trading days.

X A 10-day holding period. This means that the Bank

measures risk assuming that exposures could not be

hedged or unwound in less than 10 working days.

X A 180-day time series of changes in market variables.

This means that a 6-month history of market

movements is used to estimate likely changes in

market risk factors (volatilities and correlations).

Since VaR constitutes an integral part of the Bank’s

market risk control system, VaR limits are established

by the Board of Directors on all portfolio operations

including interest rate, FX and equities.

Foreign Exchange rate risk is calculated against local

base currency, its measurement incorporates factors

corresponding to individual foreign currencies in

which the Bank has material positions.

Interest rate risk measurement includes a set of

risk factors corresponding to interest rates in each

of the currencies in which the Bank has material

interest rate sensitive positions. For each currency,

the yield curve is divided into a number of maturity

segments in order to capture the variation in

volatility of interest rates at different points on the

yield curve.

Equity prices risk measurement includes risk

factors corresponding to each of the national

markets in which the Bank has a material position,

irrespectively, in listed or unlisted securities. A

market index captures market-wide movement in

equity prices.

y

note 4 – cash in hand, balances with central banks and post office banks

In accordance with the requirements of the European

Central Bank, the Luxembourg Central Bank

implemented, effective January 1, 1999, a system

of mandatory minimum reserves which applies to

all Luxembourg credit institutions. The minimum

reserve balance as at December 31, 2011 held by the

Bank with the Luxembourg Central Bank amounted

to EUR 26,461,992 (2010: EUR 38,557,732).

y


note 5 – transferable securities

5.1 – Listed securities

5.2 – Unlisted securities

2011

EUR

2010

EURy

Debt securities and other fixed-income securities:y

public sector issues 75,701,320 218,948,330y

other issues 134,729,609 4,771,313y

Total 210,430,929 223,719,643

2011

EUR

2010

EURy

Shares and other variable-yield securities – 10,139y

Participating interests 7,141 7,661y

Shares in affiliated undertakings 410 410y

5.3 – Fixed-income securitiesX Bonds and other fixed-income transferable securities

maturing in 2012 amount to EUR 0 (2011: EUR

13,012,748).

X Bonds and other fixed-income transferable securities

amount to EUR 210,430,929 (2010: EUR 223,719,643).

Of these, EUR 76,590,929 are classified in the

Bank’s structural portfolio and EUR 133,840,000 are

classified in the Bank’s investment portfolio.

5.4 – Bonds eligible for refinancing with a central bank of the Euro zoneThe market value of bonds eligible for refinancing with

a central bank of the Euro zone included in the heading

“Bonds and other fixed-income transferable securities”

is EUR 199,264,321 (2010: EUR 168,619,712).

5.5 – Sale and Repurchase transactionsAs at December 31, 2011, the Bank is committed

in sale and repurchase transactions with a firm

repurchase obligation. The securities still appear on

the balance sheet of the bank for a total amount of

EUR 36,276,695 (2010: EUR 197,058,278).

In the meantime, the Bank is also committed in reverse

repurchase agreements for a total amount of EUR

36,276,695 (2010: EUR 103,343,278).

y



5.6 – Sale of portfolio in Investment PortfolioOn 4 May 2011, in the context of the financial situation

and economic environment in Greece, the Bank sold

the Greek Government Bonds (GGBs) held in its

investment portfolio. Following a Group-developed

valuation method using accepted principles to exclude

market overreaction and noise, the GGBs were sold

for a total amount of EUR 218.3 million. The Bank

realized a loss on the sale of bonds of EUR 2.7 million.

The sale of the GGBs was followed by an unwinding

of a hedging derivative with an additional loss of

EUR 6.4 million. The Bank does not hold any Greek

Government Bonds, neither in the investment nor in

the structural portfolio as of December 31, 2011.

The Bank’s Board of Directors decided to use the

proceeds of the sale to purchase European Central

Bank eligible bonds. As a result, the Bank purchased

an AAA rated bank bond with additional government

guarantee (face value EUR 40 million), an AA1 rated

covered bank bond (face value EUR 100 million) and

an A rated Polish sovereign debt (face value EUR

76 million).

The decision on the classification of the acquired

portfolio was taken by the Bank’s Board of Directors.

The Bank classified the AAA and the AA1 Bank bonds

in its investment portfolio as it has the intention and

ability to hold them to maturity. The Polish government

bond is covered by an Interest Rate Swap derivative

instrument held for Cash Flow Hedging purposes.

The Bank has classified the Polish government bond

in its structural portfolio. As at December 31, 2011, the

Bank considers that no impairment has to be made

as there is no durable reduction in the value of the

respective bonds at year end.

y


note 6 – Affiliated undertakings and participating interests

6.1 – Summary of shares in participating interests and affiliated undertakingsAt December 31, 2011, the Bank held participating interests and shares in affiliated undertakings in the following

companies:

Participating interests Head OfficeCostEUR

Proportion of

capital held

%

Capital and

reserves at

31/12/11

EUR

Profit or (loss)

at 31/12/11

EURy

European Financial Group EFG S.A Luxembourg (1) 3,099 10% 11,821 (139)y

Other participations 4,959 – – –y

8,058

Cumulative value adjustments (see note 7) (917)

y

Net value of participating interests 7,141

Shares in affiliated undertakingsy

Eurobank EFG Holding (Luxembourg) S.A (2) Luxembourg 310 1% 11,602,572 3,959,941

yEurobank EFG Fund Management Company (Lux) S.A (3) Luxembourg 100 0.008% 24,336,819 4,943,058

y

Total 410

Cumulative value adjustments (see note 7) –

y

Net value of shares in affiliated undertakings 410

(1) December 31, 2010 (unaudited).(2) December 31, 2009 (unaudited).(3) December 31, 2010 (audited).



6.2 – Transactions with other group companies

y

2011

EUR

2010

EUR

Assetsy

Loans and advances to credit institutions 1,226,790,688 5,083,038,606y

Loans and advances to customers 10,795,930,546 6,436,013,863y

Total 12,022,721,234 11,519,052,469

Liabilitiesy

Amounts owed to credit institutions 13,446,243,870 13,146,317,482y

Amounts owed to customers 73,378,673 73,684,306y

Subordinated liabilities 156,752,491 156,752,491y

Total 13,676,375,034 13,376,754,279


no

te 7

– M

ove

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ts in

fixe

d a

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Cos

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adju

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Am

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ts (i

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)

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begi

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of th

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yea

r

2011

Add

itio

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sals

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at

the

end

of

the

finan

cial

year

201

1

Cum

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valu

e

adju

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at

the

begi

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of th

e fin

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year

201

1

Valu

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adju

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Rev

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of V

alue

adju

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Cum

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at

the

end

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e

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201

1

Net

boo

k va

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at

the

end

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the

finan

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year

201

1y

Deb

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eld

as fi

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ass

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229,

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133,

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00

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00

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,081

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00

0y

Long

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g:y

Part

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9,20

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y

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)(3

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–(1

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)83

7,820

y

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)(3

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y

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806



note 8 – subordinated liabilities

The following subordinated borrowings granted by the Mother Company, EFG Eurobank Ergasias S.A, were

outstanding at December 31, 2011:

These subordinated borrowings meet the requirements of point 18 d) of part IV of the circular 06/273 as

amended.

Interest periods (starting from the date of the drawdown of the loan) have a duration of three months. The

interest rate applicable is EURIBOR 3 months + 20 b.p for subordinated debts from a) to d) and 65 b.p. for e).

Interest paid during the year amounts to EUR 2,625,746.

y

note 9 – subscribed capital

The authorised and paid-up share capital of the Bank amounts to EUR 70,000,000.

The Bank’s capital comprised the following shares at the end of the year:

y

Currency Nominal value Interest rate (%) Maturity datey

a) EUR 25,000,000 1.674 27/11/2013y

b) EUR 25,000,000 1.67 11/12/2013y

c) EUR 20,000,000 1.61 24/03/2014y

d) EUR 46,752,491 1.79 31/07/2014y

e) EUR 40,000,000 2.037 30/03/2017y

156,752,491

Number

Nominal

value

Total

EURy

Registered shares 500,000 140 70,000,000y


note 10 – reserves

10.1 – Legal reserveIn accordance with Luxembourg law, the Bank is

required to transfer at least 5% of its annual profit to

the legal reserve until this equals 10% of subscribed

capital. The legal reserve is not available for

distribution to shareholders.

10.2 – Special reserveIn accordance with the tax law, the Bank reduces the

Net Wealth Tax liability by deducting it from itself. In

order to comply with the tax law, the Bank allocates

under non-distributable reserves (item “special

reserve”) an amount that corresponds to five times

the amount of reduction of the Net Wealth Tax. This

reserve is non-distributable for a period of five years

from the year following the one during which the Net

Wealth Tax was reduced.

y

note 11 – shareholders’ equity

The movements of shareholders’ equity of the Bank may be summarised as follows:

The appropriation of the 2010 result was approved by the Annual Meeting of Shareholders on March 8, 2011.

Subscribed

capital EUR

Reserves Profit

brought

forward

EUR

Current

year profit

EUR

Total own

funds EUR

Legal

EUR

Special

EUR

Total

reserves

EURy

Balance at December 31, 2010 70,000,000 5,380,312 19,335,901 24,716,213 81,929,038 20,532,606 197,177,857

yTransfer to legal

reserve – 1,026,630 – 1,026,630 (1,026,630) – –y

Transfer to special reserve – – 579,560 579,560 (579,560) – –

y

Profit brought forward – – – – 20,532,606 (20,532,606) –y

Current year profit – – – – – 17,203,142 17,203,142y

Balance at December 31, 2011 70,000,000 6,406,942 19,915,461 26,322,403 100,855,454 17,203,142 214,380,999

y



note 12 – Assets and liabilities denominated in foreign currencies

y

2011

EUR

2010

EUR

Total assets in foreign currencies 2,376,075,950 2,933,104,112y

Total liabilities in foreign currencies 2,375,845,641 2,932,947,392y

2011

EUR

2010

EUR

Guarantees and other direct substitutes for credit 30,651,868 17,475,362y

note 13 – contingent liabilities and commitments

13.1 – Contingent liabilitiesContingent liabilities included in off balance sheet accounts at December 31, 2011 comprised:

13.2 – Other off-balance sheet commitments

2011

EUR

2010

EUR

Assets held on behalf of third parties 1,534,870,099 2,770,318,895y

Credits confirmed but not used 1,220,769,039 1,585,437,018y

Repurchase agreements 40,836,849 113,804,481y

Interest rate swaps 153,285,725 125,000,000y

Forward foreign exchange transactions 996,216,060 674,706,664y

Fiduciary operations 483,317,830 220,260,138y

Other 67,787 40,102y

y


13.3 – Deposit Guarantee SchemeAll credit institutions in Luxembourg are a member of

the non-profit making “Association pour la Garantie

des Dépôts, Luxembourg” (AGDL).

The exclusive objective of the AGDL is the

establishment of a system of mutual guarantee of cash

deposits and of receivables arising from investment

operations made by individuals with members of

the AGDL, without distinction of their nationality

or residence, by corporations incorporated under

Luxembourg or another European Union member

state law, which are authorised, because of their size,

to prepare an abridged balance sheet in conformity

with the applicable law, as well as by those

corporations of a similar size as defined by law of

another European Union member state.

The AGDL reimburses to the deposit holder the

amount of his guaranteed cash deposits and to the

investor the amount of his guaranteed receivable with

a maximum foreign currency equivalent limit of EUR

100,000 per guaranteed cash deposit and EUR 20,000

per guaranteed receivable arising from investment

operations other than that relating to a cash deposit.

At December 31, 2011, the Bank has no provision in

connection with this deposit guarantee and investor

compensation scheme.

13.4 – Management and representative servicesThe Bank has provided the following management

and representative services to third parties in the

course of the financial year:

X Investment management and advice.

X Safekeeping and administration of securities.

X Fiduciary services.

X Agency services.

y


note 14 – Profit and loss account

14.1 – Sources of income by geographical region (OECD)By application of Article 69 of the amended law of June 17, 1992 on the annual accounts of credit institutions,

sources of income have not been analysed by geographical region.

14.2 – Other operating incomeOther operating income at December 31, 2011 represents:

2011

EUR

2010

EUR

Income Eurobank EFG Holding (Luxembourg) SA 11,500 595,846y

Service fees billed to Eurobank EFG Fund Management

Company (Lux) SA 148,993 164,562y

Other income 5,157 88,838y

Reversal of prior years’ tax provisions 500,970 2,456,104y

666,620 3,305,350

14.3 – Other operating chargesOther operating charges at December 31, 2011 represent:

2011

EUR

2010

EUR

Aristolux Investment Fund Management Company – 124,987y

Withholding taxes 260,419 145,237y

Loss on IRS Hedging Greek Government Bonds 6,434,017 –y

Previous year custody fees – 455,692y

Other charges 432,975 67,440y

7,127,411 793,356

14.4 – Tax chargeThe Bank is liable to taxes on income, capital and net assets. The Luxembourg tax authorities have issued

assessments for the years up to and including 2009. Tax liabilities including tax advances paid are recorded

under “Provisions for taxation” in the balance sheet.



2011 2010

Senior Management and Management 13 11y

Employees 55 53y

68 64

2011 2010

Audit fees 226,700 232,300y

Other assurance services 35,000 60,000y

Tax 5,956 70,553y

Other 3,065 7,800y

y

14.5 – Independent auditor’s feesFor the year ending December 31, 2011 independent auditor’s fees are as follows:

note 15 – staff and directors

15.1 – StaffNumber of employees at the end of the financial year 2011:

15.2 – Information relating to managementSenior Management and Management received

emoluments totalling EUR 1,741,319 in respect of

their duties (2010: EUR 1,539,833).

Board members received emoluments totalling EUR

75,200 in respect of their duties (2010: EUR 237,011).

Pension commitments in respect of Senior Mana-

gement have been concluded with an external

insurance company.

As at December 31, 2011 loans totalling EUR

188,063 were granted to 3 members of Management,

Senior Management and Board Members (2010:

EUR 4,764,483).

Guarantees (EUR 11,490) for the rent of apartments

have been given on behalf of the Bank to 3 members

of the Management and Senior Management (2010:

EUR 13,540).

Design and production: Photoengraving: Panchro

Printing: FrazierPrinted on Antinoë Brut Soft White to 270 gsm

and Focus Art Natural to 135 gsm

Eurobank EFG Private Bank Luxembourg SA 5, rue Jean Monnet – L-2180 Luxembourg — P.O. Box 897 L-2018 Luxembourg

Telephone (+352) 42 07 24-1 — Facsimile (+352) 42 07 24-650www.eurobankefg.lu

R.C. B 24724 registered office as above

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