schtzngrmm! · 2020. 4. 25. · schtzngrmm is one of the ﬁ rst so-called “speaking poems” by...

Euram Bank AGPalais EsterházyWallnerstrasse 41010 Vienna, AustriaTel. + 43 1 512 38 80 0Fax + 43 1 512 38 80 888offi [email protected]

schtzngrmm!The key to growth and protection.

Change – driven by minds.What is the origin of innovation – if not the mind?What is the root of effi ciency – if not refl ection, anticipation, team thinking,revolutionary thinking, lateral thinking?We embrace change driven by minds.Jointly: overcoming narrow limits of specialization. With our partners and clients: sensitive to each personal need and idea.In many countries: appreciating differences, yet transcending cultural divides.Time and again: expanding the limits of traditional thinking.

schtzngrmm is one of the fi rst so-called “speaking poems” by the Austrian lyricist Ernst Jandl. When the poem was fi rst published in 1957, it triggered an uproar – as did other publications by Jandl. One of the things Ernst Jandl was accused of was spoiling young people. Today, more than ten years after his death, he is a celebrated poet.Source: Ernst Jandl, Poetische Werke, published by Klaus Siblewski © 1997 Luchterhand Literaturverlag, Munich, part of Random House GmbH publishing group

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Inspired.Our services speak of continuity, reliability and sta-bility. Of expertise, mental agility and creativity. We draw from many sources of inspiration: technical innovation, deep analysis of business structures and processes, life experience. Or simply: the needs and wants of individuals. Sometimes the spark for a new idea is an image, a phrase, a statement of a client - or a line of a poem.

Creative.Creativity is a big word: used frequently, misused, misunderstood – always open to interpretation. To us, creativity means innovation in all business areas. Innovation is crucial in a faster changing world. Innovative solutions must be sustainable and stand the test of time, in an ever more complex world. Solutions which are precise in meeting clients’ needs. And they do; they are; they work.

Trusted.Positive experiences create trust. Actions that build confi dence: an impressive performance, open and transparent communication. Sometimes trust is simply advanced: someone offers you trust without knowing whether it will be justifi ed, irrespective of whether you can prove that you deserve it. Can we afford to disappoint? Of course not. Trust and trusting is a question of mindset. That is the tenor of our bank. Every day, every time.

Focused.Recent developments in the fi nancial industry around us gave pause for thought. First and foremost, they made us focus on our core competencies. Reliable private banking, pure asset management and innovative card payment services are the solid foundation of our daily business – based on excellent capital resources. In addition to strong personal values, total commitment to our clients and innovative strength. We have built a reliable foundation – and we look forward to a successful future.

schtzngrmm is one of the fi rst so-called “speaking poems” by the Austrian lyricist Ernst Jandl. When the poem was fi rst published in 1957, it triggered an uproar – as did other publications by Jandl. One of the things Ernst Jandl was accused of was spoiling young people. Today, more than ten years after his death, he is a celebrated poet.

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Inspired.Our services speak of continuity, reliability and sta-bility. Of expertise, mental agility and creativity. We draw from many sources of inspiration: technical innovation, deep analysis of business structures and processes, life experience. Or simply: the needs and wants of individuals. Sometimes the spark for a new idea is an image, a phrase, a statement of a client - or a line of a poem.

Creative.Creativity is a big word: used frequently, misused, misunderstood – always open to interpretation. To us, creativity means innovation in all business areas. Innovation is crucial in a faster changing world. Innovative solutions must be sustainable and stand the test of time, in an ever more complex world. Solutions which are precise in meeting clients’ needs. And they do; they are; they work.

Trusted.Positive experiences create trust. Actions that build confi dence: an impressive performance, open and transparent communication. Sometimes trust is simply advanced: someone offers you trust without knowing whether it will be justifi ed, irrespective of whether you can prove that you deserve it. Can we afford to disappoint? Of course not. Trust and trusting is a question of mindset. That is the tenor of our bank. Every day, every time.

Focused.Recent developments in the fi nancial industry around us gave pause for thought. First and foremost, they made us focus on our core competencies. Reliable private banking, pure asset management and innovative card payment services are the solid foundation of our daily business – based on excellent capital resources. In addition to strong personal values, total commitment to our clients and innovative strength. We have built a reliable foundation – and we look forward to a successful future.

2012/2013 Annual ReportEuropean American Investment Bank AG

Foreword by the Chief Executive Officer

Ever since the financial crisis, the financial industry has been struggling to restore trust and confidence. The question remains why it took a disaster like 2008 to wake up and cause industry and investors to reflect.

By now, many things have moved in the right direction. A new general framework of stricter rules and regulations disciplines the financial industry. The banks’ business models have come under scrutiny, their risk profiles have been made transparent, and there is a healthy tendency to refocus on core competencies. In addition, banks have been building up capital and empha-sising conservative liquidity management.

We successfully rose to the challenges in the business year 2012/2013 and have im-plemented the necessary steps. We have re-structured our equity participations favou-rably, strengthened our core businesses,

and have advanced significant and promi-sing growth projects. Moreover, Euram Bank’s capital resources continue to be ex-cellent.

Trust and confidence simply cannot be commanded – any call for trust triggers suspicion and distrust. Trust needs to be the general rule in guiding actions, not the exception. Our daily task is to make the “banking business” understandable and transparent again, in everything we do.

Whenever you have questions, please do not hesitate to contact us – we start by lis-tening closely to you.

Manfred Huber Chief Executive Officer September 2013

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Supervisory Board

Adolf Walter Höllmer– Chairman Dr. Erik Max Michael Obermayer– Vice chairman Dkfm. Senta Penner

Managing Board

Manfred HuberJohannes LangerJosef Leckel

Manfred Huber

Johannes Langer

Josef Leckel

Corporate Bodies

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1. Business Development and Economic Situation

Business Model

European American Investment Bank Ak-tiengesellschaft (“Euram Bank") is an Aus-trian bank specializing in Private Banking, Asset Management and Card Payment Ser-vices. Our customers are mainly wealthy international private individuals and ent-repreneurs, as well as established instituti-onal investors. Our highly qualified em-ployees come from 6 different nations and reflect Euram Bank's open-minded corpo-rate culture.

Euram Bank is 100% privately owned. The majority – via Euram Holding AG - is held by executives and members of their fami-lies together with financial investors, a fact which ensures a high level of continu-ity and commitment for the bank and its customers.

Viktor Popovic, who has built up the Cor-porate Finance, Card Payment Services and Investment Banking sectors since 2002,

relinquished his position as CEO effective as of April 30, 2013. Manfred Huber, res-ponsible for Asset Management and Priva-te Banking, was appointed by the supervi-sory board as new CEO. Josef Leckel joined the managing board on April 15, 2013. He has held executive positions in the banking and finance sector for almost 30 years and has set up several institutions and bran-ches from scratch, implementing the ne-cessary regulatory and operational proces-ses and successfully establishing Product Management and Customer Service divisi-ons. Josef Leckel is responsible for the di-visions Card Payment Services, Alternative Investments and IT. Johannes Langer will continue to serve as Chief Financial Of-ficer.

Business Development

The slackening trend in the Eurozone, which got significantly worse during the last quarter, clearly lost momentum in the first quarter of 2013. Since late March 2013, international financial markets were strongly influenced by changing economic growth signals and – as a consequence –

Management Report

alternating expectations as to future mo-netary policies across the Atlantic. Moreo-ver, major central banks further loosened their already expansive monetary policy, including a reduction of the key interest rate in the Eurozone. Initially, these rela-xing measures led to a worldwide decrease in the yield return on long-term bonds. In May, however, interest began to rise again worldwide based on positive economic data. In addition, there was mounting ex-pectation that the US monetary policy could probably be tightened sooner than previously assumed. Towards the end of the second quarter of 2013, however, the US Federal Reserve’s confirmation that its policy would remain accommodative in the near future led to a slowdown and partial reversal of the interest increase.

Despite the difficult economic environ-ment, we continued to meet the expecta-tions of our customers and were rewarded with their confidence, thanks to the expe-rience and dedication of our staff and the excellent performance in all our invest-ment strategies. Our prudent management of the assets entrusted to us, our compe-

tence and our long term experience in ad-vising our customers in all investment matters have proven very successful in an environment undergoing structural change. The Private Banking division was strongly affected by the resignation of a team of client advisors. Our remaining dedicated Private Banking team with the support of the entire staff superbly coped with this very difficult situation showing strong commitment and enthusiasm. The Europ-portunity Bond Fund managed by our Asset Management department was awar-ded with the best bond fund distinction (5 stars) by “FWW Fundstars", an inde-pendent, internationally renowned fund rating agency. Our Card Payment Service division continued its extremely profitable development following a successful inter-nal restructuring in 2010. A project deve-loped with local partners was successfully sold to an Austrian financial institution.

Our equity holding business was subject to a fundamental restructuring process. The planned sale of the 53.5% share in White-Concierge Limited was successfully com-pleted during the business year 2012/2013.

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Euram Bank Asia Limited, in which Euram Bank holds a 51% stake, withdrew from Dubai in the second half of 2012. On July 30, 2012, Euram Bank filed an application with the Dubai Financial Services Agency (DFSA) for a voluntary return of the licen-se of Euram Bank Asia Limited, which was approved on October 31, 2012, thus initia-ting its quiet liquidation. Three of Euram Bank’s holdings (Euram Invest Holdings I GmbH, Euram Invest Holdings II GmbH and Euram Invest Holdings Vier GmbH) are currently in liquidation, the shares held in these companies were either dissol-ved or sold.

The balance sheet total as of June 30, 2013 amounted to EUR 182.7 million, which is a decrease of 51.5% on last year (June 30, 2012: EUR 376.9 million). Receivables from customers declined by 68.9% on last year to EUR 76.1 million (June 30, 2012: EUR 244.5 million), and liabilities to cus-tomers were also down 57.3% to EUR 149.9 million (June 30, 2012: EUR 351.3 million). These declines are the result of the termination of a business model in 2011, which was carried out in cooperation

with Euram Bank Asia Limited. The busi-ness model supported Indian companies in the issuance of Global Depositary Receipts at the Luxembourg Stock Exchange. Due to the underlying structure (100% collaterali-zation of lendings by deposits and securi-ties), the ending of that business model noticeably affected the balance sheet total. GDR transactions in the total value of USD 202 million were terminated in the fiscal year 2012/2013.

Euram Bank's operative result was remar-kable in the fiscal year 2012/2013. At EUR 13.7 million, its operating income was only marginally lower than last year’s (June 30, 2012: EUR 13.9 million). The si-gnificant decline in net interest income from EUR 3.5 million (June 30, 2012) to EUR 1.8 million, which was due to low in-terest levels and the ending of the above mentioned business model, was more than compensated by the sale of the 53.5% share in WhiteConcierge Limited. Opera-ting expenses amounted to EUR 10.7 milli-on (June 30, 2012: EUR 11 million), the operating result rose to EUR 3 million (June 30, 2012: EUR 2.8 million).

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Income from the release of value adjust-ments of receivables and of accruals for contingent liabilities and for credits risks amounted to EUR 178.7 thousand (value adjustments for receivables in the amount of EUR 440.2 thousand were recognized as of June 30, 2012), value adjustments for securities and for investments and shares in affiliated companies amounted to EUR 34.8 thousand (June 30, 2012: EUR 912.4 thousand).

As a result, the profit from ordinary acti-vities remarkably amounted to EUR 3.1 million (June 30, 2012: EUR 1.5 million).

Financial and Non-Financial Key Performance Indicators

Euram Bank's capital resources continue to be excellent. Eligible capital pursuant to Section 23 of the Banking Act amounted to EUR 15.2 million (June 30, 2012: EUR 15.2 million) and thus by far exceeded the capi-tal requirement of EUR 5.4 million (June

30, 2012: EUR 6.1 million). At 37%, the equity ratio thus considerably exceeded the statutory minimum level (June 30, 2012: 30.6%). Own funds consist entirely of Tier 1 capital. The cost/income ratio was 78.2% compared to 79.7% last year.

In the fiscal year 2012/2013 Euram Bank generated net profits of EUR 3.4 million. Upon the respective resolution adopted by the shareholders in the general assembly meeting to be held in October 2013, Euram Bank intends to distribute a dividend of EUR 3.3 million – i.e. 21.8% of the capital of EUR 15,261 million.

Material Events after the Balance Sheet Date as of June 30, 2013

No material events occurred after the ba-lance sheet date as of June 30, 2013, which could have affected the presentation of the Bank's assets and liabilities, financial con-dition and results of operation.

2. Forecast Development and Risks

Outlook 2013/2014

In the fiscal year 2013/2014 we expect further stabilization and growth and hence increase in income from our Private Ban-king business. The outstanding perfor-mance of our funds should lead to more substantial volume in Asset Management. Promising new Card Payment Services projects are close to completion. Together with our partners we are currently develo-ping further projects in the field of card-supported payment transactions.

Material Risk and Uncertainties

The interim order issued by the Securities and Exchange Board of India (SEBI) on September 22, 2011, which accuses Euram Bank of having breached the rules of con-duct of the Indian Stock Exchange as FII licensee is still in force. Euram Bank con-tinues to cooperate with all authorities in-volved and urges a fast clarification of the matter.

In February 2012, an Indian company filed a complaint with the Vienna Commercial Court, to obtain a declaratory judgment against Euram Bank. Euram Bank and the Indian company disagree as to the authen-ticity of a pledge agreement dated March 2010 between the Indian company and Euram Bank and whether Euram Bank is therefore entitled to use the pledged credit balance on the Indian company's account with Euram Bank to secure a loan which Euram Bank has granted to a borrower. In reliance on that pledge agreement, Euram Bank refuses to transfer the Indian company's credit balance to that company's other accounts. Euram Bank has obtained an opinion from a sworn and court-certi-fied expert for forensic graphologic exami-nation in order to clarify whether the sig-nature on the pledge agreement between the Indian company and Euram Bank is an authentic signature of the Indian company's authorized representative, or whether it might be forged as the Indian company claims. The expert concluded that the sig-nature on the pledge agreement between the Indian company and Euram Bank is an

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authentic signature of the person autho-rized by the Indian company and not a forgery. Two court hearings took place in this case in the fiscal year 2012/2013. The court has however not yet treated the main allegation of the Indian company, which is to “clarify the pledge agreement's lack of authenticity". Based on the above menti-oned expert opinion, Euram Bank assumes that the court will decide in favor of Euram Bank.

On January 2, 2013, Euram Bank learned that a US citizen brought an “action for damages" against Euram Bank before the United States District Court for the District of North Carolina in August 2011. The plaintiff argues that in December 2002 he participated in a transaction planned, pro-moted and marketed by Euram Bank. Ha-ving investigated the plaintiff's income tax return, the Internal Revenue Service (IRS) denied the plaintiff the right to offset his losses. Euram Bank refuted and entirely rejected all claims and accusations of the

plaintiff and made available to the District Court of North Carolina through US coun-sel all relevant documents, which prove that Euram Bank has not planned, promo-ted or marketed those transactions at any point in time. Euram Bank considers it un-likely having to accept any financial res-ponsibility for this case. Consequently, Euram Bank has not made accruals for li-tigation risks in its June 30, 2013 financi-al statements.

3. Risk Reporting

Euram Bank applies the standard method set out in Section 22a of the Banking Act to calculate its credit risk. Euram Bank grants loans in the context of existing cus-tomer relationships and subject to full col-lateralization, either through cash deposits or through securities held with Euram Bank, taking into account appropriate conservative lending limits. Euram Bank does not invest in derivative financial ins-truments.

Furthermore, Euram Bank does not engage in trading for its own account. Securities held as current assets are exclusively held for resale to customers and not with the intention to take advantage of short-term price and interest fluctuations.

The liquidity risk is limited by largely matching maturities. Customer deposits are mainly invested according to maturiti-es, and demand deposits are invested up to a maximum of one week with a selected group of other banks. Interest rate risks are controlled upon advice from the Asset/Liability Management Committee (ALCO) which issues recommendations for asset/liability management. The results are eva-luated and discussed on a monthly basis. The recoverability of collateral provided for collateralized loans is reviewed auto-matically on a daily basis.

Due to Euram Bank's geographical focus, the operational risk is the most significant risk. The money laundering risk is mitiga-

ted by implementing an analytical anti-money laundering, compliance and risk solution. The AML solution allows us to identify unusual, unexpected and suspi-cious customer patterns and transactions, and the Compliance Officer is automati-cally warned in case of any significant suspicious patterns. Besides identifying suspicious situations, this AML solution supports the investigation, further proces-sing and documentation of identified ca-ses. Each step is completely documented in compliance with audit guidelines and can be reviewed and verified at any time by means of reporting tools.

To limit its legal risk, Euram Bank closely cooperates with a renowned law firm and uses this firm's expertise in connection with the launch of new products, transac-tions and lines of business.

In the process of operational risk manage-ment, guidelines for the identification, evaluation and monitoring of risks are up-

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dated on an annual basis. Daily risk ma-nagement was incorporated into business and administration sectors. This business partnership model ensures close monito-ring and guides the staff to a high aware-ness of operational risks.

We apply the base indicator method pur-suant to Section 22j of the Banking Act (BWG) in conjunction with Section 182 of the Solvency Regulation to calculate our operational risk.

In compliance with the pillar II/Basel II re-quirements, “ICAAP" measures were adop-ted. Euram Bank issues a risk strategy which is updated on an annual basis. As provided in the risk strategy, the risk bea-ring capacity analysis compares the availa-ble risk coverage with potential risks. That analysis is prepared on a quarterly basis and is submitted to the managing board and the supervisory board as part of the risk report.

Vienna, September 6, 2013

The Managing BoardManfred Huber Johannes Langer Josef Leckel

| 18BALANCE SHEET as of June 30, 2013

ASSETS June 30, 2013 June 30, 2012 EUR EUR THOUSAND EUR 1. Cash in hand, balances with central banks and post office banks 41,270,246.84 37,750 2. Claims against credit institutions 54,886,937.36 46,896 a) repayment on demand 50,299,046.18 23,198 b) other loans and advances 4,587,891.18 23,699 3. Loans and advances to customers 76,068,063.55 244,546 4. Stocks and other non fixed income securities 4,724,581.03 9,909 5. Participations 1,938,207.00 33,523 6. Shares in affiliated companies 972,609.63 1,007 7. Intangible fixed assets 56,604.43 57 8. Tangible assets 182,090.35 196 hereof: land and buildings used by the credit institution in the course of its own business (EUR 0.00) 9. Other assets 2,276,534.63 2,55610. Prepayments and accrued income 361,841.20 454 182,737,716.01 376,894

11. Foreign assets 100,090,441.18 292,763

LIABILITIES June 30, 2013 June 30, 2012 EUR EUR THOUSAND EUR 1. Liabilities to credit institutions 7,247,470.83 3,073 a) repayable on demand 2,622.11 73 b) with agreed maturity dates or period of notice 7,244,848.72 3,000 2. Liabilities to customers (non-bank) 149,934,606.71 351,301 a) Other liabilities aa) repayable on demand 124,806,928.62 323,253 bb) with agreed maturity or period of notice 25,127,678.09 28,048 3. Securitised liabilities 1,531,520.45 1,905 4. Other liabilities 2,059,794.53 2,321 5. Accruals and deferred income 125,604.85 140 6. Provisions 3,250,078.93 2,526 a) provisions for severance payments 174,466.04 254 b) provisions for taxation 0.00 275 c) other provisions 3,075,612.89 1,997 7. Subscribed capital 10,045,712.61 10,046 8. Capital reserves 1,920,350.77 1,887 a) tied-up 1,886,813.16 1,887 b) free 33,537.61 0 9. Profit reserves 2,634,904.17 2,635 a) other reserve 2,634,904.17 2,635 10. Liability reserve pursuant to § 23 para 6 Banking Act 660,500.00 660 11. Net Profit 3,327,172.16 401 182,737,716.01 376,894

1. Contingent liabilities 3,376,387.83 3,968 2. Fiduciary Deposits 2,516,231.01 2,581 3. Own funds to be taken into account pursuant to § 23 15,204,863.12 15,171 4. Required own funds pursuant to § 22 para 1 5,428,248.00 6,148 5. Liabilities abroad 151,253,387.43 346,777

| 20Profit and loss account for 2012/2013

PROFIT AND LOSS ACCOUNT June 30, 2013 June 30, 2012 EUR EUR THOUSAND EUR 1. Interest and interest-like earnings 2,631,758.66 5,435.4 hereof: fixed interest securities EUR 0,00 2. Interest and interest-like expenditures -848,856.45 -1,980.0 I. NET INTEREST EARNINGS 1,782,902.21 3,455.4 3. Earnings from securities and participations 139,895.98 94.3 4. Earnings from commissions 48,427,972.38 17,331.2 5. Expenditures from commissions -43,178,945.63 -9,874.4 6. Earnings/expenditures from financial transactions -136,836.42 -123.8 7. Other operating earnings 6,634,253.31 2,988.5 II. OPERATING EARNINGS 13,669,241.83 13,871.3 8. General administrative expenditures a) personnel expenditures -6,041,976.54 -5,038.9 aa) wages and salaries -5,234,812.67 -4,120.6 bb) payment of legal social levies and compulsory contributions -675,343.36 -651.7 cc) other social expenditures -45,039.91 -52.9 dd) expenditures for old-age care and assistance -120,566.99 -109.1 ee) endowment of the severance compensation provision 33,786.39 -104.6 b) Other administrative expenditures (overhead) -4,135,476.72 -5,612.3 -10,177,453.26 -10,651.2

PROFIT AND LOSS ACCOUNT June 30, 2013 June 30, 2012 EUR THOUSAND EUR 9. Value adjustments of the assets listed in asset items 7 and 8 -136,008.97 -154.9 10. Other operating expenditures -377,690.90 -242.5 III. OPERATING EXPENDITURES -10,691,153.13 -11,048.6 IV. OPERATING RESULT 2,978,088.70 2,822.7 11. Balance of value adjustments and earnings from the dissolution of value adjustments of claims and allocations to/from provisions for contingent liabilities and credit risks 178,692.06 -440.2 12. Balance of earnings and expenditures from value adjustments of securities valued like financial investments as well as of participations and shares held in affiliated companies -34,878.58 -912.4 V. RESULT OF ORDINARY BUSINESS OPERATION 3,121,902.18 1,470.1 13. Income and earnings tax 204,714.63 -541.8 VI. ANNUAL SURPLUS 3,326,616.81 928.4 14. Change of reserve 0.00 -536.0 VII. ANNUAL PROFIT 3,326,616.81 392.4 15. Profit carryforward / loss carryforward 555.35 8.2 VIII. NET PROFIT 3,327,172.16 400.6

| 24Notes

to the financial statements of European Ame-rican Investment Bank Aktiengesellschaft (“Euram Bank") as of June 30, 2013.

The financial statements as of June 30, 2013 were prepared according to the provisions of the Accounting Act in compliance with the special provisions of the Banking Act.

1. GENERAL PRINCIPLES AND INFORMATION ON ACCOUNTING AND VALUATION

General PrinciplesThe financial statements as of June 30, 2013 were prepared in compliance with generally accepted accounting principles and the general standard to present a true and fair view of the company's assets and liabilities, financial condition, and results of operation.

The financial statements were prepared in compliance with the principle of consis-tency of presentation.

Assets and liabilities were valued in com-pliance with the principle of individual va-luation and the going concern principle.

Compliance with the principle of conserva-tism is ensured by recognizing only profits realized on the balance sheet date and re-cognizing all identifiable risks and impen-ding losses in the balance sheet.

According to Section 9 of the Corporate In-come Tax Act on taxation of corporate groups, as of June 30, 2013, the group consists of Euram Holding Aktiengesell-schaft as group parent and of Euram Bank as group company. Taxes are allocated using the stand-alone method.

The bank is organized as a stock corporati-on. Euram Beteiligungverwaltung GmbH (as transferring company) was merged with Euram Bank (as acquiring company) with retrospective effect as of June 30, 2012(“Downstream Merger", by maintai-ning the book values pursuant to Section 202 (2) (1) of the Companies Act (UGB)). The merger was approved by the Austrian Financial Market Authority in May 2013. Euram Bank is now wholly-owned by Euram Holding Aktiengesellschaft. Prior-year amounts were not adjusted, thus pri-or-year figures are not comparable.

Foreign Currency AmountsPursuant to Section 58 (1) of the Banking Act, amounts in foreign currency are translated at the mean rates of exchange on the balance sheet date.

Financial Instruments in the Bank BookShares in hedge funds and two collatera-lized loan obligations in the amount of EUR 2.1 million (June 30, 2012: EUR 3.3 million) are held in the bank book.

Shares in Hedge Funds EUR thousand1794 Commodore Overseas Fund EUR 519 CFS I EUR 942 Sharpe Futures Fund EUR 682

Collateralized Loan Obligations EUR thousandWhitebark Pine I Ltd. EUR 3 Canal Point I Ltd. EUR 39

Lending RisksLoans to customers amounted to EUR 76.1 million (June 30, 2012: EUR 244.5 milli-on), loans in an amount of EUR 23.9 milli-on (June 30, 2012: EUR 215.0 million) are collateralized by deposits; the remaining

loans are mainly collateralized by mortga-ges, deposits and/or securities.

Lendings EUR millionCollateralized by deposits EUR 23.9Collateralized by mortgages, deposits and securities EUR 52.1Non-collateralized EUR 0.1

Shares in affiliated companiesEuram Bank holds 100% in Euram Invest Holdings I GmbH in Liquidation with its registered office in Vienna, Austria, in Euram Invest Holdings II GmbH in Liqui-dation with its registered office in Vienna, Austria, in Euram Invest Holdings 3 GmbH with its registered office in Munich, Ger-many, in Euram Invest Holdings Vier GmbH in Liquidation with its registered office in Vienna, Austria (the companies’ line of business being the management of investments), and 51% in Euram Bank Asia Limited in Liquidation with its regis-tered office in Dubai, United Arab Emira-tes. In the fiscal year 2012/2013, the sha-res in Euram Bank Asia Limited in Liquidation were written down to EUR 537,5 thousand (30.6.2012: EUR 569,4 thousand).

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In the fiscal year 2012/2013 no dividends were distributed to Euram Bank, as in the fiscal year 2011/2012. Pursuant to Section 238 (2) of the Companies Act, the equity

capital and the results of affiliated compa-nies of the last fiscal year can be summa-rized as follows:

(in EUR thousand) Share Result last Equity in Equity fiscal yearEuram Invest Holdings I GmbH in Liquidation 196.3 100% -3,0Euram Invest Holdings II GmbH in Liquidation 103.6 100% -3,0Euram Invest Holdings 3 GmbH 266.2 100% -48,2Euram Invest Holdings Vier GmbH in Liquidation 47.5 100% -8,1Euram Bank Asia Ltd. in Liquidation 1,053.8 51% -348,0

ParticipationsBesides the investment in the deposit gua-rantee scheme (“Einlagensicherung der Banken und Bankiers GmbH”), Vienna, this item includes shares held in trust in three (June 30, 2012: five) entities in the amount of EUR 1.9 million (June 30, 2012: EUR 33.5 million). In the fiscal year 2012/2013, the trust investments in E.S.B.C., a.s. (EUR 3.1 million) and in In-vecture Group, S.A. DE C.V. (EUR 28.5 mil-lion) were terminated.

Property, Plant and EquipmentIntangible fixed assets as well as property, plant and equipment are valued at cost less regular depreciation. Low-value items are fully depreciated in the year of acquisition. Regular depreciation is made on a straight-line basis.

Regular depreciation is based on the fol-lowing useful lives:

Company cars 8 yearsOffice furniture 5 yearsLeasehold improvements 5 yearsOffice equipment 5 yearsSoftware 5 yearsHardware 5 years

Accruals for Severance PaymentsAccruals for severance payments are cal-culated according to principles of financial mathematics by applying an interest rate of 4% and on the basis of an arithmetical pension age of 60 years for women and 65 years for men. A fluctuation discount is not applied.

Contingent LiabilitiesContingent liabilities contain financing guarantees collateralized by securities or by cash in the amount of EUR 0.2 million (June 30, 2012: EUR 0.3 million), one non-collateralized financing guarantee of EUR 0.6 million (June 30, 2012: EUR 0.6 milli-on) and guarantees to credit card compa-nies for the credit card limits granted to Euram Bank customers in the amount of EUR 2.6 million (June 30, 2012: EUR 3.0 million).

Credit RisksThis item includes undrawn credit facilities of EUR 2.5 million (June 30, 2012: EUR 2.6 million).

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Fiduciary ReceivablesFiduciary receivables are included in the following items: - Loans and advances to customers: EUR 5.6 million (June 30, 2012: EUR 5.6 million)

- Shares and other non-fixed income se-curities: EUR 1.0 million (June 30, 2012: EUR 1.2 million)

- Participations: EUR 1.9 million (June 30, 2012: EUR 33.5 million)

Fiduciary LiabilitiesFiduciary liabilities are included in the fol-lowing items: - Liabilities to customers: EUR 7.5 million (June 30, 2012: EUR 39.1 million)

- Securitized liabilities: EUR 1.0 million (June 30, 2012: EUR 1.2 million)

2. NOTES TO THE BALANCE SHEET

A. Presentation of MaturitiesReceivables (not repayable on demand) from banks and customers as well as paya-bles (not repayable on demand) to banks and customers are summarized according to remaining maturities as follows:

Receivables from banks EUR thousandUp to 3 months EUR 4,588More than 3 months to 1 year EUR 0More than 1 year to 5 years EUR 0More than 5 years EUR 0

Receivables from customersUp to 3 months EUR 760More than 3 months to 1 year EUR 29,568More than 1 year to 5 years EUR 10,824More than 5 years EUR 6,687

Payables to banksUp to 3 months EUR 7,245More than 3 months to 1 year EUR 0More than 1 year to 5 years EUR 0More than 5 years EUR 0

Payables to customersUp to 3 months EUR 327More than 3 months to 1 year EUR 18,571More than 1 year to 5 years EUR 6,230More than 5 years EUR 0

B. SecuritiesIn the fiscal year 2012/2013, Euram Bank did not hold any fixed-interest securities.

C. Shares and Other Non-fixed-interest Securities

This item includes shares in investment funds in the amount of EUR 1.8 million (June 30, 2012: EUR 1.8 million) held as fixed assets.

Current assets contain shares in hedge funds in the amount of EUR 1.6 million (June 30, 2012: EUR 2.3 million), two col-lateralized loan obligations in the amount of EUR 0.1 million (June 30, 2012: EUR 0.3 million), and shares in the “1794 Commo-dore Overseas Fund" in the amount of EUR 0.5 million (June 30, 2012: EUR 0.7 milli-on). This item also includes investment fund shares in the amount of EUR 0.5 mil-lion (June 30, 2012: EUR 4.4 million), a self-issued partial debenture in the amount of EUR 70 thousand (June 30, 2012: EUR 250 thousand), and a self-issued certificate in the amount of EUR 122 thousand (June 30, 2012: EUR 53 thousand). Furthermore, shares in the amount of EUR 10 (June 30, 2012: EUR 10) are held in “Petrocapital

Resources PLC” as well as a bond of EUR 10 (June 30, 2012: EUR 0) in A-Tec Indus-tries AG.

Fixed Assets EUR thousandEuropportunity Bond EUR 1,845

Current AssetsCFS I EUR 942Sharpe Futures Fund EUR 682Whitebark Pine I Ltd EUR 3Canal Point I Ltd EUR 391794 Commodore Overseas Fund EUR 519Europportunity Bond EUR 290USD Convergence Bond EUR 205Advantage Stock EUR 8Euram CLO Note I EUR 70Euram Commodore Index – Certificate Euro Protected 2 EUR 1225,75 A-Tec Industries EUR 0.01Petrocapital Resources PLC EUR 0.01 None of the items of fixed and current as-sets are quoted on the stock exchange. The listing of “Petrocapital Resources PLC" was terminated in 2010.

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In the fiscal year 2012/2013, Euram Bank did not hold a securities trading book.

In the fiscal year 2012/2013, Euram Bank held one share (“Petrocapital Resources PLC").

D. Fixed AssetsThe fixed-asset movement schedule is pre-sented as a separate schedule of the notes.

E. Other AssetsOther assets include corporation tax, value added tax and capital gains tax receivable from prepayments to the Tax Office for Corporations (EUR 23 thousand / June 30, 2012: EUR 241 thousand), a pending re-payment (EUR 0.7 million / June 30, 2012: EUR 0.5 million), fees charged for the ma-nagement of investment funds (EUR 0.3 million / June 30, 2012: EUR 0.5 million), outstanding receivables (EUR 1.0 million / June 30, 2013 EUR 185 thousand), a real estate property which is not intended to be held on a long term basis (EUR 250 thousand / June 30 2012: EUR 250 thousand).

F. Prepayments and accrued incomeThis item includes current salary payments in the amount of EUR 102.7 thousand (June 30, 2012: EUR 130.9 thousand), pre-paid insurance premiums, information and maintenance expenses in the amount of EUR 234.6 thousand (June 30, 2012: EUR 242.5 thousand), prepaid rent in the amount of EUR 11.5 thousand (June 30, 2012: EUR 11.7 thousand) and other pre-payments in the amount of EUR 13.0 thousand (June 30, 2012: EUR 68.8 thousand).

G. Securitised LiabilitiesThis item contains self-issued bonds and a self-issued certificate. EUR thousandEuram CLO Note I EUR 76CFS Alternative Investment Note I EUR 942Euram Commodore Index – Certificate Euro Protected 2 EUR 513

H. Other LiabilitiesInvoices already received but not yet paid in respect of the fiscal year 2012/2013 amount to EUR 0.3 million (June 30, 2012: EUR 0.4 million), liabilities to a data coll-ection company – profit share from ATM business – amount to EUR 1.7 million (June 30, 2012: EUR 1.4 million), liabilities to an affiliated company from tax alloca-tions amount to EUR 5.5 thousand (June 30, 2012: EUR 0.5 million).

I. Accruals and deferred IncomeThis item mainly includes fees of EUR 0.1 million (June 30, 2012: EUR 0.1 million) already received, but allocated to the fiscal year 2013/2014.

J. Shareholder's Equity1.) The share capital of EUR 10,045.7 thousand is divided into 270,000 share units, each representing the same interest in the share capital.

2.) The shareholders' equity consists of the following:

EUR thousandSubscribed capital EUR 10,045.7(Appropriated) reserve EUR 1,920.4Retained earnings EUR 2,634.9Liability reserve pursuant to Section 23 (6) Banking Act (BWG) EUR 660.5 3.) The net profit for the fiscal year 2012/2013 amounts to EUR 3,327.2 thousand (June 30, 2012: EUR 400.6 thousand).

K. Required own fundsEuram Bank uses the following methods to calculate its required own funds:

Credit risk: Standard method Operational risk: Basic indicator approach

The required own funds for the credit risk amount to EUR 3,295 thousand (June 30, 2012: EUR 3,967 thousand).

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Pursuant to Section 22a (4) of the Banking Act, 8% of the weighted receivables for each class of receivable amount to:

EUR thousandReceivables from central states or central banks EUR 0Receivables from regional administrative bodies EUR 0Receivables from institutions EUR 774Receivables from companies EUR 1,458Retail receivables EUR 164Receivables collateralized by real estate properties EUR 0Receivables in the form of investment fund shares EUR 114Other items EUR 785

The required own funds for the foreign currency risk amount to EUR 0 (June 30, 2012: EUR 0).

The required own funds for the operational risk amount to EUR 2,133 thousand (June 30, 2012: EUR 2,181 thousand).

L. Additional Disclosures1.) Total amount of assets and liabilities in foreign currency:

EUR millionForeign currency assets EUR 90.9Foreign currency liabilities EUR 90.4

2.) In the fiscal year 2012/2013, Euram Bank was not restraint in the disposal of assets (June 30, 2012: EUR 3.6 million).

3.) Receivables from affiliated companies amount to EUR 4.4 million (June 30, 2012: EUR 6.5 million).

4.) Liabilities to affiliated companies amount to EUR 0.9 million (June 30, 2012: EUR 0.5 million).

5.) Other accruals in the amount of EUR 3 million (June 30, 2012: EUR 2 million) in-clude accruals for bonuses, unconsumed annual leave, legal, auditing and advisory fees, as well as other expenses.

6.) Liabilities from the use of fixed assets not recognized in the balance sheet amount to EUR 402.2 thousand in the next year (June 30, 2012: EUR 389.6 thousand), to approx. EUR 2 million for the next five years and are mainly related to rental pay-ments for the use of office space.

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7.) The total volume of forward exchange transactions not yet executed on the ba-lance sheet date can be summarized as fol-lows: June 30, June 30, EUR million 2013 2012Contracts to buy EUR 0.5 EUR 0.4Contracts to sell EUR 0.5 EUR 0.4

3. NOTES TO THE INCOME STATEMENT

With reference to Section 242 (1) of the Companies Act, income will not be itemized by geographical markets pursuant to Section 64 (1) no. 9 of the Banking Act.

With reference to Section 237 of the Companies Act, other operating income and other operating expenses can be summarized as follows pursuant to Section 64 (1) no. 12 of the Banking Act:

- Other operating income mainly consists of costs recharged to customers in the amount of EUR 1.8 million (June 30,

2012: EUR 1.0 million), income from the sale of an asset (“WhiteConcierge Limi-ted") in the amount of EUR 4.6 million. The release of accruals in respect of the fiscal year 2011/2012 amounts to EUR 6.3 thousand (June 30, 2012: EUR 0.2 million), and a VAT credit amounts to EUR 0.2 million (June 30, 2012: EUR 0.2 million).

- Other operating expenses recognized in the fiscal year 2012/2013 in the amount of EUR 377.6 thousand (June 30, 2012: EUR 242.0 thousand) concern mainly costs of external advisors and non-ope-rating interest.

There were no value adjustments on recei-vables (June 30, 2012: EUR 440 thousand).

Income from the release of value adjust-ments of receivables and of accruals for contingent liabilities and for credits risks amount to EUR 178.7 thousand (June 30, 2012: EUR 0.0 thousand) in the fiscal year 2012/2013.

Expenditures from value adjustments in respect of securities as well as of invest-ments and shares in affiliated companies

amount to EUR 34.8 thousand (June 30, 2012: EUR 0.9 million) and mainly concern the value adjustment for Euram Bank Asia Limited in Liquidation (EUR 31.9 thousand) and for Euram Invest Holdings II GmbH in Liquidation (EUR 2.9 thousand).

“Taxes from income and earnings" in the amount of EUR +204.7 thousand (June 30, 2012: EUR -0.5 million) recognized in the profit and loss accounts, taking into ac-count tax allocations, adversely affect the “Profit or loss on ordinary activities" in an amount of +6.6% (June 30, 2012: -35.7%).

There were no allocations to revenue reser-ves in the fiscal year 2012/2013 (June 30, 2012: EUR 536 thousand).

4. OTHER INFORMATION

1.) The Bank employed on average 32 (June 30, 2012: 36) employees in the fiscal year 2012/2013.

2.) In the fiscal year 2012/2013, accruals for severance payments and pensions for executives amount to EUR 156.3 thousand (June 30, 2012: EUR 156.0 thousand) and to EUR 97.5 thousand (June 30, 2012: EUR

98.0 thousand) for other employees. In ad-dition, contributions in the amount of EUR 120.6 thousand (June 30, 2012: EUR 109.0 thousand) were paid to the company pen-sion fund.

3.) The total compensations to 4 (June 30, 2012: 3) members of the managing board in consideration for their activities in the fiscal year 2012/2013 amount to EUR 1.9 million (June 30, 2012: EUR 1.3 million); the compensations paid to members of the supervisory board in the fiscal year 2012/2013 amount to EUR 0.1 million (June 30, 2012: EUR 0.1 million).

4.) In the fiscal year 2012/2013, Euram Bank granted two loans in the amount of EUR 144.4 thousand to executives (June 30, 2012: EUR 150.0 thousand).

5.) In the fiscal year 2012/2013, the mana-ging board consisted of the following indi-viduals:

Viktor Popovic (until April 30, 2013) Manfred Huber Johannes Langer Josef Leckel (since April 15, 2013)

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6.) In the fiscal year 2012/2013, the super-visory board consisted of the following in-dividuals:

Dr. Erik Max Michael Obermayer Chairman (until November 28, 2012) Vice-Chairman (since November 29, 2012)Adolf Walter Höllmer Vice-Chairman (until November 28, 2012) Chairman (since November 29, 2012)Dkfm. Senta Penner

7.) Euram Bank is included in the consoli-dated financial statements of the following company:

Euram Holding Aktiengesellschaft Wallnerstrasse 4 1010 Vienna, Austria

5. ADDITIONAL DISCLOSURES

In compliance with the Company's disclo-sure requirements laid down in Section 26 of the Banking Act (BWG), it is noted that the publication is available on the website of Euram Bank (www.eurambank.com) at “Euram Bank / Publications and Disclosu-res".


The Managing Board

Manfred Huber Johannes Langer Josef Leckel

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Report on the Financial Statements

We have audited the accompanying fi-nancial statements, including the accoun-ting system, of European American In-vestment Bank Aktiengesellschaft, Vienna, for the fiscal year from July 1, 2012 to June 30, 2013. These financial statements comprise the balance sheet as of June 30, 2013, the income statement for the fiscal year ended June 30, 2013, and the notes.

Management’s Responsibility for the Financial Statements and for the Accounting System

The Company’s management is responsible for the accounting system and for the pre-paration and fair presentation of these fi-nancial statements in accordance with Austrian Generally Accepted Accounting Principles. This responsibility includes: de-signing, implementing and maintaining internal control relevant to the preparation

and fair presentation of financial state-ments that are free from material mis-statement, whether due to fraud or error; selecting and applying appropriate ac-counting policies; and making accounting estimates that are reasonable in the cir-cumstances.

Auditor’s Responsibility and De-scription of Type and Scope of the Statutory Audit

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in ac-cordance with laws and regulations appli-cable in Austria and Austrian Standards on Auditing. Those standards require that we comply with professional guidelines and that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

Audit opinion

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

Opinion

Our audit did not give rise to any objec-tions. In our opinion, which is based on the results of our audit, the financial state-ments comply with legal requirements and give a true and fair view of the financial position of the Company as of June 30, 2013 and of its financial performance for the fiscal year from July 1, 2012 to June 30, 2013 in accordance with Austrian Ge-nerally Accepted Accounting Principles.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assess-ment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk as-sessments, the auditor considers internal control relevant to the Company’s prepa-ration and fair presentation of the financi-al statements in order to design audit pro-cedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An au-dit also includes evaluating the appropria-teness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evalua-ting the overall presentation of the finan-cial statements.

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Comments on the Management Report

Pursuant to statutory provisions, the ma-nagement report is to be audited as to whether it is consistent with the financial statements and as to whether the other disclosures are not misleading with respect to the Company’s position. The auditor’s report also has to contain a statement as to whether the management report is consis-tent with the financial statements.

In our opinion, the management report is consistent with the financial statements.


Ernst & YoungWirtschaftsprüfungsgesellschaft m.b.H.

Mag. Andrea Stippl mpCertified Public Accountant

Mag. Ernst Schönhuber mpCertified Public Accountant

Euram Bank AGPalais EsterházyWallnerstrasse 41010 Vienna, AustriaTel. +43 1 512 38 80 0Fax +43 1 512 38 80 [email protected]

Concept, design and productiondie3 Agentur für Werbung und Kommunikation GmbH

PhotographsMichael Stelzhammer, Kurth Keinrath, Shutterstock

PrintVorarlberger Verlagsanstalt

This is a translation from German. In case of any discrepancies between the English and the German version the German text shall prevail.

Euram Bank AGPalais EsterházyWallnerstrasse 41010 Vienna, AustriaTel. + 43 1 512 38 80 0Fax + 43 1 512 38 80 888offi [email protected]

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