Annual Review 2008 - Hyposwiss Privatbank AG

Annual Review 2008

Idyllic view from Rigi, Cantons of Lucerne/Schwyz
2 September 1806 saw one of the worst natural disasters ever to
hit Switzerland. On Rossberg, in the Canton of Schwyz, huge
masses of rock came loose and thundered down into the valley.
The landslide covered an area of some 6.5 km². The villages of
Goldau and Röthen were buried, and the surface of the nearby
Lake Lauerz shrank by a seventh. Eyewitnesses reported that
the landslide triggered a 20-metre-high tidal wave. A tsunami
in a mountain lake! Two hundred years later, the traces of
the rockslide can still be seen. But as we know, time heals all
wounds. New life has emerged from the wreckage of the
debris over the past two centuries. And on some days, the veil
of cloud overhanging the valley is positively idyllic.

Annual Review 2008

Picture concept in this annual review
The last financial year was marked by one of the most dramatic
global financial crises in history. The unprecedented collapse
of financial markets around the world and dried-up credit markets
came as a shock to investors and companies alike. It was a
painful reminder to all that we can never fully eliminate risk. But
dealing with risk and the emerging opportunities is part and
parcel of the work we do, overcoming crisis situations and laying
the ground for new things to come. We want to illustrate this
idea with an incident from Swiss history: the Goldau rockslide of
1806 – a once-in-a-century catastrophe.
Hyposwiss Private Bank Ltd.
Bahnhofstrasse/Schützengasse 4
P.O. Box 3180, CH-8021 Zurich, Switzerland
T +41 44 214 31 11, F +41 44 211 52 23
info@hyposwiss.ch, www.hyposwiss.ch

Contents
Editorial
Annual review
Bank governing bodies
Organisation
Key figures 2008
Finance section
Overview
Balance sheet details
Income statement details
Personnel
Income statement 2008
Balance sheet as at 31 December 2008
Appropriation of disposable profit
Cash flow statement
Auditor’s report
5
6
7
11
15
19
20
22
24
25
26
31
32
33

An eyewitness account
Arth-Goldau, Switzerland, 2 September 1806:
“In a matter of seconds, a huge landslide catapulted enormous
boulders far across the valley – a fertile expanse about two
miles wide, covered in houses – over to the Rigi mountain on
the other side. It pushed the debris thousands of feet up the
mountain, knocking down even the strongest of trees along the
way. The entire area is a scene of complete devastation […] You
can’t even see where the different villages used to be. And right
in the middle of this desolate patch is a brand new mountain
of earth and rock.” (Neue Zürcher Zeitung, 6 September 1806)

Editorial
Dear Customers
Ladies and Gentlemen
Last year, we faced the worst financial crisis in recent memory.
Investors as well as financial institutions met with unprecedented
turmoil on the global financial markets, and recovery is likely
to take some time. Naturally, our earnings could not escape the
broad decline in financial values across the globe. At times like
this, it is important to remember that changes of this magnitude
do not only carry risk, they also create new opportunities
for the canny and patient investor. The theme of this year’s
annual review draws an analogy to one of Switzerland’s worst
natural disasters: the landslide that hit the village of Arth-Goldau
in 1806. Since then, new and vibrant life has emerged from
the total devastation, and the area has become a thriving part
of Switzerland.
As a result of the financial crisis, the performance of our clients’
assets in the past year was disappointing. We have initiated the
necessary steps to remedy the situation. Thanks to our excellent
financial strength and creditworthiness, we were able to attract
significant new funds from new and existing clients throughout
the year. Net new money grew by close to 20% measured against
funds under administration at the end of 2007.
2008 was a challenging year in terms of our financial results.
Operating income was down 17% year on year. Following the
completion of major IT infrastructure investments in previous
years, we were able to cut our operating expenses by 11% in
the year under review. Despite these savings, gross profit fell
by 22% and net income for the year was down 36%.
On a more positive note, our excellent reputation on the labour
market allowed us to increase our workforce in terms of both
quality and quantity from 164 to 171 persons (full-time positions).
In the coming year, we will continue to expand.
During the year, we completed the renewal of the executive
committee begun in the second half of 2007. In April 2008,
Alexander Iten became Head of Private Banking and a Member
of the Executive Board. In September, I took over the position
of CEO from my predecessor Theodor Horat. On behalf of all my
colleagues, I would like to thank him for his unflagging commitment
to clients and employees alike. As of September 2008,
Theodor Horat returned to the Board of Directors. At the same
time, Stefan Klinger was also elected as a new board member.
I would like to thank all our customers for their trust and support
during this turbulent period in the world’s financial markets.
Your loyalty, but also your constructive criticism in difficult
times, gives us the strength and conviction to face the future
challenges with confidence and optimism.
Siegfried R. Peyer
CEO
Hyposwiss Annual Review 2008 5

Annual review
2008 will certainly go down in history as one of the weakest
and most challenging investment years ever. The markets
succumbed to sharp price fluctuations, especially in September
and October.
After a number of global financial institutions collapsed, the
financial markets were plagued by uncertainty. Share prices
plummeted, triggering compulsory liquidations of securities
positions held on credit and placing the markets under further
strain. Most equity markets lost nearly 50% of their value in
2008. The Swiss share market got off comparatively lightly with
a loss of 34%. This was mainly thanks to its defensive orientation,
focusing on pharmaceuticals and foodstuffs. Some emerging
markets, however, such as China and Russia, lost two-thirds or
more of their market capitalisation. Meanwhile, many investors
fell foul of tumbling bond markets, losing even more than in
equities. The catastrophe we had previously seen in subprime
paper spread to bonds, which suffered on the back of rampant
uncertainty and the insolvency of some reputable borrowers,
resulting in growing mistrust, dwindling liquidity and rising
credit spreads.
Board of Directors
Roland Ledergerber
Chairman
Dr. Franz Peter Oesch
6 Hyposwiss Annual Review 2008
Dr. Rico Jenny
Vice-Chairman
Stefan Klinger
Such an environment also spawned massive shifts in currency
prices, largely to the benefit of the US dollar and, in particular,
the yen. The euro, however, and the pound sterling lost considerable
ground in the rapidly deteriorating economy.
For the first time in quite a number of years, our portfolio
managers underperformed the benchmark in their management
mandates in 2008. This was mainly due to the use of
certain products that suffered disproportionately from the
collapse of market liquidity. However, despite the adverse
conditions, no mandates suffered complete losses on any
investment.
2008 was also a testing time for SGKB Group investment funds
administered by Hyposwiss Zurich. Some of these took quite a
beating in terms of performance, with investments falling
accordingly from 1.6 billion to 0.6 billion Swiss francs. Nonetheless,
despite the bleak environment, two funds maintained their
positions in the top half of the ranking.
Theodor Horat

Bank governing bodies
Board of Directors Expiry
Roland Ledergerber, St. Gallen, Chairman 2011
Dr. Rico Jenny, Erlenbach, Vice-Chairman 2009
Theodor Horat, Obfelden 2011
Dr. Franz Peter Oesch, St. Gallen 2009
Stefan Klinger, St. Gallen 2011
Executive Board
Siegfried R. Peyer, CEO
Anton Schaad, Deputy CEO, Managing Director
Alexander Iten, Managing Director
Dr. Thomas Stucki, Managing Director
Stefan Betschart, Managing Director
Auditors
PricewaterhouseCoopers AG
Executive Board
Siegfried R. Peyer
CEO
Dr. Thomas Stucki
Investment Center
Anton Schaad
Products
Stefan Betschart
Services/Logistics
Members of senior management
Managing Director
Hans Bucher
Executive Directors
Jürg Althaus, Christoph Angster, Gabriele Bosshard,
Georg Hoheneck, Markus Holenstein, Dr. Milan Kormanak,
Guido Lustenberger, Caterina Minelle, Andreas Moser,
Rolf Müller, Alfred Rüttimann, Daniel Schibli, Roland Schneiter,
Giuseppe Stella, Heinz von Dach, René Wyss
Directors
Hansjürg E. Christen, Oliver Egli, Hans Peter Ehrler, Philipp Ess,
Kurt Frischknecht, Ernst Gfeller, Yves Guenot,
Giacomo Hagenbuch, Birgit Heim, Roger Hugentobler,
Doris Ingold, Marc Jungi, Karl R. Keller, Adrian D. Koller,
Ueli Lott, Oliver Lyhs, René Merz, Gregor Neidhart,
Daniel Reichmuth, Alex Rinderknecht, Roger Stalder,
Günter Stessel, Alfred Steininger, Barbara Voegeli,
Michael von Mecklenburg, Anneliese Weber, Konstantin Zalad
Alexander Iten
Private Banking
Hyposwiss Annual Review 2008 7

One rockslide, numerous causes
For decades leading up to the disaster, the people living in the
region had been warned that, one day, the mountain was going
to collapse into the valley. But no-one could have imagined the
magnitude of the disaster. As it happens, the village of Goldau
had been built on the ruins of a prehistoric landslip: history was
to repeat itself. The foundations for the catastrophe were laid
25 million years before, during the ice age, when the Reuss glacier
hollowed out the foot of the Rossberg mountain. This left the
upper layers without any support. After several years of heavy
rain, the Rossberg was saturated right up to the summit. On
2 September 1806, the rock could no longer withstand the
pressure of the water and ripped apart. The entire slope, 80 metres
deep, started sliding downhill. Today, even with the facts before
us, it’s hard to imagine such a thing really happening.

Organisation as at 1 March 2009
* Member of the Executive Board
** Member of the Extended Executive Board
CEO: Chief Executive Officer
MD: Managing Director
ED: Executive Director
DI: Director
AD: Associate Director
Private Banking
Alexander Iten, MD*
(Deputy Andreas Moser, ED**)
Switzerland / Independent
Asset Managers
Andreas Moser, ED**
Central Europe /
Eastern Europe
Alexander Iten, MD
Latin America /
Spain / Portugal
René Wyss, ED
Legal&Compliance, HR
Daniel Schibli, ED**
HR/Reception
Ueli Lott, DI
Investment Center
Dr. Thomas Stucki, MD*
(Deputy Jürg Althaus, ED)
Financial Analysis /
Fund Research
Jürg Althaus, ED
Investment Strategy
Caroline Hilb, AD
Portfolio Management
Standard
Marcel Rüdisüli, AD
Portfolio Management
Special
Karl Keller, DI
Structured Products
Christoph Angster, ED
Executive Board
Siegfried R. Peyer, CEO*
(Deputy Anton Schaad, MD)
Products
Anton Schaad, MD*
(Deputy Roland Schneiter, ED)
Loans
Alex Rinderknecht, DI
Trading Desk
Roland Schneiter, ED
Taxes
Hans Peter Ehrler, DI
Cash Desk
Philippe Bertholet, AD
Lombard Lending / Fund
Distribution / Pricing
Oliver Lyhs, DI
ALM / Treasury
Anton Schaad, MD
Secretariat
Vasiliki Furian, AD
Business Development
& Finance
Hansjürg E. Christen, DI
Services / Logistics
Stefan Betschart, MD*
(Deputy Giuseppe Stella, ED)
Business &
Advisory Services
Giuseppe Stella, ED
Business Development
& Finance
Hansjürg E. Christen, DI
IT
Ernst Gfeller, DI
Internal Services
Giacomo Hagenbuch, DI
Risk Officer
Adrian D. Koller, DI
Securities Operations
Guido Lustenberger, ED
Payment Transactions
René Merz, DI
Hyposwiss Annual Review 2008 11

A spectacular natural phenomenon
The Goldau landslide made headlines all over Europe. Thanks
to wood engravings, a new means of reproduction, the story
quickly spread in graphic detail. As a stage backcloth or projected
with a camera obscura, the disaster even became something
of a fairground attraction in several European cities. It was an
event that was easily staged, exploiting Switzerland’s image as
a world of nature. Brought to life in visual form, the “pastoral
Swiss countryside” was transformed into a “scene of devastation”.
It has to be said, however, that all this media attention
was instrumental in making the Goldau rockslide the subject
of Switzerland’s first fundraising campaign for humanitarian
disasters.

Key figures 2008
Key figures 2008
in 1 000 CHF 2008 2007 2006
Net interest income 20 962 24 303 21 447
Net fee and commission income 70 479 86 775 80 906
Net trading income 8 146 9 181 9 888
Other ordinary income 1 080 792 326
Operating income 100 667 121 051 112 567
Personnel expenses 33 316 35 599 32 226
Other operating expenses 15 148 18 660 23 564
Administrative expenses 48 463 54 259 55 790
Gross profit 52 205 66 792 56 777
Depreciation on fixed assets 1 279 1 464 1 305
Value adjustments, provisions and losses 7 679 927 4 790
Operating profit 43 246 64 401 50 682
Extraordinary income/expenses 843 4 400 8 024
Taxes -9 047 -14 078 -11 226
Net profit for the year 35 043 54 723 47 480
Shareholders’ equity (after use of profit) 109 238 104 195 102 792
Customer assets (incl. double counts) 9 159 648 10 828 692 12 399 086
Cost/income ratio (%) 48.8 45.6 50.7
Employees (number of FTEs) 171 164 146
Hyposwiss Annual Review 2008 15

The wild and romantic rockslide region – a conservation area
In the early 1920s, a group of animal-lovers decided to set up
a nature reserve in this unique and romantically wild rockslide
region. An animal sanctuary for a wide variety of fauna was
opened in 1925. Growing to 34 hectares of forest, the park now
harbours deer, wolves, bears, lynxes and birds of prey. The
protected forest offers rare and endangered species a base for
safeguarding their future. Tourists come from far and wide
to enjoy long rambles, marvelling at the pioneer vegetation and
the animal park that has been built here. For a broad catchment
area, the nature reserve offers a welcome retreat from the
rigours of daily life.
Hyposwiss Private Bank supports the preservation and growth
of the Nature and Animal Park Goldau.

Finance section
Overview
The last financial year, which was characterised by a virulent
financial crisis, has also left its mark on Hyposwiss. Operating
income suffered a decline of CHF 20.4 million or 16.8% to
CHF 100.7 million. Major investments having been made in
a new IT system in previous years, operating expenses were
brought down by CHF 5.8 million to CHF 48.5 million. Thanks
to these savings, we were able to limit the decrease in gross
profit from CHF 66.8 million to CHF 52.2 million.
Depreciation on fixed assets fell slightly year-on-year to
CHF 1.3 million. A net figure of CHF 7.7 million was posted
for value adjustments, provisions and losses in connection
with Lombard (collateral) loans.
In the extraordinary result, profits of CHF 0.8 million were
posted from the remnant sale of a shareholding at book value
of just under CHF 0.1 million.
The generated net profit of CHF 35.0 million allows us to
distribute a dividend of CHF 30.0 million to our shareholder.
At 49%, the cost/income ratio including depreciation of tangible
assets is slightly above the prior-year level. Compared with
other private banks, this is an excellent figure and reflects
Hyposwiss’s high level of productivity and customerconsciousness.
As at the end of the financial year, the balance sheet total
was CHF 1 236.3 million. This corresponds to an increase of
CHF 367.8 million or 42.4% compared with the prior-year
figure of CHF 868.5 million. The growth in the balance sheet
total is primarily attributable to the almost doubling of
customer deposits. The Bank’s reported capital resources,
after appropriation of profits, total CHF 109.2 million, and
the self-financing level is a very solid 8.8%.
Customer deposit and asset values fell during the financial
year from CHF 10.8 billion to CHF 9.2 billion. Of this,
CHF 584.4 million accrues to the investment funds managed
by the Investment Center. A net new money inflow of
CHF 2 134.7 million was recorded during the financial year.
Hyposwiss Annual Review 2008 19

Balance sheet details
Assets
Total loans to customers, i.e. receivables due from
customers and mortgage loans, fell from CHF 635.5 million
to CHF 619.1 million. Receivables due from customers are
largely secured by collateral loan business or covered by pledged
fiduciary investments.
In detail, fixed advances and loans increased by CHF 2.5 million
to CHF 390.7 million. Current account receivables decreased
as at the end of the year by CHF 7.9 million to a value of
CHF 28.2 million. The portfolio of mortgage loans fell from
CHF 211.1 million to CHF 200.2 million.
Assets
Balance sheet total 1 236 271 (in 1 000 CHF)
Liquid assets
19 459
Receivables due from banks
545 693
Of which loans to customers
Total 619 087 (in 1 000 CHF)
Securities trading portfolio, financial
investments and participations
12 145
Mortgage loans
200 197 32.3 %
20 Hyposwiss Annual Review 2008
1.0 %
Other assets
39 887 3.2 %
44.1 %
Current account receivables
28 201 4.6 %
Receivables due from banks increased by CHF 361.5 million to
CHF 545.7 million. This increase is associated with the investment
of the liquidity obtained from the strong inflow of customer
deposits.
The Bank primarily holds its financial investments as a liquidity
reserve. As at the balance sheet date, these totalled
CHF 12.0 million.
Investments in fixed assets reached a figure of CHF 0.2 million.
Following deduction of ordinary depreciation of CHF 1.3 million,
they balanced at CHF 5.7 million.
1.6 %
50.1 %
63.1 %
Loans to customers
619 087
Fixed advances and loans
390 689

Liabilities
Customer deposits grew markedly by CHF 379.7 million and,
as at the end of the reporting year, reached a total of
CHF 828.1 million. This was due to the strong growth in new
money and the regrouping of securities investments into
liquidity. The biggest balance sheet item was other liabilities
due to customers at CHF 802.2 million, followed by
accounts due to customers in savings and deposit accounts
at CHF 25.0 million. Of the former, CHF 154.6 million
were attributable to fixed-term deposits in our Bank.
Liabilities
Balance sheet total 1 236 271 (in 1 000 CHF)
Shareholders’ equity
104 196
Other liabilities
95 094
Of which customer deposits
Total 828 089 (in 1 000 CHF)
Medium-term notes
935
Accounts due to customers in savings
and deposit accounts
24 978 3.0 %
Time deposits
154 573
7.7 %
Accounts due to banks
208 892 16.9 %
8.4 %
18.7 %
0.1 %
Of the CHF 208.9 million in accounts due to banks,
CHF 174.5 million was assumed by our parent company
for refinancing purposes.
The share capital remains unchanged at CHF 26.0 million,
while open reserves after appropriation of profit are stated
at CHF 80.5 million.
67.0 %
78.2 %
Customer deposits
828 089
Demand deposits
647 603
Hyposwiss Annual Review 2008 21

Income statement details
Expenses
Total 101 512 (in 1 000 CHF)
Income
Total 101 512 (in 1 000 CHF)
Depreciation and provisions
8 958
Taxes
9 047 8.9 %
Other operating expenses
15 148 14.9 %
Extraordinary income
843
22 Hyposwiss Annual Review 2008
8.8 %
32.8 %
Net other ordinary income
1 080 1.1 %
Net trading income
8 146
Net interest income
20 962 20.7 %
0.8 %
8.0 %
34.6 %
69.4 %
Net profit for the year
35 043
Personnel expenses
33 316
Net fee and
commission income
70 479

Net interest income fell in the year under review by
CHF 3.3 million to CHF 21.0 million. This result was significantly
affected by the dramatic decline in interest rates during the
financial year, lower loans to customers and the weakness of
key conversion rates. Mortgage interest stagnated at prior-year
levels at CHF 6.7 million.
The exceptional crisis on the financial markets was reflected in
the lower net fee and commission income. These reached a
figure of CHF 70.5 million in the financial year and were thus
CHF 16.3 million or 18.8% below the outstanding prior-year
result. The biggest earnings slump was recorded in the securities
business. Receipts here were around one-third lower than
the figure for 2007. Hyposwiss was also exposed to customers’
reluctance in this difficult economic environment to make new
investments in securities. This was exacerbated by the fact that
the market for structured products recorded a massive fall-off.
The sharp price losses and resulting reduction in client assets
impaired the portfolio-dependent earnings. The prior-year
value for fiduciary commissions was exceeded thanks to the
dramatic increase in assets.
Net trading income fell from CHF 9.2 million to CHF 8.1 million.
The decline in our customers’ transaction volumes led to lower
foreign exchange earnings.
Administrative expenses fell during the year under review by
CHF 5.8 million to CHF 48.5 million. Despite a higher number
of staff, personnel expenses were reduced by CHF 2.3 million
to CHF 33.3 million. This is due first and foremost to lower
performance-related remuneration.
After investments in the new Avaloq Banking System had
sharply increased other operating expenses the previous year,
this slid back in the year under review by CHF 3.5 million
to CHF 15.1 million. Savings were also made in the area of
marketing and communications.
The massive collapses on the international share markets meant
that individual collateral loans were not sufficiently covered
by the underlying securities. Net value adjustments of
CHF 7.2 million were formed in order to allow for this. The
value adjustments for default risks in place as at the balance
sheet date amounted to 2.0% of the loans.
Extraordinary income contains the capital gains from the
sale of our shareholding in Pfandbriefbank Schweizerischer
Hypothekarinstitute.
Hyposwiss Annual Review 2008 23

Personnel
As at 1 January 2009, the following promotions were made
at director level:
Executive Director
Daniel Schibli, Giuseppe Stella
Director
Philipp Ess, Oliver Lyhs, Roger Stalder,
Barbara Voegeli, Anneliese Weber
24 Hyposwiss Annual Review 2008
We attach great importance to providing our employees with
continuous education and advanced training. In the year under
review, employees made frequent use of the various internal
and external courses on offer.
We would like to take this opportunity to thank all of our
employees wholeheartedly for their commitment and hard
work for the benefit of our customers.
In particular, we would like to thank Theodor Horat, who
managed the Bank as interim CEO until the end of August.
Thanks to his broad experience, a thorough understanding
of markets and customers and his strong leadership, he
handed over the Bank to his successor in excellent condition
on 1 September 2008.
Zurich, 5 February 2009
For the Board of Directors: For the Executive Board:
Roland Ledergerber, Chairman Siegfried R. Peyer, CEO

Income statement 2008
Income and expenses from ordinary banking business
in 1 000 CHF 2008 2007
Interest and discount income 33 786 37 408
Interest and dividend income on financial investments 337 395
Interest expenditure -13 161 -13 500
Net interest income 20 962 24 303
Commission income from lending activities 318 365
Commission income from securities and investment activities 73 827 89 261
Commission income from other service fee activities 514 527
Commission expenses -4 180 -3 378
Net fee and commission income 70 479 86 775
Net trading income 8 146 9 181
Income from disposal of financial investments -29 50
Investment income 32 51
Other ordinary income 1 084 693
Other ordinary expenditure -7 -2
Net other ordinary income 1 080 792
Operating income 100 667 121 051
Personnel expenses 33 316 35 599
Other operating expenses 15 148 18 660
Administrative expenses 48 463 54 259
Gross profit 52 205 66 792
Profit for the year
Gross profit 52 205 66 792
Depreciation on fixed assets -1 279 -1 464
Value adjustments, provisions and losses -7 679 -927
Operating profit (before extraordinary items and taxes) 43 246 64 401
Extraordinary income 843 4 400
thereof dissolution of reserves for general banking risks 0 3 320
Taxes -9 047 -14 078
Net profit for the year 35 043 54 723
Hyposwiss Annual Review 2008 25

Balance sheet as at 31 December 2008 before appropriation of profit
Assets
in 1 000 CHF 2008 2007
Liquid assets 19 459 9 343
Receivables due from banks 545 693 184 208
Receivables due from customers 418 890 424 324
Mortgage loans 200 197 211 126
Securities trading portfolios 103 0
Financial investments 12 000 13 000
Participations 42 104
Fixed assets 5 687 6 768
Accrued income and prepaid expenses 6 113 5 834
Other assets 28 087 13 754
Total assets 1 236 271 868 461
Total receivables from Group companies
and qualified partners
26 Hyposwiss Annual Review 2008
433 811 125 683

Liabilities
in 1 000 CHF 2008 2007
Accounts due to money market securities 283 528
Accounts due to banks 208 892 205 265
Accounts due to customers in savings and deposit accounts 24 978 16 402
Other liabilities due to customers 802 176 430 654
Medium-term notes 935 1 330
Accrued expenses and deferred income 15 323 27 478
Other liabilities 24 516 20 603
Value adjustments and provisions 19 929 12 006
Reserves for general banking risks 1 700 1 700
Share capital 26 000 26 000
General statutory reserves 45 500 40 500
Other reserves 30 000 27 000
Profit brought forward 996 4 272
Net profit for the year 35 043 54 723
Total liabilities 1 236 271 868 461
Total liabilities due to Group companies
and qualified partners
177 493 141 406
Off-balance-sheet transactions
Contingent liabilities 62 275 80 699
Irrevocable undertakings 4 619 6 122
Obligation to deposit and pay further capital 0 660
Derivative financial instruments 305 139 403 231
Positive gross replacement values 10 853 4 622
Negative gross replacement values 10 861 3 682
Fiduciary transactions 3 417 215 1 961 210
Hyposwiss Annual Review 2008 27

A bright new beginning
Goldau was always afflicted by rockslides. It is hardly surprising,
therefore, to learn that the town’s name is derived not from
the precious metal gold but from the Celtic expression “golet”,
which more or less means “debris”. In recent decades, on the
rockslide’s vast debris fields, the region of Arth-Goldau has
grown into an important hub of activity. Each year, the inhabitants
take great pride in celebrating their local traditions. The
“Rigi Mountain Run” has developed into a challenging and internationally
renowned race across its steep terrain. And for
200 years now, cultural enthusiasts have enjoyed the area’s small
but much loved theatre performances. Meanwhile, the economy
has prospered through local craftsmanship and trade as well as
retail businesses and farming.

Appropriation of disposable profit
Appropriation of disposable profit
in 1 000 CHF 2008 2007
Net profit for the year 35 043 54 723
Balance brought forward from previous year 995 4 272
At the disposal of the AGM (balance sheet profit) 36 038 58 995
The Board of Directors proposes the following appropriation:
a) Distribution of a dividend 30 000 50 000
b) Allocation to the general statutory reserve 0 5 000
c) Allocation to the other reserves 5 000 3 000
d) Balance brought forward to new account 1 038 995
Total 36 038 58 995
Following authorisation of this proposal, total shareholders’
equity is as follows:
Share capital 26 000 26 000
General statutory reserve 45 500 45 500
Other reserves 35 000 30 000
Reserves for general banking risks 1 700 1 700
Balance brought forward to new account 1 038 995
Total 109 238 104 195
Hyposwiss Annual Review 2008 31

Cash flow statement
in 1 000 CHF Year under review Previous year
32 Hyposwiss Annual Review 2008
Source of
resources
Use of
resources
Balance Source of
resources
Use of
resources
Profit for the year 35 043 54 723
Depreciation on fixed assets 1 279 1 464
Value adjustments and provisions 7 923 548
Reserves for general banking risks 3 320
Active deferrals 279 1 508
Passive deferrals 12 155 326
Dividend in the previous year 50 000 40 000
Cash flow from operating result
(internal financing)
Balance
44 245 62 434 -18 189 58 243 43 646 14 597
Participations 62 80
Fixed assets 198 20 888
Cash flow from operations
in fixed assets
62 198 -136 100 888 -788
Due to money-market securities 245 306
Liabilities due to banks 3 627 120 975
Receivables from banks 361 485 75 532
Securities trading portfolios 103
Interbank transactions 3 627 361 833 -358 206 75 838 120 975 -45 137
Medium-term notes 395 2 495
Liabilities to customers in savings
and deposit accounts
8 576 2 685
Other liabilities to customers 371 522 119 606
Mortgage loans 10 929 18 238
Receivables from customers 5 434 187 182
Customer business 396 462 395 396 067 205 420 124 786 80 634
Financial investments 1 000 912
Mortgage-backed loans 56 000
Capital market business 1 000 0 1 000 912 56 000 -55 088
Other assets 14 333 8 553
Other liabilities 3 913 10 538
Other balance-sheet items 3 913 14 333 -10 420 10 538 8 553 1 985
Cash flow from banking business 405 002 376 561 28 441 292 708 310 314 -17 606
Liquid assets 10 116 -10 116 3 797 3 797
Total source of resources 449 309 354 848
Total use of resources 449 309 354 848

Auditor’s report
The following Auditor’s report refers to the 2008 annual
report, which is available from Hyposwiss Private Bank Ltd.
Auditor’s report on the annual accounts
In the capacity of auditor, we have audited the annual
accounts of Hyposwiss Private Bank Ltd., (balance sheet, income
statement, cash flow statement and notes to the accounts;
pages 25 to 48 of the annual report) for the financial year
ended 31 December 2008.
Responsibility of the Board of Directors
The Board of Directors is responsible for preparing the annual
accounts in compliance with the legal requirements and articles
of association. This responsibility includes the design, implementation
and upkeep of an internal control system to allow the
preparation of annual accounts that are free from significant
false statements as a result of violations or errors. Furthermore,
the Board of Directors is responsible for the selection and application
of appropriate accounting methods and for making
adequate estimates.
Auditor’s responsibility
Our responsibility is to issue an audit opinion on the annual
accounts based on our audit. We conducted our audit in
compliance with Swiss law and with the Swiss auditing standard.
On the basis of these standards, audits are to be planned and
performed in such a way that material misstatements in the
annual accounts are reasonably certain to be recognised.
An audit includes the performance of audit activities to obtain
audit evidence for the valuations contained in the annual
accounts and other information. The choice of audit activities
is a matter for the dutiful discretion of the auditor. This incorporates
an assessment of the risks of significant false information
in the annual accounts as a result of violations or errors. In
assessing these risks, the auditor takes into account the internal
control system, to the extent that it is significant for the preparation
of the annual accounts, in order to define the appropriate
audit activities for the circumstances, but not, however, to issue
an audit opinion on the effectiveness of the internal control
system. The audit also incorporates an assessment of the adequacy
of the accounting methods used, the plausibility of the estimates
made and an evaluation of the overall view of the annual
accounts. We are of the view that the audit evidence obtained
by us provides a sufficient and appropriate basis for our audit
opinion.
Audit opinion
In our view, the annual accounts for the financial year ended
31 December 2008 are in compliance with Swiss law and the
articles of association.
Reporting due to additional statutory regulations
We confirm that we meet the statutory requirements in respect
of authorisation according to the Federal Act on the Licensing
and Oversight of Auditors (Revisionsaufsichtsgesetz, RAG) and
independence (Article 728 CO and Article 11 RAG) and that there
are no circumstances inconsistent with our independence.
In compliance with Article 728a (1) figure 3 CO and the Swiss
Audit Standard 890 we confirm that an internal control system
exists for the preparation of the annual accounts that has been
designed in accordance with the guidelines from the Board of
Directors.
We further confirm that the application for the appropriation
of net retained profits is in compliance with Swiss law and the
articles of association and recommend that these annual
accounts be adopted.
Zurich, 5 February 2009
PricewaterhouseCoopers AG
Pascal Portmann Thomas Kleger
Audit specialist
Chief Auditor
Audit specialist
Hyposwiss Annual Review 2008 33

Impressum
© 2009 Hyposwiss Private Bank Ltd.
Concept and text
IRF Communications AG, Zurich
Design
TGG Hafen Senn Stieger, St. Gallen
Images
Aura, Keystone

Hyposwiss Private Bank Ltd.
Bahnhofstrasse/Schützengasse 4
P.O. Box 3180, CH-8021 Zurich, Switzerland
T +41 44 214 31 11, F +41 44 211 52 23
info@hyposwiss.ch, www.hyposwiss.ch