ANNUAL REPORT 2008 - Amazon S3...The Bank operates on the basis of strict segregation of duties and application of the four-eye principle at all levels. Front, middle and back office

ANNUAL REPORT 2008

CONTENTSCONTENTS

Management Report

Page 4

Report of the Reviseur d’Entreprises

Page 7

Balance Sheet and

Off-Balance Sheet Items

Page 8

Profit and Loss Account

Page 10

Notes to the Accounts

Page 11

Location

Page 32

THE SAFRA GROUP

Banque Safra-Luxembourg S.A.

Safra International Bank and Trust Ltd.

J. Safra Asset Management Limited

Safra Asset Management (Bahamas) Limited

J. Safra Asset Management S.A.

Banque J. Safra (Suisse) S.A.

Banque J. Safra (Monaco) S.A.

Banque Safra-France S.A.

Bank J. Safra (Gibraltar) Limited

J. Safra Gestion (Monaco) S.A.

“If you choose to sail upon the seas of banking, build your bank as you would your boat, with the strength to sail safely through any storm.”

Jacob Safra, founder

“If you choose to sail upon the seas of banking, build your bank as you would your boat, with the strength to sail safely through any storm.”

Jacob Safra, founder

4

The profit for the year, after allocation for depreciation, taxes and

value adjustments, was EUR 11 million. The Bank proposes to

allocate EUR 9 million to free reserves and EUR 2 million

to a special reserve, in accordance with the provisions of paragraph

8 the Law of October 16, 1934 as modified by Article 5 of the Law of

December 22, 2001. Based on that paragraph, the Bank may elect to

obtain a tax credit for all or part of the net worth tax due for the year.

This tax credit is, however, limited to the amount of the corporate

income tax due for the same year before the imputation of any tax

credits. In order to benefit from this provision, the Bank must commit

itself to post before the end of the subsequent year an amount equal

to five times the net worth tax to be credited to a special reserve,

which has to be maintained for a period of five years.

The Bank’s total own funds as defined for capital adequacy ratio

purposes at the end of the year 2008 were EUR 177 million.

The Bank is required by the banking supervisory authorities to

observe at all times a capital adequacy ratio, in which the Bank’s

own funds must equal at least 8% of the sum of its weighed assets

and off-balance sheet items. At the end of 2008, this ratio was 21%

before the appropriation of the profit of the year.

The Bank is a member of the non-profit making “Association pour la

Garantie de Dépôts” (AGDL), which objective is the establishment of

a mutual guarantee scheme for deposits made by customers of

member credit institutions, and as such, the Bank is required to set

up provisions under the limits set out by the regulations (please refer

to note 33 of this report). As of December 31, 2008, the Bank’s AGDL

provisions amount to EUR 1 million. In November and December

2008, advances requested by the AGDL were made for a total

amount of EUR 0.4 million, and posted as a reduction of the existing

AGDL provision, in accordance with the CSSF Circular 08/386.

The Management of Banque Safra-Luxembourg, Société Anonyme, is

pleased to present the Annual Accounts for the year ended

December 31, 2008.

Total client assets, which include client off-balance sheet items, were

EUR 13,981 million at the end of 2008, compared to EUR 13,096

million in the previous year. The total balance sheet of the Bank was

EUR 1,663 million at the end of 2008. This compares to EUR 1,547

million at the end of the previous year. The variation of the total

balance sheet is due to the combination of the increase of the

Bank’s securities portfolio and the variation of the exchange rate

used for translation of other currencies into EUR.

The Bank continues to adhere to its main philosophy of protecting

and preserving wealth, while procuring prudent growth. Balance

sheet assets comprise very liquid short-term placements with highly

rated credit institutions located in OECD countries, loans and

advances to customers which are of short-term maturity, generally

not exceeding three months and highly liquid securities issued by

public bodies and other borrowers from the private sector.

The Bank’s main activity is the private banking business to selected

high net worth individuals. Deposits from clients represent the major

portion of the liabilities and are essentially considered a stable

source of funds. The amounts deposited may vary from time to time

according to clients’ demand for securities, which depends on

market conditions and interest rate trends. The securities thus

acquired are recorded as off-balance sheet items.

Off-balance sheet items as presented in this report are comprised in

part of contingent liabilities, representing various types of

agreements with clients in the form of guarantees and other

substitutes for credit, including stand-by letters of credit. These

facilities normally have specific expiration dates, credit risk

equivalent to that of loans to customers and are subject to the

prudent credit policies of the Bank. In addition, off-balance sheet

items also include commitments, representing the sum of forward

purchases and forward sales of assets, settlement of spot

transactions and amounts not yet paid up on traded securities.

MANAGEMENT REPORT

5

RISK MANAGEMENT

The Bank’s continued commitment towards strong controls

and a systematic approach to risk management provides assurance

that all risks are identified and analyzed according to the

recommendations of the banking supervisory authorities and market

practices. Risk is monitored by the Risk, Planning and Control

department at management level. Specific risk management issues

are as follows:

1. Credit Risk

Loans to customers are approved within the powers set up in the

chart of authorities. Loans to customers above the specified limits are

submitted to the Bank’s Credit Committee, which operates at senior

management level. The majority of lending operations are with private

customers and due to their nature they are reserved for individuals

and corporate entities of good financial standing. The risks are

mitigated by a selective account opening process and, whenever

deemed necessary, additional guarantees are obtained.

Credit to banks, which represent 38% of the balance sheet items,

are made within the limits established and revised regularly

by the Credit Committee and the Board of Directors. The Bank’s

policy is to establish limits for banks located in Zone A countries

taking into consideration the credit ratings and capital strength of

these institutions, in addition to other relevant credit information.

The purchase of securities for either the investment, structural or

trading portfolio is subject to very conservative principles and is

processed within the established limits. In the event that no limit

has been established or if the maturity of the instrument falls beyond

one year, prior approval of the Credit Committee is required.

Daily reports permit management to adequately monitor compliance

with the approved limits and to immediately detect any irregular

transaction. The regulatory maximum exposure limit towards any

individual borrower or those belonging to a same economic group,

is measured as a percentage of the capital and must not be

exceeded. The Bank has consistently complied with this limit.

2. Liquidity risk

The Bank is required to maintain a liquidity ratio, as defined by

the banking supervisory authorities. A calculation of this ratio is

performed monthly and included in the Bank’s monthly reports

addressed to the Management and Board of Directors. In addition, a

daily cash flow statement lists total assets and liabilities falling due

for repayment each day, beginning on the reporting day, preventing

any liquidity shortage. Along with an analysis of the balance sheet,

a list of cash balances available at each correspondent bank, taking

into account expected payments and receipts falling due on that

date, is prepared and submitted to the attention of management on

a daily basis.

3. Currency Risk

The majority of the Bank’s commitments in currencies is made on

behalf of customers. Only a small limit is granted for the purposes of

own dealing in major currencies. Daily currency positions are

generally covered using foreign exchange contracts and similar

hedging instruments, in order to arrive at a low net position.

A detailed report of all foreign exchange deals by maturity date

is produced on a daily basis with a summary of all open positions as

at the closing of the previous day. This reports is prepared for the

attention of the Treasury department of the Bank.

4. Market risk

The Bank’s Asset and Liability Management (ALM) Committee

monitors exposure to interest rate risk on a regular basis.

A complete report, which is produced by the Risk Department

and addressed to the ALM Committee, analyses the entire risk

exposure of the Bank. A mark-to-market analysis is applied

to each individual item of the balance sheet.

Additionally, the Banks calculates the maximum expected net

financial result following parallel shifts in the yield curves using a

variety of basis point scenarios for each individual currency. The

interest rates applied to mainstream assets and liabilities are a

function of recognized floating rate basis.

6

5. Operational risk

The Bank analyses all specific risks on a separate basis. Operational

risk is assumed as that associated with human or technological

failure. In addition to a comprehensive contingency plan, which is

tested on a regular basis, the Bank has developed several control

levels and an efficient management information system to ensure

that operational risk is minimized. Reconciliation of transactions at

nostro, vostro and depositary levels is made on a daily basis,

complementing the matching of all transaction confirmations. All

option transactions are checked for accuracy and reported on a

daily basis by expiration dates, including strike and market prices.

The Bank operates on the basis of strict segregation of duties and

application of the four-eye principle at all levels. Front, middle and

back office functions are kept autonomous of each other. Access to

systems to any individual or group of users is granted only upon

approval of senior management and subject to restrictions

corresponding to the respective function of the user.

6. Settlement risk

The Bank only deals with counterparts of good financial standing,

subject to the approval of the Credit Committee. Settlement risk is

implicitly taken into consideration when setting limits. In addition

the Bank makes use of netting agreements when appropriate.

Formal written confirmation of all transactions with counterparts is

required, including authenticated S.W.I.F.T. confirmation when

applicable.

7. Legal risk

In addition to an in-house legal counselor, the Bank uses the services

of a number of external legal counselors to obtain advice in their

respective areas of expertise. All documentation is submitted to the

legal counselors for revision, in order to ensure legal validity,

counterpart capacity, performances, enforceability and all other

relevant legal aspects.

It is the Bank’s policy to enter into business only with approved

counterparts of good reputation and financial standing, and

whenever possible the Bank requires that its own jurisdiction is

taken into consideration for the enforceability of legal documents.

8. Compliance Risk

In line with regulatory requirements in the field of compliance

and the fight against money laundering and terrorism financing,

in particular the law of 12 November 2004 and CSSF Circulars

04/155 and 08/387, the Bank has established a Compliance

Department.

The Compliance Department is headed by a full time Director

of Compliance and its main responsibility is to assist the Bank

to ensure fulfillment of its regulatory obligations, notably the

establishment and development of compliance policies, procedures

and systems, the coordination of efforts in the compliance field and

the permanent monitoring of business activities.

More particularly, the Compliance Department provides assurance

that the regulations the Bank is subject to are being duly respected

and promotes a compliant culture throughout the organization and

the conduct of operations with integrity and the highest ethical and

professional standards in conformity with applicable Regulations,

especially those relating to the fight against money laundering and

terrorism financing.

Furthermore, the Department contributes to the development

of internal control systems, the identification and management

of risks, the establishment of preventive procedures, and organizes

training programs to ensure that all employees are periodically

made aware of the Bank’s Compliance Policy, that they understand

their responsibilities and are kept up-to-date with the regulatory

environment.

During the year 2008 the Bank sold its subsidiary, Banque Safra

France S.A. Since the end of 2008, no significant events have

occurred, which would have an impact on the balance sheet

and reported results. No major changes in activities are anticipated

in the forthcoming year and therefore the Bank remains committed

to strengthening the relationship with its clients, seeking to

understand and address their needs, and continue to offer a

complete array of products and services at the highest level

of professional standards.

The management wishes to express their gratitude for the loyalty of

the customers, and their appreciation to the entire staff for their

contribution to the continued development of the Bank.

7

To the board of directors of Banque Safra-Luxembourg, Société Anonyme

Report on the annual accountsFollowing our appointment by the board of directors, we have audited the accompanying annual accounts of Banque Safra-Luxembourg,

Société Anonyme, which comprise the balance sheet as at December 31, 2008 and the profit and loss account for the year then ended, and

a summary of significant accounting policies and other explanatory notes.

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. This responsibility includes: designing, implementing

and maintaining internal control relevant to the preparation and fair presentation of annual accounts that are free from material

misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that

are reasonable in the circumstances.

Responsibility of the réviseur d’entreprises

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 by the Institut des réviseurs d’entreprises. 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 judgement of the réviseur d’entreprises, 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 considers

internal control relevant 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.

Opinion

In our opinion, the annual accounts give a true and fair view of the financial position of Banque Safra-Luxembourg, Société Anonyme as of

December 31, 2008, and of the results of its operations for the year then ended in accordance with the Luxembourg legal and regulatory

requirements relating to the preparation of the annual accounts.

Report on other legal and regulatory requirementsThe management report, which is the responsibility of the board of directors, is in accordance with the annual accounts.

Deloitte S.A. Olivier Lefèvre

Réviseur d’entreprises Partner

April 20, 2009

REPORT OF THE REVISEUR D’ENTREPRISES

8

BANQUE SAFRA - LUXEMBOURG, SOCIÉTÉ ANONYMEBALANCE SHEET AND OFF-BALANCE SHEET ITEMS

DECEMBER 31, 2008 (EXPRESSED IN EUR)

NOTE 2008 2007

ASSETS

Cash, balances with central banks and post office banks 34 53,691,969 27,180,168

Loans and advances to credit institutions 12, 34 645,510,602 827,182,406

a) repayable on demand 200,334,717 568,324,589

b) other loans and advances 3 445,175,885 258,857,817

Loans and advances to customers 4, 32, 34 165,587,502 217,748,281

Debt securities and other fixed-income securities 5, 6, 9, 34 570,620,456 407,205,536

a) issued by public bodies 228,008,339 203,211,692

b) issued by other borrowers 342,612,117 203,993,844

Shares and other variable-yield securities 5, 34 136,823,101 7,390,771

Shares in affiliated undertakings 5, 7, 9 - 23,213,230

Intangible assets 9, 10 687,184 655,159

Tangible assets 9, 10 1,165,252 1,070,640

Other assets 8 27,878,138 21,397,249

Prepayments and accrued income 11 60,657,812 13,616,623

TOTAL ASSETS 13 1,662,622,016 1,546,660,063

See notes to the accounts.

9

BANQUE SAFRA - LUXEMBOURG, SOCIÉTÉ ANONYMEBALANCE SHEET AND OFF-BALANCE SHEET ITEMS


NOTE 2008 2007

LIABILITIES

Amounts owed to credit institutions 21, 34 427,614,939 493,885,972


b) with agreed maturity dates or periods of notice 14 354,512,552 392,895,635

Amounts owed to customers 34 797,727,331 850,869,123


b) with agreed maturity dates or periods of notice 15 473,364,996 631,378,397

Debts evidenced by certificates 16, 34 215,021,770 -

Other liabilities 17 26,595,205 19,611,744

Accruals and deferred income 9,839,359 11,342,425

Provisions 19 8,402,244 6,782,885

a) provisions for taxation 5,508,454 4,175,509

b) other provisions 33 2,893,790 2,607,376

Subordinated liabilities 20, 34 43,113,000 40,758,000

Fund for general banking risks 39,391,719 39,391,719

Subscribed capital 22, 23 8,800,000 8,800,000

Reserves 23 75,218,195 60,906,421

Profit for the financial year 10,898,254 14,311,774

TOTAL LIABILITIES 24 1,662,622,016 1,546,660,063

OFF-BALANCE SHEET

Contingent liabilities 25, 34 58,982,162 75,467,663

of which:

- guarantees and assets pledged as collateral security 58,982,162 75,467,663

Commitments 26, 34 51,013,853 84,726,718

Fiduciary operations 28 3,239,960,944 1,202,624,778


10

BANQUE SAFRA - LUXEMBOURG, SOCIÉTÉ ANONYMEPROFIT AND LOSS ACCOUNT


NOTE 2008 2007

Interest and similar income 80,716,480 92,188,590

of which:

- that arising from fixed-income securities 32,693,869 55,294,775

Interest and similar charges 20 (62,925,086) (77,665,802)

Income from securities 25,309 218

of which:

- income from shares and other variable-yield securities 25,309 218

Commission income 19,414,297 20,288,619

Commission expense (2,785,011) (1,994,298)

Net profit on financial operations (9,991,003) 1,568,436

Other operating income 29 576,862 2,449,311

General administrative expenses (16,261,150) (16,801,918)

a) staff costs 31, 32 (11,972,000) (11,804,287)

of which:

- wages and salaries (10,852,361) (10,818,450)

- social security costs (901,895) (833,467)

of which:

- social security costs relating to pensions (700,083) (658,228)

b) other administrative expenses (4,289,150) (4,997,631)

Value adjustments in respect of tangible and intangible assets (620,658) (500,428)

Other operating charges 30 (4,988,882) (791,346)

Value adjustments in respect of loans and advances and

provisions for contingent liabilities and for commitments (1,043,164) (3,861,559)

Value re-adjustments in respect of loans and advances and provisions

for contingent liabilities and for commitments 5,255,699 16,600

Value re-adjustments in respect of transferable securities held

as financial fixed assets and participating interests and shares

in affiliated undertakings 4,454,270 418,152

Tax on profit on ordinary activities 19 (241,129) (1,000,897)

Profit on ordinary activities after tax 11,586,834 14,313,678

Other taxes not shown under the preceding items (688,580) (1,904)

Profit for the financial year 10,898,254 14,311,774


11

BANQUE SAFRA - LUXEMBOURG, SOCIÉTÉ ANONYMENOTES TO THE ACCOUNTS

DECEMBER 31, 2008

NOTE 1 - GENERAL

1.1. Corporate matters

Banque Safra - Luxembourg, Société Anonyme (hereafter "the

Bank") was incorporated in Luxembourg on August 19, 1985 as a

Société Anonyme.

The Bank is an independent banking institution.

1.2. Nature of the Bank's business

The object of the Bank is to undertake all banking and financial

operations of whatsoever kind.

1.3. Annual accounts

The Bank prepares its annual accounts in Euro (EUR), the currency in

which the capital is expressed.

The Bank’s accounting year coincides with the calendar year.

NOTE 2 - SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

The Bank prepares its annual accounts under the historical cost

principle, in accordance with the laws and regulations in force in the

Grand-Duchy of Luxembourg and on the basis of accounting

principles generally accepted in the banking sector in the Grand-

Duchy of Luxembourg.

In observing these, the following significant accounting policies

are applied:

2.1. The date of recording of transactions in the balance sheet

Assets and liabilities are stated in the balance sheet when the

amounts concerned become cleared funds.

2.2. Foreign currencies

The Bank maintains a multi-currency accounting system that records

all transactions in the currency or currencies of the transaction on

the day on which the contract is concluded.

Revenues and expenses in foreign currencies are translated

into EUR monthly at the prevailing exchange rates.

All assets and liabilities are converted into EUR at the average

of the buy and sell spot rates applicable at the balance sheet date.

Both realised and unrealised profits and losses arising on revaluation

are accounted for in the profit and loss account for the year.

At year-end, all uncompleted forward transactions are translated

into EUR at the forward rate applicable for the remaining term

at the balance sheet date.

Results on uncompleted forward transactions linked to spot

transactions and on swap transactions are accrued at the balance

sheet date. The revaluation of these transactions does not affect the

result from the financial year.

Uncovered forward transactions are valued individually on the basis

of forward foreign exchange rates applicable at the balance sheet

date. Unrealised revaluation profits are ignored, whereas a provision

is set up in respect of any unrealised revaluation losses. This

provision is included on the liability side of the balance sheet under

"Provisions : other provisions".

Currency futures and options are translated into EUR at the spot rate

at the balance sheet date.

2.3. Financial instrument derivatives

The Bank's commitments resulting from financial instrument

derivatives such as interest rate swaps, financial futures and options

are recorded on the transaction date as off-balance sheet items.

At year-end, where necessary, a provision is set up in respect of individual

unrealised losses resulting from the revaluation of the Bank's

commitments at market value. This provision is included on the liability

side of the balance sheet under "Provisions : other provisions".

No provision is set up in cases where a financial instrument clearly

covers an asset or a liability and economic unity is established or

where a financial instrument is hedged by a reverse transaction so

that no open position exists.

12


DECEMBER 31, 2008

2.4. Specific value adjustments with respect to doubtful

and irrecoverable debts

It is the Bank's policy to establish specific value adjustments in

respect of doubtful and irrecoverable debts, as deemed appropriate

by the board of directors.

Value adjustments, if any, are booked in the same currency as the

underlying assets and are deducted from the assets items to which

they relate. It is the Bank’s policy to reclassify existing specific value

adjustments on securities arising from sovereign risk to or from

specific value adjustments on loans as required without affecting

the profit and loss account.

2.5. Fund for general banking risks

The Bank has created a fund for general banking risks intended to

cover particular risks associated with banking operations. Increases

to or decreases from this fund are determined based on the profit

after tax, but before determining the profit for the financial year, and

are not subject to limitations.

2.6. Transferable securities

Transferable securities are recorded initially at their purchase price,

plus additional charges.

The average cost method is used for valuation purposes.

Investments made under Credit Linked Notes, Total Return Swaps and

Term Deposits (“CLN/TRS/TD”) programs are kept at cost, as note

holders bear all the related risks and rewards including the effect of

foreign exchange differences. As of the reporting date the effect of

these foreign exchange differences on the balance sheet items is

neutralized for the purpose of presentation of the Bank’s accounts.

2.7. Debt securities and other fixed-income securities

The Bank has divided its portfolio of fixed-income securities into

three categories, the principal characteristics of which

are the following:

- an investment portfolio of financial fixed assets, which are

intended to be used on a continuing basis in the Bank's activities;

- a trading portfolio of securities purchased with the intention of

resale in the short term; and

- a structural portfolio of securities which do not fall within either of

the two other categories.

Fixed-income securities are valued as follows:

Investment portfolio

Fixed-income securities included in the Bank's investment portfolio

are stated at the lower of cost (purchase price) or market value.

Where the purchase price of fixed-income securities included in the

Bank's investment portfolio exceeds the amount repayable at

maturity, the difference is amortized through the life of the bond and

charged to the profit and loss account.

Trading portfolio

Fixed-income securities included in the Bank's trading portfolio are

stated at the lower of cost or market value.

Structural portfolio

Fixed income securities included in the Bank's structural portfolio

are stated at the lower of cost or market value.

Securities issued on a discounted basis

Securities issued on a discounted basis, in cases where the discount

represents the sole source of income from these securities, are

stated at cost as adjusted for the difference between the issue (or

purchase) value and the par (or disposal) value. This difference is

accrued over the life of the security.

2.8. Shares and other variable-yield securities

At the balance sheet date, shares and other variable-yield securities

are stated at the lower of cost or market value.

2.9. The "Beibehaltungsprinzip"

It is the Bank's policy to retain value adjustments in respect of

certain categories of assets made previously but which no longer

correspond to a reduction in the value of the assets in question, in

accordance with Articles 56 (2) (f) and 58 (2) (e) of the Law on the

accounts of banks.

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DECEMBER 31, 2008

2.10. Shares in affiliated undertakings

Shares in affiliated undertakings held as financial fixed assets are

started at historical acquisition cost. Value adjustments are made in

case of permanent diminution of value as deemed appropriate by

the board of directors.

2.11. Intangible assets

Intangible assets are stated at purchase price. The value of

intangible assets with limited useful economic lives is reduced by

value adjustments calculated to write-off the value of such assets

systematically over their useful economic lives.

2.12. Tangible fixed assets

Tangible fixed assets are valued at purchase price. The value of

tangible fixed assets with limited useful economic lives is reduced by

value adjustments calculated to write-off the value of such assets

systematically over their useful economic lives.

2.13. Taxes

Income taxes are accounted for on an accrual basis.

NOTE 3 - LOANS AND ADVANCES

TO CREDIT INSTITUTIONS

Loans and advances to credit institutions other than those repayable

on demand may be analysed according to their remaining maturity

as follows: 2008 2007EUR EUR

Not more than three months 317,910,620 216,569,553

More than three months but not more than one year 127,265,265 32,288,264

More than one year* - 10,000,000

445,175,885 258,857,817

* A subordinated loan granted to Banque Safra France S.A. in 2002 wasreimbursed during the year 2008.

NOTE 4 - LOANS AND ADVANCES TO CUSTOMERS

Loans and advances to customers may be analysed according to

their remaining maturity as follows:2008 2007EUR EUR

Not more than three months 105,649,561 177,126,256More than three months but not

more than one year 59,665,784 40,332,024More than one year 272,157 290,001

165,587,502 217,748,281

NOTE 5 - TRANSFERABLE SECURITIES

Transferable securities shown under the various items "Debt

securities and other fixed-income securities"and "Shares and other

variable-yield securities" and “Shares in affiliated undertakings”

may be broken down as follows into listed and unlisted securities:

Listed Unlisted Total2008 2008 2008EUR EUR EUR

Debt securities and other fixed-income securities 570,240,641 379,815 570,620,456

Shares and other variable-yield securities 136,807,630 15,471 136,823,101

Shares in affiliated undertakings(see note 7) - - -

707,048,271 395,286 707,443,557

In the course of the year 2008, the Bank launched a new program of

Credit Linked Notes, Total Return Swaps and Term Deposits.

Proceeds received from the issuance of the notes were invested in

Brazilian investment funds (EUR 148,754,006), financial instruments

(EUR 2,582,417) and bonds (EUR 63,685,347). Please refer also to

notes 6 and 16.

14


DECEMBER 31, 2008

Listed Unlisted Total2007 2007 2007EUR EUR EUR

Debt securities and other fixed-income securities 406,846,467 359,069 407,205,536

Shares and other variable-yield securities 7,375,300 15,471 7,390,771

Shares in affiliated undertakings(see note 7) - 23,213,230 23,213,230

414,221,767 23,587,770 437,809,537

NOTE 6 - DEBT SECURITIES AND OTHER

FIXED-INCOME SECURITIES

As at December 31, 2008, transferable securities shown under

"Debt securities and other fixed-income securities" due within one

year of the balance sheet date amount to EUR 428,370,302 (2007:

EUR 383,765,096).

Transferable securities shown under "Debt securities and other

fixed-income securities" may be analysed as follows:

2008 2007EUR EUR

Financial fixed assets 142,250,154 23,440,440Current assets 428,370,302 383,765,096

570,620,456 407,205,536

Transferable securities are included under financial fixed assets wherethe Bank intends to use them on a continuing basis in its activities.

NOTE 7 - SHARES IN AFFILIATED UNDERTAKINGS

On July 29, 2008, the Bank sold its subsidiary, Banque Safra-France

S.A., for an amount of EUR 23,213,232. The adjustment in value

of the subsidiary (EUR 4,454,270 as of December 31, 2007) was

reversed through profit and loss account.

NOTE 8 - OTHER ASSETS

2008 2007EUR EUR

Premiums on options purchased (see note 17) 25,656,203 17,496,321

Short term receivables 302,285 -Other 1,919,650 3,900,928

27,878,138 21,397,249

For options contracted on behalf of customers, the Bank enters intoreverse hedging transactions.

As of December 31, 2008, the premiums on options purchased

include amounts for options designated as a hedge for securities

in the Bank own portfolio.

NOTE 9 - MOVEMENTS IN FIXED ASSETS

The following movements have occurred in the Bank's fixed assets

in the course of the financial year:

15


DECEMBER 31, 2008

NOTE 10 - INTANGIBLE AND TANGIBLE ASSETS

Intangible assets are made up of software used by the Bank for its

own activities for a net amount of EUR 687,184 (2007: EUR 655,159).

Tangible assets include land and buildings used by the Bank for its own

activities for a net amount of EUR 1,165,252 (2007: EUR 1,070,640).

NOTE 11 - PREPAYMENTS AND ACCRUED INCOME

As of December 31, 2008 the total balance of prepayments and

accrued income of EUR 60,657,812 includes the neutralization of

foreign exchange result related to CLN, TRS and TD programs

amounting to EUR 38,188,581. CLN, TRS and TD programs did not

exist as of December 31, 2007.

NOTE 12 - RELATED PARTY BALANCES - ASSETS

As at December 31, 2008, the following balances with related

parties are included on the assets side of the balance sheet:

Affiliated Affiliatedundertakings undertakings

2008 2007EUR EUR

Loans and advancesto credit institutions - 19,560,937

NOTE 13 - FOREIGN CURRENCY ASSETS

As at December 31, 2008, the aggregate amount of the Bank's

assets denominated in currencies other than Euro amounts to EUR

1,315,735,462 (2007: EUR 1,147,038,610).

MOVEMENTS IN FIXED ASSETSFIXED ASSETS

Gross value at Additions Disposals Foreign Gross value Value Net valuethe beginning of exchange at the end adjustments at the end

the financial year translation of the at the end of of thefinancial the financial financial

ITEM year year yearEUR EUR EUR EUR EUR EUR EUR

1. Shares in affiliatedundertakings 27,667,500 - 27,667,500 - - - -

2. Debt securities and otherfixed-income securities 24,160,410 116,885,561 11,306,415 16,609,929 146,349,485 4,099,331 142,250,154

3. Intangible assets 1,330,638 387,098 - - 1,717,736 1,030,552 687,184

4. Tangible assets 4,040,652 360,198 - - 4,400,850 3,235,598 1,165,252of which:

a) Land and buildings 2,221,258 - - - 2,221,258 1,720,753 500,505

b) Plant and machinery 1,235,733 322,895 - - 1,558,628 1,086,888 471,740

c) Other fixtures and fittings,tools and equipment 583,661 37,303 - - 620,964 427,957 193,007

16


DECEMBER 31, 2008

NOTE 14 - AMOUNTS OWED TO CREDIT

INSTITUTIONS WITH AGREED MATURITY

DATES OR PERIODS OF NOTICE

Amounts owed to credit institutions with agreed maturity dates or

periods of notice may be analysed according to their remaining

maturity as follows:

2008 2007EUR EUR

Not more than three months 353,740,237 391,500,895

More than three months but not more than one year 772,315 1,394,740

354,512,552 392,895,635

NOTE 15 - AMOUNTS OWED TO CUSTOMERS WITH

AGREED MATURITY DATES OR PERIODS OF NOTICE

Amounts owed to customers may be analysed according to their

remaining maturity as follows:

2008 2007EUR EUR

Not more thanthree months 450,121,798 553,950,217

More than three monthsbut not more than one year 22,632,430 75,169,507

More than one year 610,768 2,258,673

473,364,996 631,378,397

NOTE 16 - DEBTS EVIDENCED BY CERTIFICATES

Debts evidenced by certificates other than debt securities in issue

may be analysed according to their remaining maturity as follows:

2008 2007EUR EUR

More than one year 215,021,770 -

215,021,770 -

The outstanding amount of EUR 215,021,770 represents the notes

issued under Credit Linked Notes, Total Return Swaps and Term

Deposits program and denominated in USD. Proceeds are invested

into Brazilian investment funds and bonds denominated in BRL.

Please refer also to notes 5 and 6.

NOTE 17 - OTHER LIABILITIES

2008 2007EUR EUR

Premiums on options written (see note 8) 21,699,637 16,554,918Short-term payables 2,972,300 2,353,692Preferential creditors 1,043,800 702,736Other 6,518 398

26,595,205 19,611,744

For options contracted on behalf of customers, the Bank enters into

reverse hedging transactions.

NOTE 18 - FEES PAYABLE TO THE AUDIT FIRM

Fees charged to the Bank by the audit firm and its respective entire

network are analysed as follows:

2008 2007EUR EUR

Annual Audit fees 110,000 108,000Other assurance services 134,500 1,500Tax advisory fees 11,900 45,170Other fees - 19,910

256,400 174,580

Fees are shown net of VAT on an accrual basis for the financial year.

17


DECEMBER 31, 2008

NOTE 19 - PROVISIONS

At December 31, 2008, the Bank has provided EUR 241,129 (2007:

EUR 1,000,897) for revenue taxes.

The balance of the provision for taxes, which amounts to EUR

5,508,454 (2007: EUR 4,175,509) is shown under the liabilities item

“Provisions, provisions for taxation”.

It is the Bank’s policy to create a country risk provision (CRP) to

cover the risks linked to Brazilian exposure. The CRP is calculated

once a year at year-end and amounts to 10% of total exposure.

NOTE 20 - SUBORDINATED LIABILITIES

The following represents the total amount of subordinated liabilities:

Amount Rate of Maturity Amount inof borrowing Currency Interest Date EUR

60,000,000 USD 8.375 % 06/04/2011 43,113,000

For the purpose of calculating the Bank's capital adequacy ratio, the

subordinated liabilities may be assimilated to own funds to

a certain extent.

The Bank has incurred charges of EUR 3,508,470 (2007: EUR 3,469,664)

during the financial year with respect to its subordinated liabilities.

NOTE 21 - RELATED PARTY BALANCES -

LIABILITIES

As at December 31, 2008 the following balances with related parties

are included on the liabilities side of the balance sheet:

Affiliated Affiliatedundertakings undertakings

2008 2007EUR EUR

Amounts owed to credit institutions - 32,658,922

NOTE 22 - SUBSCRIBED CAPITAL

The subscribed capital has not changed during the year 2008.

The share capital of EUR 8,800,000 is divided into 14,100 shares

without nominal value.

NOTE 23 - MOVEMENTS IN RESERVES

AND PROFIT BROUGHT FORWARD

The following movements have occurred in the Bank’s capital

reserves and profit brought forward in the course of the financial

year:

Capital Legal Other Profitreserve reserves

Balance at January 1, 2008 8,800,000 880,000 60,026,421 -

Profit for the year ended December 31,2007 - - - 14,311,774

Appropriation of profit- Transfer to

reserves - - 14,311,774 (14,311,774)

Balance at December 31, 2008 8,800,000 880,000 74,338,195 -

Under Luxembourg Law, the Bank must appropriate to a legal

reserve an amount equivalent to at least 5% of the annual net profit

until such reserve is equal to 10% of the share capital.

This appropriation is made in the following year. Distribution of the

legal reserve is restricted. The legal reserve is equal to 10% of the

share capital.

The Annual General Meeting of Shareholders of May 20, 2008

resolved to allocate to other reserves the profit for the year 2007 of

EUR 14.3 million of which reserve for tax credit of EUR 2.4 million

and free reserves of EUR 11.9 million.

18


DECEMBER 31, 2008

In order to take advantage of the provisions of paragraph 8a of the

Net Worth Tax Law, the Bank may elect to get a tax credit for all or

part of the net worth tax due for that year. This tax credit is, however,

limited to the amount of the corporate income tax due for the same

year before any tax credit. In order to benefit from this provision,

the Bank must commit itself to post to a special reserve before the

end of the subsequent year an amount equal to five times the net

worth tax to be credited, which has to be maintained for a period

of five years.

NOTE 24 - FOREIGN CURRENCY LIABILITIES

As at December 31, 2008, the aggregate amounts of liabilities

denominated in currencies other than Euro amounts to EUR

1,370,920,886 (2007: EUR 1,166,436,682).

NOTE 25 - CONTINGENT LIABILITIES

The Bank's contingent liabilities may be analysed as follows:

2008 2007EUR EUR

Guarantees and other direct substitutes for credit 56,464,717 75,467,663Documentary credit 2,517,445 -

58,982,162 75,467,663

A significant proportion of the guarantees issued by the Bank and

the opened documentary credits are secured by assets pledged in

due form. At year-end, there were no related party balances.

NOTE 26 - COMMITMENTS

The Bank's contingent liabilities may be analysed as follows:

2008 2007EUR EUR

Forward purchases of assets 23,397,511 20,474,007Forward sales of assets 9,738,874 29,525,980Amounts not paid up on securities, participating interests and shares in affiliated undertakings 17,734,666 34,726,731Settlement of spot transactions 142,802 -

51,013,853 84,726,718

The Bank has entered into certain other commitments which

are not disclosed either in the balance sheet or in the off-balance

sheet items but which are not significant for the purposes

of assessing the financial situation of the Bank. Such other

commitments are:

- commitments in respect of fixed rental payments contracted

on office building;

- financial liabilities arising out of membership of the deposit

guarantee scheme (see note 33).

NOTE 27 - OPERATIONS LINKED TO

CURRENCY EXCHANGE RATES, INTEREST

RATES AND OTHER MARKET RATES

The following types of forward transactions are outstanding as at

December 31, 2008:

Operations linked to currency exchange rates

- Forward exchange transactions (swaps, outrights);

- Options;

- Precious metal futures.

Operations linked to currency exchange rates are made to a large

extent for hedging purposes.

Operations linked to other market rates

- Options.

Operations linked to other market rates are made to a large extent

for hedging purposes.

19

NOTE 28 - INVESTMENT MANAGEMENT

SERVICES AND UNDERWRITING FUNCTIONS

The Bank provides management and agency services to third parties.

Management and agency services consist of:

- Custody and administration of transferable securities;

- Fiduciary operations;

- Agency functions.

NOTE 29 - OTHER OPERATING INCOME

Other operating income is made up as follows:

2008 2007EUR EUR

Release of deferred taxes - 1,844,023Income related to prior years - 451,324Account closing fees 24,050 36,385Safekeeping Fees 256,896 -Tax adjustment 115,510 -Other 180,406 117,579

576,862 2,449,311

NOTE 30 - OTHER OPERATING CHARGES

Other operating charges are made up as follows:

2008 2007EUR EUR

Loss on sale Banque Safra-France S.A.(see note 7) 4,450,268 -

Charges related to prior years 190,240 630,608AGDL provision 78,000 74,465Other 270,374 86,273

4,988,882 791,346

NOTE 31 - STAFF NUMBERS

The average number of persons employed by the Bank during the

financial year is as follows:

2008 2007Number Number

Senior management 10 10Middle management 9 8Employees 96 75

115 93

NOTE 32 - MANAGEMENT REMUNERATION

The Bank has granted emoluments in respect of the financial year

to the members of the Senior Management of the Bank by reason

of their responsibilities, and has entered into commitments in

respect of retirement pensions for present members of these

bodies, as follows:

Emoluments Emoluments Retirement Retirementpensions pensions

2008 2007 2008 2007EUR EUR EUR EUR

SeniorManagement 3,008,437 2,530,472 116,859 88,499

The Bank has granted advances and credits to the members

of its Senior Management as follows:

Advances Advancesand credits and credits

2008 2007EUR EUR

Senior Management 104,285 60,458


DECEMBER 31, 2008

20


DECEMBER 31, 2008

NOTE 33 - DEPOSIT GUARANTEE SCHEME

On September 25, 1989, all credit institutions in the Luxembourg

banking sector became members of the non-profit making association

“Association pour la Garantie des Dépôts, Luxembourg” (“AGDL”).

In accordance with the Law of April 5, 1993, as amended

by the Law of June 11, 1997, the sole object of AGDL is the

establishment of a mutual guarantee scheme covering

deposits made by customers of member credit institutions

(“the Guarantee”). The customers covered by the Guarantee include

all depositors who are physical persons, whatever their nationality

or country of residence. Also covered by the Guarantee are small

companies constituted under the Law of a Member State of the

European Union, whose size is such that they would be permitted to

draw up abbreviated accounts pursuant to Article 35 of the Law of

December 19, 2002 on commercial companies, as amended.

With respect to each member, the Guarantee is limited to a

maximum amount per depositor of EUR 20,000 or its foreign

currency equivalent. No depositor can receive more than this sum,

regardless of the number of accounts or deposits held in the sole or

joint name of the depositor with the same credit institution.

The Law of July 27, 2000 stipulates that banks must also belong

to an investment Guarantee scheme. This additional Guarantee

covers the reimbursement of claims resulting from investment

transactions up to the amount of EUR 20,000.

The total amount of the Guarantees which will in no case exceed

EUR 40,000 per customer (EUR 20,000 deposit guarantee and EUR

20,000 investor compensation) represents an absolute figure and

cannot be increased by any interest, charges or any other amount.

As at December 31, 2008 and 2007, the Bank has set up a provision

in recognition of its potential liabilities under the Guarantees within

the limits set out in the Grand Ducal Regulation of December 21,

1991 enacting Article 167 § 1 (5) of the income tax Law of

December 4, 1967.

As of December 31, 2008, the Bank was requested by the AGDL

to contribute an amount of EUR 1,070,849 to the Deposit Guarantee

Scheme. Advances were paid in November and December 2008 for

a total amount of EUR 423,649 and posted as a reduction of the

existing AGDL provision, in accordance with the CSSF circular 08/386.

NOTE 34 - FINANCIAL INSTRUMENT DISCLOSURES

34.1. Primary Non-Trading Financial Instruments

As at December 31, 2008, the analysis of primary non-trading

financial instruments by class and residual maturity is the following:

21


DECEMBER 31, 2008

≤ 3 months > 3 months > 1 year > 5 years Undetermined Total≤ 1 year ≤ 5 years maturity

At carrying amount in EUR EUR EUR EUR EUR EUR EUR

Financial Assets

Cash on hand 146,252 - - - - 146,252

Balances with the BCL 53,545,717 - - - - 53,545,717

Loans and advances

to credit institutions 518,245,337 127,265,265 - - - 645,510,602

Loans and advances

to customers 105,649,561 59,665,784 272,157 - - 165,587,502

Listed government

fixed-income securities 202,553,384 3,219,008 599,520 21,636,427 - 228,008,339

Listed non government

fixed-income securities 168,389,214 66,040,760 92,929,208 14,873,121 - 342,232,303

Not listed non government

fixed-income securities - - - 379,815 - 379,815

Shares and other

variable-yield securities 46,992,187 89,830,914 - - - 136,823,101

Total 1,095,521,652 346,021,731 93,800,885 36,889,363 - 1,572,233,631

Financial Liabilities

Amounts owed to credit institutions 426,842,624 772,315 - - - 427,614,939

Amounts owed to customers 774,484,133 22,632,430 610,768 - - 797,727,331

Debts evidenced by certificates - - 215,021,770 - - 215,021,770

Subordinated debt - - 43,113,000 - - 43,113,000

Total 1,201,326,757 23,404,745 259,745,538 - - 1,483,477,040

Off-balance sheet items

disclosed as contingencies

and commitments

Guarantees and assets pledged 18,359,656 9,799,519 25,922,476 4,900,511 - 58,982,162

Forward purchases of securities 23,397,511 - - - - 23,397,511

Forward sales of securities 9,738,874 - - - - 9,738,874

Amounts not paid up on securities 17,734,666 - - - - 17,734,666

Settlement of spot securities

transactions 142,802 - - - - 142,802

Total 69,373,509 9,799,519 25,922,476 4,900,511 - 109,996,015

22


DECEMBER 31, 2008

≤ 3 months > 3 months > 1 year > 5 years Undetermined Total≤ 1 year ≤ 5 years maturity

At carrying amount in EUR EUR EUR EUR EUR EUR EUR

Financial Assets

Cash on hand 187,149 - - - - 187,149

Balances with the BCL 26,993,019 - - - - 26,993,019

Loans and advances

to credit institutions 784,894,142 32,288,264 10,000,000 - - 827,182,406

Loans and advances

to customers 177,126,256 40,332,024 290,001 - - 217,748,281

Listed government

fixed-income securities 182,731,700 - - 20,479,992 - 203,211,692

Listed non government

fixed-income securities 156,524,306 44,509,090 - 2,601,380 - 203,634,776

Not listed non government

fixed-income securities - - - 359,069 - 359,069

Shares and other variable-yield securities - - - - 7,390,771 7,390,771

Total 1,328,456,572 117,129,378 10,290,001 23,440,441 7,390.771 1,486,707,163


Amounts owed to credit institutions 492,491,232 1,394,740 - - - 493,885,972

Amounts owed to customers 773,440,943 75,169,508 2,258,673 - - 850,869,124

Debts evidenced by certificates - - - - - -

Subordinated debt - - 40,758,000 - - 40,758,000

Total 1,265,932,175 76,564,248 43,016,673 - - 1,385,513,096

Off-balance sheet items

disclosed as contingencies

and commitments

Guarantees and assets pledged 17,407,656 8,415,997 37,131,304 12,512,706 - 75,467,663

Forward purchases of securities 20,474,007 - - - - 20,474,007

Forward sales of securities 29,525,980 - - - - 29,525,980

Amounts not paid up on securities 34,726,731 - - - - 34,726,731

Settlement of spot securities transactions - - - - - -

Total 102,134,374 8,415,997 37,131,304 12,512,706 - 160,194,381

As at December 31, 2007, the analysis of primary non-trading financial instruments by class and residual maturity is the following:

23


DECEMBER 31, 2008

≤ 3 months > 3 months > 1 year > 5 years Total≤ 1 year ≤ 5 years

At notional amount in EUR EUR EUR EUR EUR EURFinancial AssetsInstrument class

Foreign exchange transactions

Forwards 439,749,309 239,846,347 260,704 - 679,856,360

Swaps 2,648,352,520 130,053,108 - - 2,778,405,628

Options 4,206,023 25,961,339 45,960,481 - 76,127,843

Futures - 149,549,368 - - 149,549,368

Securities transactions

Options 337,521,905 - - - 337,521,905

Total 3,429,829,757 545,410,162 46,221,185 - 4,021,461,104


Instrument class


Forwards 445,513,256 426,364,545 287,420 - 872,165,221

Swaps 2,594,124,692 5,972,497 - - 2,600,097,189

Options 3,701,247 20,960,577 69,779,323 - 94,441,147

Futures - 417,174,437 - - 417,174,437

Interest rate transactions

Futures - 12 - - 12

Total 3,043,339,195 870,472,068 70,066,743 - 3,983,878,006

These amounts include derivative non-trading financial instruments with a trade date before December 31, 2008 and a value date after

December 31, 2008.

34.2. Derivative Non-Trading Financial Instruments

As at December 31, 2008, the analysis of derivative non-trading financial instruments by class and residual maturity is the following:

24


DECEMBER 31, 2008

≤ 3 months > 3 months > 1 year > 5 years Total≤ 1 year ≤ 5 years

At notional amount in EUR EUR EUR EUR EUR EURFinancial AssetsInstrument class


Forwards 1,033,627,951 18,150,596 - - 1,051,778,547

Swaps 240,623,709 2,054,642 - - 242,678,351

Options 111,425,434 11,514,675 38,179,030 - 161,119,139

Interest rate transactions -

Interest rate swaps 47,756 - - 33,965,000 33,965,000

Futures - - - 47,756


Options 339,256,006 - - - 339,256,006

Total 1,724,980,856 31,719,913 38,179,030 33,965,000 1,828,844,799


Instrument class


Forwards 373,778,899 3,854,328 - - 377,633,227

Swaps 778,156,599 25,748,970 - - 803,905,569

Options 108,341,514 12,067,504 56,693,568 - 177,102,586


Interest rate swaps 7,703 - - - 7,703

Total 1,260,284,715 41,670,802 56,693,568 - 1,358,649,085

These amounts include derivative non-trading financial instruments with a trade date before December 31, 2007 and a value date after

December 31, 2007.

As at December 31, 2007, the analysis of derivative non-trading financial instruments by class and residual maturity is the following:

25


DECEMBER 31, 2008

Carrying amount Carrying amount

2008 2007

in EUR in EUR

Financial Assets

By instrument class and geographic location

Cash, balances with the BCL

EU member countries 53,691,969 27,180,168

53,691,969 27,180,168

Loans and advances to credit institutions


Western Europe, non-EU member countries 55,258,418 75,227,371

Eastern Europe, non-EU member countries 665,853 883,543

Asia 241,626 398,569

Oceania 16,808 20,314

North America 153,735,198 160,819,017

Central and South America 159,142,630 33,135,547

645,510,602 827,182,406

Loans and advances to customers


Western Europe, non-EU member countries 505,130 399,900

South Europe, non-EU member countries - -

Middle East 148,864 1,221,266

North America 5,089,010 5,183,015

Asia 4,324,460 8,263,380

North Africa 14,081 -


165,587,502 217,748,281

Listed OECD government fixed-income securities

EU member countries 465,582 465,582

North America 3,219,008 -

3,684,590 465,582

Listed non OECD government fixed-income securities


224,323,749 202,746,110

34.3. Information on credit risk on Primary Non-Trading Financial Instruments

The Bank is exposed to the following credit risk on primary non-trading financial instruments:

26


DECEMBER 31, 2008

Carrying amount Carrying amount

2008 2007

in EUR in EUR

Financial Assets (Continued)

Listed OECD non-government fixed-income securities

EU member countries 60,063,006 -

60,063,006 -

Listed non OECD non-government fixed-income securities


282,169,297 203,634,776

Unlisted non OECD non-government fixed-income securities

Central and South America 379,815 359,069

379,815 359,069

Listed shares

Central and South America 136,807,630 102,366

North America - 784,129

Middle East - 6,488,805

136,807,630 7,375,300

Unlisted shares

EU member countries 15,470 15,470

15,470 15,470

Total 1,572,233,630 1,486,707,162

27


DECEMBER 31, 2008

34.4. Information on credit risk on derivative Non-Trading Financial Instruments

As at December 31, 2008, the Bank is exposed to the following credit risk on derivatives non-trading financial instruments:

Notional Risk-equivalentAmount Amount

Use of initial risk method EUR EUR

Counterparty solvency and geographic location


Zone A credit institutions and financial institutionsEU member countries 911,818,886 18,766,542North America 688,218,647 13,785,929Western Europe, non-EU member countries 1,591,230,875 32,094,061

Zone B credit institutions and financial institutionsCentral and South America 808,505,735 16,365,859

Private customersWestern Europe, non-EU member countries 1,095,171,665 23,374,486EU member countries 269,568,525 5,400,101Middle east 442,520 8,850Central and South America 2,302,860,351 51,872,528Oceania


Private customersCentral and South America 12 -



Total 8,005,339,121 168,418,794

28


DECEMBER 31, 2008

Notional Risk-equivalentAmount Amount

Use of initial risk method EUR EUR

Counterparty solvency and geographic location


Zone A credit institutions and financial institutionsEU member countries 640,707,084 13,091,584North America 153,182,458 3,117,814Western Europe, non-EU member countries 143,043,013 2,934,453


Private customersWestern Europe, non-EU member countries 86,076,251 3,186,936EU member countries 2,475,973 117,799Middle east 4,357,799 87,156Central and South America 1,351,122,242 29,367,119Oceania 7,825,589 156,512


Zone A credit institutions and financial institutionsEU member countries 33,965,000 1,698,250

Private customersCentral and South America 55,459 277



Total 3,229,978,162 69,940,628

As at December 31, 2007, the Bank was exposed to the following credit risk on derivatives non-trading financial instruments:

29

2008 2007EUR EUR

Foreign exchange transactionsForward exchange transactions

Positive results 168,086,771 14,580,282Negative results (244,623,184) (8,768,506)

Net result on forward exchange transactions (76,536,413) 5,811,776

SwapsPositive results 209,339,110 3,619,442Negative results (127,356,937) (7,329,147)

Net result on swaps 81,982,173 (3,709,705)

OptionsPositive results 14,476,257 9,433,469Negative results (15,238,666) (9,984,035)

Net result on options (762,409) (550,566)

Total Foreign exchange transactions 4,683,351 1,551,505

Interest rate transactionsInterest rate swaps

Interest rate swaps classified as assets - 114,640Interest rate swaps classified as liabilities - -

Net result on interest rate swaps - 114,640

FuturesPositive results - 3,913Negative results (12) (30)

Net result on futures (12) 3,883

Total interest rate transactions (12) 118,523

Securities transactionsOptions

Positive results - 2,798,723Negative results (13,330,459) -

Net result on options (13,330,459) 2,798,723

Total securities transactions (13,330,459) 2,798,7233


DECEMBER 31, 2008

34.5. Fair Value Of Derivative Non-Trading Financial Instruments

As at December 31, 2008, the fair value of non-trading financial derivatives is as follows:

BOARD OF DIRECTORS

J. Inacio Puga

Chairman

Jorge Alberto Kininsberg

Vice-Chairman

Carlos Alberto Vieira

Director

Gilbert Ribeira

Director

EDMOND SAFRA1931-1999

BANQUE SAFRA – LUXEMBOURG S.A.BANQUE SAFRA – LUXEMBOURG S.A.

10A, Boulevard Joseph II

L-1840 Luxembourg

Tel. (352) 45 47 731

Fax (352) 45 47 86

CONTENTSCONTENTS

Management Report

Page 4


Page 7

Balance Sheet and


Page 8


Page 10


Page 11

Location

Page 32

CONTENTSCONTENTS

Management Report

Page 4


Page 7

Balance Sheet and


Page 8


Page 10


Page 11

Location

Page 32

Documents

ANNUAL REPORT 2008 - Amazon S3...The Bank operates on the basis of strict segregation of duties and application of the four-eye principle at all levels. Front, middle and back office