Annual Report 2016 - Bankhaus Lampe · Bankhaus Lampe is an independent private bank that was established in Eastern Westphalia in 1852. It serves wealthy private, corporate and institutional

Annual Report 2016

Contents

Strategic Focus� // 7

Management Report // 17

Business Review 2016 and Outlook // 19

Risk Report // 47

Subsidiaries and Holdings // 59

Consolidated Financial Statements for 2016 // 65

Consolidated Balance Sheet // 66

Consolidated Profit and Loss Account // 68 Auditors’ Certificate // 71

Consolidated Financial Statements Annex // 72

The Boards // 92

Addresses // 94

Overview of Business Performance

in million euros 2012 2013 2014 2015 2016

Totalassets 3,132 2,903 2,779 2,658 2,885

Businessvolume 3,329 3,065 2,938 2,796 3,058

Loansandadvancestoclients 1,308 1,324 1,258 1,236 1,393

Loansandadvancestobanks 358 273 317 247 196

Clientdeposits 2,462 2,322 2,196 2,076 2,121

Liabilitiestobanks 212 152 114 99 137

Equity(includinggroupnetincomefortheyear) 239 259 281 304 348

Netinterestincome(includingcurrentincome) 57 56 64 43 49

Netcommissionincome 71 87 92 110 100

Netincomefromproprietarytrading 8 4 8 4 0,3

Administrativeexpenses 117 128 135 143 162

Groupnetincome 21 21 22 23 55

Numberofemployees 650 678 677 675 693

Annual Report 2016

Themegatrendsdigitalisation,demographicchange,globalisationandsustainabilityaresignificantlyinfluencingthescopeofactivitiesofthefinancialindustry.Regulationandtheinterestratepolicyofthecentralbankslimitthedegreeoffreedomofbanks’businessmodels.Ontheotherhand,alternativemarketparticipantssuchasFinTechsareenteringthemarkettakingoverpartsofthetraditionalbankingvaluechaininveryefficientways.

Bankshavetoscrutinisetheirtraditionalapproachtobusinessandrethinktheirbusinessmodels.Masteringthisadjustmentprocesssuccessfullyrequiresasolidfoundationofvalues.Traditionalvaluesandamodernspiritarenotoppositesbutrathersettingthestageforfuturegrowth.

BankhausLampehasbeenactingflexiblyintheserapidlychangingtimes.Asanindependentprivatebank,weconnectpeoplewithinvestmentopportunities.Webuildbridgesbetweenvariousclientgroupsandmarkets.

Responsibility,innovation,qualityandpartnershipareofutmostimportancetoBankhausLampeanditsemployees.Thesevaluesarepre-requisitesforourholisticapproachtoclientadvisory.

TheBank’sequityratiotherebyrepresentsasolidbasisoftrust.Atwellabove15%,itexceedstherequirementslaiddowninBaselIIIconsiderably.Inaddition,ourlongstandinghistoryofover160yearsreflectsreliabilityandcontinuity.

However,wedonotjustrelyonourtradition;wecontinuallyexpandandmoderniseourrangeofservices.Forthebenefitofourclientswecreateinnovativeandtailoredfinancingandinvestmentsolutions.Besidesanintelligentassetmanagementofferingthisalsoincludescorporatefinanceandwealthmanagementservices.Ouraimistoprovideexceptionalsolutionsandservicestoourclients.

Wewouldliketothankourclientsandbusinesspartnersfortheircontinuedconfidenceandsupport.Satisfyingyourneedswillremainourdailychallengeandcontinuetodriveourmotivation.

Yoursfaithfully,

TheGeneralPartnersofBankhausLampeKG

Dear clients and business partners,

(fromrighttoleft)ProfessorDr.StephanSchüller(Spokesman)

Dr.NicolasBlanchard,UteGerbaulet,WernerSchuster

Strategic Focus

9

BankhausLampeisanindependentprivatebankthatwasestablishedinEasternWestphaliain1852.Itserveswealthyprivate,corporateandinstitutionalclients.Theseclientsareofferedholisticadvisoryservicesthatfocusonassetmanagementandcorporatefinance.

TheBankaspirestodeliverthebestperformanceandqualitybydevelopingintelligentandrisk-awaresolutionsthatareindividuallytailoredtomeeteachclient’sneeds.CombiningBankhausLampe’sskilledandmotivatedemployeeswithitscompactstructuresallowittomeettheneedsofeveryclientquicklyandtothehighestpossiblestandard.BankhausLampeaimstobecomethequalityleaderforcomplexfinancialmattersamongGermany’sprivatebanks.

Anindispensablefoundationforthisisaholisticapproachtoadvisoryservice.Thisincludesacomprehensiveexaminationofalltheissuesofrelevancetoclients.Forexample,forsmallandmedium-sizedenterprises,thisanalysiswillalwaysscrutinisethethreeinterlinkedareasofthecorporation,privateassetsandthefamily.

ShareholderbackgroundBankhausLampehasbeenpartoftheOetkerGroupsince1949.Itsindustrialshareholderbackgroundisuniqueinthebankingsectorandstandsforindependence,stabilityandresponsibility.

// ThefactthatitisindependentanddoesnotbelongtoafinancialconglomerategivesBankhausLampetheentrepreneurialfreedomtoreactquicklytomarketconditions.TheBankcanthereforecrediblypromiseeachofitsclientstofindthebestsolutionforthempersonally,freefromcorporateconstraints.

// TheBank‘sverygoodcapitalresourcesandtheshareholder‘sbackingforitsfuturestrategydemonstratethestabilityofourinstitution.

// TheimportanceweattachtoexecutiveaccountabilityisprimarilyshownbythefactthattheBankismanagedbypersonallyliableGeneralPartners.Ratherthanjusttryingtomakeaquickprofit,theBankthereforefocusesonastableperformancethatcreateslong-termvalue.

Strategic Focus

Strategic Focus

10

PersonalityBoththeBank’sGeneralPartnersanditsemployeesarecommittedtoastrongsetofvaluesonwhichreststhefoundationofitsbusiness.Itsemployeesstandfirstandforemostforhonestyandreliabilitytowardsitsclientsandbusinesspartners.Thesefactorsformthebasisforatrustingrelationship.Ourteamofadvisorsalsohasahighdegreeofcontinuity;itisrisk-awareanddeterminedtofindourclientsthebestsolution.

Transparencyisessentialinclientrelationships.Asamatterofcourse,theBankthereforeprovidesinformativereporting,transparentpricingandastatementofportfoliocommissions.Besidesthis,allclientadvisorsarerequiredtosignacomprehensivecodeofconduct.

ExpertonGermanyThroughitsexperienceandshareholderbackground,theBankhasaspecialunderstandingofGermany’sMittelstand,beitlistedcompaniesorfamily-runenterprises.Foritsclients,BankhausLampeistheexpertinGerman-speakingEuropeandthefirstportofcallforcomplexfinancialmatters.ServedbytheBank’ssubsidiariesinNewYorkandLondon,internationalinvestorsalsoincreasinglyholdtheBank’sclosetieswithGermany’sMittelstandinhighesteem.

TheBankhasanin-depthunderstandingoftheconsumer/retail,industrials/businessservices,realestateandtechnology/digitalsectors.TheBank’snumerousindustrycontactsallowittoengageinstrategicdialoguewithclientsandrelevantbusinesspartners,forexample,viatheEconomicAdvisoryBoarditestablishedin2016.

TheBank’sownEquityResearchteamadditionallyenhancesitsreputationasaspecialistforGermany.Ourresearchcurrentlycoversabout200listedcompanies.

OngoingdevelopmentInachallengingenvironmentwithstill-lowinterestrates,strictregulationandglobalchallenges,BankhausLampehasbeensteadilydevelopingitsbusinessmodelforyears.

Inrecentyears,forinstance,theBankhasopenednewbranches,establishedsubsidiariesbothathomeandabroad,andexpandeditscapitalmarketbusiness.Thisexpansionwasaugmentedbysteadilyenlargingtherangeofproductsandservicesforallclientgroups.TheAssetManagementandCorporateFinancebusinessesarecurrentlyfocusingoninvestment.Inaddition,theBankhassetitselfatargetofmorecloselyinterlinkingtraditionalclientadvisoryservicesintheBranchbusinesswiththeknow-howofitsproductspecialistsforinvestmentandfinancingsolutions.ThisaspectsetstheBankapartfromspecialistprovidersandlaysthefoundationfortheBank’sholisticadvisoryapproach.

Annual Report 2016

11

AssetmanagementAssetmanagementisanessentialelementinBankhausLampe’sholisticapproachtoadvisoryandotherservices.Allclientgroupswillhaveaccesstothegroup’sentireexperienceandexpertiseinfuture.Theseactivitiesincludeliquidandilliquidassetmanagement.

Inordertobeabletoofferclientsattractiveliquidproductalternativesinanenvironmentthatremainsdifficult,theBankhassupplementeditsprovenactiveinvestmentapproachwithrule-basedinvestmentstrategies.

Forexample,theBankisexamininghowprivateclientsandfamilyofficescanbegivenaccesstoinnovativesolutionsthatwerepreviouslythesolepreserveofinstitutionalclients.Thesesolutionsincludequantitative-basedabsolutereturnproductsthataddressafast-growingmarket.

Inthecurrentenvironment,thereisahighpriorityforilliquidalternativeinvestmentsaswell.BankhausLampehasalreadyoffereditsclientsilliquidinvestmentsolutionsatanearlystage,e.g.,inselectinvestmentsectorssuchasenergyinfrastructureorprivateequity/mezzanineforsmallandmedium-sizedGermanenterprises.Therangeofserviceswillbeaugmentedinfuturewithfurtheradvisoryservicesapproachesthatcanextendfromindividualpartialaspectsthroughtotheentireimplementationofatransaction.

CorporatefinanceFinancingandinvestmentmatters,strategicadvisoryservicesandclient-relatedcapitalmarketactivitiesarepartandparcelofcorporatefinancebusiness.

AspartofBankhausLampe’sholisticapproachtoadvisoryservices,thereareveryclosetiesbetweenproductspecialists,suchasEquityDebtCapitalMarkets(EDCM)orMergers&Acquisitions(M&A)andtheBranchbusiness.TheBank’sM&Aexpertsarethepeopletospeaktoaboutcomplexissues,suchaspublicM&Aanddivestmentsfromfamilybusinessundergoingsuccessionphases.OurEDCMemployeesdevelopandmentorcapitalmarketsolutionsforcompaniesthatmaybemid-sizedorevenstock-exchangelisted.Beingaprivatebank,wecanalsoguaranteeahighdegreeofconfidentialityandefficiency.ThismakestheBankverydifferenttocorporatefinanceboutiquesandevenbigbanks.

AsGermanMittelstandcompaniesareincreasinglyfacedwiththegrowingcomplexity,dynamismandglobalisationofthecorporateenvironment,theM&Abusinesswillbecomemoreinternationalinthissegment.ItisveryimportantfortheBank’sclientstohavestrongnetworksandgoodcontactsintheUSAandChina.Wecoverotherrelevantregions(e.g.France,ScandinaviaandtheUK)viaco-operationagreements.

Strategic Focus 13

Annual Report 201614

Strategic Outlook of the Bank

Basedonastablefoundation,BankhausLampeiscontinuingtodevelopitselfsystematically.HavingaclearlydefinedsetofvaluesandpersonallyliableGeneralPartnerssetstheframeworkforitscontinuousfuturedevelopment.ThisisconsistentwiththeBank’srisk-awareandlong-termbusinessmodel.

BankhausLampe’sindependencegivesitthenecessaryflexibilitytobeabletorespondtoalargenumberofexternalfactorsonacase-by-casebasis.Atthesametime,complyingwithalloftheregulatoryrequirementsisamatterofhighestprioritytous.

BankhausLampe’slonghistory,extensiveexperienceandstrongrootsinGermany’sMittelstandsectorprovidegenuineaddedvalueforourbusinesspartnersandclients.Bothouremployees’greatcapacityforinnovationandtheindependenceofourinstitutionpermitustocreateforward-lookinginvestmentandfinancingsolutions.Theyalsorepresentapromisingbasisforasuccessfulfuture.

Management Report

2014 2015 2016 2014 2015 2016 2014 2015 2016

6.0

4.0

2.0

0.0

-2.0

6.0

4.0

2.0

0.0

-2.0

6.0

4.0

2.0

0.0

-2.0

3.23.3

1.6

0.9

3.1

1.9

1.7

1.5

1.6

Global European German

GDP in %

19

General Economic Conditions

GlobalGlobalgrowthmomentumremainedsubduedin2016.EconomicconcernsaboutChinaatthestartoftheyearandtheBrexitvoteinJunecausedhighuncertaintiesattimes.(Geo)politicaltensions,highpublicandprivatedebt,lackofstructuralreforms,andongoingpressureintheEuropeanbankingsectorstillthwartedahighergrowthmomentumoftheworldeconomy.Theexpansionarymonetarypolicy,aboveallinindustrialisednationshelpedtooffsetanevenweakergrowthtrend.Intheemergingmarkets,growthratesstabilisedatalowlevel,althoughRussiaandBrazilremainedinarecession.After3.2%in2015,theglobalgrossdomesticproduct(GDP)increasedataslightlyslowerrateof3.1%in2016.

EurozoneThemoderateeconomicupswingcontinuedintheeurozone.TheEuropeaneconomygrewat1.6%in2016.Themostimportantpillarofgrowthisprivateconsumption,whichbenefitedfromlowerenergypricesandbetterlabourmarketconditions.Furtherpositiveimpetuscamefromthestrengthoftheeuroagainstothercurrencies.However,structuralproblemspersisted.

GermanySupportedbysoliddomesticdemand,theGermaneconomygrewat1.9%in2016.Theimprovedsituationonthelabourmarket,higherrealwagesandtheoverallpositiveeconomicoutlookfuelledprivateconsumption.Inaddition,public-sectorconsumptionalsocontributedstrongertogrowththaninthepastfewyears.Afterverystrongmomentumofbusinessactivityinthefirsthalfoftheyearandaslightlyweakerthirdquarter,theGermaneconomyreturnedtoarobustgrowthtrajectoryinQ42016.

ConsumerpricesTheaverageinflationratesinmostcountriesremainedatverylowlevelsordeclinedevenfurtherinsomecountries.Thiswasmostlyduetothehighcrudeoilprices.Althoughitpickedupfromitslowinearly2016,itdidnotoncesurpassthepreviousyear’sleveluntilautumn.Sincethenhigherenergypriceshaveincreasinglytranslatedintohigherconsumerpricesthanlastyear.Theinflationrateintheeurozoneslowlycreptupfromitsannuallowof-0.2%inAprilto1.1%inDecember.TopushtheinflationrateinthemediumtermbacktowardstheECB’stargetofclosetobutbelow2.0%,theECBapprovedthefurtherexpansionandextensionofitsassetpurchasinginMarchandDecemberaswellasanotherbaseratecutinMarch.

Business Review 2016 and Outlook



GovernmentbondsBesidessubduedglobaleconomicgrowthandpartlydeclininginflationrates,theliquiditymeasuresoftheECBalsocontributedtothepersistentlow-interestenvironmentin2016.Asaresult,governmentbondyieldsdroppedtonewhistoricallowsattimes.InGermany,the10YBundyieldsdroppedbelowzeroinJuneforthefirsttime,downfrom0.63%atthestartoftheyear,andreachedalowof-0.22%attheendofSeptember.DuetotheprospectofaratehikebytheFed,increasingtreasuryyieldsandthedebateaboutareductionoftheECBassetpurchasing,yieldsimprovedto0.30%inmid-December.Treasuryyieldsincreasedby120basispointsfromtheirannuallowof1.4%inJulytonearly2.6%inmid-December2016.

CurrenciesUntiltheendoftheyear,thedivergenceofthemonetarypolicyofECBandFedresultedinstrongvolatilityoftheEUR/USDexchangerate.InglobalenvironmentcharacterisedbyhighuncertaintiesandtheabsenceofaUSratehike,theeurorecoveredto1.16inMayfrom1.09atthestartoftheyear.Throughthesummer,itremainedstableinarangeof1.10to1.12.However,aftertheUSelectionatthestartofNovemberandthegoodprospectofaratehikebytheFed,theratefellto1.04bytheendoftheyear.

EquitymarketsTheDAXended2016at11,481points,6.9%higherthanatthebeginningoftheyear.Whileeconomicconcernsdominatedthefirsthalfoftheyear,thepositivegrowthtrendwasachievedwithasignificantyear-endrallytriggeredbyhopesofastrongUSstimulusprogramme.

Annual performance of key stock market indices in %

2014 2015 2016

30

20

10 2.7 9.

6DAX

40

30

20

10

2014 2015 2016

2.2

22.7

MDAX

20

10

2014 2015 2016

4.0

6.4

EURO STOXX 50*

*Performanceindexwithdividends

6.9

6.8

3.7


Market and Sector Environment

Thechangesintheenvironmentfollowingtheemergenceofthefinancialcrisisandthesubsequentsovereigndebtcrisisarestillhavingvariousconsequenceswithregardtobanks’businessmodels.Inparticular,thepersistentlow-interestratepolicyinconjunctionwiththeECB’sexpansivemonetarypolicyandtheevertighterregulatoryregimecharacterisethedifficultenvironmentforfinancialinstitutions.Inaddition,therearetheeffectsfrommegatrendssuchasdigitalisation,demographicchange,globalisationandsustainability.

TraditionalsourcesofinterestincomearedisappearingTheongoinglow-interestenvironmenthampersthegeneratingofincomeviamaturitytransformation.First,clientdepositscannolongerbeinvestedprofitablybecausetheECBdepositratehasdroppedbelowzero.Second,investmentsandloanswithhigherinterestratesaregraduallymaturingandcannotbereplacedatcomparableterms.Theresultisthepermanenterosionofinterestincome.

Thishasledtoawiderangeofassetandliability-relatedeffectsandadjustmentstothebusinessmodels.Whilesomefinancialinstitutionshaveexpandedtheirmaturitytransformation,extendingloantermsandtherebybearingahigherriskwheninterestlevelsriseagain,othershaveloosenedtheirlendingpolicy,inparticularinthecorporateclientbusiness.Ontheliabilitiesside,financialinstitutionsareincreasinglyintroducingnegativeinterestrates,therebypassingontheongoingnegativeinterestratesontheECB’sdepositfacilitytotheirclients.

InparticularthelendingbusinesswiththelargegroupofcreditworthyMittelstandclientshasbecomehighlycompetitive.ThisisfurtherexacerbatedbythegenerallyhighcashpositionsofMittelstandcompanies,whichlimitstheirdemandforloans.Furthermore,thetraditionalcorporateclientbusinessisalsochanging.Companiesareabandoningtheirtraditionalprincipalbankrelationshipsdiversifyingtheirfinancingacrossseveral–includingalternative–lenders.

Whiletheaforementionedlow-interestenvironmenthassignificantlynegativeeffectsonthematuritytransformationresultoflargeretailbanks,theeffectonprivatebanksisrathersmall.Thisisbecauseprivatebanksaremostlyactiveintheshort-termlendingbusinesswiththecorrespondingshort-termrefinancing.Duetothecongruentbalancesheetstructure,maturitytransformationisofminorimportance.However,privatebanksaretraditionallystronglyengagedintheinvestmentbusinessforbothprivateandinstitutionalclients.Here,ongoinglowinterestratesleadtosignificantproblemsininvesting.Theserviceofferingofassetmanagementsolutionsneedstobedevelopedfurther.

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Sectorconsolidationencumberedbylow-interestratepolicyThecombinationofongoinglowECBrefinancingratesandtheexpansionarymonetarypolicysuchastheassetpurchasingaspartofquantitativeeasingpermitlendingactivitieswhichmaynotbeviableinthelongterm.Thus,anecessaryconsolidationofthesectorisartificiallyprotracted.Insteadofgivingthefinancialsectorapositiveimpetus,themonetarypolicymeasureshavecausedvarious,counter-productiveinteractions.

RegulatorymeasuresstillaffectingbankingbusinessmodelsDuetotheevertighteningregulation,i.e.increasingrequirementsandlawsinthebankingsector,financialinstitutionsareforcedtoimplementextensivechangestotheirsystemsandprocesses.TheincreasingrequirementsnotonlyresultinrisingexpensesfortheITinfrastructurebutalsogreatercomplexityoftheorganisationalstructureofthebusinessoperations.Especiallysmallerbanksarefacingchallengesastheycannotdistributethesefixedcostswellacrosstheirsmallerclientbaseandthus,thelackofeconomiesofscaleisfurtherexacerbatedbyincreasingsupervisoryrequirements.Inparticularbyinternationalstandards,thesesupervisoryrequirementsmayrepresentacompetitivedisadvantage.

ThecurrentregulatorytopicsincludethepreparationforBaselIV,MRELandTLAC(resolutionandrestructuringofbanks),EMIR,MiFIDII,AnaCredit,thenewversionoftheRemunerationOrdinanceforInstitutions(InstitutsVergV)andtheautomaticexchangeofinformation(AIA).

Besidesthelow-interestenvironment,theregulatorymeasurescanaffectnotonlyabank’sprofitabilitybutalsoitscapitalisationrateorequityratio.Thestrengtheningofthelatterhasbeenandwillcontinuetobeakeyobjectiveoftheregulationtomakebanksmoreresilientagainstlosses.Incontrast,thehigherequitycapitalrequirementsalsocutintothebanks’profitability.

TheprincipleofdoubleproportionalitynolongerholdstrueTheincreasingregulationofthebankingsectoraswellasnewinternationalstandardsandregulationsareweighingontheparticipantsinthefinancialindustry.Theprincipleofdoubleproportionalityensuresthecompetitivenessofsmallerfinancialinstitutions.Itaimstobalancebothgenerallyregulatoryrequirementsandtheintensitytheoperatingsupervisionwithrespecttothesize,businessactivitiesandriskprofileoftherespectivefinancialinstitution.However,inthelastfewyears,smallandmid-sizedbankshavebeendisproportionallyweigheddownbyregulations.Thisisincreasinglydistortingthecompetition.Theeconomicimpactofthemorestringentrequirementsforthevariousbusinessmodelsofbanksismuchlesspredictable.Furthermore,specificnationalaspects,suchasthethree-pillarsysteminGermany,orotherlegalformsofbanksotherthanapubliclimitedcompany,arenotadequatelytakenintoaccount,especiallyinviewoftheregulatoryharmonisationefforts.Thus,theprincipleofdoubleproportionalityappearstonolongerholdtrue.



DigitalisationThedigitalisationmegatrendcoversvariouskeytopicsforbanksandgreatlyinfluencesthedifferentbusinesssegmentsoffinancialinstitutions.Customersincreasinglyexpecttobeabletomanagealloftheirbankingactivitiesanytimeandanywhere.Meanwhile,digitalchannelsandonlinebankinghavebecometheminimumstandardandessentialtostaycompetitive.FinTechsaretakingadvantageofthistrend,increasinglyattackingspecificpartsofthebanks’value-addedchain.

Traditionalfinancialinstitutionsareverymuchawareofhowimportantimplementinganddevelopingnewtechnologiesis.Yetsomebanksarestillbehindwithrespecttosystematicdigitalisationoftheirsalesandcommunicationchannelsaswellastheirbusinessprocesses.Capacityshortagesduetopersistentregulatorypressureandpartlydecliningprofitabilityareencumberingtechnologicaladvancement.Thus,thefocusissettoremainonsecuringandoptimisingexistingbusinessoperations.However,itisnotpossibletocopewiththeregulatoryregimeandtheconsequencesofthelow-interestphasewithoutafunctioningandsophisticatedITarchitecture.Afteracostlyimplementationprocess,banksshouldbeabletoreapsignificantcostsavingsthroughefficienttechnologiesandprocessesandtosecuretheirprofitabilityinthelongterm.

DemographicchangeTheneedsandrequirementsoftheprivatebanks’ageingclientelearechangingandfinancialinstitutionshavetorespondaccordingly.Inparticular,thereisagreaterneedforadviceoncompanysuccessionduetolongerlifeexpectancyandenvironmentalcomplexity.Thesuccessfulhandoverofacompanytothenextgenerationisoftentheprimarygoalforafamilybusiness.However,theprobabilityoffailureincreasesdisproportionatelyfromonegenerationtothenext.Asaresult,85%ofsuccessionsfailinthefourthgeneration.

Moreover,financialinstitutionsarenotonlyfacingthechallengetofulfiltheneedsoftheirolderclientelebutalsotocatertotheyoungergeneration.YoungcustomersareincreasinglyturningtodigitalchannelsofinformationandcommunicationaswellasalternativesupplierssuchasFinTechs,disbandingtraditionalprivatebankingrelationships.

Inthecourseofthedemographicchange,theproblemoftheshortageofskilledprofessionalsduetotheageingpopulationisalsosteadilyincreasing.Banksareunderimmensepressuretoconvincehigh-potentialsfromanevershrinkingpoolofcandidatestojointheirinstitution.

GlobalisationTheneedforgloballyorientedservicesisincreasingamongallcustomergroups.Investorsareincreasinglylookingforopportunitiesabroad,particularlyintheUSdollarregion.GermancompaniesseekingcapitalarebenefitingfromtherisinginterestofforeigninvestorsofbuyingstakesintheGermanMittelstand.

25

SustainabilityInaddition,customersareincreasinglymakinginvestmentdecisionstakingintoaccountecologicalandethicalcriteria.Thus,thebankingsectorisencouragedtooffertransparent,ethicallyresponsibleproductsandservicesinordertocapitaliseonthegrowingtrendofsustainableinvesting.Here,businesspartnersandcustomersaretobeselectedaccordingtoethicalminimumstandards.Themandatoryreportingofnon-financialkeyfiguresinthefinancialstatementsfrom2017onwardsisputtingthespotlightonsustainability.

BankingbusinessmodelsareinfluencedbyglobalmegatrendsThemegatrendsdigitalisation,demographicchange,globalisationandsustainabilityaresignificantlyinfluencingthescopeofactivitiesofthefinancialindustry.Althoughnoteverytrendisequallyrelevanttothedifferentbankingbusinessmodels,anintensiveassessmentofalltopicsisnecessaryforfinancialinstitutionstomaintaintheirfuturecompetitiveness.Themegatrendsandthustherapidlychangingenvironmentrequiregreatflexibilityandwillingnesstoadaptfromtheparticipantsinthebankingsector.

IncreasingcompetitionduetoexternalinfluencesThecompetitiveenvironmentinthebankingsectorischaracterisedbychangingconditions.Inthewakeofglobalisation,moreandmoreforeignfinancialserviceprovidersareenteringthemarketincreasingthecompetitivepressureinthebusinesswithwealthyprivatecustomers,corporateclientsandinstitutionalinvestors.Inthebusinesswithwealthyprivateclients,independentassetmanagersarealsoenteringthemarket,targetingpartsoftheserviceofferingoftraditionalfinancialinstitutions.

Companiesareincreasinglytappingthecapitalmarkettobothraiseandinvestcapitalandthusbecomemoreindependentofbanks.Besidesprivateinvestors,large,regionalandprivatebanksarealsocompetingforcorporatecustomerbusiness.

Inthebusinesswithinstitutionalinvestors,fundandassetmanagersarealsoofferingtheirservices,whichputsgreatercompetitivepressureontraditionalbanks.

Duetotheincreasingcompetition,variousbanksalreadyhadtoslimdownbusinessunitsorgivethemupentirelyinordertoremainprofitable.Apermanentcriticalevaluationofthevaluechainwithrespecttoriskandprofitabilitywillremainanimportanttasktosecurethesustainabilityofthebank.Somebankingbusinessmodelswillnolongerbeviableonthemarket.Thetransformationofthebankingsectorissettoaccelerate.Afocusedbusinessmodel,asolidbalancesheetandasustainablestrategyarenecessarytoprevailinthecurrentmarketenvironment.



Business Review of Bankhaus Lampe Group in 2016

InGermany,theBankhausLampeGrouphasofficesinBerlin,Bielefeld,Bonn,Bremen,Dresden,Dusseldorf,Frankfurt/Main,Hamburg,Munich,Münster,OsnabruckandStuttgart.Withitssubsidiariesandco-operationarrangementsabroad,theBankisalsorepresentedinLondon,NewYorkandVienna.Asexpected,BankhausLampecontinuedtoholditsgroundin2016inwhatonceagainprovedtobeachallengingfinancialmarketenvironment.Inviewofone-offeffects,theoverallbusinessperformancecanberegardedassatisfactory.

BankhausLampeoffersitsclientsnotonlytraditionalservicesbutalsomodernandalternativeservicesthattakeaccountofthecurrentfinancialmarketconditionsandmeaningfullybringtogethervariousclientgroups.

TheBankcontinuestofocusitsbusinessactivitiesonclientadvisoryandsupportservicesforitsthreeclientgroups,i.e.wealthyprivateclients,corporateclientsandinstitutionalclients.TheBankpursuesacloserelationshipandcross-clientco-operationofitsbranchesandcapitalmarket-orientedbusinessunits.

Changesinthecompetitivelandscape,regulatorychallenges,theongoinglowinterestratephaseinconnectionwithextensivemonetarymeasuresofthecentralbanks,andtheresultingseriouschangesonthemarketcallforregular,criticalreviewsofthebusinessmodel.BankhausLampeworkscontinuouslytowardsaddressingthesechallengeswhilefocusingatalltimesonitsclients’interests,theBank’seconomicviabilityandtheinterestsofitsshareholderpartners.Againstthisbackdrop–asoutlinedinthepreviousannualreports–theBankhasbeenactivelytacklingthefollowingchallengesforanumberofyears:

// Corecapitalratio// Refinancing// Companysize

ForaprivatebankthatpreparesitsaccountsinaccordancewiththeGermanCommercialCode(HGB)andthereforehasnoexternalrating,ahighcorecapitalratioservesasanindicatorofitsfinancialreputation.DespiteBaselIII,BankhausLampehasaccordinglyimproveditscorecapitalratioinrecentyears,from10.2%in2010tomorethan15.0%in2016.TheBankhasthusmetalloftheregulatoryrequirementsbymorethanacomfortablemargin.

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BankhausLampe’straditionallyhighclientdepositsonceagainensuredasolidrefinancingbaseagainin2016;however,thenegativeECBdepositrateweighedonearnings.

Toensureadequacyintermsofsize,theBankcontinuestopursueanorganicgrowthstrategythatmeetsitsclients’needsbest,albeitwithoutexpandingitsrisk-weightedassetsandhencetotalassets.Principally,BankhausLampeKGputsthefocusofitsbusinessactivitiesonadvisoryservicesratherthanbalancesheetoperations.Asaprivatebank,BankhausLampeKGstrivestobuildanindependent,robustanddiversifiedearningsbase,especiallyinviewoftheongoinglow-interestratephase.Thisincludesthegradualincreaseoftheshareofnetcommissionincomevs.netinterestincome.

However,individualplanningcomponentsdidnotperformaswellasexpectedduetothecurrentmarketenvironment.Tostrengthenitsearningsmomentum,theBankinitiatedthefollowingthreestrategicinitiativesin2016,whichyieldedthefirstsuccessesinthesecondhalfoftheyear:

// Strategicdevelopmentoftheassetmanagementbusiness(expansionofthescopeofassetmanagement;tobeabletooffermorealternativesinadifficultenvironment,theBankisalsosettinguparangeofquantitative-basedabsolute-returnproducts,inadditiontoitsprovenactiveapproach)

// Strategicdevelopmentofthebranchbusiness(strongerfocusontheproductofferingandconsequentinterlinkingofclientadvisoryservicesandproductspecialists)

// Sharpeningofthebrandimage

ThegrowingbaseofactivelymanagedassetsinthepastfewyearsshowsthehightrustintheBank’scompetency.Asper31December2016,theBank’sassetsundermanagementcameto€18.6billion.



Business Review by Segment

WealthyprivateclientsInanongoingdifficultenvironment,dominatedbyvolatilecapitalmarketsandpersistentlyloworevennegativeinterestrates,BankhausLampeachievedasatisfactoryperformanceinitsassetmanagementbusiness.Inahighlycompetitivemarketenvironment,theBankwasabletokeepitsactivelymanagedassetsbasestablein2016.

Intheongoinglow-interestenvironment,alternativeinvestmentsarebecomingmoreimportant.BankhausLamperespondstocontinuinghighlevelofinterestbyconsistentlyadjustingandexpandingitsindividualinvestmentstrategies.Forinstance,thealternativeinvestmentsstrategywasimplementedintheassetmanagementunit.Theequitystrategywasparticularlysuccessfulwithitsfocusonhigh-dividendstocks.

OtherinvestmentalternativesdevelopedbyBankhausLampein2016includedprovidingaccesstoentrepreneurialinvestments.TheBankalsocomplementeditsofferingwithalternativeinvestmentopportunitiesparticipatinginglobalmegatrendssuchasdigitalisation.Thisincludedinvestmentsolutionsthatarebasedoninternettechnology-relatedbusinessmodels.WealthyprivateclientswerealsoofferedattractiverealestateinvestmentsinGermanyandtheUS.

CorporateclientsIn2016,thecorporateclientbusinessfocusedonholisticadvisoryservicesandcloseco-operationwiththecapitalmarketbusiness.Forinstance,numerousentrepreneurstowhomBankhausLampealreadyprovidedadvisoryservicesatthecorporatelevelalsodecidedtoappointtheBanktolookaftertheirprivateassets.Equityanddebttransactionscarriedoutforcompaniesin2016significantlyenhancedtheBank’sperceptionasastrategicpartnerforcorporateclients.Aspartofthecloseco-operationofitsbranchesandcapitalmarket-orientedbusinessunits,BankhausLampefilledvariousmanagerialpositions.

Besidessolutionsinthelendingandcorporatefinancebusiness,theBankconsistentlyexpandeditsassetmanagementconceptsforcompanieswithhighcashpositions.

Despiteachallengingmarketenvironment,theBankwasabletoslightlyincreaselendingvolumesandkeepmarginsstable.Thus,theBankremainsaproviderofshort-termloansforGermany’sMittelstand.Thankstoitshigh-qualitycreditportfolio,BankhausLampedidnotrequiretheplannedriskcostsforFY2016.

29

InstitutionalclientsForinstitutionalinvestors,BankhausLampeexpandeditsportfolioofservicesandintensifieditssupportapproachin2016.

TherapidlygrowingequityandbondissuancebusinessisbasedonprofoundexpertiseintheGermanmarket.Thisisalsoshownbyranking4thintheBrokerExtelRankinginGermany.BankhausLampeadvisesinstitutionalinvestorsonGermanstocksinGermany,inLondonthroughitsLampeCapitalUK,andinNewYorkthroughLampeCapitalNorthAmerica.

Inaddition,theBankcontinuestoofferitsinvestorsinterestingalternativeinvestmentssolutions.BankhausLampe’sbroadinvestorbaseisakeyargumentinfavourofacquisitionsintheprimarymarket.

Asaresultofthemassivepressureonearningsexertedbythelow-interestenvironment,alternativeinvestmentsarestillveryimportantforinstitutionalinvestorstoo.TheBankmeetstheseneeds,forinstance,withequityinvestmentsinrenewablesourcesofenergyandinGermanMittelstandcompaniesthroughitsLampeEquityManagementsubsidiary.ThroughLampeCapitalFinance,theBankfacilitatestheinvestmentofmezzaninecapitalinfast-growingGermanMittelstandcompanies.SinceissuingtheLampeMezzanineFundI,fiveinvestmentshavetakenplace.Furtherengagementsareonthecardsfor2017.

InadditiontoBankhausLampe’sexcellenteconomicresearch,itsequitystrategygivesitsinstitutionalclientsasolidbasisfortheirinvestmentdecisions.

TheBank’sanalystscovermostoftheDAXandMDAXcompaniesinadditiontoanalysingalargenumberofSDAX,TecDAXandPrimeStandardstocks,aswellasanumberofEuropeanbluechips.Ourresearchcoveragecurrentlycomprisesabout200listedcompanies.Regularscheduledcontactswithcompaniesinadditiontovisitsatthetopmanagementlevelensureanin-depthunderstandingofcompanies’businessperformancewhileguaranteeingthatouranalysesareup-to-date,forwhichBankhausLampeResearchagainreceivedseveralawards.



Management System of Bankhaus Lampe KG

BankhausLampeKGismanagedbasedonfinancialperformanceindicators,whichindicatetheBank’sprofitabilitytakingaccountofitsrisk-bearingcapacity.Thethreekeyobjectives,returnonequity(RoE),asolidcorecapitalratioand–basedonthefirsttwoobjectives–anadequatedistribution,aredesignedtodemonstratetheBank’sprofitability.

Themanagementsystemisbasedonanannualstrategicplan,whichcontainsgrowthtargetsthatarecontinuouslyevaluatedasregardstheachievementofthesetargets.Theplanningusesbothatop-downandabottom-upapproachandissupportedbytheriskcontrollingandregulatoryaffairsdepartments.First,thetargetsaswellasmeasurestoreachthemaredefinedforthegeneralpartnersincloseco-operationwiththeextendedmanagementboard.Second,thesettargetsarealignedwiththeforecastsoftheindividualdepartmentstoaccuratelydeterminethefinalplanningfigures.

Toachievethegroup-widetargets,definingandreachinggrowthandstructuraltargetsiskey.BankhausLampeisaimingtoexpandbothitsclientbaseanditsassetsundermanagementtomakeitsbusinessoperationsevermoreefficientandmaintainthehighqualityofservice.Thetargetedorganicgrowthandtheresultingefficiencygainsshouldbereflectedinrisingcommissionincome,whichisthethirdgrowthtarget.

Thesestructuralgoalsshouldhelptosecuretheindependencefromsinglesourcesofearningsandclientsegments.Theobjectiveistodeveloparobustanddiversifiedearningsbasethatisindependentoftheinterest-rateenvironment.Thisincludesgraduallyincreasingtheshareofcommissionincomevs.netinterestincome,diversifyingthecommissionincomeandbalancingthedistributionofearningsacrossallclientsegments.Abalanceddistributionoftheearningsacrossallclientsegmentsisessentialtoavoidbecomingdependentonasinglesegmentwhilethebusinessriskisdiversifiedandtheinterlinkingofthesegmentsisensured.

ByreachingvariousmilestonesBankhausLampeisaimingtoachievethesekeyobjectives.Besidesconsistentlyhighcustomersatisfaction,abalancedfinancingstructureandamanageablebaseofrisk-weightedassetsareofgreatimportance.

Definition of key performance indicators

Return on equity (RoE) Net profit before taxes / average balance sheet equity

Core capital ratio Core capital / risk-weighted assets

Payout ratio Payout / net profit

Assets under management Value of assets that Bankhaus Lampe Group manages on behalf of its clients

Commission ratio Commission income / (commission income + interest income)

(excl. income from shareholdings/associated companies)

Cost-income ratio Administrative expenses / earnings (minus annual net profit)


Notes on Net Assets and the Financial Situation

Thetotal assetsofBankhausLampeKGasperthebalancesheetdateof31December2016stoodat€2,885millioncomparedwith€2,658millionlastyear.

Loans and advances to banks declinedby€52millionto€196millionintheyearunderreview.

At€1,393million,loans and advances to clientswereslightlyabovetheprior-yearlevelof€1,236millionasper31December2016.Themagnitudeofthecreditportfoliofacilitatesanadequatediversificationofrisksontheonehandandisalsocommensuratewiththerisk-bearingcapacityofaprivatebankontheother.

Debentures and other fixed income securitiesincreasedslightlyfrom€148millionto€161million.

Thetrading portfolioasperthebalancesheetdatestoodat€453million(previousyear:€441million)andessentiallycomprisesbondsandequities.

Liabilities to banksrosefrom€99millionto€137million.

Client depositsasperthebalancesheetdateof31December2016roseby€45millionto€2,121million(previousyear:€2,076million).Accountingfor74%oftotalassets(previousyear:78%),clientdepositsrepresentthemostimportantsourceofrefinancingandsubstantiallyexceedtheBank’screditbusiness.Thisunderscoresthesolidityofthebalancesheetstructure.

Intheyearunderreview,€20millionwereallocatedtofunds for general banking riskspursuanttoSection340goftheGermanCommercialCode(HGB).Aspertheendoftheyear,fundsforgeneralbankingrisksamountedto€57million.

TheBankenjoyedacomfortableliquidity positionthroughoutFY2016.Asat31December2016,theliquidityratiopursuanttotheGermanLiquidityRegulationcameto5.4(previousyear:6.1).ItwasthereforewellabovetherequirementslaiddownbyGermany’sFederalFinancialSupervisoryAuthority(BaFin),whichdemandsaminimumco-efficientofmorethan1.0.

Duetotheallocationfromshareholderfundsof€11.5million,theBank’sreported equityroseto€293millionandmadeup10.2%oftotalassetsasat31December2016(previousyear:10.6%).

Onthebalancesheetdate,the irrevocable lending commitmentsamountto€98million(previousyear:€57million).

Balance sheet structure in 2016 in %

Loans and advances to clients 48.2 %

Loans and advances to banks 6.8 %

Securities 21.3 %

Other items 23.7 %

Assets

Liabilities to clients 73.5 %

Liabilities to banks 4.8 %

Other items 11.6 %

Balance sheet equity 10.1 %

Liabilities

20162014 2015

9080706050403020100

93.3

84.6

81.2

62.5

54.7

50.2

Personnel and material expenses in million euros

Personnelexpenses

Materialexpenses

2014 2015 2016

1101009080706050403020100

48.5

43.1

64.4

100.

0110.

3

91.5

0.34.37.8

Components of results in million euros

Netinterestincome

includingcurrentincome

Netcommissionincome

Netincomefrom

proprietarytrading

35

Notes on the Income Situation

TheBankendedFY2016withagroup net income for the year of€55.0million(lastyear€23.0million).TheBankthussignificantlyexceededthesteadyresultpredictedinthe2015managementreport.However,theresultwaspositivelyaffectedbythesaleofthe47.5%stakeinUniversal-Investment-GesellschaftmbHandpartlynegativelyaffectedbydeclinesintheoperatingbusiness.Theproceedsfromthesaleofthisnon-strategicassetarebalancedbymaximumprovisionsforallpossibleobligationsresultingfromcontractofsale.BankhausLampebelievesthatthetransformationprocessesimplementedintheyearunderreviewwillhelptoboosttheearningsmomentum.However,thesetransformationprocessesareassociatedwithprojectandup-frontcostsnotonlyin2016butalsoin2017.

Net commission income declinedinFY2016duetothedifficultmarketenvironment,butitstilldocumentstheBank’sgoodpositionintheservicebusiness,whichisofparticularimportanceforthebusinessmodel.Netcommissionincome,whichisdominatedbysecuritiestrading,totalled€100.0million,down9.3%fromthepreviousyear’slevelof€110.3million.

Net interest incomeasbalanceofinterestincomeandinterestexpenses–includingongoingincomefromequityandothervariable-yieldsecuritiesaswellasshareholdings–rosefrom€5.4millionto€48.5millionduetotransactions.Thecurrentnetinterestincomedecreasedfrom€32.2millionto€28.3million,essentiallyduetothehistoricallylowlevelofinterestrates.Ongoingincomefromequityandothervariable-yieldsecuritiesaswellasshareholdingsroseby€9.0millionto€20.2million.

The ratio of net commission income to current net interest income(excl.incomefromshareholdingsandassociatedcompanies)hascontinuedtodeveloppositivelyin2016andstoodat78/22(previousyear:77/23).ThisratiounderlineshowimportantthecommissionbusinessisforBankhausLampeKGandconfirmedhowsuccessfulthefocusoncommissionincomehasbeenaspartofthere-orientationofthebusinessmodel.

Onbalance,net income from proprietary tradingwasdown€4.0millionto€0.3million,stillcontributingpositivelyandinlinewithourforecast.StatutoryreservesderivedfromnetincomefromtradingactivitieswerealsoallocatedinFY2016(asinthepreviousyear)pursuanttoSection340goftheGermanCommercialCode(HGB)inconjunctionwithSection340eParagraph4HGBandwillbeavailableasadditionalriskcoverinthefuture.

TheBankreportedanet valuation resultof€-12.2millionasper31December2016(previousyear:€9.2million).Thisincludesavaluationresultfromthelendingbusinessof€-16.6million(previousyear:€6.2million),whichcomprisesnetadditionsofspecificvaluationadjustments,provisions,depreciationandcontingencyreservespursuanttoSection340fHGBaswellaschangesingeneralvaluationadjustments.Allrecognisableriskswereprovidedforthroughadequatevalueallowancesandprovisions.

Therewasanetvaluationgainonsecuritiesheldintheliquidityreserveof€4.4millionasper31December2016(previousyear:€3.0million).


Personnel and material expenses,includingdepreciationandvaluationadjustmentsonintangibleassetsandproperty,plantandequipment,roseby12.9%inFY2016duetoone-offeffects,upfrom€143.2millionto€161.6million.Thisisessentiallyduetoincreasedmaterialexpensesof€62.5million(previousyear:€54.7million)andhigherpersonnelexpensesof€93.3million(previousyear:€84.6million).

Thenet valuation resultfrom shareholdingsasbalanceoftheitems“Earningsfromwrite-upstoshareholdings,shareholdingsinaffiliatedcompaniesandsecuritiestreatedasfixedassets”and“Depreciationandvaluationallowancestoshareholdings,shareholdingsinaffiliatedcompaniesandsecuritiestreatedasfixedassets”cameto€108.4million.

Thecost-income ratioshowstheadministrationcostsinrelationthenetresultfromnetinterestincome,netcommissionincome,netincomefromproprietarytradingandotheroperatingearnings.Asper31December2016,itstoodat106.5vs.88.4lastyear,primarilyduetotheaforementionedprojectandup-frontcosts.

Other comprehensive incomeinFY2016declinedby€1.4millionto€2.8million.Otheroperatingincomeroseto€8.4million(previousyear:€6.7million)primarilyduetoreversalofprovisions.Otheroperatingexpensesincreasedto€5.5million(previousyear:€2.4million).

Corporate Responsibility

Asaprivatebankwithastrongfocusonquality,BankhausLampeassignsahighprioritytoitsemployees.Inadditiontoitsclients,theyareacompany’smostimportantandvaluableresource.

Asat31December2016,693staffwereemployedatBankhausLampeGroup(previousyear:675).Theiraveragelengthofservicewasmorethan10years.Thestaffturnoverrate–i.e.theratioofthoseleavingtheBanktothetotalnumberofstaff–was4.1%(previousyear:6.9%)andthusmarkedlybelowthesectoraverageof6.7%.

Intimesofskillsshortageandthedecliningreputationofthebankingsectorasemployer,humanresourcesmanagementhasbeenfacingmajorchallenges.Onceagainin2016,BankhausLampeinvestedgreateffortintotherecruitment,supportandsustainabledevelopmentofitsemployees.


2011 2012 2013 2014 2015 2016

800

750

700

650

600

550

500

677

675 69

3

Number of employees

678

650

625


BankhausLampeattachesgreatimportancetoahighlevelofprofessionaldevelopmentofitsemployees.BankhausLampe’sdeclaredaimistoretainstaffattheBankforaslongaspossible.TheBank’scoursesandtrainingactivitiesin2016focusedonleadershipandmotivating,developingandretainingemployees.OtherkeyaspectsincludedtrainingrelatedtoregulatoryandlegalrequirementsandEnglishlanguagecourses.BankhausLampealsosupportsitsemployees’continuingeducationandcertificationtrainingcourses,forexampleasfinancialplannerorCharteredFinancialAnalyst.Inaddition,theBankalsosupportsselectedemployeesintheirendeavoursofpursuingamaster’sdegreeinparallelwiththeirprofessionalcareer.In2016,employeesenrolledindegreeprogrammessuchasinheritanceandestatelaw,facilitymanagement,financialservices,realestatelawandcompanysuccession.

Since2014,anoccupationalhealthmanagementprogrammeispartoftheBank’sbusinessguidelines.Variousmeasureswithrespecttoprevention,exercise,nutritionandstressmanagementareofferedthroughthisprogramme.Thegoaloftheprogrammeistomaintainandpromotethehealth,well-beingandperformanceoftheBank’semployees.

TheBank’sin-housetraineeprogrammeisdesignedtotrainqualifieduniversitygraduatesspecificallywithrespecttotherequirementsofBankhausLampe,andtoprovideanopportunityfortheirfurtherprofessionalandpersonaldevelopment.Since2012,14traineeshavesuccessfullycompletedthisambitiousprogrammewithafocusontheprivateandcorporateclientaswellasthecapitalmarketbusiness.Twonewtraineeshavejoinedtheprogrammesincetheautumnof2016.TheintegrationofselectjuniorstaffattheBankintotheinterdisciplinarytraineeworkshopshasalsobornefruit.

Asinpastyears,BankhausLampecontinuedtopromoteyoungacademictalentthroughthesupportoftheUniversityofDuisburg-Essenscholarshipprogramme.Togetherwithothercompanies,theUDEscholarshipprogrammeprovidesfinancialsupporttotalentedandtop-performingstudents.Inaddition,closeco-operationwithselecteduniversitieshasaffordedmanystudentstheopportunitytocompletetheirinternshipsatBankhausLampe.

39

Relatedtotheirmajorfieldsofstudy,29studenttraineesand41internswereabletoapplytheirtheoreticalknowledgeinpracticein2016.Moreover,theindividualdepartmentsgainedtheopportunitytobecomebetteracquaintedwithpotentialcandidatesforfuturepositionsattheBank.TheOetkerGroup’s“StayinTouch”programmealsoprovidesBankhausLampewithaninterestingapproachtoremainingincontactwithhigh-potential,motivatedtraineesinthefuture.Currently,32formerinternsandstudenttraineestakepartinthisprogrammeontherecommendationofthedifferentdepartments.

BankhausLampewasactivelyinvolvedincultural,socialandcommunityprojectsthroughpersonalinvolvementofitsemployeesaswellasdonations.Forexample,inco-operationwithSteinwayGermanytheBankawardedregionalsponsorshipstotalentedyoungpianists.TheBankalsocontinueditssuccessfulcollaborationwithKunstmuseumBonnandZeit-StiftungEbelin&GerdBuceriusfoundationinHamburg.Numerousconferencesandsymposiumsoncurrentfinancial,politicalandinter-generationaltopicsofthefuturewereheldattheBank’sbranches.

ManyemployeesalsoactivelyengagedoutsidetheiractivitiesattheBank,e.g.asspeakers,visitinglecturers,associationboardmembersorassociationtreasurers.

Forexample,intheareaofsocialandhealthcareservices,ourstaffwereinvolvedwithKinderschutzbund(associationfortheprotectionofchildren)inBielefeldandDeutscheMultipleSkleroseGesellschaft(Germanmultiplesclerosissociety).

Theaspectsofsustainabilityandenvironmentalprotectionareofcentralimportancetoaprivatebankthatthinksandactsforthelongterm.Aspartofitsenvironmentalmissionstatement,theBankdevelopedcorrespondingbindingguidelinesforallemployees.ThekeyobjectiveofBankhausLampeGroupistopreservenaturalresources,toprotecttheenvironmentandtosaveenergy.Forexample,nearlyalllocationsaresuppliedwithelectricityfromrenewablesources.Inaddition,energy-savingmeasuresareimplementedalongwithplannedrenovations.


4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

-0.5

-1.0

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

-0.5

-1.0

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

-0.5

-1.0

3.1

3.1

1.5

1.4

1.4

1.4

Global European German

GDP in %2016

2017 forecast

Outlook // Economy

GlobalAfter3.1%in2016,growthofglobalGDPin2017isprojectedtoremainmerelystableat3.1%.Intheemergingcountries,growthislikelytostabilisetoo,andintheindustrialisednations,economicmomentumisunlikelytoimproveascurrentgrowthdriversaretailingoff.

EurozoneTherobusteconomicrecoveryintheeurozoneissettocontinuein2017andeconomicactivityisforecasttoincreaseby1.4%.Theexpansionarymonetarypolicywillnolongerprovideadditionalimpetus.Anexpectedfirmereuroandthehighercrudeoilpricewillhaveaslightlynegativeeffect.Thesituationinthelabourmarketmaywellimprovefurtherslightlyandthus,privateconsumptionshouldremainthemostimportanteconomicdriver.

GermanyGrowthmomentumisunlikelytobeconsiderablystrongerin2017intheabsenceofadditionalimpetusforprivateconsumptionandinvestment,andinthefaceofsubduedglobaleconomicgrowth.Asaresult,GDPisforecasttogrowby1.4%in2017.

ConsumerpricesByendof2017,theinflationrateshouldslowlymovetowards1.5%.However,itissettoremainwellbelowtheECB’stargetrate.

GovernmentbondsInthecurrentenvironment,governmentbondyieldsarelikelytoremainlowin2017.Theslightlyhigheryieldscomparedwith2016resultfromtheinflationtrend,thereducedECBassetpurchasingandhigherbaseratesalongwiththeprobablymoreexpansionarycourseofthefiscalpolicyintheUnitedStates.

CurrenciesTheEUR/USDexchangeratein2017isexpectedtomoveinarangeof1.0to1.15.ThehighexpectationsofastrongeconomicrecoveryandacceleratedratehikesintheUSareunlikelytomaterialise.TheECBwillprobablyannounceafurtherreductionofitsassetpurchasingandthus,exchangeratesataround1.10aremoreprobablethanratesatorbelowparity.

EquitymarketsTheyear2017islikelytobedominatedbytheexpectedUSstimuluspackage.Fiscalpolicydecisionscouldprolongthecurrentequitycycle.However,investorshaveanticipatedsomethisduringtheDecemberrallyandamoreaggressivetradepolicyfromthenewUSadministrationcouldleadtonewrisksfortheexport-dependentDAX.Germancorporateearningswillprobablyincreasesomewhat,however,theoptimisticestimatesoftheanalystsconsensusexpectingdouble-digitgrowthratesmaywellbedisappointed.TheDAXisforecasttofluctuateduring2017andreach11,400pointsbytheendoftheyear.Inthecourseoftheyear,theindexmaywelldropmarkedlybelow10,000points(misgivingsaboutChina,disappointmentabouttheUSstimulusand/ortemporaryuncertaintyintheeurozone).Italsomaywellovershootthetargetto12,200andhigher(duetoexcessiveUSfiscalhopes).

41Business Review 2016 and Outlook


Outlook // Market and Competition

Thebankingsectorisstillfacingasimilarlydifficultenvironmentin2017asinthepastfewyears.Theongoinglow-interestphaseischallengingforbothforthedepositbusinessandthelendingbusiness.Asaresult,thenetinterestincomeofbanksremainsconsiderablyunderpressure.Alooseningoftheregulatoryrequirementsinthebankingsectorisstillnotonthecards.Externalfactors–includingthemegatrendsofdigitalisation,demographicchange,globalisationandsustainability–willcontinuetohaveadetermininginfluencethebankingsectorenvironment.InparticularthebreakingupofthevaluechainandthepartialreplacementofbankingbusinessmodelsbyFinTechsareshapingthesectorintheareaofdigitalisation.Inaddition,therearethechallengesoftheskillsshortageandthechangingdemandsofanageingclientele.Merelyinstitutionsthatarehighlyflexibleandwillingtochange,willremainsuccessfulinthecomingyear.

Outlook // Bankhaus Lampe

Toofferallclientsahigh-qualityandindependentrangeofserviceswillremainBankhausLampe’smainobjective.Thechallengesofcorecapitalratio,refinancingandcompanysizehavebeenaddressed.

// Theequitybaseandthedistributioncapabilityshallbestrengthenedbyanadequategroupnetprofitin2017.

// Awell-differentiatedclientdepositmixwillensureasolidrefinancingbaseforBankhausLampe.Asinthepast,growthintotalassetsisnotoneoftheBank’sobjectives.Refinancingoptionshavetobecontinuouslyreviewedinthecontextofthegeneralinterestrateenvironmenttobeabletoadaptflexiblytolegalandregulatoryrequirements.

// BankhausLampewillcontinuetopursueitsorganicgrowthstrategyacrossalldivisionsin2017.

WealthyprivateclientsAgainstthebackdropofthepersistingnegativeinterestrateenvironmentandthevolatilestockmarkets,thebusinesswithwealthyprivateclientsrequiresintensivemarketanalysis,asuccessfulportfoliomanagementandacustomisedproductrange.OneoftheeffectstheBankhasbeenanticipating,istheincreasingdemandforalternativeinvestments,whichitisrespondingtowithanexpandedserviceoffering.

CorporateclientsWithacomprehensiveadvisoryapproach,BankhausLampeaddressesandhelpstoco-ordinatetheneedsofcompanies,entrepreneursandfamilywealth.Forexample,theBankisofferingcapital-marketrelatedadvisoryservicestoservetheneedforindependentfinancing.Inaddition,therequirementsofdefinedclientgroupsaremetbytheBank’sexistingserviceoffering,supplementedbyspecialservicesprovidedthroughsubsidiariesandselectedco-operations.

43

Thecorporateclientbusinesshasgeneratedstablecontributionstoearningsinrecentyearsandhasbeenlargelycharacterisedbyhighcreditqualitycombinedwithlowdefaultrates.BankhausLampecontinuestopursueacautiouslendingpolicyin2017.Asinthepreviousyear,itsobjectiveistonotrequirealloftheplannedriskbudget.

InstitutionalclientsThankstoitsstrongtrackrecordinplacements,BankhausLampewillcontinuetoexpanditsissuingbusinesswithinstitutionalclients.Thespotlightisonaholisticandstrategicdialoguewithinstitutionalinvestors.Inthisway,BankhausLampeisabletodelivergenuineaddedvaluethankstoitsextensiveexpertise.Moreover,theBankhasbeencontinuouslyexpandingitsalternativeinvestmentoffering.

Outlook // Income Components

NetinterestincomeOverall,BankhausLampeexpectsnetinterestincometoweakenagainastheprevailinglowinterestratelevelwillcontinueandtherewillbenosignificantexpansionofthecapital-intensivebusiness.Owingtoitslargelymaturity-matchedbalancesheetstructure,however,interest-relatedoperationsatBankhausLampewillbarelybeaffectedcomparedwithothercompetitorsbythedeclineinmaturitytransformation.

NetcommissionincomeBankhausLampeisconfidentregardingitsnetcommissionincome.Theextensionofserviceofferingtoallthreeclientgroupsisexpectedtohaveapositiveimpactprovidedthefinancialmarketswillremainstable.

NetprofitfromproprietarytradingItisdifficulttoestimatenetincomefromproprietarytradinggiventheuncertaintiesinthefinancialmarkets.However,theBankanticipatesthatitstradingactivitieswillcontinuetocontributepositivelytoearningsin2017.

AdministrativeexpensesTheexpectedincreaseinadministrativeexpenseswillbemoderate,however,itwillincludeinvestmentandup-frontcostsfortheimplementationofstrategicprojects.

GroupnetincomefortheyearOnbalance,theBankexpectsnetincomein2017tobesignificantlybelowlastyear’slevel,whichwasnoticeablyinfluencedbythesaleofthestakeinUniversal.Moreover,theBankonlymakescautiousassumptionsabouttheincreaseofindividualincomecomponentsastheeffectsofthestrategicadjustmentmeasuresaresubjecttoconsiderableuncertainty.

Outlook // Strategy

TheBankhausLampeiscontinuouslyworkingonimprovingitsbusinessmodel.Itiswellequippedtooperateinthecurrentmarketenvironmentthankstoitssolidcorecapitalbase,acomfortabledepositsituationandstablebackgroundprovidedbyitsowners.Meetingupcomingregulatoryrequirementswillremainakeychallenge.TheimportanceofprudentmanagementattheBankincreasesinperiodsofsignificantmarketturmoil.Nonetheless,theBankisinasolidpositionthankstoitsbusinessmodelandissettobenefitfromtheproblemsinthefinancialservicesindustry.


Breakdown of conservatively calculated aggregate risk contribution

34.5 % credit risks

26.3 % shareholding risks

18.0 % market risks proprietary trading/liquidity reserve

16.0 % operational risks/reputation risks

2.7 % interest rate risks in the banking book

2.5 % market liquidity risks proprietary trading/

liquidity reserve

47

ThekeyobjectiveofBankhausLampeKG’sriskmanagementistoappropriatelylimitthemajorrisksfrombusinessoperationsaccordingtoitsrisk-bearingcapacitytoenableittogenerateareturnoncapitalemployedcommensuratewithrisk.

Tosupportefficientriskmanagement,theBank’smanagementattachesparticularimportancetopromotingandmaintaininganadequateriskcultureintheBankasawhole.Basedontherisk-orientedapproachinitsguidingprinciples,theBankdemandsitsmanagersandemployeestoactrisk-consciously.Opencommunicationandcriticaldialogueaswellasadequateincentivestructuresareamatterofcourse.

TheBankthereforeidentifies,assesses,controls,monitorsandcommunicatesthemainriskspromptlyatGrouplevelandbacksthemwithcapital.Particularfocusisplacedonriskconcentrations.Anannualriskreviewensuresthatallrisksaretakenintoaccountintheirentirety.

Forthepurposeofaquarterlyrisk-bearingcapacitycalculationinaccordancewiththeliquidationapproach,alltypesofriskareevaluatedataconfidencelevelof99.9%usingariskhorizonofoneyear.Allindividualrisksarecalculatedusingaconservativeapproach,i.e.risk-loweringcorrelationsaredisregarded,andthenaggregatedtoanoverallbankrisklevel.TheresultingfiguremustalwaysbelessthanthesumoftheBank’sequityandallowablereserves.Positivebudgetresultsaredisregardedundertheconservativeapproach.Autilisationofriskcoverfundsof80%ormoretriggersinternalsanctionmeasures.

InFY2016,basedontheliquidationapproachtheoverallbankriskscalculatedaccordingtothesemethodswerealwayswellbelowtheBank’sdefinedrisk-bearingcapacity.Utilisationatallreportingdateswasbetween46%and59%.

Asat31December2016,theconservativelycalculatedtotalriskcontributionof€187.2millionwasbrokendownbytypeofriskasfollows:

// 34.5% creditrisks// 26.3% shareholdingrisks// 18.0% marketrisksproprietarytrading/

liquidityreserve// 16.0% operationalrisks/reputationrisks// 2.7% interestraterisksinthebankingbook// 2.5% marketliquidityrisksproprietarytrading/

liquidityreserve

Afeasibilitytestoftheresultsisalsoperformedeveryquarterinaccordancewiththegoingconcernapproach.CorecapitalandtotalcapitalinvestedinaccordancewiththeCapitalRequirementsRegulation(CRR)issubtractedfromtheregulatoryriskcoverfunds.Thetotalbankrisks(calculatedataconfidencelevelof95%)arethencomparedtotheremaininglevelofriskcover.Accordingtothismethod,utilisationofcorecapitalwasbetween55%and72%,andutilisationoftotalcapitalwasbetween59%and81%asofallreportingdates.

Risk Report

Risk Report


Moreover,aspartofaquarterlystresstestthatincludesallriskclasses,wesimulateaseriouseconomicdownturnandanextremelossofconfidenceinthemarketsoramongclientsfollowinganexternalevent.Utilisationofriskcoverageincludingsubordinatefundswasbetween46%and67%.Throughqualitativeinversestresstestsweanalysevariousscenarios,whichcouldbecriticaltothesurvivaloftheBank.ThesescenariosarebasedonthebusinessmodelofaprivatebankandonthemainsourcesofincomeandriskfortheBank.

InaccordancewiththerequirementsoftheCRR,theconsolidatedtotalratiointhereportsubmittedtothesupervisoryauthoritiesstoodat18.6%asper31December2016.Themandatoryminimumrequirementsforcorecapitalandtotalcapitalwereclearlyexceededduringtheentirefinancialyear.

TheBankusesderivativefinancialinstrumentsprimarilyashedginginstruments.InterestrateswapsintheOTCmarketandfuturesandoptionsonEurexarethepreferredproducts.Suchitemsarecloselyintegratedintotheriskmanagementsystem.

ThereportontheuseofderivativefinancialinstrumentsisincludedintheConsolidatedFinancialStatementsAnnex.

Asinthepreviousyear,norisksthatendangeredthecontinuedexistenceofBankhausLampeoritsperformancewereidentifiedneitheratthebalancesheetdatenorinthecourseofthereportingyear.Riskswerecoveredbasedonallmethodsofanalysisandatalltimesduringtheperiodunderreview.Allexecutedstresstestsconfirmedtheadequateriskcoverage.Allexecutedvaluationmeasuresconfirmedtheadequacyoftheriskcontrollingmeasures.

Inthefollowing,thematerialrisksasdefinedbytheBankareexplainedinmoredetail.

49

Credit Risks

Creditrisksincludepotentiallossesduetodefaultorachangeinthecreditratingofbusinesspartners.Theyaresubdividedintogeneralcreditrisks,counterpartyrisks,issuerrisksandcountryrisks.

TheBank’screditriskstrategyfollowsallqualitativeandquantitativerequirementsforriskcontrol,andformsthebasisofthecreditbusiness.Thefocusisonshort-termfinancinginGermany.Inordertoavoidinappropriateconcentrationsofrisk,thecreditriskstrategyspecifieslimitsforthetotalcreditrisk,grossandnetvolumesofcommitments,andotheraspects.

TheBank’screditcommitteeisresponsibleforthemanagementofcreditrisksinbothindividualcasesandthetotalportfolio.Supportedbyanearly-warningsystem,risksaremanagedbytheprofitcentresandindividualkeypersonnelincludingthebackoffice.Closeco-operationbetweentheriskcontrollingdepartmentandback-officefunctions,togetherwiththeprofessionalhandlingofproblematicloans,ensuresthepromptidentificationofpotentialrisks.Theclientcreditportfolioischaracterisedbyabove-averagecreditratings.

TheBankappliesawidelyusedandrecognisedcreditportfoliomodeltoquantifyportfoliorisk.Thekeyperformanceindicatoristhecreditvalue-at-riskintheclientcreditportfolioincludingbanksandissuersataconfidencelevelof99.9%foraone-yearperiod.Asat31December2016,thecreditvalue-at-riskcameto€55.3million.

Inaddition,migrationrisksfortheclientcreditportfolioincludingbanksarecalculatedatthesameconfidencelevel.Atyear-end,theriskcontributionstoodat€2.7million.Furthermore,thedefaultriskofcommitmentsasper31December2016wasdeterminedtobe€6.7million.

Theanalysesarecomplementedbyregularmodel-based,historicalandhypotheticalstresstestsandongoingmonitoringofrelevantearly-warningindicators.TheseprovidednoevidenceofdevelopmentsthreateningtheBank’scontinuedexistenceasagoingconcern.Theprocedureisbasedonspecificratingsystemsfortargetcustomergroups(retailclients,corporateclients,banksandrealestate)andtakesintoaccountbothquantitativeandqualitativecriteria.

Significantparameterandmethodspecificationsareregularlyreviewedand,ifappropriate,adjustedtotakeaccountofalteredconditions.Themethodsandmodelsusedforriskcontrolundergoanextensivevalidationprocessatleastonceeveryyear.

Boththeriskcontrollingdepartmentandthecreditbackofficesubmitcomprehensivequarterlyreportsonriskswithinthecreditportfolioandsignificantindividualcommitments,togetherwithinformationontheutilisationofthevariouslimitstothegeneralpartnersandtheadvisoryboard.Efficientad-hocreportingcompletesthereporting.Nounacceptablerisksweredetectedatanytimeinthereportingyear.

TheBankdoesnotusesecuritisationorloanderivativestohedgerisks.Itmitigatesrisksonanindividualbasisthroughvolumereductions,sub-participationsorbyobtainingadditionalcollateralorappropriatecovenants.Inaddition,portfolioeffectsareusedtominimisetotalrisk.

Intheyearunderreview,theBankreportedapositivevaluationresultinthecreditbusiness.Additionstoriskprovisioningwerebelowtheplannedstandardriskexpenses.

Risk Report


Market Risks

Marketrisksarepotentiallossesduetodetrimentalchangesinmarketpricesorotherprice-influencingmarketparameters.Dependingontherelevantfactors,theycanbesubdividedintointerestratechangerisks,currencyrisksandotherpricerisks,aswellasspotrate,forwardandoptionrisks.Dependingontherelevantfactors,theycanbesubdividedintointerestratechangerisks,currencyrisksandpricerisks,aswellasspotrate,forwardandoptionrisks.Moreover,marketrisksalsoincludespreadrisksfrombondsandpromissorynoteloans.

Adetailedtradingstrategyisappliedtomanagemarketrisks.Itdefinesproprietarytradingasasupplementarysourceofrevenuethatcontributescorrespondinglytobasicprofitability.ProprietarytradingoccursmainlyineurosonEuropeanmarketsandstockexchangesandthuscurrencyrisksplayasubordinaterole.Thebankhasnoexposuretocommodityrisks.

Thelimitsystemislaiddowninthetradingstrategy.Itdefinesupperlosslimits,losslimits,risklimitsandvolumelimitsifapplicable,andincludesreportingregulationsaswellassanctionmechanismsforcasesofcriticallimitutilisations.Atyear-end,thelosslimitsforproprietarytrading,includingtheliquidityreserveof€21.6million,werebrokendownbytypeofriskasfollows:

// 42.7% spreadrisks// 23.2% pricerisks// 22.0% interestraterisks// 12.1% currencyrisks

Inaddition,alosslimitwassetupforcapitalmarkettransactionsmostlyasareservelimitof€10.0million.Alltheaforementionedlosslimitscountasriskcontributionsinthecalculationoftherisk-bearingcapacityinsteadofactualvalue-at-risks.Inthecaseofmostlylowlimitutilisations,thisrepresentsaconservativeapproach.Marketrisksaremanagedbyaninternalriskmanagementcommittee,whichmeetsatleastonceamonth.Theriskcontroldepartmentmonitorsriskscontrolledbytrading.

51

TheBankusesthevariance-covarianceapproachasitsmaininstrumentforriskmeasurement.Usingthisapproach,itcalculatesrisksfrommarketpricechangesintheformofpotentiallossesbasedonhistoricaldatafromthelast250tradingdays.BankhausLampequantifiestherisksfrompotentialchangesinthemarketpriceaspartofthedailycontrolprocessataconfidencelevelof97.7%assumingaholdingperiodofonetradingday.Inaddition,risksarecalculatedonthebasisof99.0%andaten-dayholdingperiod.Asat31December2016,theseregulatoryparametersresultedinavalue-at-riskof€5.8millionforallproprietarytradingincludingtheliquidityreserveportfolioandthecapitalmarketbusiness.Limitallocation,specificationofriskparametersandriskevaluationmethodsareregularlycheckedandadjustedasnecessaryifconditionschange.

Tradingresults,riskestimatesandlimitutilisationsarecompiledeveryworkingdaydividedbyriskareaandbrokendowntothesub-portfoliolevel.Thisreportissubmittedtothegeneralpartners.Additionalspecialanalysesaswellashistoricalandhypotheticalstresstestscomplementthereporting.Thequalityoftheriskassessmentisensuredbyback-testinganalyses,inwhichthestatisticalassumptionsarecomparedwithactualempiricaltrends,andawiderangeofothervalidationmeasures.

Inthecaseofcriticalutilisations,theBankimplementsimmediatereductionsinitsriskpositionstoprotecttheupperlosslimitandlosslimitsataconfidencelevelof99.9%.Intheyearunderreview,therewerenocasesthatnecessitatedaction.

Risk Report

Interest Rate Risks in the Banking Book

Inaccordancewiththetradingstrategy,interestraterisksinthebankingbookarekepttoaminimumbasedonarefinancingpolicyandmanagedbythetreasurydepartmentseparatelyfromothermarketrisks.Additionalmonitoringisperformedbytheinternalriskmanagementcommittee.

Inordertoquantifyavalue-at-risk,amonthlyhistoricalsimulationiscarriedoutusingthenetpresentvaluemethodataconfidencelevelof99.9%withariskhorizonofoneyear.Forfixedinterestratepositions,agreedinteresttermsaretakenintoaccountthroughout.Forvariableandopen-endedinterestratepositions,appropriatemixingratiosofslidingaveragesareassumedbasedonexpertassessments.Implicitoptionsandpotentialspecialrepaymentsplayasubordinateroleduetoshort-termfixedinterestrates.

Amonthlyreporttothegeneralpartnersdetailsthecashvalues,cashflowstructuresandkeyriskfiguresfortheinterestratepositionsinthebankingbook,brokendownbysub-portfolio.Thereportalsocontainslimitutilisations,theresultsofstresstestsandback-testingandonaquarterlybasistheeffectsofinterestrateshockspursuanttoGermanregulations.Assignificantfixedinterestpositionsinthebankingbookareusuallyrefinancedorinterest-ratehedgedthroughsimultaneousback-to-backtransactionswithmatchingmaturitiesandtypicallyveryshortperiodsoffixedinterestrates,thistypeofriskisofminorimportancefortheBank.Asat31December2016,thevalue-at-riskcameto€1.5millionwithalosslimitof€5.0million.

53Risk Report


Risks from Shareholdings

RisksfromshareholdingsaredefinedaspotentiallossesthatcouldarisefromtheprovisionofequityandmezzaninecapitalbytheBanktoothercompaniesincludingsupplementalloansandcapitalcommitments.

BankhausLampe’sstrategicobjectivesforshareholdingsaresetoutinaseparateshareholdingstrategy.AlloftheBank’sshareholdingsareclassifiedasstrategicholdings(includingprivateequity),otherfinancialholdings,andotherenterprises.TheyareallocatedtotheappropriateBankdivisionaccordingtotheoperationalmanagementandresponsibility.

ShareholdingriskiscontrolledbytheBankriskcontrollingdepartment.Inaddition,foreachofitsassociatedcompaniestheBankhasappointedariskcontrollereitheratthecompanyorattheBank.Majordecisionsonshareholdingsaremadeafteravotebythecreditdepartmentonacase-by-casebasisbytheBank’sgeneralpartnersand,tosomeextent,withinvolvementofthelimitedpartners.Moreover,aseparatelimitforthetotalvolumeofprivateequitydealsisalsoinplace.Thebusinessperformanceoftheshareholdingsisconstantlymonitoredandanalysed.

Aspartofinternalriskcontrol,capitalbackingisprovidedforallinvestmentsfollowingthesimpleriskweightingapproachinaccordancewiththeCRR,basedonariskcontributionof47.6%calibratedataconfidencelevelof99.9%.Thebasisforthiscalculationcomprisesthebookvaluesofshareholdings,mezzaninecapital,loansand,ifapplicable,additionalfundingobligationsfromopencapitalcommitments.Asat31December2016,thisresultedinaconservativelycalculatedriskcontributionof€49.2million.Ongoingmonitoringofearly-warningindicatorscompletestheriskmonitoring.

Incomprehensivequarterlyshareholdingsreportsandappropriatead-hocreporting,theriskcontrollingdepartmentinformsthegeneralpartnersandtheadvisoryboardabouttheindividualcapitalcomponentsofshareholdingsaswellasonallimportantdevelopmentsofthevariouscompanieswithrespecttoperformanceandrisk.TherewerenocriticaldevelopmentsfortheBankintheyearunderreview.

Forriskmanagementpurposes,BankhausLampeisgenerallygrantedextensiveinformationandvotingrightsintheindividualcompanies.Inaddition,thegeneralpartnersoremployeesoftheBanknormallysitonsupervisorybodies.

55

Liquidity Risks

Liquidityrisksincludecall,maturity,refinancingandmarketliquidityrisks.

Themainobjective,setoutinaseparateliquiditystrategy,istosecuretheBank’ssolvencyatalltimesandatthesametimeoptimiseprofit.Sufficientliquidityfundsaremaintainedpermanentlytoavoidliquiditybottlenecks.Securitiesandderivativefinancialinstrumenttransactionsaregenerallyconcludedwithinthemostliquidmarkets.TheBankalsotakesECBeligibilityintoaccountinthecaseofannuitybondsandpromissorynoteloansforthetradingportfolio.Theliquidityreserveportfolioexclusivelyconsistsofhigh-qualityliquidassets.Forthemostpart,liquiditymaturitytransformationisconductedonaveryshort-termbasis.Thankstoacomfortabledepositsituationinclientbusiness,liquidityremainedverysoundthroughoutthepastyear.

TheBank’streasurydepartmentisresponsibleforcontrollingliquidityrisks.Therefinancingstructureisconstantlyoptimisedbytakingcostsintoaccount.Theinternalriskmanagementcommitteeisresponsibleformanagementoftherisks,whiletheriskcontrollingdepartmentisinchargeofmonitoringthem.

Amodel-basedmethodisnotappliedtoquantifyliquidityrisks.BankhausLampe’sconsistentlyverygoodliquiditysituationisdemonstrated,forexample,bytheliquidityratioaccordingtotheGermanLiquidityRegulation(LiqV),whichwas5.42asper31December2016,andwasconsistentlywellabovetheminimumrequirementof1.0.Theregulatoryliquiditycoverageratiocameto2.12asof31December2016.

TheBankusesdetailedmonthlyliquidityforecasts,earlywarningindicatorsandvariousstressteststomonitorliquidityrisks,whicharereportedtothegeneralpartners.SuchtestssimulateinparticulartheeffectsofsignificantdamagetotheBank’sreputationoranextremeeconomiccrisisontheBank’sliquiditysituation.Theresultsprovethatsufficientrefinancingwouldbeensuredevenifextremescenariosweretooccur.Additionalstatementsfromthetreasurydepartmentcomplementthereportingtothegeneralpartners.

Aconservativeliquiditypolicyandongoingcontrollingreduceliquidityrisksinmoneymarkettrading.Forpotentialemergencysituations,BankhausLampemaintainsasufficientliquidityreserveofdemanddepositsatalltimes.Marketliquidityrisksarerestrictedthroughlimitationofthepermissiblemarketsfortheindividualtradingportfoliosandbymeansofrigorousinternalrequirementsforcounterpartiesandproductselection.Inaddition,anappropriatecapitalchargeissetforthistypeofriskintherisk-bearingcapacitycalculation.Asat31December2016,theriskcontributionforproprietarytrading,includingtheliquidityreserve,was€4.8million.

Risk Report


Operational Risks / Reputation Risks

Operationalriskscomprisetherisksoflossesincurredasaresultoftheinadequacyorfailureofinternalprocedures,peopleorsystems,orasaresultofexternaleventssuchasnaturaldisasters.Legalrisksarealsodefinedasoperationalrisks.

ReputationrisksareindirectordirectrisksofthelossoftrustofitsstakeholdersorthereputationoftheBankduetonegativeeventsrelatedtoitsbusinessoperations.TherebythelossofstakeholdertrustortheBank’sreputationmusthaveapotentialimpactontheBank’scorebusiness.Stakeholdersincludeclients,competitors,businesspartners,media,thegeneralpublic,supervisoryauthorities,governmentinstitutions,employeesandthegeneralpartnersoftheBank.

AspecialstrategyforoperationalandreputationrisksformsthebasisforhandlingoperationalrisksthroughouttheBank.Thegeneralpartnersareresponsibleformanagingthistypeofrisk.Riskcontroliscarriedoutbyspecificofficersinthespecialistdepartments.Tolimitreputationrisks,theBankhassignificantlyexpandeditsspecificationsandrestrictionsintheyearunderreview.Inparticular,theBankdefinedexplicittransactionsinwhichitsisnotallowedtoparticipateknowinglyneitherdirectlynorindirectly.

LawfirmsretainedbytheBankandthelegaldepartmentofthebankareresponsibleforlegalrisks.Animportanttoolforriskreductionhereistheuseofstandardisedagreementscustomaryintheindustry.Adequateprovisionshavebeenrecognisedforcurrentlitigation.

TheparticularlysensitiveareaofITrisksiscoveredbyextensiveandappropriateprotectivemeasuresoftechnicalandorganisationalcharacter.TheBankalsocontinuallyrefinesitsinformationsecurityandbusinesscontinuitymanagementsystemsinaccordancewithprevailingstandards.Forthispurpose,thecompanyappointedaninformationsecurityofficerwhoisindependentfromitsITdepartment.Thecentraloutsourcingmanagementoftheorganisation/ITdepartmentisinchargeoftheoutsourcingofservices.

TheBankdoesnotusemodel-basedquantificationofoperationalandreputationalrisks.Itsmethodsofanalysisconsistofthemaintenanceofaninternalriskandlossdatabase(forcasesfrom€1,000upward)togetherwitharegularbank-wideself-assessmentprogramme.BankhausLampeusesthebasisindicatorapproachinaccordancewithCRRtomeasuretheregulatorycapitalrequirementforoperationalrisks.

57

Fortheinternalriskcalculation,theregulatoryriskcovercalculatedatgrouplevelisadjustedforpotentialnewordiscontinuedbusinessdivisionsorshareholdings.Tocoverreputationrisks,theratioissubsequentlymultipliedbyapre-determinedfactortoraiseittoanappropriatelevel.Asat31December2016,theriskcontributionthusstoodat€30.0million.

ThegeneralpartnersarealwayskeptfullyinformedabouttheBank’soperationalandreputationalrisks.Thisisachievedthroughthequarterlystandardreportstakenfromtheriskandlossdatabase,aregularpresentationonthedevelopmentofselectedoperationalandreputationalrisks,andadhocreportingonspecialcases.

Thereductionofoperationalandreputationalrisksisachievedprimarilythroughclosecommunicationbetweentheriskunitsandthedecision-makersandcase-by-caserisk-mitigatingaction.Raisingriskawarenessamongallemployeescreatestransparencyandreducestheriskofloss.Reputationrisksarealsolimitedthroughspecificbusinessguidelines.

Strategic Risks

Strategicrisksrefertotheuncertaintyrelatingtoearningsperformanceduetobusinesspolicydecisionsorchangedconditionssuchasmarketenvironment,customerbehaviourortechnologicaladvances.

ManagementofstrategicrisksbytheBank’sgeneralpartnersisbasedonanannualforwardprojectionoftheoverallbankstrategyaspartofthestrategyandplanningprocesses.Thedecisionmakersaresupportedintheirstrategicmanagementbythequarterlyshort-termincomestatement,themonthlyprofitandlossaccount,andanalysesoftheearningsstructureinresponsetospecificsituations.Thisprocessensuresclosemonitoringofcompliancewiththestrategicgoalsandguidelines.

Risk Report

Subsidiaries and Holdings

Besidestraditionalassetmanagementservices,LampeAssetManagementGmbHalsooffersindividualspecialtyfundmandatesandmutualfundconceptswithinvestmentsinbonds,equitiesandcommodities.Thus,thecompanyoffersacomprehensiveandprofessionalarrayofassetmanagementservices.

Itstailor-madeinvestmentsolutionsarebasedonanactiveapproachtoassetmanagementthatfocusesontheabsolutereturnachievablefortheclient.LampeAssetManagementco-operatesinsettlementwithmanyrenownedcustodianbanksandcapitalinvestmentcompanies.Thecompanyisasought-afterpartnerforsegmentfundsintheMasterKVGenvironment.Riskmanagementisofparticularimportance,beingafundamentalelementofportfoliomanagement–especiallyinthecaseofguaranteedvaluemandates.

Inadditiontotraditionalinvestments,LampeAssetManagementGmbHisalsoincreasinglyofferinginvestmentsolutionsthataregearedtowardssustainabilitycriteria.Inthisarea,LampeAssetManagementGmbHco-operateswithoekomresearchAG.

Theassetmanagementbusinesswithinstitutionalclientsputinaverygoodperformancein2016.Specialtyandmutualfundsregisteredaslightlynegativeperformance.Whilethemanagedvolumesintheinsuranceandcorporateclientsegmentdeclined,assetsundermanagementforassociations,familyofficesandchurch-relatedinvestorsincreasedsignificantly.Thefocusofthenewbusinesswasonequityfundsandabsolute-returnstrategies.Traditionalfixed-incomeproductsdeclinedduetothelow-interestrateenvironment.

Thecompany’sresponsetoachangedcapitalmarketenvironmentisamoreglobalapproachtoinvestmentsolutionsaswellasinnovativemulti-assetconceptsandrisk-basedinvestmentstrategies.

Inachallengingcapitalmarketenvironment,assetsundermanagementwereslightlydownonayearagoat€6.36billion(previousyear:€6.45bn).

Onceagain,theeditorialteamofRenditeWerkhashonouredthebestendowmentfundsoftheyear.TheendowmentfundLAM-Stifterfonds-Universalwonthesecondplaceinthecompetition.ThenewestLAMmutualfund,LAM-Euro-CorporateHybride,wasratedforthesecondtimebyTelosGmbH.ThefundwasawardedanAA+ratingasitmeetstheveryhighstandardsofquality.

Subsidiaries and Holdings

59Subsidiaries and Holdings

TheBankhausLampeGroupcomprisesseveralsubsidiariesandvariousshareholdingsinadditiontoBankhausLampeKG.Withacomprehensiverangeofbankingandadvisoryservices,thegrouptherebymeetsitsclients’manyandvariedrequirements.


LampeBeteiligungsgesellschaftmbHoffersBankhausLampeKG’smedium-sizedcorporateclientsarangeofcomplementaryservicesforallaspectsofacquisitionandmanagementofcorporateinvestmentsofanytypeorlegalform.Inaddition,itsservicesalsoincludethestructuringandexecutionofcustomisedfiduciaryoperations.

LampeCreditAdvisorsGmbHoffersadvisoryservicesforcomplexissuesrelatingtoEuropeanfinancialinstitutions,insurancecompaniesandpublic-sectorinstitutions.Theseservicesincluderegulatoryadvice,thestructuringandarrangementofinvestmentandrefinancingsolutions,portfolioandriskmanagementservicesandcomprehensiveadvisoryandotherservicesrelatingtostrategicpartnershipsandequityholdings.

LampeCreditAdvisorsGmbHisapartnerinCaplanticGmbH,ajointventureestablishedbetweenBankhausLampe,Nord/LBandTalanxGroup.Caplanticprovidesbanks,insurancecompaniesandinstitutionalinvestorswithadministrativesupport,riskmodellingandreportingonvariousinvestmentproducts,especiallyalternativeassetclasses.Caplanticalsostructuresinnovativeinvestmentproducts,suchasalternative(credit)fundsormanageddebtaccountsthatinvestinloansandcomparablefinancialinstruments.

LampeEquityManagementGmbHoffersinstitutionalinvestorsexclusiveinvestmentopportunitiesinthefieldofrealassets.

InvestmentsintheenergyinfrastructuresectoraremadeviatheholdingcompanyCEEHoldingGmbH&Co.KGaA.InconjunctionwithaLuxembourg-basedspecialistfund,LampeAlternativeInvestmentsS.A,SICAV-FIS(withthethreesub-fundsLAI-CEESidefundI,IIandIII),institutionalinvestorshavepooledroughly€460millioninequityandthusachievedatotalinvestmentvolumeofsome€1.2billion.

TheCEEinvestmentscurrentlyinclude28photovoltaicparkswithatotaloutputof300megawatts,ofwhich22inGermany,threeinFranceandthreeinEngland.Inaddition,thecompanyhasinvestedin14GermanandfourFrenchwindparkswithatotaloutputof256megawatts.TheCEEgrouptherebyexpandeditsportfolioofrenewableenergiesplantstoanoutputofmorethan550megawatts.

Inadditiontotheseactivities,CEEHoldinghasworkedwithRWEInnogysince2011toinvestintechnologycompaniesinthefieldofcleantech,thusbenefitingfromtheindustrialexpertiseoftheRWEGroup.

Foundedin2014,CEEFundAdvisoryGmbH(CEEFA)isaninvestmentadvisoryfirmthatspecialisesininfrastructureinvestments.CEEFAprovidesadvisoryservicestotheinvestmentmanagerofaninfrastructuredebtfundwithatargetvolumeof€1billion.Thefundoffersinstitutionalinvestorstheoptiontoparticipateinprofitableinfrastructureprojects.DeutscheBankactsasdistributionpartnerforthisinfrastructuredebtfund.



ThesubsidiaryLampePrivatinvestManagementGmbHpermitsaselectgroupofentrepreneuriallymindedprivateinvestorstobuyupmajorityandminorityshareholdingsinallsectorsofGermany’sMittelstand.Aconsciousdecisionhasbeentakennottousefundstructuressothateveryinvestmentisflexibleandgearedtotherelevantinvestor’sneeds,aswellastoensurelong-termsupportfortherespectivecompanies.

TheinvestmentfundLampeMezzanineFondsIGIKGGmbH&Co.KG,establishedbythesubsidiaryLampeCapitalFinanceGmbHin2014,representsaninterestinginvestmentalternativeforinstitutionalinvestorsespeciallyinthecurrentlow-interestenvironment,whileprovidingcompanieswithanadditionalsourceoffinancingintheformofmezzaninecapital.ThefundsraisedareexclusivelyinvestedinGermanMittelstandcompanies,wheretheyareusedtofinancegrowthsituationsorcorporatetransactions.Withtheinvestmentsmadebytheendof2016,aboutonethirdofthefundshavebeenallocatedthusfar.

Foundedin2015,LampeInvestmentManagementGmbH(LIM)istheinvestmentmanagementcompanyofBankhausLampeGroup.Thefirmmanagesalternativeinvestmentfunds(abbreviated“AIF”)forsemi-professionalandprofessionalinvestors,inparticularinareasofenergy&infrastructure,privateequity,venturecapital&mezzanineaswellasrealestate.Besidestherelatedcoreservicessuchasadministration,portfolioandriskmanagement,thecompanyalsooffersplanningandstructuringservicesforsettingupnewAIF.Thecompany’smanagedfundvolumestandsataround€215million.

VilmarisManagementGmbHprovidesfurtherinvestmentopportunitiesintheshippingsector.ThisisthemanagementcompanyofVilmarisGmbH&Co.KGaA,ashippinginvestmentcompanythatpurchases,sellsandcharterssea-goingvessels.Itsportfoliocurrentlyconsistsofonebulkcarriersandanewlybuiltcontainershipthatwasaddedin2013.

BankhausLampehasaccesstotheAustrianmarketthroughitsmajorityholdinginVienna-basedDALEInvestmentAdvisorsGmbH.DALEhaslongstandingexperienceinthemanagementofsignificantfamilywealthandprivatefoundations.DALEalsoincreasinglymanagespensionplansofprofessionalassociationsandotherpubliccorporations.Moreover,DALEhasestablisheditselfinthefieldofethicalandsustainableinvestmentsandisspecialisedinanabsolute-returnbased,systematicapproachtoassetmanagement.BankhausLampe’sGermanclientsalsobenefitfromthisexpertiseasDALEactsasanadvisortotheLampeUniversalSolidFonds.DALEmanagedatotalof€1.8billionininstitutionalandprivateassetsasper31December2016.ThismakesDALEoneofthelargestmulti-familyofficesintheGerman-speakingcountries.

Inthesecondhalfof2016,BankhausLampesoldthemajorityofits50%stakeinUniversal-Investment-GesellschaftmbH,Frankfurt/Main,toMontaguPrivateEquity,aUK-basedfirm.Withfundsundermanagementofsome€290billion(asper31December2016),morethan1,000specialtyandmutualfundmandatesandapproximately650staff,Universal-InvestmentisoneofGermany’smostsuccessfulinvestmentcompanies.ItremainsanimportantpartnerforBankhausLampeGroupinthespecialtyfundarea.


Consolidated Financial Statements for 2016

Consolidated Balance Sheet for Bankhaus Lampe KGasat31December2016

Assets

in euros 2016 2015inTeuros

Cash Reserves

a)Cashonhand 708,279.55 635

b)Balanceswithcentralbanks 548,921,848.20 455,058

thereof:atDeutscheBundesbank 548,921,848.20 549,630,127.75 (455,693)

Loans and advances to banks

a)Dueondemand 125,236,656.83 174,910

b)Otherclaims 70,276,138.06 195,512,794.89 72,331

Loans and advances to clients 1,392,572,453.59 1,236,448

thereof:securedbyliensonproperty 42,628,439.77 (63,583)

thereof:loanstomunicipalities 45,268,000.00 (55,400)

Debt securities and other fixed income securities

Bondsanddebtsecurities

a)Frompublicissuers 50,655,477.08 15,043

thereof:eligibleascollateralforadvancesfromDeutscheBundesbank 50,655,477.08 (15,043)

b)Fromotherissuers 110,039,584.59 160,695,061.67 133,313

thereof:eligibleascollateralforadvancesfromtheDeutscheBundesbank 110,039,584.59 160,695,061.67 (133,313)

Equity and other variable-yield securities 400.00 0

Trading portfolio 452,684,001.06 440,633

Shareholdings 42,346,089.42 30,657

thereof:banks 8,147,193.04 (7,453)

thereof:financialservicesinstitutions 8,605,068.01 (5,923)

Shareholdings in affiliated companies 352,000.00 276

thereof:banks 0.00 (0)

thereof:financialservicesinstitutions 0.00 (0)

Shareholdings in associated companies 0.00 28,706

Fiduciary assets 11,855,266.91 11,889

thereof:fiduciaryloans 11,855,266.91 (11,889)

Intangible assets 4,290,472.19 5,224

Property, plant and equipment 28,243,885.24 28,949

Other current assets 30,621,889.26 22,348

Accruals and deferred items 16,403,777.10 1,784

Total assets 2,885,208,219.05 2,658,206


Liabilities


Liabilities to banks

a)Dueondemand 71,957,522.07 49,368

b)Subjecttoanagreedtermorperiodofnotice 65,480,816.22 137,438,338.29 49,333

Liabilities to clients

Otherliabilities

a)Dueondemand 1,694,393,633.90 1,850,335

b)Subjecttoanagreedtermorperiodofnotice 426,166,168.25 2,120,559,802.15 2,120,559,802.15 225,399

Trading portfolio 32,844,154.61 23,860

Fiduciary liabilities 11,855,266.91 11,889

thereof:fiduciaryloans 11,855,266.91 (11,889)

Other liabilities 31,578,247.20 14,943

Accruals and deferred items 17,855,139.45 1,586

Provisions

a)Provisionsforpensionsandsimilarobligations 10,866,608.84 11,308

b)Taxprovisions 2,882,104.47 4,862

c)Otherprovisions 66,926,785.82 80,675,499.13 26,436

Subordinated liabilities 27,723,640.28 27,724

thereof:duewithintwoyears 723,640.28 (724)

Profit participation capital 20,000,000.00 20,000

thereof:duewithintwoyears 10,000,000.00 (0)

Funds for general banking risks 56,950,000.00 36,900

thereofspecialitemsaccordingtoSection340eParagraph4GermanCommercialCode(HGB) 4,250,000.00 (4,200)

Equity

a)Subscribedcapital 70,000,000.00 70,000

b)Capitalreserve 205,500,000.00 194,000

c)Othersurplusreserves 16,749,861.39 16,748

d)Adjustmentsforminorityinterests 478,269.64 517

e)Consolidatedprofit 55,000,000.00 347,728,131.03 23.000

Total liabilities 2,885,208,219.05 2,658,206

Contingent liabilities

Liabilitiesarisingfromguaranteesandwarrantyagreements 74,965,931.22 80,466

Other liabilities

Irrevocablelendingcommitments 98,298,310.07 57,397

67Consolidated Balance Sheet for Bankhaus Lampe KG

Consolidated Profit and Loss Accountof Bankhaus Lampe KG fortheperiodfrom1Januaryto31December2016

Expenses


Interest payable 24,459,789.43 29,375

Commission payable 10,190,948.43 22,147

General administrative expenses

a)Personnelexpenses

aa)Wagesandsalaries 82,876,505.89 76,215

ab)Socialsecuritycontributionsandexpendituresforpensionsandrelatedbenefits 10,413,644.63 93,290,150.52 8,403

includingpensions:2,517,879.83EUR (2,270)

b)Otheradministrativeexpenses 62,481,926.40 155,772,076.92 54,694

Depreciation and valuation allowances on intangible assets and property, plant and equipment 5,845,125.10 3,876

Other operating expenses 5,529,693.61 2,426

Depreciation and valuation allowances to accounts receivable and certain securities and allocation of provisions in the credit business 12,244,523.77 0

Allocation to fund for general banking risks 20,000,000.00 0

Depreciation and valuation allowances to shareholdings, shareholdings in affiliated companies and securities treated as fixed assets 0.00 5

Taxes on income and profit 10,828,833.76 4,582

Other taxes not shown under “other operating expenses” 62,023.30 96

Consolidated net income for the year 55,341,475.08 23,377

Total expenses 300,274,489.40 225,195


Income


Interest earned on

a)Creditandmoneymarkettransactions 30,316,160.77 35,040

b)Fixed-incomesecuritiesanddebtregisterclaims 22,439,752.67 52,755,913.44 26,504

Current income from

a)Equityandothervariable-yieldsecurities 9,135,073.96 981

b)Shareholdings 11,088,977.37 20,224,051.33 3,205

Earnings from associated companies 0.00 6,789

Commission earnings 110,212,159.42 132,488

Net earnings from financial transactions 276,723.62 4,323

thereof:allocationaccordingtoSection340eParagraph4GermanCommercialCode(HGB) 50,000.00 (500)

Earnings from write-ups to accounts receivable, certain securities and from reversal of provisions in the credit business 0.00 9,198

Earnings from write-ups to to shareholdings, shareholdings in affiliated companies and securities treated as fixed assets 108,431,584.54 0

Other operating earnings 8,374,057.05 6,666

Total income 300,274,489.40 225,195

Net income for the year 55,341,475.08 23,377

thereof:profitduetootherpartners -341,475.08 -377

Profit carryforward from previous year 0.00 0

Withdrawal from capital reserves 0.00 0

Withdrawals from retained earnings 0.00 0

Advance distribution 0.00 0

Allocations to retained earnings 0.00 0

Advance withdrawals from partners 0.00 0

Group profit 55,000,000.00 23,000

69Consolidated Profit and Loss Account

71Auditors’ Certificate

WehaveauditedtheconsolidatedfinancialstatementspreparedbyBankhausLampeKGcomprisingthebalancesheet,theprofitandlossaccount,theannexaswellasthecashflowstatementandconsolidatedstatementofchangeinshareholders‘equity,andthegroupmanagementreportforthebusinessyearfrom1Januaryto31December2016.InaccordancewiththerequirementsofGermancommerciallaw,thepreparationoftheconsolidatedfinancialstatementsandthegroupmanagementreportistheresponsibilityofthegeneralpartnersoftheCompany.Ourresponsibilityistoexpressanopinionontheannualconsolidatedfinancialstatementsandtheconsolidatedannualreportbaseduponouraudit.

WeconductedourauditoftheconsolidatedfinancialstatementsinaccordancewithSection317oftheGermanCommercialCode(HGB)andgenerallyacceptedGermanstandardsfortheauditoffinancialstatementspromulgatedbytheInstitutderWirtschaftsprüfer(InstituteofPublicAuditorsinGermany)(IDW).Thesestandardsrequirethatweplanandperformanauditsuchthatanymisstatementsandinfringementsthatwouldmateriallyaffectthepresentationofnetassets,financialpositionandresultsofoperationsintheconsolidatedfinancialreportinaccordancewithprinciplesofproperaccountingandinthegroupmanagementreportaredetectedwithreasonableassurance.KnowledgeofthebusinessactivitiesandtheeconomicandlegalenvironmentoftheGroupandexpectationsregardingpotentialmisstatementsaretakenintoaccountinthedeterminationofauditprocedures.Theeffectivenessoftheaccounting-relatedinternalcontrolsystemandtheevidencesupportingthedisclosuresintheconsolidatedfinancialstatements

andthegroupmanagementreporthaveprimarilybeenexaminedonarandomsamplebasiswithintheframeworkoftheaudit.Theauditincludesassessingtheannualfinancialstatementsofthecompaniesincludedintheconsolidation,thedeterminationofthecompaniestobeincludedintheconsolidation,theaccountingandconsolidationprinciplesusedandsignificantestimatesmadebytheCompany‘sgeneralpartners,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatementsandthegroupmanagementreport.Webelievethatourauditprovidesareasonablebasisforouropinion.

Ouraudithasnotledtoanyreservations.

Inouropinion,basedonthefindingsofouraudit,theconsolidatedfinancialstatementscomplywiththelegalrequirementsandgiveatrueandfairviewofthenetassets,financialpositionandresultsofoperationsoftheGroupinaccordancewiththeprinciplesofproperaccounting.ThegroupmanagementreportisconsistentwiththeconsolidatedfinancialstatementsandasawholeprovidesasuitableviewoftheGroup‘spositionandsuitablypresentstheopportunitiesandrisksoffuturedevelopment.

Dusseldorf,13March2017

PricewaterhouseCoopersGmbHWirtschaftsprüfungsgesellschaft

PeterKleinschmidt ppa.RalfScherelloWirtschaftsprüfer Wirtschaftsprüfer(GermanPublicAuditor) (GermanPublicAuditor)

Auditors’ Certificate

Scope of Consolidation

InadditiontoBankhausLampeKG,thescopeofconsolidationncludesthefollowingcompanies:

Basic Accounting Principles

BankhausLampeKGisheadquarteredinBielefeldandregisteredunderthecommercialregisternumber12924atthedistrictcourtofBielefeld.

TheconsolidatedfinancialstatementsofBankhausLampeKGasat31December2016werepreparedinaccordancewiththeprovisionslaiddownintheGermanCommercialCode(HGB)inconjunctionwiththeRegulationonAccountingforCreditandFinancialServiceInstitutions(RechKredV).

PursuanttoSection313HGB,theseconsolidatedfinancialstatementshaveanexemptingeffectonthecompaniesincludedintheListofShareholdings,publishedintheelectronicBundesanzeiger(GermanFederalGazette),withinthemeaningofSection264Paragraph4HGB.

Theconsolidatedfinancialstatementscomprisethebalancesheet,theprofitandlossstatement,thenotes,thecashflowstatementandthestatementofchangesinequitycapital.Furthermore,agroupmanagementreportpursuanttoSection315HGBhasbeenprepared.

100 %

25

Lampe Immobilien Verwaltungs GmbH, Dusseldorf

100 %

Lampe UI Holding GmH & Co. KG, Dusseldorf

5,917

100 %

Lampe Equity Management GmbH (subgroup), Hamburg1)

-686

100 %

Lampe Beteiligungsgesell-schaft mbH, Dusseldorf 1)

1,100

100 %

Lampe Immobilien GmbH & Co. KG, Dusseldorf

51

100 %

TETRARCH Aktiengesell-schaft, Dusseldorf 1)

50

Share in company

Equity in thousand

euros

61 %

DALE Investment Advisors GmbH, Vienna

1,269

100 %

Lampe UI Beteiligungs GmbH, Dusseldorf

24,631

100 %

Lampe Verwaltungs- GmbH, Dusseldorf

6,084

100 %

Lampe Private Advisory GmbH (previously Poseidon Beteiligungs- GmbH), Bielefeld1)

52

100 %

Lampe Asset Management GmbH, Dusseldorf 1)

3,000

100 %

Lampe Credit Advisors GmbH, Dusseldorf

1,021

100 %

BTF Beteiligungs- und Treuhandgesellschaft mbH, Frankfurt/Main1)

52

Consolidated Financial Statements AnnexGeneral Disclosures

1) A profit-and-loss transfer agreement exists with Bankhaus Lampe KG


Duetothesaletoathirdparty,Universal-Investment-GesellschaftmbHisnolongerregardedasanassociatedcompanyandthusnotconsolidated.Thesaleledtoanearningseffectof€137.4million.

Othergroupcompanieswerenotincludedasthecompaniesareofsecondaryimportanceforthenetassets,financialpositionandresultsofoperationpursuanttoSection296Paragraph2HGB.

Shareholdingsinsubsidiarycompaniesthatdidnothavetobeincludedarestatedathistoricalcostunderfinancialassets.

Consolidation principles

Thecapitalconsolidationofthesubsidiariesacquiredbefore31December2009wasdoneaccordingtothebookvaluemethod.Theacquisitioncostsofanaffiliatedcompanywereoffsetagainsttheparentcompanyshareinitsequitycapitalatthetimeoftheaffiliatedcompany’sacquisitionorinitialconsolidation.Since1January2010,capitalconsolidationhasbeendoneaccordingtotherevaluationmethod.AcquisitioncostsofanaffiliatedcompanyareoffsetagainsttheGroup‘sshareinequityatthatdateatwhichthecompanybecameasubsidiary.Equityofthesubsidiaryissetattheamountcorrespondingtothepresentvalueofassets,liabilities,prepaidanddeferreditemsandspecialitemstobeincludedintheconsolidatedfinancialstatements(ifapplicable,afteradjustmentofthevaluationratespursuanttoSection308Paragraph2HGB).Ifadifferenceremainsontheassetsideafteroffsetting,itisshownintheGroupbalancesheetasgoodwillundertheposition“intangibleassets“andisdepreciatedaccordingtoscheduleovertheexpectedusefullife.Adifferenceaccruingontheliabilitiessideisshownundertheitem“Differencefromcapitalconsolidation“afterequity.

Intra-Groupreceivablesandliabilities,provisions,contingentliabilitiesandotherliabilities,aswellasexpensesandincome,areoffsetagainsteachother.InterimresultsthatareofsecondaryimportancetoprovidinganaccurateviewoftheGroup‘snetassets,financialpositionandresultsofoperationsarenoteliminated.

73Consolidated Financial Statements Annex

Group Accounting Principles and Valuation Methods

TheannualfinancialstatementsofBankhausLampeKGandthedomesticandforeignsubsidiarycompaniesincludedintheconsolidatedfinancialstatementsarepreparedinaccordancewithstandardaccountingprinciplesandvaluationmethods.

Theaccountingprinciplesandvaluationmethodshaveessentiallyremainedunchangedfromthepreviousyear.

Therehasbeenanamendmenttotheaccountingprinciplesandvaluationmethodsinconnectionwiththeintroductionofthetradingsystemforforeigncurrencytransactions.Intheprofit-and-lossaccount,incomeandexpensesfromcurrencyconversionarenotbalancedinthetradingportfoliobutreportedunder“otheroperatingearnings”and“otheroperatingexpenses”,respectively.Incomeandexpensesfromforeigncurrencytransactionsinthetradingportfolioarereportedasnetincomeorthenetexpensesinthetradingportfolio.

Inaddition,accrualsforsecuritiescommissionsfromvolume-basedfeemodelshavebeenallocatedtotheaccountingperiodduetofurtherdevelopmentoftherespectivesystems.

Loansandadvancestobanksandclientsarealwaysreportedattheirnominalamountorattheiracquisitioncosts.Allforeseeablecreditandcountryriskshavebeentakenintoaccountbysettingupspecificvaluationallowancesandprovisions.

Latentcreditriskisaccountedforbygeneralvaluationallowancesaccordingtocommerciallawprinciples.Furthermore,thereisaprovisionforgeneralbankingriskspursuanttoSection340fHGB.Forthepurposeofshowingriskprovisioningintheprofitandlossstatement,theoptionofcompensationofexpensesandrevenuewasapplied.

Separatevaluationunits(micro-hedges)areformedforthevaluationofownissues,selectedclienttransactionsandsinglecreditsofthenon-tradingportfolio.Theobjectiveofmicro-hedgesistocoverinterestfluctuationsrelatedtoassetsanddebtinstrumentsviaderivativeswithmatchingvalues,currenciesandmaturities.

Thesemicro-hedgesareformedinaccordancewiththeregulationssetoutinSection254HGBandthereportingprinciplesforfinancialderivatives(IDWRSHFA35).Thesehedgingrelationshipsendwhentheunderlyingtransactionorthehedginginstrumentmatures,issoldorexercised,ortherequirementsfortheformationofvaluationunitsarenolongermet.

Thesevaluationunitsareaccountedforunderthenethedgepresentationmethod.Usingthismethod,balancingvaluechangesresultingfromthehedgedrisk(effectivepart)arenotstatedonthebalancesheet.Ifthevaluationunitresultsinanunrealisedgain,itisnottakenaccountof.However,ifthenon-effectivepartofthevaluechangesfromthehedgeditemandhedginginstrumentsresultsinaloss,acorrespondingprovisionismade.

Forecastingandtheretroactivelyassessingthevaluationunit‘seffectivenessisdonebywayofthecriticaltermmatchmethodasthetermsforthehedgeditemandthehedginginstrumentsareworkingintheoppositedirection.


Asofthebalancesheetdate,liabilitieswithabookvalue€60millionandderivativeswithapositivemarketvalueof€51.5millionwerehedgedinvaluationunits.Thederivativesusedashedginginstrumentshaveanegativemarketvalueof€52.1million.

Therearenovaluationunitswithahighprobabilityforexpectedtransactions.

Henceforth,thestrictlower-of-cost-or-marketprincipleisappliedtosecuritiesfromtheliquidityreservepursuanttoSection340eParagraph1Clause2HGBinconjunctionwithSection253Paragraph4HGB.

Financialinstrumentsinthetradingportfolioareassessedatfairvalueminusariskpremium.Fairvalueistheamountatwhichanassetcouldbeswappedbetweencompetentbusinesspartnerswhoarewillingtoenterintoacontractandwhoareindependentofeachotheroratwhichaliabilitycouldbesettled.Therewasanactivemarketforallfinancialinstrumentsshowninthetradingportfoliosothatthefairvaluecorrespondstothemarketprice.

Thetradingportfoliocomprisesallfinancialinstrumentsthatarepurchasedorsoldwiththeintentofgainingashort-termproprietary-tradingprofit.Liabilitiesthatareenteredintowiththeintentofrepurchasingthemintheshorttermforthepurposeofgainingatradingprofitareshownastradingliabilities.

Inordertoaccountforpossibleresidualrealisationrisks,theamountresultingfromthemarketvaluationisreducedbyariskpremium,whichisdeductedfromtheassetsidetradingportfolio.Theriskpremiumconstitutesavalueatriskaccordingtothevariance-covariancemethodpursuanttoSection365CRR.Thecalculationisbasedonamonitoringperiodof250days,aholdingperiodoftentradingdaysandaconfidencelevelof99%.Asper31December2016,theriskpremiumcameto€5,267thousand.

Shareholdingsandnon-consolidatedsharesinaffiliatedcompaniesareshowninthebalancesheetatamortisedacquisitioncostsaccordingtotheregulationsapplyingtofixedassets.Incaseofanticipatedpermanentdeclinesinvalue,unscheduleddepreciationsaremade.Ifthereasonsthatledtodepreciationnolongerexist,awrite-upiscarriedoutuptoamaximumoftheacquisitioncosts.Asinpreviousfiscalyears,securitiesmanagedasfixedassetholdingsarenotpartoftheportfolio.Thesettingoffpermissibleaccordingtocommerciallawisapplied.

RepurchaseagreementsarereportedpursuanttotheapplicableprinciplesofSection340bHGB.Securitieslentinsecuritieslendingtransactionsremainpartofthebalancesheetwhereasborrowedsecuritiesarenotstatedonthebalancesheet.

Property,plantandequipment,aswellaspurchasedintangibleassets,arelistedonthebalancesheetattheirrespectiveacquisitionorproductioncosts,reducedbyscheduleddepreciations.Ifpermanentdeclinesinvalueareanticipated,unscheduleddepreciationsaremade.Byanalogywiththeapplicabletaxregulations,certainitemsofthefixedassetsaretreatedaslow-valueassetsforreasonsofsimplicity.


Deferredtaxesaredeterminedfortimedifferencesbetweenthecommercial-lawandtax-lawvaluationratesofassets,liabilitiesandprepaidanddeferreditems.Inadditiontothebookingdifferencesrelatedtotime,taxlossescarriedforwardareaccountedfor.DuetoBankhausLampeKG’slegalform,deferredtaxesaredeterminedonthebasisofanincometaxrateofcurrently15.8%,whichcomprisesonlytradetax.Anoveralltaxburdenresultingfromthiswouldbeshowninthebalancesheetasdeferredtaxliability.Intheeventoftaxrelief,thecorrespondingoptiontocapitalisewouldnotbeused.Intherelevantfinancialyear,therewasanoveralldeferredtaxassetthatwasnotshowninthebalancesheet.

AccruedanddeferreditemsarecreatedpursuanttotheapplicableprinciplesofSection250HGB.Theseitemsaredeferredcorrespondinglyasincomeorexpensesintheaccountingperiod.

Allotherassetsarestatedonthebalancesheetattheiracquisitioncostortheirfairvalue.

Liabilitiesarestatedonthebalancesheetattheirrespectiveamounttobepaid.

Provisionsforpensionsandsimilarliabilitiesarecalculatedonthebasisofbiometricprobabilities(guidelinetablesHeubeck2005G)accordingtotheentryageactuarialcostmethod.Thereportedpensionprovisionsincludefirmcommitments.Pensionincreasesarecurrentlyaccountedforwithanannualadjustmentrateof1.60%.Thediscountrateappliedtothepensionobligationswas4.01%.Thebankutilisestheoptionofusingtheaveragemarketinterestrateforanassumedmaturityof10years,whichisdeterminedandpublishedbytheBundesbank.ThebalanceasperSection253Paragraph6Clause3HGBcomesto€740thousand.TheinterestrateusedisbasedontheBundesbankprojectionpublishedon31October2016.

Inordertofulfiltheobligationsfromdeferredcompensationpaymentsofemployees,therespectivefinancialresourceshavebeeninvestedininvestmentfundsorqualifyinginsurancepolicies.TheinvestmentfundsareheldintrustforBankhausLampeKG,andothercreditorshavenoaccesstothem.Thequalifyinginsurancepoliciesarepledgedtotherespectiveemployees.Thevaluationiscalculatedbasedonafairvalueof€2,005thousand;thisvalueisbalancedagainsttheindividualunderlyingliabilities,whichcameto€2,378thousand.Theliabilitysurplusof€373thousandisenteredunderprovisions.Acquisitioncostsamountto€546thousand.Thebalancedinterestexpensefromthisliabilityis€27thousand.

Provisionsfortaxesandotherprovisionstakeintoconsiderationallrecognisablerisksanduncertainliabilities.Valuationiscarriedoutintherespectiveamountstobepaid,inaccordancewithapropercommercialassessment,tocoverfuturepaymentobligations.Futurepriceandcostincreasesareaccountedforasfarasthereissufficientobjectiveevidencefortheiroccurrence.

Fornon-bankingitems,theeffectsofinterestaccruedandchangesininterestratesinsubsequentperiodsarereportedunderOtheroperatingexpenses(€345thousand).ThechangesininterestaccruedforprovisionsrelatedtobankingitemsarereportedunderInterestexpenses(€11thousand).


TheitemFundsforgeneralbankingriskswascreatedinaccordancewiththerulesandregulationsofSection340gHGB.Theequityitemsarestatedonthebalancesheetatnominalvalue(Section272Paragraph1HGB).

Undertheloss-freevaluationmethod,provisionsforanticipatedlossesaretobesetasideinthebankingbookforapossibleexcessliabilityarisingfromtransactionswithinterest-basedfinancialinstruments.Allassetandliabilityitemsthatwerenotassignabletothetradingbookorwererecognisedunderequityorequity-likeitemswereincludedinthebankingbook.Indeterminingapossibleexcessliability,bothassetandliabilityamountormaturitycongruencieswereclosedthroughfictitiousforwardtransactions.Thevaluationofthebankingbookwasconductedusingthepresent-valuemethod,wherebythebookvaluesofinterest-bearingtransactionsofthebankingbookarecomparedagainstinterestrate-inducedpresentvalues.Theneedtocoveranyanticipatedriskcostsandadministrativecostsiscarriedoutasadiscountofthegrosscashvalueofthebankingbook.Theauditdidnotascertainanyneedtoaccrueprovisions.

PursuanttoSection256aHGB,receivablesandliabilitiesinforeigncurrencyweretranslatedintoeurosatthemiddlespotexchangerateprevailingonthebalancesheetdate.Forwardtransactionsthathavenotyetbeensettledatbalancesheetdatearetranslatedattheforwardrateprevailingonthebalancesheetdate.

On-balancesheetitemsandopentransactionsdenominatedinforeigncurrenciesoutsideofthetradingportfolioareevaluatedpursuanttotheapplicableprinciplesofSection340hinconjunctionwithSection256aHGBifaspecialcoverageisavailable.Iftherequirementsforspecialcoverarenotfulfilled,thecurrencyconversioniscarriedoutaccordingtotheprincipleslaiddowninSection256aHGB.Iftheresidualtermisoneyearorless,unrealisedprofitsfromcurrencyconversionarerecognisedasincome.Iftheresidualtermismorethanoneyear,thegeneralvaluationprinciplesareapplied.

Theprincipleofspecialcoverage(pursuanttoSection340hHGB)inlinewithIDWRSBFA4canberegardedasfulfilledifthecurrencyriskismanagedthroughaforeigncurrencypositionandtheindividualitemsareincludedinsuchposition.Transactionsoutsideofthetradingportfolioaremanagedasawholeforeachcurrency.

Intheprofit-and-lossaccount,incomeandexpensesfromcurrencyconversionarenotbalancedinthetradingportfolio,butinsteadreportedunder“otheroperatingearnings”and“otheroperatingexpenses”,respectively.

FinancialinstrumentsinthetradingportfolioinforeigncurrencyareassessedatfairvalueandtranslatedatthemeanspotexchangerateonthebalancesheetdatepursuanttoSection340cinconjunctionwithSection340eParagraph3HGB.Accordingly,allexpensesandincomearisingfromcurrencyconversionarerecognisedintheprofit-and-lossaccountasnetincomeornetexpensesfromproprietarytrading.

Expensesfromdepreciationonshareholdings,shareholdingsinaffiliatedcompaniesandsecuritiestreatedasfixedassetsarebalancedwiththeearningsfromwrite-upstosuchitemspursuanttoSection340cParagraph2HGB.

Noeventsofparticularsignificancehaveoccurredsince1January2016thatcouldbeexpectedtohaveamaterialeffectonnetassetsorthefinancialandincomesituation.


in thousand euros 31/12/2016 31/12/2015

Liabilities to banks with a definite term or notice periodupto3months 22,292 4,187

morethan3monthsandupto1year 40,775 42,900

morethan1yearandupto5years 2,414 2,229

morethan5years 0 17

Liabilities to clients with a definite term or notice periodupto3months 197,625 69,217



morethan5years 35,025 25,000

Notes to Consolidated Financial Statements


Loans and advances to banksupto3months 36,282 42,876


morethan1yearandupto5years 0 0morethan5years 0 2,021

Loans and advances to clientsupto3months 637,451 467,661



morethan5years 46,098 50,451

indefiniteterm 23,853 70,758

Debt securities and other fixed income securitiesmaturinginthenextyear 50,282 9,458

Breakdown of Liabilities by Residual Terms

Breakdown of Receivables by Residual Terms


Trading portfolio (Assets)in thousand euros 31/12/2016 31/12/2015

Derivativefinancialinstruments 29,350 22,187

Debtsecuritiesandotherfixedincomesecurities 365,915 373,409

Equityandothervariable-yieldsecurities 62,686 50,304

Riskdiscount -5,267 -5,267

Trading portfolio (Liabilities)in thousand euros 31/12/2016 31/12/2015

Derivativefinancialinstruments 32,844 23,859

exchange listed not exchange listedin thousand euros 31/12/2016 31/12/2015 31/12/2016 31/12/2015

Debtsecuritiesandotherfixedincomesecurities 160,695 148,357 0 0

Equityandothervariable-yieldsecurities 0 0 0 0

Relations with Affiliated Companies

Trading Portfolio

Securities Negotiable on the Stock Exchange and Financial Investments

Thefollowingtableitemisesthesecuritiesnegotiableonthestockexchangeincludedinthebalancesheetpositions.

Inprinciple,businesstransactionswithaffiliatedcompaniesandpersonsarecarriedoutatcustomarymarketterms.Majortransactionsatnon-standardmarketterms,whichwouldthushavetobereportedpursuanttoSection314Paragraph1No.13HGB,havenottakenplace.

Affiliated companies Shareholdingsin thousand euros 31/12/2016 31/12/2015 31/12/2016 31/12/2015

Loansandadvancestobanks 0 0 114 100

Loansandadvancestoclients 152 0 3,881 536

Liabilitiestobanks 0 0 0 0

Liabilitiestoclients 1,160 841 3,259 3,694


Intangibleassetscomprisepaidconcessionsamountingto€3.6million,goodwillof€0.4millionandadvancepaymentsonintangibleassetsof€0.2million.

Theitemproperty,plantandequipmentincludeslandandbuildingsusedfortheBank’sowncommercialactivitiesof€21.4million,operatingandbusinessequipmentof€3.9million,technicalequipmentandmachineryof€0.3millionandadvancepaymentsforassetsunderconstruction.

Fiduciary Operations

Theassetsandliabilitiesshowninthebalancesheetunder“Fiduciaryassets“and“Fiduciaryliabilities“aredividedasfollows:

Statement of Changes in Fixed Assets

in thousand euros Intangible assets Property, plant and equipment

Financial assets

Historicalcostasper01/01/2016 11,787 42,629 60,495

Additions 2,635 5,359 9,113

Disposals -1,057 -471 -26,055

Historicalcostasper31/12/2016 13,365 47,517 43,552

Accumulateddepreciation 9,074 19,273 855

Bookvalue2016 4,291 28,244 42,698

Bookvalue2015 5,224 28,949 59,640

Depreciationinthefinancialyear 2,501 3,344 0

31/12/2016

Fiduciary liabilities

Fiduciary assets

31/12/2015

Loansandadvances

total11,855

Liabilitiestotal

11,855

Loansandadvances

total11,889

Liabilitiestotal

11,889

Receivablestoclients38

Liabilitiestoclients38

Receivablestoclients37

Liabilitiestoclients37

Loansandadvancestobanks11,817

Liabilitiestobanks11,817

Loansandadvancestobanks11,852

Liabilitiestobanks11,852


Other Assets

Otherassetsamountingto€30,622thousand(previousyear€22,348thousand)essentiallyincludeclaimsfortaxrefundsintheamountof€17,036thousandaswellasclaimsagainstthetaxauthorityof€6,830thousand,reinsurancepoliciesof€5,687thousandandassociatedcompaniesof€2,453thousand.

Foreign Currency

Thetotalassetsinforeigncurrencyonthebalancesheetdatecometo€68,360thousand(previousyear:€71,134thousand).

Liabilitiesinforeigncurrencyonthebalancesheetdatewere€301,493thousand(previousyear:€130,386thousand).

Subordinated Liabilities

Incaseofinsolvencyorliquidation,subordinatedliabilitiesamountingto€27,724thousand(previousyear:€27,724thousand)mayberepaidonlyafterallcreditorsthatarenotsubordinatedhavebeenpaidoff.Uptothatpointthereisnorepaymentobligationoranyclaimtointerestpayments.Interestexpensesforsubordinatedliabilitiesinthefinancialyearremainedunchangedat€1,916thousand.

Subordinated Assets


Loansandadvancestobanks 195,513 247,241

thereof:subordinated 0 0

Loansandadvancestoclients 1,390,181 1,236,301


Debtsecuritiesandotherfixedincomesecurities 160,215 148,357


Shareholdings 42,346 30,657

thereof:subordinated 2,002 2,002

Amount in thousand euros (nominal) Interest rate Maturity

12.000 6.90 31/07/2018

5.000 7.10 10/09/2018

5.000 7.21 29/08/2018

5.000 7.45 07/08/2018


Other Liabilities

Otherliabilitiesamountingto€31,578thousand(previousyear:€14,943thousand)mainlycontainliabilitiesfromvariationmarginsof€12,095thousand,liabilitiestotaxauthoritiesof€9,000thousandandprovisionsforprofitparticipationcapitalof€3,109thousand.

Statement of Changes in Group Equity

in thousand euros

Asper01/01/2015 281,282

Profitdistributionin2015 -22,000

Allocationtocapitalreserve 22,000

Changeinretainedearnings 0

Adjustmentsforminorityinterests -17

Groupprofit 23,000

Asper31/12/2015 304,265

Asper01/01/2016 304,265

Profitdistributionin2016 -23,000

Allocationtocapitalreserve 11,500

Changeinretainedearnings 2

Adjustmentsforminorityinterests -39

Groupprofit 55,000

Asper31/12/2016 347,728


83

Off-Balance Sheet Transactions

Contingent liabilitiesIntheordinarycourseofbusiness,BankhausLampeKGregularlyassumescreditguarantees,otherguaranteesandlettersofcredit.Asaconsequenceoftheseagreements,itisnecessarythatBankhausLampeKGmakespaymentstothebeneficiaryifsomeoneelsedoesnotfulfilhisorherobligationsorpaymentsaccordingtoagreement.Thetablebelowlistsallpotentialpaymentsfromcreditguarantees,otherguaranteesandlettersofcreditaftertakingaccountofanycashcollaterals(€5,310thousand),ifapplicable.

Theamountsstatedabovedonotreflectthecashflowsexpectedfromtheseagreementsinfuturesincemanyofthemexpirewithoutbeingcalledupon.Itispossiblethataprovisionofcollateralisdemandedinordertoreducethecreditriskofthisobligation.Cashdepositsreceivedforcontingentliabilitiesarerecognisedinthebalancesheetasliabilities.Theprobabilityofapossibleclaimontheseliabilitiesisconsideredtobeverylow.Ifafullorpartialclaimisexpectedintheeventofadeteriorationintheborrower‘screditquality,provisionsaresetaside.Provisionsforcontingentliabilitiestotalled€3,083thousandasat31December2016.

Irrevocable lending commitmentsBankhausLampeKGmakesirrevocablelendingcommitmentsinordertomeetitsclients’financingrequirements.TheportionsofgrantedcommitmentswhichwerenotdrawndownareincludedintheirrevocablelendingcommitmentsandcannotberevokedbyBankhausLampeKG.Theselendingcommitmentsaredisclosedattheirnominalvalueaftertakingaccountofcashcollaterals.Theamountslistedbelowthebalancesheetdonotrepresentexpectedfuturecashflowssincemanyoftheseagreementswillexpirewithoutbeingdrawndown.Irrevocablelendingcommitmentsarenotshowninthebalancesheetyetaretakenintoconsiderationinthemonitoringofcreditrisks.Onthebalancesheetdatetheirrevocablelendingcommitmentsamountto€96.3million.

Other financial obligationsAsatthebalancesheetdate,theannualfinancialobligationsresultingfromtenancyagreements,servicecontractsandotherlicenceagreementsamountto€33.8million,withresidualtermsofuptofiveyears.

31/12/2016 31/12/2015

2,882 7,397

38,885 41,536

33,199 31,533

Creditguarantees

Otherguaranteesand

warranties

Lettersofcredit


84

Resultsontheprofitandlossaccountfrominterestincome,currentincomefromequityandothervariable-yieldsecurities,earningsfromshareholdingsinassociatedcompanies,profittransferagreements,commissionincome,netearningsfromfinancialtransactionsandotheroperatingincomeareessentiallyofdomesticorigin.

Duetothepersistentlow-interestphase,atypicalinterestrates(negativeinterestrates)arepossible.BankhausLampeKGthereforestatesnegativeinterestratesfromreceivablesasinterestincome(€1.295thousand)andnegativeinterestratesfromliabilitiesasinterestexpenses(€1.222thousand).

Other Operating Income

Otheroperatingincomeintheamountof€8,374thousandessentiallyincludestaxrefunds(€2,677thousand),reversalsofprovisions(€1,668thousand)andincomefromrentalandleasecontracts(€839thousand).

Other Operating Expenses

Otheroperatingexpensesintheamountof€5,845thousandessentiallyincludesearningsorexpensesfromcurrencyconversion(€1,782thousand),expensesforreinsurances(€1,332thousand),allocationstoprovisions(€634thousand)andinterest-relatedeffectsonpensionprovisions(€345thousand).

Astheparentcompany,BankhausLampeKGintendstodistributeitsnetprofitof€55.0milliontoitsshareholders.

Notes to the Group Profit and Loss Account

Annual Report 2016

Equity interest in

the company %

Equity of the company as per

31/12/2016 in thousand

euros

Result for the financial

year in thousand

euros

BDHBiodieselHamburgGmbH,Hamburg5) 95.00 887 -200

BTFBeteiligungs-undTreuhandgesellschaftmbH,Frankfurt/Main1)2) 100.00 52 0

CEEFundAdvisoryGmbH,Hamburg5) 100.00 -2,349 -1,062

CEEManagementGmbH,Hamburg5) 99.00 224 198

CEENaturalRessourcesGmbH,Hamburg5) 100.00 -201 -205

CEEOperationsGmbH,Hamburg5) 100.00 45 0

CEETIMBAUSAManagementS.a.r.l.,Munsbach(Luxembourg) 5) 100.00 13 0

CEEProjekteVerwaltungsGmbH,Hamburg 5) 100.00 25 0

DALEInvestmentAdvisorsGmbH,Vienna 61.00 1,269 927

EquityInvestIIGmbH,Dusseldorf 100.00 25 0

EquityInvestmentManagementIIGmbH,Dusseldorf 100.00 25 0

komm.passionGmbH,Dusseldorf4) 25.51 542 83

LampeAssetManagementGmbH,Dusseldorf1)2) 100.00 3,000 0

LampeBeteiligungsgesellschaftmbH,Dusseldorf1)2) 100.00 1,100 0

LampeCapitalNorthAmericaLLC,NewYork7) 100.00 4,1508) 1248)

LampeCapitalUKLimited,London7) 100.00 3533) 533)

LampeCFDevelopmentQuattroGmbH&Co.KG,Hamburg5) 100.00 9,703 2,164

LampeCFDevelopmentQuattroVerwaltungsGmbH,Hamburg5) 100.00 28 0

LampeCreditAdvisorsGmbH,Dusseldorf 100.00 1,021 8

LampeCreditAdvisors(Austria)GmbH,Vienna6) 100.00 61 -9

LampeEquityManagementGmbH,Hamburg1)2) 100.00 1,000 0

LampeImmobilienGmbH&Co.KG,Dusseldorf 100.00 51 0

LampeImmobilienVerwaltungsGmbH,Dusseldorf 100.00 25 -5

LampeInternationalS.A.,Luxembourg 100.00 250 0

LampeInvestmentManagementGmbH,Hamburg5) 94.00 -45 -57

Other Information

List of Equity Interests and Affiliated Companies

BankhausLampeKGholdsadirectorindirectinterestofatleast20%inthefollowingcompaniesorexceeds5%ofvotingrightswithholdingsinlargecorporations.


Equity interest in

the company %

Equity of the company as per

31/12/2016 in thousand

euros

Result for the financial

year in thousand

euros

LampePrivateAdvisoryGmbH(previouslyPoseidonBeteiligungs-GmbH),Bielefeld1)2)

100.00 52 0

LampePrivatinvestManagementGmbH,Hamburg5) 100.00 -443 -493

LampePrivatinvestVerwaltungsGmbH,Hamburg5) 100.00 33 5

LampeUIBeteiligungsGmbH,Dusseldorf 100.00 24,631 66

LampeUIHoldingGmbH&Co.KG,Dusseldorf 100.00 5,917 5,870

LampeVermögenstreuhandGmbHi.L.,Dusseldorf1)2) 100.00 23 -3

LampeVerwaltungs-GmbH,Dusseldorf 100.00 6,084 450

LBVenturesGmbH,Dusseldorf4) 100.00 18 -7

LIImmobilienVerwaltungsGmbH,Dusseldorf4) 100.00 27 2

LPMETWInvestVerwaltungsGmbH,Hamburg5) 20.00 25 0

LPMETWTManagementGmbH,Hamburg5) 100.00 25 0

SEWBeteiligungsVerwaltungsGmbH,Hagen4) 51.00 38 -2

TETRARCHAktiengesellschaft,Dusseldorf1)2) 100.00 50 0

TWGTanklagerWilhelmsburgGmbH,Hamburg 95.00 3,672 0

UnterstützungskasseGmbHderBankhausLampeKG,Bielefeld 100.00 26 0

VilmarisManagementGmbH,Hamburg5) 100.00 84 19

VilmarisPrivateInvestorsVerwaltungsGmbH,Hamburg5) 100.00 45 2

1) A profit-and-loss transfer agreement exists with Bankhaus Lampe KG2) Exemption pursuant to Section 264 Paragraph 4 HGB3) Amount in GBP4) Indirectly via Lampe Beteiligungsgesellschaft mbH

5) Indirectly via Lampe Equity Management GmbH6) Indirectly via Lampe Credit Advisors GmbH7) Indirectly via Lampe Verwaltungs-GmbH8) Amount in USD


Seats in Statutory Supervisory Bodies

Fees for the Auditor

Thefeesoftheauditorcomprisethefollowingitems(inthousand€):

Forward Transactions

Forwardtransactionsthatwerenotyetcarriedoutonthebalancesheetdatemainlyincludethefollowingtypesoftransactions:

// Interestrate-relatedtransactionsForwardtransactionsoninterestrateinstruments,interest-rateforwardtransactions,interestrateswaps,interest-ratefuturescontracts,optiondealingsandoptioncontractsoninterestratesandinterestrateindices

//� Exchangerate-relatedtransactions Forwardexchangetransactions,currencyswaps,optiondealingsandoptioncontractsonforeign

exchangerates,foreignexchangeandpreciousmetalsfuturescontracts//�� Othertransactions

Equityforwardtransactions,indexforwardcontracts,optiondealingsandoptioncontractsonsharesandshareindices

Theabovetransactionshavebeencarriedoutforthemostparttocoverfluctuationsofinterestandexchangerates,aswellasmarketpricesfortradingtransactions.

Name Company Function

Prof.Dr.StephanSchüller AarealBankAG,Wiesbaden SupervisoryboardUniversal-Investment-GesellschaftmbH,Frankfurt/Main

Supervisoryboard

1,044.5 849.8

595.2 469.0312.5 158.4

136.8

222.4

31/12/2016 31/12/2015

OtherfeesAuditingfees Otherconsultingfees


Remuneration of Executive Bodies

PursuanttoSection286Paragraph4HGB,wedispensedwithdisclosingtheremunerationofactiveandformergeneralpartners,aswellastheprovisionsmadeforthisgroupofpersons.

Themembersoftheadvisoryboardreceivedloansforatotalamountof€8.3million.Theremunerationforthemembersoftheadvisoryboardcameto€327thousand.

General Partners

Prof.Dr.StephanSchüller,Banker,SpokesmanDr.NicolasBlanchard,BankerWernerSchuster,Banker

31/12/2016

in million €Nominal amount

Positive market values

Negative market values

OTC productsInterestrate-basedtransactions 6,842 173 213

Exchangerate-basedtransactions 2,053 34 37

Othertransactions 185 3 1

Exchange-traded productsInterestrate-basedtransactions 236 0 3

Othertransactions 210 1 5

Total 9,527 211 256

Members of the Management Board and Advisory Board

669Numberofemployees

Number of Employees

Theaveragenumberofemployeesduringtheyearwasasfollows:

117part-timeemployees

Advisory Board of Bankhaus Lampe KG

Dr.ErnstF.Schröder,Businessman,ChairmanDr.AlbertChristmann,Businessman,Vice ChairmanDr.AlfredOetker,BusinessmanDr.HaraldSchaub,BusinessmanDr.ArntVespermann,Businessman

552full-timeemployees

Consolidated Financial Statements Annex 89

Cash Flow Statement

in million € 31/12/2016

Net income 55

Non-cash items in net income and adjustments to reconcile net income

with net cash provided by operating activities

+/-Depreciation,valuationallowances,write-upsofreceivablesandfixedassets 30

+/-Changeinaccruals 26

+/-Changeinothernon-cashincome/expenses 23

+/-Gains/lossesfromthesaleoffixedassets -108

+/-Otheradjustments(onbalance) -23

Subtotal -52

Change in assets and liabilities from operating activities

+/-Changeinloansandadvancestobanks 52

+/-Changeinloansandadvancestoclients -17

+/-Changeinsecurities(insofarasnotfinancialassets) -12

+/-Changeintradingportfolio -2

+/-Changeinotherassetsfromongoingoperatingactivities -23

+/-Changeinliabilitiesowedtobanks 39

+/-Changeinliabilitiesowedtoclients 44

+/-Changeinsecuritisedliabilities 0

+/-Changeinotherliabilitiesfromoperatingactivities 16

+/-Interestexpenses/income -28

+/-Expenses/incomefromextraordinaryitems 0

+/-Incometax 11

+Interestanddividendsreceived 71

-Interestpaid -26

+Extraordinarycashoutflow 0

-Extraordinarycashoutflow 0

+/-Incometaxpayments -9

Cash flow from current business activities 119

+Cashinflowfromthedisposaloffinancialassets -9

-Cashoutflowforinvestmentsinfinancialassets 0

+Cashinflowfromthedisposalofproperty,plantandequipment 0

-Cashoutflowforinvestmentsinproperty,plantandequipment -3

+Cashinflowfromthedisposalofintangibleassets 1

-Cashoutflowforinvestmentsinintangiblefixedassets -3

+Cashinflowfromdisposalsofconsolidatedcompanies 0

-Cashoutflowfromadditionstoconsolidatedcompanies 0

+/-Changeincashflowfromotherinvestmentactivities(balance) 0

+Cashinflowfromextraordinaryitems 0

-Cashoutflowfromextraordinaryitems 0

Cash flow from investment activities -14


Additional disclosures in accordance with Section 26a of the German Banking Act in conjunction with Section 64r of the German Banking Act as per 31 December 2016

Therequirementsforcountry-by-countryreportinglaiddowninArticle89oftheEUDirective2013/36/EU(CapitalRequirementDirective,CRDIV)wasimplementedinGermanlawinSection26aoftheGermanBankingAct(KWG).

Thedisclosurerequirementspertaintoinformationregardingdomicile,salesandwage/salaryrecipientsoftheforeignsubsidiaries,whichaspartofthefullconsolidationareincludedintheconsolidatedfinancialstatements.

Theoperatingresultexcludingvalueimpairmentsandadministrationcosts,includingnetinterestincome,netcommissionincome,tradingresultandotheroperatingincomearedrawnuponasrevenue.

+Receiptsfromadditionsofequityfromshareholdersofparentcompany 12

+Receiptsfromadditionsofequityfromothershareholders 0

-Cashoutflowsfromequityreductionstoshareholdersofparentcompany -23

-Cashoutflowsfromequityreductionstoothershareholders 0

+Cashinflowfromextraordinaryitems 0

-Cashoutflowfromextraordinaryitems 0

-Dividendspaidtoshareholdersofparentcompany 0

-Dividendspaidtoothershareholders 0

+/-Changeincashflowfromothercapital(balance) 0

Cash flow from financing activities -11

Cash and cash equivalents at the end of the previous period 456

Cashflowfromcurrentbusinessactivities 119

Cashflowfrominvestmentactivities -14

Cashflowfromfinancingactivities -11

Changeinthegroupofconsolidatedcompanies

Cash and cash equivalents at the end of period 550

Composition of cash and cash equivalents

Cashbalance 1

Balanceswithcentralbanks 549

Consolidated Financial Statements Annex 91

Company DALEInvestmentAdvisorsGmbH

Typeofbusiness Financialservicescompany

Locationofregisteredoffice Vienna(Austria)

Revenuein€million 2.6

Numberofwage/salaryrecipients 7.0

Profitbeforetaxin€million 1.2

Taxesonprofitin€million 0.3

Publicsubsidiesreceived none

General Partners

Prof.Dr.StephanSchüller,SpokesmanDr.NicolasBlanchardUteGerbauletWernerSchuster

Advisory Board

Dr.ErnstF.Schröder,ChairmanDr.AlbertChristmann GeneralpartnerofDr.AugustOetkerKG,BielefeldDr.AlfredOetker PartnerandDeputyChairmanoftheBoardof Dr.AugustOetkerKG,BielefeldDr.HaraldSchaub MemberoftheManagementBoard ChemischeFabrikBudenheimKG,BudenheimDr.ArntVespermann MemberoftheManagementBoardHamburg

SüdamerikanischeDampfschifffahrts- GesellschaftKG,Hamburg

Limited Partners

Dr.AugustOetkerKGRudolfSchweizerDr.h.c.AugustOetkerLudwigGrafDouglasChristianOetkerRichardOetkerDr.AlfredOetkerFerdinandOetkerJuliaOetker

Members of the Executive Committee

MichaelC.MaletzkyFrank-PeterMartinOliverPlaack

The Boards

AsperApril2017


Addresses

Bankhaus Lampe KG

BerlinCarmerstraße 1310623 BerlinPhone +49 30 319002-0Fax +49 30 319002-324

BielefeldAlter Markt 333602 BielefeldPhone +49 521 582-0Fax +49 521 582-1195

BonnHeinrich-Brüning-Straße 1653113 BonnPhone +49 228 850262-0Fax +49 228 850262-99

BremenAltenwall 2128195 BremenPhone +49 421 985388-0Fax +49 421 985388-99

DresdenKäthe-Kollwitz-Ufer 8201309 DresdenPhone +49 351 207815-0Fax +49 351 207815-29

DusseldorfJägerhofstraße 1040479 DüsseldorfPhone +49 211 4952-0Fax +49 211 4952-111

Frankfurt/MainFreiherr-vom-Stein-Straße 6560323 Frankfurt/MainPhone +49 69 97119-0Fax +49 69 97119-119

HamburgBallindamm 1120095 HamburgPhone +49 40 302904-0Fax +49 40 302904-18

MunichBrienner Straße 2980333 MünchenPhone +49 89 29035-600Fax +49 89 29035-799

MünsterDomplatz 4148143 MünsterPhone +49 251 41833-0Fax +49 251 41833-50

OsnabruckSchloßstraße 28/3049074 OsnabrückPhone +49 541 580537-0Fax +49 541 580537-99

StuttgartBüchsenstraße 2870174 StuttgartPhone +49 711 933008-0Fax +49 711 933008-99


Lampe Asset Management GmbHJägerhofstraße 1040479 DüsseldorfPhone +49 211 95742-500Fax +49 211 95742-570

Bockenheimer Anlage 4460322 Frankfurt/MainPhone +49 69 2444878-0Fax +49 69 2444878-99

Lampe Beteiligungsgesellschaft mbHJägerhofstraße 1040479 DüsseldorfPhone +49 211 4952-197Fax +49 211 4952-188

Lampe Capital Finance GmbHJägerhofstraße 1040479 DüsseldorfPhone +49 211 4952-669Fax +49 211 4952-188

Lampe Credit Advisors GmbHJägerhofstraße 1040479 DüsseldorfPhone +49 211 4952-390Fax +49 211 4952-849

Lampe Equity Management GmbHSpeersort 1020095 HamburgPhone +49 40 688788-0Fax +49 40 688788-70

Lampe Privatinvest Management GmbHSpeersort 1020095 HamburgPhone +49 40 688788-0Fax +49 40 688788-70

Lampe Capital UK Limited2 Savile RowLondon W1S 3PAUnited KingdomPhone +44 203 405-1037

DALE Investment Advisors GmbHWollzeile 16/91010 WienAustriaPhone +43 1 8903507-0Fax +43 1 8903507-50

Lampe Capital North America LLC712 5th Avenue, 28th FloorNew York, NY 10019USAPhone +1 212 218-7410

Addresses 95

Print

Druckstudio GmbH Prof.-Oehler-Straße 10 40589 Düsseldorfwww.druckstudiogruppe.com

Layout and typesetting

HOCH5 GmbH & Co. KGBorriesstraße 1132257 Bündewww.hoch5.com

Photo credits

Bankhaus Lampe KG


Published by

Bankhaus�Lampe�KGCorporate�CommunicationsJägerhofstraße�1040479�DüsseldorfPhone�+49�211�4952-0

www.bankhaus-lampe.de/en

Documents

Annual Report 2016 - Bankhaus Lampe · Bankhaus Lampe is an independent private bank that was established in Eastern Westphalia in 1852. It serves wealthy private, corporate and institutional