ANCIENT ROOTS FOR NEW HORIZONS

Annual Report 2016

patrimony 1873 |  3

Johannes Blaeu

(23 September 1596 – 28 May 1673)

Dutch cartographer, born in Alkmaar, son of cartographer

Willelm Janszoon Blaeu, carried out a radical review of the globes

between 1645 and 1648, bringing about numerous changes.

Dutch Globes from the mid 1600s

The two globes, works of celebrated cartographer Johannes Blaeu in the first half of the 17th century,

were famous for being the biggest ever made at that time. Splendidly decorated and rich with

references not only geographical, but also cultural, anthropological and botanical, they were originally

created as luxury decorative objects for the libraries of the nobility and art merchants.

The work of Blaeu created two cartographic documents among the most advanced of their time,

an authentic three-dimensional representation of the geographical and astronomical discoveries

of the 17th century, sparking a new era in the world of celestial and terrestrial cartography.

Terrestrial GlobeGlobus Orbis Terrae, 68.4 cm in diameter

This version is especially renowned for the new delineation of Australia, which includes the discovery

of Tasmania. Blaeu also completely redefined the entire Indian archipelago. In the western

hemisphere he changed North East Canada to include the discovery of Thomas Button and William

Baffin, and he redrew the American coastline identifying California as an island.

Celestial GlobeGlobus Orbis Coelestis, 68.5 cm in diameter

Blaeu was a disciple of the famous Danish astronomer Tycho Brahe whose influence

is demonstrated in the globe’s astronomical detail. The fixed stars represent

the observations of Brahe, and the southern hemisphere stars were based on the findings

of Frederick De Houtman.

Patrimony, the guiding star of our worlds

patrimony 1873 |  5

TRADITION, DEDICATION, PROTECTION 7

PATRIMONY 1873 8

MANAGEMENT REPORT 2016 11

PATRIMONY 1873 ACCOUNTS 2016 15

BALANCE SHEET AS OF 31ST DECEMBER 2016 16

PROFIT AND LOSS STATEMENT 2016 17

PRESENTATION OF THE STATEMENT OF CHANGES IN EQUITY 18

NOTES TO THE PATRIMONY 1873 ACCOUNTS 19

1.  Commentaries regarding the business activities  19

  2.  Accounting and valuation principles  19

  3.  Risk control and management  21

  4.  Information on the balance sheet  23

REPORT OF THE STATUTORY AUDITOR ON THE FINANCIAL STATEMENT 30

Contents

patrimony 1873 |  7

TRADITION, DEDICATION, PROTECTION

Patrimony 1873 is the response of the EFG Group to the changing needs of discerning 

clients, with regard to the macro-economic and international regulatory environment in 

constant evolution. 

Patrimony 1873  is an independent wealth management Company, 100% owned by 

BSI SA Lugano whose ultimate shareholder is EFG International AG, which represents its 

Swiss tradition, its equidistance in respect to the world of banking and subsequent free-

dom of judgment, its dedication to clients and the precise knowledge of their values, as its 

success factors. 

Patrimony 1873 offers its clients a wide and specialized range of services aimed at the 

protection and coordinated management of assets analyzed as a whole. 

Patrimony 1873 received July 23rd, 2012 FINMA authorization to act in the capacity of 

Securities Dealer.

Dear readers,

2016 was a very demanding year in many ways, yet we can claim we have been able to successfully 

face the obstacles encountered on our journey. 

With the acquisition of BSI Group by EFG International, successfully completed in October, Patrimony 1873 

too has entered a new era.

Following the change in ownership of our controlling Company, at the end of 2016 changes occurred 

at the top management of Patrimony 1873. A new board of directors has been appointed, with 

the addition of three members of EFG International Group: Joachim H. Straehle, appointed Chairman, 

Peter Fischer and Adrian Kyriazi appointed members. Moreover, Agostino Ferrazzini, former CEO 

of Patrimony, has been appointed Deputy Chairman. Ermanno Gajo and Pierangelo Merati, former 

members of the Board  of Directors from 2013, have been confirmed in their roles. An important change 

has also taken place in the Executive Committee with the appointment of Paolo Filippini, former CFO 

of the Company, as new CEO. 

We believe the strong commitment of EFG International, along with these changes, will lay the foundations 

for a further development of Patrimony 1873 as independent wealth management Company.

A heartfelt thank you to the members of the outgoing Board of Directors who, in just four years and 

with the Executive Committee, have succeeded in making Patrimony 1873 an important and recognized

 reality of Ticino and the Swiss financial sector. 

We now intend to ensure the continuity of the excellent work performed so far and to substantially 

contribute to the growth of Patrimony 1873. The challenges ahead of us are many, but many are also 

the opportunities and we are confident we will be able to respond to current and future customer 

needs in the best possible way. 

This year we also extend our heartfelt thankyou to all our customers for the trust they have 

placed in us, customers to whom we renew our commitment towards professionalism and excellence. 

We also wish to take this opportunity to thank our partners and all our employees. 

J.H. Straehle  P. Filippini

Chairman   CEO

Patrimony 1873

patrimony 1873 |  9

BOARD OF DIRECTORS

J.H. Straehle (Chairman)

A. Ferrazzini (Deputy Chairman)

P. Fischer (Member)

E. Gajo (Member)*

A. Kyriazi (Member)

P. Merati (Member)*

* independent member in accordance with FINMA circular 2008/24

INTERNAL AUDIT (BSI)

N. Guscetti 

EXECUTIVE COMMITTEE

P.  Filippini (CEO)

M. Campana (CIO)

M. Binda (Senior Partner)

G.  Cerea (Senior Partner)

L.  Clementi (Senior Partner)

Corporate Wealth Management

M. Binda

Family Wealth Management

G. Cerea

Asset AllocationM. Campana (CIO)

Corporate CenterP. Filippini (a. i.)

CEOP. Filippini

BOARD OF DIRECTORS

patrimony 1873 |  11

Management Report 2016

MACRO ECONOMIC BACKGROUND AND FINANCIAL MARKET

2016 was marked by a nervous start, as the Federal Re-serve  had  just  raised  interest  rates  in  December  2015 and was preparing to raise them further in 2016, revers-ing the monetary policy despite fears of a global reces-sion.  However,  these  expectations  were  disregarded and Fed has only raised rates once in December. The  second  part  of  the  year  saw  three  events  which have  surprised  the  world.  First,  the  United  Kingdom voted its exit from the European Union in a referendum. Secondly,  Donald  Trump  was  elected  as  President  of the  United  States  with  a  very  expansionary  economic program, based on investments on infrastructures and tax  cuts  to  be  financed  by  increasing  the  deficit,  and which will lead to a higher growth in aggregate demand and  an  increased  inflation.  Finally,  the  agreement  be-tween OPEC countries on oil production cut. After two years of overproduction and low prices, the agreement has in fact pushed the price of oil to its highest levels in over a year.Meanwhile,  geopolitical  tensions  heightened  with  the launch of a huge offensive against Isis. This resulted in a  large  flow  of  migrants  towards  Europe  in  search  of humanitarian  protection,  a  fact  that  has  encouraged the  growth  of  populist  parties  across  Europe  and makes the political situation of major European coun-tries uncertain, a few months away from important elec-tions.

With regards to the equity markets, 2016 got off to a bad start, with stock markets dragged down by fears of a  global  recession.  They  then  reversed  course  follow-ing the prudent attitude of the Fed and the ultra-expan-sionary  behaviour  of  the  ECB.  Despite  a  few  shocks, the  markets  ended  the  year  in  positive  territory,  al-though performance was mixed across the world. Some  emerging  markets  played  the  leading  role,  fol-lowed  by  the  Anglo-Saxon  ones,  primarily  the  United States,  while  in  continental  Europe,  Germany  and France went well,  Italy and Spain  less well. Switzerland ended the year negatively, held back by the disappoint-ing performance of pharmaceutical and banking stocks. 

As for the bond market, performance was moderately positive in 2016. Central banks’ interventionist policies in developed countries and the renewed confidence in emerging  markets  have  supported  all  fixed  income segments. The macroeconomic outlook changed in the latter part of  the  year  and  this  had  strong  implications  on  the bond  market.  The  best  prospects  of  inflation  and  the newly  found  sustainability  in  growth  led  to  a  less  ex-pansionary monetary policy, resulting in a sharp rise in yields on all maturities and markets.

On the currency markets, 2016 saw increased volatil-ity and just a few recognizable trends. One of these was the  rise  of  the  US  dollar  against  developed  countries’ currencies and, most importantly, against those of emerg-ing countries.The  Swiss  Franc  remains  strong  and  could  remain  so for several quarters as a results of high political uncer-tainty in Europe. Looking  at  2017,  the  macroeconomic  and  geopolitical picture remains extremely controversial. The global eco-nomic  recovery,  with  growth  estimated  at  +3,3%  for 2017, remains below the average long term values, de-spite  the  cost  of  money  and  energy  are  still  historically very  low.  The  recovery  of  commodities  and  the  price  of money  at  its  absolute  minimum  have  increasingly  fa-voured developing countries more than advanced coun-tries, in contrast to what was expected at the beginning of the year.As said, the recovery of the raw materials listing, oil first and  foremost,  as  well  as  the  rising  cost  of  labour  in  the United States and in some important emerging countries are a clear sign that the long period of deflation is nearing its conclusion.

ACTIVITY REPORT

2016 was a year of major changes. Events that reached our  shareholder,  in  particular  the  communications  of FINMA,  the  Swiss  Financial  Market  Supervisory  Au-thority,  had  an  impact  also  on  the  development  pro-jects of Patrimony 1873. Nevertheless, our Company’s open-architecture  model  proved  once  again  to  be  ef-fective  and  allowed  us  to  successfully  overcome  the many  challenges  we  faced,  as  well  as  to  provide  our customers with quality products and services. The arrival of EFG International, the new owner of the BSI Group,  allowed  Patrimony  1873  to  revamp  its  strategy, strengthening internal expertise and reassuring custom-ers  and  employees  and  we  believe  that,  thanks  to  the adopted measures, 2017 will be a year of activity revival to the benefit of our customers and staff. 

patrimony 1873 |  13

FINANCIAL DATA

The financial results of Patrimony 1873 for 2016 are pos-itive. The Company has a license as securities dealer and thus the  main  activity  remains  asset  management.  At  year-end, Patrimony 1873 Assets under Management (AuM) amounted to CHF 5.9 billion (2015: CHF 6.5 billion). This reduction  is  due  to  the  combination  of  various  negative factors coupled with the appreciation of the Swiss Franc over major currencies. As at 31.12.2016, total revenues amounted  to  CHF  28.5  million  (2015:  33.8  million)  and the main item is represented by commission and servic-es.  Operating  expenses  amount  to  CHF  19.6  million (2015:  19.3  million)  stable  in  respect  to  the  previous year.  Operating  result  thus  amounted  to  CHF  6.5  mil-lion (2015: CHF 14.7 million), while net profit amounted to CHF 7.1 million (2015: CHF 12.1 million).As  at  31.12.2016,  total  assets  amounted  to  CHF  81.5 million (2015: CHF 101.4 million). At the end of the year under review, the Company had equity before appropria-tion of profit of CHF 32.1 million (2015: 35.1 million) and a  Total  Capital  Ratio  of  42,2%  (2015:  40.8%),  which shows that despite a difficult 2016 due to external events, the Company has strengthened its financial solidity.

Lugano, 11th April 2017  

For the Board  For the ExecutiveOf Directors    Committee

J.H. Straehle (Chairman)  P. Filippini (CEO)

  M. Campana (CIO)  M. Binda (Senior Partner)  G. Cerea (Senior Partner)  L. Clementi (Senior Partner)

patrimony 1873 |  15

Accounts 2016

BALANCE SHEET AS OF 31ST DECEMBER 2016

in SFR 1’000Note 31.12.2016 31.12.2015 Variation in %

Assets

Liquid assets 4’481 8’846 -49%

Amounts due from banks 4.9 76’656 92’300 -17%

Amounts due from customers 4.1 / 4.9 63 1 6’200%

Accrued income and prepaid expenses 84 124 -32%

Tangible fixed assets 4.2 48 - 100%

Other assets 4.3 172 107 61%

Total assets 81’504 101’378 -20%

Total subordinated claims - - -

of which subject to mandatory conversion and/or debt waiver - - -

Liabilities

Amounts due to banks 4.9 27’694 25’077 10%

Amounts due in respect of customer deposits 16’125 34’556 -53%

Accrued expenses and deferred income 5’242 6’465 -19%

Other liabilities 4.3 303 217 -40%

Provisions - - -

Reserves for general banking risks 4.6 1’540 1’540 0%

Company capital 4.7 5’000 5’000 0%

Statutory retained earnings reserve 2’500 2’297 9%

Profit carried forward 16’023 14’137 13%

Profit  7’077 12’089 -41%

Total liabilities 81’504 101’378 -20%

Total subordinated liabilities - - -

of which, subject to mandatory conversion and/or debt waiver - - -

Off-balance sheet transactions

Irrevocable commitments 4.1 46 52 -12%

patrimony 1873 |  17

PROFIT AND LOSS STATEMENT AS OF 31ST DECEMBER 2016

in SFR 1’000Note 2016 2015 Variation in %

Result from interest operations

Interest and discount income 33 38 -13%

Interest expense -11 -6 83%

Gross result from interest operations 22 32 -31%

Changes in value adjustments for default risks and losses from interest operations - -

Subtotal net result from interest operations 22 32 -31%

Result from commission business and services

Commission income from securities trading and investment activities 11’573 10’262 13%

Commission income from other services 14’895 24’459 -39%

Commission expense -418 -666 37%

Subtotal result from commission business and services 26’050 34’055 -23%

Result from trading activities and the fair value option 6.1 61 27 126%

Other result from ordinary activities

Other ordinary income - 2 100%

Other ordinary expenses -31 -118 74%

Subtotal other result from ordinary activities -31 -116 73%

Net operating result 26’102 33’998 -23%

Operating expenses

Personnel expenses 6.2 -14’396 -13’679 5%

General and administrative expenses 6.3 -5’169 -5’572 -7%

Subtotal operating expenses -19’565 -19’251 2%

Value adjustments on participations and depreciation and amortisation of tangible fixed assets and intangible assets 4.2 -5 - 100%

Changes to provisions and other value adjustments, and losses -16 -13 23%

Operating result 6’516 14’734 -56%

Extraordinary income 6.4 2’439 161 1’415%

Taxes 6.5 -1’878 -2’806 -33%

Profit/loss (result of the period) 7’077 12’089 -41%

Appropriation of profit

Profit 7’077 12’089 -41%

Profit carried forward 16’023 14’137 13%

Balance sheet profit 23’100 26’226 -12%

Proposal of the Board of Directors

Ordinary dividend on share capital 7’000 10’000 -

Allocation to general legal reserve - 203 -67%

Balance to be carried forward 16’100 16’023 13%

Total 23’100 26’226 78%

PRESENTATION OF THE STATEMENT OF CHANGES IN EQUITY

in SFR 1’000

Companycapital

Capitalreserve

Statutory retainedearnings

reserve

Reserves for general

bankingrisks

Voluntaryretained earningsreserves

and profit/loss carried

forward

Own shares(negative

item)

Result of the

period Total

Equity at start of current period 5’000 - 2’297 1’540 14’137 - 12’089 35’063

Appropriation of profit 2015 - - - - - - - -

– Assigment to statutory retained earnings reserve - - 203 - - - -203 -

– Retained earnings - - - - 1’886 - -1’886 -

– Dividend - - - - - - -10’000 -10’000

Profit / loss (result of the period) - - - - - - 7’077 7’077

Equity at end of current period 5’000 - 2’500 1’540 16’023 - 7’077 32’140

patrimony 1873 |  19

NOTES TO THE PATRIMONY 1873 SA ACCOUNTS

The  following  notes  are  referred  to  the  situation  as  at 31st December 2016.

1. COMMENTARIES REGARDING THE BUSINESS ACTIVITIES

GENERAL INFORMATIONPatrimony 1873 SA, Lugano (hereinafter “The Company”), is 100% owned by BSI SA, Lugano, whose ultimate share-holder is EFG International AG, Zurich (EFG). EFG  is  a  private  banking  group  offering  private  banking and  asset  management  services.  It  operates  in  around 40 locations worldwide, with about 3’500 employees. Its registered shares (Symbol: EFGN) are listed on the SIX Swiss Exchange. At the end of 2016, the staff of the Company converted to full-time equivalent (FTEs), is 45.9 (2015: 50.0). The Com-pany does not have participations.

MAIN ACTIVITIES The  Company  offers  its  services  to  discerning  and  so-phisticated, private and institutional clients both domes-tic  and  international,  in  compliance  with  the  regulatory framework of the destination countries. As a wealth man-agement  Company  of  the  EFG  Group,  Patrimony  1873 SA  offers  a  wide  range  of  services  for  the  protection, global  management  and  risk  management  of  complex and diverse assets at an international level. Moreover, as an independent centre of expertise, Patrimony 1873 SA can  receive  client  mandates  to  achieve  specific  objec-tives,  by  identifying,  selecting,  and  coordinating  profes-sional service providers.

BALANCE SHEET TRANSACTIONSBalance sheet transactions have a marginal role. However, the  results  from  operating  commissions  and  services greatly contribute to the operating incomes of the Compa-ny. Bank deposits are made only at leading Swiss institu-tions or OECD countries. 

OUTSOURCINGPatrimony 1873 outsources to BSI SA the internal audit, development  and  maintenance  of  its  IT  environment, back office activities and accounting. The Company com-plies with the  legal provisions on outsourcing contained in FINMA circular 08/7.

VALUE ADDED TAX (VAT) Patrimony 1873 belongs to the VAT group of BSI SA and is thus jointly and severally liable for commitments aris-ing from this tax. 

2. ACCOUNTING AND VALUATION POLICIES

GENERAL PRINCIPLESThe accounting, balance sheet entry and valuation criteria conform to the provisions of the Swiss Code of Obligations, the Swiss Banking Law and the Directives of the Swiss Fi-nancial Market Supervisory Authority FINMA.

RECORDING OF TRANSACTIONSAll transactions are recorded in the books of the Company on the execution date.

INDIVIDUAL ASSESSMENTThe assets and liabilities as well as off-balance operations are individually evaluated.

CONVERSION OF CURRENCYForeign currency transactions are recorded at the exchange rate of the trade date, and revaluations are recorded into the profit and loss account. Foreign currency denominated bal-ance sheet items are converted into Swiss francs at the rate of the balance sheet closing date. Conversion differences are booked directly within the Company shareholders’ equity. 

Exchange rates used for the main currencies:

31.12.2016 31.12.2015 AVG 2016 AVG 2015

USD/CHF 1.019 0.995 0.989 0.964

EUR/CHF 1.074 1.084 1.091 1.064

JPY/CHF (100) 0.870 0.827 0.908 0.797

GBP/CHF 1.254 1.476 1.330 1.470

CASH AND OTHER LIQUID ASSETS, MONEY MARKET PAPERS, DUE FROM BANKS AND LIABILITIESThese items are recorded in the balance sheet at the nom-inal value or purchase cost. Any discounts are recorded in the appropriate liabilities items.

DUE FROM CUSTOMERSLoans to customers are recorded in the balance sheet at their nominal value,  less any value adjustment for uncer-tain debts.

ACCRUALS AND DEFERRALSInterest income, interest expenses and all other income and expenses not settled during the accounting period are ac-crued  or  prepaid  in  order  to  match  the  correct  profit  and loss period.

FIXED ASSETSFixed asset acquisitions are capitalized and valued at their purchase price  if  their  intended use  is for more than one accounting period and their purchase price exceeds a min-imum of CHF 5’000. Thereafter, fixed assets are recorded at their purchase price less accumulated depreciation. De-preciation is calculated on the basis of the asset’s expect-ed useful life.

PENSION PLANSThe  accounting  complies  with  Swiss  GAAP  AAR  16  re-lating  to  the  presentation  of  accounts.  Further  details are  provided  in  point  4.4  in  the  notes  to  the  Company account.

TAXESTaxes  relating  to  the  current  accounting  period  are  esti-mated in accordance with local tax legislation and record-ed as costs for the period to which they relate. Direct taxes on  current  year  profits  payable,  but  not  yet  paid,  are  re-corded as “accrued expenses”. The accounting is in com-pliance  with  ARR  11  relating  to  the  presentation  of  ac-counts. The reserve for general banking risks is taxed and the  consequent  tax  expense  is  reported  as  “Accrued  ex-pense and deferred income”.

VALUE ADJUSTMENTS AND PROVISIONSSpecific provisions and value adjustments are made with respect to all identified risks in accordance with the prin-ciple  of  prudence.  The  value  of  such  items  is  deducted from the balance sheet assets to which they relate. Value adjustments and provisions proving to be financially un-necessary  during  the  financial  year  are  released  and 

credited to the profit and  loss statement. Provisions for latent  risk  or  other  risks  are  booked  as  liabilities  in  the balance sheet under “Value adjustment and provisions”.

RESERVES FOR GENERAL BANKING RISKSThis  item  was  created  in  accordance  with  FINMA  direc-tives on the presentation of accounts. Movements  in  the reserves for general banking risks are posted to “Changes in reserves for general banking risks”.

CONTINGENT LIABILITIES, IRREVOCABLE COMMITMENTS, CONTINGENT LIABILITIES FOR CALLS AND MARGIN LIABILITIESOff-balance sheet items are stated at nominal value. Any provisions  for  identified  risks  are  included  under  “Value adjustments and provisions”. Following the application of the banking agreement on deposit guarantees, an irrevo-cable commitment of CHF 46’000 was booked as commu-nicated by the Supervisory Authority.

CLIENT ASSETSThe value of clients’ assets under management is calculat-ed with reference to the total value of all client positions at year-end. Assets managed by the Company but deposited at third party banks are also included.

MATERIAL EVENTS AFTER THE BALANCE SHEET DATEAfter  the  balance  sheet  date,  no  event  took  place  that would lead to a correction of the financial statements.EFG  International  SA,  in  the  context  of  the  Group  re-structuring, has bought from BSI SA the participation in Patrimony 1873, SA with effective date 22 of March 2017.

3. RISK CONTROL AND MANAGEMENT

PRINCIPLESRisk management is an integral part of the business poli-cy  of  the  Company.  In  compliance  with  applicable  laws and  regulatory  requirements,  the  Company  has  estab-lished a structure of risk control and management. 

STRUCTURE AND RESPONSIBILITIES The Company has a risk management and  internal con-trols structure appropriate to the size and complexity of the business activities. These include processes and con-trols that ensure the delegation of powers and the sepa-ration of critical functions.

patrimony 1873 |  21

•  The Board of Directors monitors whether the Company has  a  clear  process  of  global  risk  management,  ap-proves risk policies and limits, and is informed quarter-ly in writing about all risk situations of the Company.

•  The Executive Committee  is  responsible  for  imple-menting the risk management process throughout the entire organization by defining the principles, risk strat-egies  and  policies,  global  limits  and  authorities  ap-proved by the Board of Directors.

•  Risk Management and Internal Control Units conduct various  independent  controls,  intervening  directly  in cases of non-compliance with limits, and reports regu-larly to the Executive Committee on the risk status. The Internal Control Unit provides and monitors data related to  commercial  performances,  and  reports  regularly  to the  Executive  Committee.  The  Risk  Management  Unit analyzes and consolidates the data and the risk informa-tion at a Company level and produces a quarterly “Glob-al Risks Report” for the Executive Committee and Board of Directors. Finally, the Risk Management and Internal Control  Units  assume  the  second-level  controls  activi-ties  for  the Family  Wealth  Management,  Asset  Alloca-tion and Corporate Wealth Management.

•  Legal & Compliance  is  responsible  for  the  manage-ment of the legal and reputational risks, and for ensur-ing that the Company complies with regulatory and le-gal requirements.

• Client Compliance is  the  unit  in  charge  for  the  fight against money laundering and terrorism financing. In this area  of  interest  is  in  charge  of  managing  reputational risk, compliance with legal regulations and compliance with the standard and  market conduct rules.

CREDIT RISKS Credit risk is the risk that a counterparty’s creditworthiness deteriorates  and  the  counterparty  becomes  insolvent  or does not pay back its liabilities. Credit risk also includes oth-er risk categories such as counterparty risk, delivery risk, concentration risk and country risk. The Company has set out various internal and Group policies that define risk gov-ernance principles, the method of calculation and risk limi-tation. The Company measures the credit risk and, through a system of  limits, defines the maximum risk exposure to groups  of  counterparties  and  monitors  compliance  with regulatory  requirements  related  to  large  exposures.  The Risk  Management  unit  carries  out  the  independent  con-trols. The Company does not currently provide lending ac-tivities to customers and does not own a property portfolio.

MARKET RISKS Market  risk  is  the  risk  of  losses  arising  from  unexpected changes  in  interest  rates,  exchange  rates,  share  prices, the prices of precious metals and commodities, as well as the corresponding expected volatility. 

The Company carries out trading operations for the clients using all financial products and their derivatives. The Com-pany has established an Asset Allocation Committee which is  responsible  for  investment  decisions  with  particular  at-tention  to  the  portfolio  structure,  the  selection  of  instru-ments as well as the risk-return of different risk profiles. 

OPERATIONAL RISKS Operational risk is the risk of loss resulting by the inadequa-cy or failure of processes, people and systems or from exter-nal events. Operational risks also include compliance risks, legal risks and reputational risks. The operational risk man-agement of the Company is under the responsibility of the Risk Management and Internal Controls units, and is mainly based on the collection and analysis of centralized operating losses, on the identification and analysis of the inherent risks in the processes and the management of corrective meas-ures. The Company creates provisions for events that could generate a financial  loss. The use and monitoring of some risk indicators selected by the Risk Management and Inter-nal Controls allow advanced assessment of any increase in the level of the risk within the Company. 

CONTROL LEVEL STRUCTURE The Company’s risk mitigation controls have a three level structure. •  First  level  controls  are  performed  by  the  line  and  are 

basic  for  carrying  out  operational  activities.  The  pur-pose is to ensure correct execution.

•  Second level controls monitor and ensure that activities are correctly carried out by the operational units. These controls are carried out by the Risk Management, Internal Control  and  Legal  &  Compliance  units  which  are  inde-pendent from the monitored unit.

•  Third level controls are conducted to verify the correct implementation and the effectiveness of the first level and second level controls. They are carried out by the Group Internal Audit unit.

4. INFORMATION ON THE BALANCE SHEET

4.1 PRESENTATION OF COLLATERAL FOR LOANS

in SFR 1’000 Type of collateral

Secured by mortgage

Other collateral Unsecured Total

Loans (before netting with value adjustments)

Amounts due from customers - - 63 63

Total at 31.12.2016 - - 63 63

Total at 31.12.2015 - - 1 1

Off-balance sheet

Irrevocable commitments - - 46 46

Total at 31.12.2016 - - 46 46

Total at 31.12.2015 - - 52 52

Grossdebt

amount

Estimated liquidation

valueof collateral

Net debt amount

Individual value

adjustments

Impaired loans / receivables - - - -

Total at 31.12.2016 - - - -

Total at 31.12.2015 - - - -

4.2 PRESENTATION OF TANGIBLE FIXED ASSETS

in SFR 1’000

Acquisitioncost

Accumulateddepreciation

Book value previous at 31.12.2015

2016Book value

as at 31.12.2016

Reclassi-fications Additions Disposals Depreciation Reversals

Other tangible fixed assets 15 -15 - - 68 - 20 - 48

Total 15 -15 - - 68 - 20 - 48

patrimony 1873 |  23

4.3 BREAKDOWN OF OTHER ASSETS AND OTHER LIABILITIES

in SFR 1’000 Other assets Other liabilities

31.12.2016 31.12.2015 31.12.2016 31.12.2015

Compensation account - - - -

Deferred income taxes recognised as assets - - - -

Amount recognised as assets in respect of employer contribution reserves - - - -

Amount recognised as assets relating to other assets from pension schemes - - - -

Negative goodwill - - - -

Tax asset/liability 71 83 130 139

Other 101 24 173 78

Total 172 107 303 217

4.4 DISCLOSURE OF LIABILITIES RELATING TO OWN PENSION SCHEMES, AND NUMBER AND NATURE OF EQUITY INSTRUMENTS OF THE COMPANY HELD BY OWN PENSION SCHEMES

in SFR 1’00031.12.2016 31.12.2015

Commitment to Pension Institution

Commitment to Pension Institution - -

Disclosures on the economic situation of own pension schemes

The “Fondazione di previdenza di BSI SA” (Foundation) provides 

pension  insurance to all employees of Patrimony, with the ex-

ception  of  interns,  trainees,  volunteers  and  collaborators  with 

fixed-term  contract  exceeding  three  months  or  an  advisory 

mandate.  Employees  with  a  fixed-term  employment  contract 

exceeding three months or a temporary or permanent advisory 

mandate  have  occupational  pension  insurance  with  a  primary 

pension institution.

The Foundation, which guarantees occupational pension contri-

butions  in  compliance  with  the Swiss Federal Law  on  Occupa-

tional Retirement, Survivors and Disability Pension Plans (LPP) 

and its ordinances, is based on a defined-contribution system, 

according to which the old-age pension is calculated by applying 

the conversion rate to the individual savings accumulated until 

retirement.

On the contrary, contributions for disability and death are deter-

mined based on the last salary paid before the occurrence of the 

insured event.

The  “Fondo  complementare  di  previdenza  BSI  SA”  (Fund)  con-

sists of a defined-contribution supplementary plan. The Fund in-

sures employees already covered by the Foundation, whose annu-

al insured salary is above four times the maximum AVS retirement 

pension or whose entry benefit generated a purchase surplus.

The statutory retirement age is set at 64 for both the Founda-

tion and the Fund.

As at 31.12.2016, the responsible actuary determined the pen-

sion funds and actuarial provisions applying the technical rate of 

2.5% and the 2015 LPP generational technical bases year 2017. 

On  the  basis  of  these  actuarial  estimates,  coverage  at 

31.12.2016 stands at 100.9% (unaudited) for the Foundation 

(31.12.2015:  101%,  technical  rate  2.75%,  2010  LPP  genera-

tional tables year 2016) and 102.3% (unaudited) for the Fund 

(31.12.2015: 104.8%, technical rate 2.75%, 2010 LPP genera-

tional tables year 2016).

4.5 DISCLOSURES ON THE ECONOMIC SITUATION OF OWN PENSION SCHEMES

a) Employer contribution reserves (ECR)

There are no reserves of contributions by the employer.

b) Presentation of the economic benefit / obligation and the pension expenses

Overfunding/ underfunding

at the end of the current

year

Economic interest of the bank /

financial group

Change in economic

interest (economic

benefit / obligation)

Contribu-tions

paid for the current

periodPension expenses

in personnel expenses

31.12.2016 31.12.2015 31.12.2016 31.12.2015

Employer sponsored funds / employer sponsored pension schemes

Fondazione di previdenza BSI SA

without overfunding / underfunding - - - - 627 627 633

Fondo complementare di previdenza BSI SA

without overfunding / underfunding - - - - 398 398 384

4.6 PRESENTATION OF VALUE ADJUSTMENTS AND PROVISIONS, RESERVES FOR GENERAL BANKING RISKS, AND CHANGES THEREIN DURING THE CURRENT YEAR

in SFR 1’000 31.12.2016

Situation as at

31.12.2015

Use in conformity

with designated

purposeReclassi-fications

Currency differences

Past due interest,

recoveries

New creations

charged to income

Releases to income

Situation as at

31.12.2016

Provisions for deferred taxes - - - - - - - -

Provisions for pension benefit obligations - - - - - - - -

Provisions for default risks - - - - - - - -

Provisions for other business risks - - - - - - - -

Provisions for restructuring - - - - - - - -

Other provisions - - - - - - - -

Total provisions - - - - - - - -

Reserves for general banking risks 1’540 - - - - - - 1’540

Value adjustments for default and country risks - - - - - - - -

– of which, value adjustments for default risks in respect of impaired loans/receivables - - - - - - - -

– of which, value adjustments for latent risks - - - - - - - -

4.7 PRESENTATION OF THE COMPANY’S CAPITAL

in SFR 1’000 31.12.2016 31.12.2015

Total par value

No. of shares

Capitaleligible for

dividendTotal

par valueNo. of

shares

Capitaleligible for

dividend

Company’s capital

Company’s capital (of which, paid up) 5’000 5’000 5’000 5’000 5’000 5’000

patrimony 1873 |  25

4.8 DISCLOSURE OF HOLDERS OF SIGNIFICANT PARTICIPATIONS

in SFR 1’000 31.12.2016 31.12.2015

Nominal % of equity Nominal % of equity

With voting rights BSI SA, Lugano* 5’000 100.00 5’000 100.00

* The ultimate shareholder’s is EFG International AG, Zurigo (EFG)

4.9 PRESENTATION OF THE MATURITY STRUCTURE OF FINANCIAL INSTRUMENTS

in CHF 1’000

At sight Cancellable

Due

TotalWithin 3 months

Within 3 to 12

months

Within 12 months

to 5 yearsAfter

5 yearsNo

maturity

Assets / financial instruments Liquid assets 4’481 - - - - - - 4’481

Amounts due from banks 76’656 - - - - - - 76’656

Amounts due from customers 63 - 63

Total current year 81’200 - - - - - - 81’200

Total previous year 101’147 - - - - - - 101’147

Debt capital / financial istruments

Amounts due to banks 27’694 - - - - - - 27’694

Liabilities from securities financing transactions - - - - - - - -

Amounts due in respect of customer deposits 16’125 - - - - - - 16’125

Trading portfolio liabilities - - - - - - - -

Total current year 43’819 - - - - - - 43’819

Total previous year 59’633 - - - - - - 59’633

4.10 PRESENTATION OF ASSETS AND LIABILITIES BROKEN DOWN BY THE MOST SIGNIFICANT CURRENCIES FOR THE COMPANY

CHF USD EUR GBP Other Total

Assets

Liquid assets 4’225 7 245 4 - 4’481

Amounts due from banks 38’691 1’840 35’659 73 393 76’656

Amounts due from customers 13 - 50 - - 63

Financial investments 84 - - - - 84

Tangible fixed assets 48 - - - - 48

Other assets 138 24 - 3 7 172

Total assets shown in balance sheet 43’199 1’871 35’954 80 400 81’504

Delivery entitlements from spot exchange, forward forex and forex options transactions - - - - - -

Total assets 43’199 1’871 35’954 80 400 81’504

Liabilities

Amounts due to banks 4’897 350 22’382 57 8 27’694

Amounts due in respect of customer deposits 916 1’502 13’323 13 371 16’125

Accrued expenses and deferred income 5’242 - - - - 5’242

Other liabilities 302 - 1 - - 303

Reserves for general banking risks 1’540 - - - - 1’540

Bank’s capital 5’000 - - - - 5’000

Statutory capital reserve 2’500 - - - - 2’500

Profit carried forward  16’023 - - - - 16’023

Profit (result of the period) 7’077 - - - - 7’077

Total liabilities shown in the balance sheet 43’497 1’852 35’706 70 379 81’504

Delivery obligations from spot exchange, forward forex and forex options transactions - - - - - -

Total liabilities 43’497 1’852 35’706 70 379 81’504

Net position per currency -298 19 248 10 21 -

5. INFORMATION ON THE OFF BALANCE SHEET BUSINESS

5.1 BREAKDOWN OF FIDUCIARY TRANSACTIONS

in SFR 1’000

31.12.2016 31.12.2015

Fiduciary investments with group companies and linked companies 3’764 6’875

Total 3’764 6’875

patrimony 1873 |  27

5.2 BREAKDOWN OF MANAGED ASSETS

in SFR 1 Mio.

31.12.2016 31.12.2015

Type of managed assets:

Assets in collective investment schemes managed by the company 1’258 982

Assets under discretionary asset management agreements 3’776 4’232

Other managed assets 907 1’299

Total managed assets (including double counting) 5’941 6’513

– of which, double counting 1’258 982

Presentation of the development of managed assets

Total managed assets (including double counting) at beginning 6’513 8’301

+/- net new money inflow or net new money outflow -673 -302

+/- price gains / losses, interest, dividends and currency gains / losses 101 -1’486

+/- other effects  - -

Total managed assets (including double couting) at end 5’941 6’513

Definition of “Assets under Management” (AuM)Assets under management (AuM) consist of client assets man-aged  or  deposited  at  Patrimony  1873  SA  for  investment  pur-poses.  Patrimony  1873  SA  provides  clients  management  or consultancy services. Custody-only services are excluded from the calculation of assets under management (and are separate-ly  classified  as  “Assets  under  custody”).  “Asset  management mandates” refer to assets for which clients delegate investment decisions  to  Patrimony  1873  SA  (including  assets  deposited with third parties).“Other assets under management” refer to assets for which fi-nal investment decisions are made by the clients themselves.The  calculation  of  assets  under  management  is  carried  out  in accordance with FINMA guidelines. 

Definition of “Net New Money” (NNM)Net  New  Money  consists  of  contributions  by  new  clients,  out-flows due to the end of relationships with clients and inflows or outflows in relation to existing customers.The scope of clients used to calculate Net New Money is the same used for the calculation of assets under management. The calcu-lation is based on transactions carried out by clients. New uses as well as the repayment of credit lines are included among the rele-vant transactions for the purposes of calculating Net New Money.Interests and dividends received by clients in the context of as-set management or consultancy, changes in the market or for-eign exchange rates, as well as commissions paid by customers are  not  included  among  the  relevant  transactions  for  the  pur-poses of calculating Net New Money.

6. INFORMATION ON THE PROFIT & LOSS STATEMENT

6.1 BREAKDOWN OF THE RESULT FROM TRADING ACTIVITIES AND THE FAIR VALUE OPTION

in SFR 1’00031.12.2016 31.12.2015

a) Breakdown by business area (in accordance with the organisation of the Company)

Banks - -

Asset manager - -

Financial companies - -

Public institution - -

Insurance - -

Client 61 27

Total 61 27

b) Breakdown by underlying risk and based on the use of the fair value option

31.12.2016 31.12.2015

Interest rate instruments (including funds) - -

Equity securities (including funds) - -

Foreign currencies - -

Commodities / precious metals 61 27

Total result from trading activities 61 27

– of which, from fair value option - -

6.2 BREAKDOWN OF PERSONNEL EXPENSES

in SFR 1’00031.12.2016 31.12.2015

Salaries 12’100 11’550

– of which, expenses relating to share-based compensation and alternative forms of variable compensation 2’220 2’220

Social insurance benefits 1’159 928

Other personnel expenses 1’137 1’201

Total 14’396 13’679

6.3 BREAKDOWN OF GENERAL AND ADMINISTRATIVE EXPENSES

in SFR 1’00031.12.2016 31.12.2015

Office space expenses 892 921

Expenses for information and communications technology 1’562 1’978

Expenses for vehicles, equipment, furniture and other fixtures, as well as operating lease expenses 15 25

Fees of audit firm(s) (Art. 961a no. 2 CO) 173 253

–ofwhich,forfinancialandregulatoryaudits 173 253

Other operating expenses 2’527 2’395

Total 5’169 5’572

6.4 EXPLANATIONS REGARDING MATERIAL LOSSES, EXTRAORDINARY INCOME AND EXPENSES, AS WELL AS MATERIAL RELEASES OF HIDDEN RESERVES, RESERVES FOR GENERAL BANKING RISKS,

AND VALUE ADJUSTMENTS AND PROVISIONS NO LONGER REQUIRED

in SFR 1’00031.12.2016 31.12.2015

Other extraordinary income 2’439 161

Total extraordinary income 2’439 161

Reserves for general banking risks - -

Total variation of reserves for general banking risks - -

As per sale and purchase agreement dated 21 February 2016, 100% of the shares of BSI Holding AG, Zurich has been acquired 

by EFG International AG, Zurich on 31 October 2016 from BTG Pactual SA, Sao Paulo, Brazil. A retention plan has been im-

plemented as part of such transaction; it has been agreed that the retention plan cost would be beared by the shareholders of 

Patrimony 1873 SA. For this purpose a payment of CHF 2.3 million has been made by BSI SA in favour of Patrimony 1873 SA.

6.5 PRESENTATION OF CURRENT TAXES, DEFERRED TAXES, AND DISCLOSURE OF TAX RATE

in SFR 1’00031.12.2016 31.12.2015

Dissolution of provisions for deferred taxes - -216

Current tax costs 1’878 3’022

Total 1’878 2’806

Average tax rate (in %) 28.82 19.04

patrimony 1873 |  29

CAPITAL PLANNING (Unaudited) Since 2013, capital requirements are calculated accord-ing to Basel 3. At the end of 2015 the constraints speci-fied  by  the  Ordinance  on  Capital  Adequacy  (CAO)  have been  respected  both  in  terms  of  the  minimum  capital and concentration risk. Quantitative information on cap-ital and credit risks is provided in the attached tables. In accordance with the FINMA guidelines on capital buffer and capital planning, and  in consideration of the size of the risks to which the Company is exposed (category 5), it was defined that the new free surplus buffer, above the basic  capital  adequacy  requirements  during  favourable periods, should be set at  the minimum of 31.2%. Addi-tional  information  about  the  calculation  methods  used by the Company is provided below.

•  Credit risk  The  maximum  limits  on  large  exposures  indicated  by 

the  Ordinance  on  Capital  Adequacy  (CAO,  Art.  95  et seq.)  have  been  met.  There  are  no  groups  with risk-weighted assets, calculated in accordance with art. 95 CAO, over 10% of eligible capital. As indicated in art. 99  of  the  related  ordinance,  the  intra-group  positions can be totally excluded from the limits stated in art.97. 

•  Market Risk  Patrimony 1873 applies the standard approach to the 

calculation of capital requirements for market risk. As at 31.12.2016 these requirements amount to less than 1% of the available eligible capital.

•  Operational Risk   To calculate the regulatory requirement for operational 

risks, the Company uses the basic indicator approach, weighting gross revenues with 15% factor as defined in the FINMA circular 2008/21. As at 31.12.2016 the reg-ulatory capital for the Company operating risk amount-ed to CHF 5.4 million (2015: 5.4 million), which is about 21% (2015: 21%) of the available eligible capital.

INFORMATION CONCERNING EQUITY CALCULATIONIn  relation  to  the  publication  requirements  of  the  Basel III,  reinforced  by  FINMA  Circular  2016/1  “Disclosure  – banks”, here below the required information. 

31.12.2016

Capital Requirements

Minimal capital requirements ratio (CET1) 32.98%

Additional capital requirements ratio (T1) 32.98%

Minimal and all additional capital requirements ratio 32.98%

Capital ratio determining capital adequacy target 10.50%

Leverage ratio 29.70%

PricewaterhouseCoopers SA, via della Posta 7, casella postale, CH-6901 Lugano, Switzerland Telefono: +41 58 792 65 00, Fax: +41 58 792 65 10, www.pwc.ch

PricewaterhouseCoopers SA is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

Report of the statutory auditor to the General Meeting of Patrimony 1873 SA Lugano Report of the statutory auditor on the financial statements As statutory auditor, we have audited the financial statements of Patrimony 1873 SA, which comprise the balance sheet, income statement, statement of changes in equity and notes (pages 15 to 28), for the year ended 31 December 2016. Board of Directors' responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor's responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements for the year ended 31 December 2016 comply with Swiss law and the company’s articles of incorporation. Other matter The financial statements of Patrimony 1873 SA for the year ended 31 December 2015 were audited by another firm of auditors whose report, dated 17 March 2016, expressed an unmodified opinion on those statements.

patrimony 1873 |  31

Report on other legal requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (art. 728 CO and art. 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with art. 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company's articles of incorporation. We recommend that the financial statements submitted to you be approved. PricewaterhouseCoopers SA

Omar Grossi

Yousuf Khan

Audit expert Auditor in charge

Audit expert

Lugano, 11 April 2017

Via Peri 21b, CH-6901 Lugano

Tel. + 41(0)91 912 72 72

Fax + 41 (0)91 912 72 70

This document is for purely informative purposes and in no 

way represents an offer, invitation or recommendation to 

buy or sell certain products or services, which are subject to 

change without obligation of prior notification.

Patrimony 1873 Ltd is authorized to operate in Switzerland 

as a securities dealer and, as such, is regulated by the Swiss 

Financial Market Supervisory Authority (FINMA).

Patrimony 1873 Ltd is not authorized to act as a 

securitiesdealer in other countries and is not authorized 

to promote or advertise its products and financial 

services in these countries. In some countries certain 

products and services are subject to legal restrictions; 

information about these products is understood to 

be intended for those countrieswhere these restrictions 

do not apply.

www.patrimony1873.com